1983 Flashback: Does the Coin Market and Silver Price Correlate, still?

Juan Blanco · Nov 28, 2012

From the Coin Commentary Archive: September 10, 2007: "So How's the Coin Market? (Parts 1 & 2)" http://www.coinraritiesonline.com/index.php?page=mkt

{My study} actually was a lot of work, and took the better part of a year to put together. First I had to gather up Greysheets for the prior 20 years (better known as The Coin Dealer Newsletter, published weekly since 1963). Then I chose a representative basket of coins that were actually available for sale on the market (for example, a common date $20 Saint was chosen for the basket, whereas an 1804 Silver Dollar was not). Then I had to gather up data from the same period on every bit of economic data that I thought could possibly have an effect on rare coin prices. For example:

Interest rates

Precious Metal Prices

Stock Market Indexes

Housing Prices

Inflation Rate

Crude Oil Prices

Money Supply Data

Then I had to find coin market data that was simply not available in the Greysheets. This was actually the most interesting part of the study, and the most fun. I made up a survey and sent it to about 75 of the most prominent coin dealers of the day. These were the Big Dogs of the coin market - the ones who had lived through the ups and downs of several markets.

According to my research, the price levels of US rare coins could be predicted largely by (drum roll please) . . . watching the price of silver. During the period studied, anyway, there was about a 2 month lag in the price of that “basket” of rare coins vs. the price of an ounce of silver bullion. At the time, silver was skyrocketing. Lots of coin dealers and collectors were taking some or all of their windfall profits in silver bullion (even scarce silver coins were often worth more as “melt value” than they were as collectables) and pouring their profits into rare coins.

There are only so many rare coins on the market at any one time. Thus, the prices of the rare coins on the market also skyrocketed. Conversely, when the silver market crashed, all of those people who made ridiculous amounts of money in silver bullion were now engaged in losing it each day as the price of silver plummeted. These people now had zero interest in buying any more rare coins. In fact, many would have liked to sell them for whatever they could get. And some did – taking huge percentage losses.

I’m not sure why the price of gold did not track US rare coin prices nearly as closely as silver did. My memory of those events was that when silver went up, gold did too. But the reality was, according to the data they followed different paths in many cases (though they obviously peaked in price at about the same time). Strange maybe, but that’s the story that the numbers told.
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1983 Flashback: Does the Coin Market and Silver Price Correlate, still?

Juan Blanco New Member

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1983 Flashback: Does the Coin Market and Silver Price Correlate, still?

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