Are coins in a BUBBLE?

I like world moderns too. Many of these are even scarcer than US coins.

 

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Last year I bought a 1977 Brazil 1 Cruzeiro, AU58, mintage 98k, for $15. Some of these world coins are the best deal in any town as long as you like the design. How can I go wrong with that for $15?

 

I used to care because it was an "investment" and I wanted the monetary reward also. Now, even though I made some money this isn't very important to me any longer and I just want the truth to get out. People believe all moderns are common but one of their biggest weaknesses is that there just aren't enough of most of them for a mass market.

A person can put together a really nice set of something like clad dimes from circulation and this won't change anytime soon. Even the scarcest dates can be found in a nice attractive and desirable VF condition. With effort you can even find every date in nice attractive XF. In the long run this could be one of their greatest strenghts because some collectors will want to get pristine examples and will discover thesearehard to find. The only thing that's really lacking for these coins to be much higher priced is demand. Even though there are millions of folders being made there's not much demand for any of them except at face value.

 

There's every chance that almost all of them went into circulation and are now parts of Toyotas in old junk yards.

I usually like paying a fraction of Krause but will pay up for this sort of coin.

 

Well, remember, I only look at the Lincolns in them....and they are usually crap.

 

Clad, okay -- I thought we were talking "in general."

My misunderstanding.

I could see that, and it's an interesting point.

 

I like the idea of pulling out of pocket change, some very oldish nickels, dimes and cents still in decent shape. Recently pulled a red 1956 Lincoln cent that was AU quality. I try to pluck the good stuff but it is very difficult to find these coins in collectible condition.
BTW I am trying to put a list together for my son when he goes thru his plastic barrels of coins. He is pretty good with cents but dimes, nickels and quarters, mostly appear common except of course the pre-64 quarters dimes and halves. What are some key dates and error coins for those coins. Thanks in advance for any and all replies.

 

Back when I was handling much more cash than I am now (I do most of my transactions via card now), I was regularly pulling nickels from the 40's and 50's out of circulation. As a kid, I managed to pull almost every date and mint except 1938 PDS, 1939 PDS, and 1950-D. (I don't recall exactly what I was missing, but I know those were among the few.)

 

Since this thread started in Oct. 2014, any sign of a bubble, or a bursting?

 

Doug, that picture doesn't show a bubble. It shows a market decline - but not every market decline is the result of a bubble. The late 80's was a bubble - this is not. Looking at the ten year chart puts this decline in better context:



On this chart, you can see that the 2007 - 2008 range exhibits bubble-like behavior. A bubble is characterized by exponentially increasing prices, a mania attitude that "it will never come down," and excessive speculation. There is increasing hype until someone decides to get off, and then the price decrease is just as rapid (such as 2009).

There can be mini-bubbles embedded within a market. For example, as someone pointed out earlier, the Kennedy half fiasco exhibited bubble behavior. But that had relatively little bearing on the rest of the market.

It is interesting to note the severity of the bull market we have going on right now. I would guess that it would roughly correspond to the overall stock market correction that we've experienced over the last year or so, but I would have thought hard assets and stocks would have been less correlated.

To those of us building collections, this bull market presents a fantastic buying opportunity. Buy while the prices are low!

 

For anyone interested in reading more about bubble markets, their characteristics, how to recognize them, how to avoid them, and how to make money during them, I would highly recommend these books:

Manias, Panics and Crashes: A History of Financial Crises
This Time Is Different: Eight Centuries of Financial Folly
Irrational Exuberance
Devil Take the Hindmost: a History of Financial Speculation

 

Till you try to sell yours....then the bubble breaks

 

Thanks to whoever bumped this 2014 thread. Was an interesting read this a.m.

Been seeing these charts for years and I'm always amazed at people's need to see a snap shot to cover the entire coin market in order to dictate how they feel about it. Maybe there's some value to it? Maybe if you own whatever specific items are included in the data.

It more-so comes down to individual situations, individual coins, and varying degrees of urgency to sell. If somebody has a large collection and urgently needs a large amount of money and wants to liquidate it all quickly, does the price received reflect the market in any way? How much value can we put on this transaction?
Other than somebody got desperate and dumped everything for likely too cheap of a price which the buyer will likely turn around and sell them for a profit, it doesn't tell us anything.
Now lets say an educated buyer goes out today and buys 10 different popular coins. 5, 10, 20 years from now, pick the duration of time, all 10 could have went in different directions while some stayed flat. Is this Earth shattering data? Does it affect whether someone should buy a coin today at all or not? To me it does not.
I don't believe it's possible for somebody to come on here and say everybody should expect 50 cents on the dollar for their collection when they have no idea what's in the collection, when it was purchased, for how much it was purchased, how they intend to sell.

The only truth is that there are coins that will be winners and losers and anybody trying to sell anything (not just coins) in a desperate situation is going to get SCREWED, every time. That doesn't set the market for me.

 

Nothing against any of the posters in this thread, but more against PCGS itself -- I hate graphs that purport to show financial performance, but don't start the vertical scale at ZERO.

Here, have a look at the overall graph:



In this case, the real bubble at the end of the 1980s does flatten the rest of the graph more than necessary, but you can just mentally clip off everything above 80000 to fix that.

What you'll see is that the market has been pretty much flat for the last ten years or more, with a minor bump of less than 10% around 2008.

Now, compare that graph to the price of silver or gold (starting a bit later, but that doesn't introduce any significant distortion):




There are your "bubbles". Low-end silver and gold coin prices have followed a similar trajectory. (At least silver has; I wasn't paying as much attention to gold.) If anything, I think the surprise is that the PCGS index stayed so flat as metal prices spiked five years ago; it certainly shows that the coins in the index have a lot more numismatic than bullion value (not really a "surprise"), but it also says something about how the rare-coin market tracks or ignores the bullion market.

 

Guess I'm saying that you look in a coin book to get a value of your coin....they say it's worth $12.00.....you bring it to a coin shop and they say we'll give you $4.00....that's what gets me going.....lets be more realistic on the value of coins....can't say something is worth $200.00 when you can only get $85 bucks for it.....misleading???? I think so.

 

That's not really what they're talking about. Price guides are worthless. The book is giving you the cost to buy something in a retail setting. No one sell and buy a coin for the same value and expect to stay in busisness. Coin shops have to pay rent, insurance, pay their employees, etc. and after all that eek out a profit.

 

The bullion market and the numismatic market are two different creatures. I will definitely agree that, for the bullion market, the bubbles are the peaks which you indicate. However, the PCGS index intentionally selects numismatic coins, and ignores bullion. Low end common coins like you mention trade essentially as bullion - they aren't really connected to the numismatic market (as there is little to no numismatic premium attached to them). When we talk of the coin market (which the PCGS index is designed to track), we are talking about coins for which the bullion value is essentially irrelevant.