decline in coin prices

In the other thread: investing versus collecting: somebody said a $50 common morgan at its high point was $1500. I would dare to say that i think such declines have nothing to do with volatility of the coin market, and nothing to do with normal cyclical trends. I would venture to guess coin collecting was simply a completely different creature before the internet. Before the internet, collectors had no idea of the actual supply, nor did they really have any way to buy and sell outside their local markets. now, the common date coin you're looking for, can be located in any of a hundred to a thousand cities. It doesnt matter what you collect: cardboard crowns from burger king; plastic hair rollers; mickey mantle baseball cards. The internet has changed the antiques and collectibles industry. Possibly more than any other industry.

 

Log in or Sign up to hide this ad.

Sure would be a lot harder to collect coins without the internet.

 

That's part of it. The other parts were soaring silver prices, a collapsing economy, and investment pool buying up rare coins as a separate asset class. It could happen again in the right circumstances. People tend to repeat mistakes if you wait a generation or two.

 

It was never that high.Collectors managed long before the internet, it was known what was rare.

 

That is a huge Huge HUGE issue.

Take a look at that graph. It showed an ENORMOUS surge in 1989, then an enormous collapse, then a gradual upwards trend.

Most price graphs show little ups and downs which add up to a general trend. Anytime one sees an enormous one-time anomaly like the coin prices boom / crash of 1989 / 1990, it is wise to ask "What was unique about that time period ?"

That was shortly after PCGS and NGC came on the scene... which - IN THE MINDS OF INVESTORS - transformed high-end Rare Coins from "dangerous territory - specialists only" into a standardized commodity. In their minds, all certified MS-64s are the same, and thus interchangeable in the marketplace. Commodities.

In their minds, they no longer needed to worry about forgeries, alterations, improper cleaning, counterfeits, overgrading... so it was safe to throw money into rare coins. And they did.

Obviously, they overdid it. When they began profit-taking at the peak, money rushed out and the market collapsed.

Maybe. "Never say never again". But in many ways it was a unique setting. Personally, I think things have settled down into long-term trends - which are up over time. I doubt there will be another mega-peak / crash. But who knows ... ?

 

Here is The Graph...

 

If history has shown any thing, it is that bubbles in investing will occur from time to time, and they _will_ repeat themselves in areas that have already experienced burst bubbles previously. People have an ability to tell themselves that "this time is different".

I don't know that we will see a repeat of the coin price surge like that one, but it would not shock me to have it happen again.

 

That's certainly reasonable.

But I think it's a question of magnitude.

Some look at every little drop with a Chicken Little "Sky is falling" attitude.

But these little 10% ups / downs don't compare with the 80% skyrocket / crash of '89/90.

 

Hey, Im waiting for my cardboard crown collection to take off any day now, when it does....im cashing in big time!!!

 

I agree... I've always had an interest in Coin Collecting, but I (a little stupid I now realize) never knew, Coin Shops, shows, and all these places existed... I thought you had to pull all you coins out of Circulation...

Then one day I was searching for something on the Internet and I foud Forums, online stores, then checked E-bay, etc.. etc...

 

That graph looks really worrying....south sea bubble like....

 

Agreed.

Looking at The Graph, I don't feel that we are at an "Irrational Boom Peak" right now. If I did, it would be wise to sell, not buy... then wait for the drop and use the cash to buy back in.

So the question seems to be... will there be large amounts of non-hobbyist investor cash pumping the market to another artificial high ?

I'm staying tuned to CT...

 

Sounds like the stock market :rolling:

 

The RELEVANT QUESTION IS: When non-hobbyist investors buy coins, do they DUMP their collections when the stock market recovers? ....Coins or bullion is not a good investment in a declining stock market. The stock market always recovers. If the stock market took a permanent dive, that would be extreme world events like oil supply being cut off or mass terrorist attacks. If the stock market took permanent dive, the economy would collapse, and your coins would have no buyer. So this increase in coin prices during stock market declines is a short term game people play.

 

Many people invest in gold and silver including coins to hedge against inflation, and if there were ever a collapse of the markets gold and silver have always been worth something since there discovers.
Just opinionencil:

 

coin price rising

Some sources say the State Qrtr issues made a lot of new coin collectors and brought the collectors count up to 150,000,000. Once the newbies found out their were other coins to collect, they got the 'itch' and are buying what they can afford, or want to invest in. The rise in Gold and Silver bullion also played a part.

 

The added sources of supply and speed of aquistition today relative to the pre-Internet days should reduce the time before the law of diminishing marginal utility kicks in.

http://www.investopedia.com/terms/l/lawofdiminishingutility.asp

That's another Internet variable and it's probably too early to tell what the over-all effects will be on coin collecting/investing. One of the effects on collectors will be complaints of "burn-out" and that's been happening. But speeded up "burn-out" may in the end be a good "slayer" for the over-all picture, keeping things from heating up too much too fast? But eventually it's going to end no matter what.

If you choose to believe that moods and attitudes are causative to market swings then the bad signs are here: Thomas Noe scandal, the A.N.A and the Walter episode, the "First-Strike" episode, the reactions to discussions of 100 point grading. And now the latest--An A.N.A complaint filed by Dwight Manley against Donald Kagin.