My Impression of the Current Numismatic Market

Nah, we’re going to come back stronger than ever, if global warming doesn't get us all. It matters immensely who runs DC. If you want to cut taxes, put two wars on the credit card, put less into education, infrastructure and R&D, negotiate lopsided trade agreements, and let crooks on Wall Street run with the money, you get what we got, a screwed middleclass, with demoralized youth, who have seen the American Dream evaporate. If you want to do the opposite, like emerging nations, we rebuild stronger than ever.

That shouldn't be politics, it's plain & simple economics that builds a nation that benefits all its people, not tears it down for the benefit of the top 1%.

So, just to get back on point, WHEN we the people force DC to work for us, so the economy recovers for us, numismatic value should recover.

 

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This might not be the right forum for this, and I’ll try to keep it anti political. Some of the most respected economists believe in an Austrian economical approach (hands off), as compared to a Keynesian economical approach (our current approach). This being said besides cutting down on entitlements, Austrian economists do not want to artificially stimulate the economy in any way, shape, or form. Many short term solutions carry long term problems. Right now the housing market is still valued as having a bubble of 10%-20% above value, we continue to devalue the dollar by printing money, and our consumption rate is much greater compared to what we are producing. Some believe that the best thing to happen for the long run economy of America is that we go ahead and let the economy collapse. Right now the economy is on life support, and if we pull the plug, we can finally start forging ahead. We are still a self-sustaining nation and could get by with fruits and veggies in our backyard if need be =/. As far as politics the Joint Committee on deficit reduction is in a quagmire. You have 12 highly skilled economists, but 6 believe in an democratic approach, and 6 believe in the republican approach. I’m not sure how politically motivated their decisions will be, but there has been a lot of pressure put on them, and I doubt they’ll make much headway minus some slashing in entitlements. Many believe that Republicans actually want the economy to collapse, because this would be their ticket to come into complete power, as in both house, white house, and even a shift in the senate. The problem with this is, if republicans take over and have no problem implementing policy their would be great social unrest. As soon as entitlements were slashed (SSN, Welfare, ECT..) people would go bananas. This would cause another paradigm shift towards a democratic approach.
I don’t think global warming is that much of a current issue, as much as reduction on reliance of oil. If you look at the past 5 recessions oil prices had a hand in each of them. It’s not so much that the price of oil hurts the pocket book, and people spend less, but it is the sheer amount of currency that is taken out of the system. When oil prices skyrocket the money is taken out of circulation and held for savings in overseas banks. Billions and billions of dollars.
All in all I believe in an Austrian economical based approach to the economy. I also believe that my generation has turned into the “entitlement generation,” and that we are currently in the age of over consumption by non production.
How does this equate to gold and silver? Once again I think that Silver, and silver coinage are a great investment. The government continues to try to inflate the dollar through things such as quantitative easing, and the green backs will be worth nothing compared to physical silver in 15 years or so. Silver is a precious metal, and we have a climbing world population with a limited amount of resources. It can also be stored, and can’t be inflated. I believe after the economy climbs out of the next recession/depression silver will be very strong! Enough about that. Just my opinion.

 

politics-on

"Beware false equivalencies."

politics-off

Has anyone ever wondered what would happen to the value of their coins if people simply stopped spending money on them? In times of severe trouble, why should a coin with a certain number on the front be worth two years' median salary when the same coin with the following number is worth 90% less? Scary.

Fortunately, there are enough people that the risks of that are low, and similar risks exist for nearly any investment. However, collectibles are one of those market types where the bottom can totally drop out with a very low floor.

 

I was at Philly Whitman, and found the prices in general to be too high, with many dealers asking too much for coins that should have been priced based on greysheet, rather than the "PQness" that the dealer thought it had. I was willing to buy more than I did, but wouldn't overpay. I left with less than I wanted to, and was disappointed.

 

Great write up! Although I'd have to say I'm a Keynesian, which has worked in the past to pull us out of depressions & recessions. Having been a Bus Admin major, accounting & finance, I tend to believe there is no real free market or at least not one that works for everyone. A capitalist market left to its own will concentrate wealth in fewer & fewer hands over time (like today and the past), so government intervention is imperative if it's going to work for the majority. Or, like you said, the people won't stand by and let it happen. I also believe we can compete in a world market if the playing field is level and provide entitlements, which are really only a minimal level of existence, as well as a living wage. Anyway, like you said, all of this is beyond the scope of this forum, other than the economy’s relation to PM’s. If you believe in Austrian economics, long run, PM’s look pretty good - if you believe in Keynesian economics, not so good.

 

Austrian vs Keynesian:

There's benefit in being reasonable. One extreme gives you short-term damage the other extreme gives you long-term trouble. The notion of economics based on political purity is childish and dangerous.

 

A Finance major who is a Keynesian? Heavan forbid. You should have taken my MBA Econ or Finance class, I would have driven that out of you.

I disagree sir that the Keynesian policies pulled us out of any recessions, and especially the depression. Having almost half your workforce disappear and being the "factory to the world" is what pulled us out of the depression. Look at the failures of these policies in the 30's even while the policies were piling on Federal debt.

I do agree sir that free markets need regulation, but its not from the free market, its from things like insider trading, price fixing, corruption of the beauracracy, etc etc. Free markets, absent people "cheating", is self regulatory. Long term there are always game changing events that preclude any one company or class from dominating. Even if you look at past large firms, you will find they broke many laws along the way to become dominant. Free market is not to blame, it is human greed and willingness to cheat.

An example would be Microsoft. They did many underhanded, illegal things along the way to become dominant. Politicians have been trying to "break them up" for more than a decade now. With the change to cell phones, tablets, etc how dominant are they today? If they do not change, how dominant will they be in 20 years? Absent a couple of purchases, I do not see one new successful product from them in 20 years.

Chris

 

not to rock the boat, Chris, but what do you call the iPhone???

 

Very true, compromise is a necessity. Unfortunately, with our bought & sold government, big money, not the people have been winning.

 

A very successful APPLE product sir!

(Had to scroll up to make sure I wrote microsoft and not Apple in my post above, lol)

 

Any short term damage is just that, short term. Better to take your lumps right away to allow for the rebound.

Lets look at the housing bubble in the US. We are now, what, 4 years past the start? Is it any better? This is why market corrections should always be allowed to happen. If we would have allowed the market to correct, we would be 2 or 3 years into the recovery already. You will not see a strong housing recovery until buyer believe we are at the bottom and prices are increasing again. It is government interference that has made is a 4 year long and counting disaster in the housing market.

Would people have lost money? Yes, but they were the ones buying at those prices. They took the risk, they lost, lesson learned and move on. Dragging this out hurts everyone in the country, not just those who took foolish risks or made bad decisions. I remember distinctly people bragging about taking out $100,000 out of their house to finance world cruises, luxury cars, and the like. They are the ones who should suffer the most, not the rest of the US. Why aren't there essays about this today, talking about how millions of jobs in housing have disappeared because the government is stringing out the housing crisis, and not allowing these house speculators take their losses?

Chris

 

my Freudian Slip was showing... sorry Chris, you're right and I was waaaay off if my own world...

 

Awe, but here you blame only the buyers and not the banks that knew the loans would go bad before they made them and then sold them off to us as AAA paper. And, how many of these mortgagees would still be paying, if their jobs weren’t shipped offshore through lopsided trade agreements? I’d say, “Softening” the harm to buyers is in order, rather than allow big money to grab up more houses, further shifting wealth to them.

 

Of course we can agree to disagree sir.

Also, I forgot to post it was also a Republican congress that actually created the depression with their import tariffs. Not trying to pick on a certain party's president. I never said it was preferable to have WWII pull us out, not by a long shot, I am just saying I believe Keynes was tried and failed miserably until we were brought out of it by WWII.

As for something similar to Keynes, not not, I do believe the government by facilitating college attendance, creating infrastructure, prohibiting and enforcing illegal monopolistic practices, and ensuring orderly labor practices, can help free market economics. I am not anti-government, I am for government creating an environment that allows the free market to most benefit our nation.

Btw you are right I never went to or taught at Berkley, but you shouldn't assume too much. Where I taught is one of the top 20 Finance MBA programs in the world. Not Berkley but very close in rankings and GMATs. PM me and we can trade MBA "war stories".

Chris

 

But how many of these loans were made because of Fannie and Freddie? Those GSE are the real market distorter, and between that and the Fed faciliating the asset bubble are the reason so many got sucked into buying at those prices.

Did the banks know the loans were going bad? Did anyone put a gun to the borrowers head and make them borrow? Should banks be your nanny and make sure you never lose money in a transaction? Where is personal responsibility in this equation?

 

I fear this thread will be "shut down" soon if we don't get back on track and away from this ****-bent political conversation.

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To return to the "numismatic market" question at hand, I agree with many comments others have made.

My crystal ball says: We as a nation will continue to increase consumption, decrease production, and the incoming work force will become lazier and lazier with more and more expectations of entitlement. The average age of numismatic collectors will continue to get older and older, as the new generation isn't interested in anything they can't "text" or "twitter" or "facebook". A small but fringe group of youngish collectors will keep the hobby alive, but the market will likely suffer decreased demand and increased supply as the senior collectors kick the bucket.

I am always amazed when I attend shows near where I live. I am almost always the youngest person there by at least 10 years, if not 20. This past weekend was no different. The majority of the sales at the show seem to be shuffling of coins between dealers, with the attendance being sparse at best. Two weekends in a row, I have gone to a coin show with a pocketful of cash, and I have spent $0 on coins. The selection at in person shows where I live is so sparse, the dealers are functioning as metals traders, and the quality of coins is horrendous. I have an annual coin budget of roughly $6000-$8000, small by many standards, and probably 90%+ of that is spent online (Teletrade, Heritage, eBay, etc).

 

Yes, the banks knew, based on the buyers' loan apllications, that x% would default. But, then I think the banks wrongly assumed too that prices would continue to rise, so even when the buyer defaulted, they wouldn't lose. Or, even better, the banks got bailed out and grabbed the houses at bargain prices.

This brings us back to what happened? IMO, the number one contributing factor to the colapse was the loss of jobs through unfair trade agreements that benefit big money and screwed the working class. You can say the world market is here and companies can operate were they want, which is true. But, then let's treat them like foreign companies that want access to our markets, yet provide no jobs here.