US Coin Market Stagnant

That doesn't seem to be the case, just the bullion value of the 288 gold coins in the index is just under $200k, quite a bit higher than the index value of $54k. If it was just an average of the most recent values of each coin, I would think the index value would be quite a bit lower, so there must be some kind of weighting going into the calculation.

 

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The US Coin market in my big picture view can be summed up like this:

1972-89 - nowhere but up.

1989 crash to present - mostly downward slide

Gold and Silver bullion coins seem to be only thing that is truly liquid.

 

Get out a copy of the Redbook and look after the $20 gold section.

 

Investment in gold bullion material seems to beat numismatic gold.

 

Depends on WHEN you buy numismatic gold. The presence of bubbles in the last 30 years leads to skewed results.

 

Actually, it was a result of hype -- most of it REAL and LEGITIMATE -- about Wall Street firms coming in and buying coins with hundreds of millions of dollars.

As I recall, generic Gem Saints tripled in price in less than 2 years with not much of a move in the underlying gold price.

I had just started out in the finance field and I knew some of the people involved in the underlying money raising for the coins.

 

No, if you quantify it via a regression analysis it will generally show a weak direct linear relationship.

If the stock market is plunging, unlikely that gold or coins will be moving up.

 

Weighing and divisor effect, like the DJIA, might be in play.

 

The crash was pretty much over by 2000-02. By 2000 gold had bottomed at about $280/oz. The premiums for the most popular coins -- i.e., Saints, Morgans -- slowly dissipated over the 1990's, the absolute price falling, but as gold fell too they had more "catching up" to do on the dowside as the premium could remain the same or expand even as the coin's price fell (because gold fell faster).

If you cold buy MS65 Saints (commons) for $700-$800 in 2001 or 2002 then you lagged gold to the present but still did OK.

 

I think it would be interesting to know the details. Even if we take it for granted that the market as a whole is trending downward, that doesn't necessarily mean that all segments of the market are falling. Maybe there are pockets that are increasing?

 

I think GDJSMP said as much with the links to all the sub-sectors of the PCGS 3000.

You have to know the composition of an index and the weighings and how it is computed to be able to discern special anomalies. For instance, in 2015 and early-2016 oil prices collapsed and this pressured the energy sector including many debt-laden smaller companies. As a result, the bond prices in that sector collapsed and this impacted the high-yield ("junk") bond market. Overall the junk bond market was fine but you needed to know that 1 sector which accounted for a large portion of the index was responsible for like 80% of the yield spike.

 

That certainly was a major factor for it, but that said the dealers knew better than the hype many of them were spewing. At best it was naive and in many cases it was just scummy taking people for all they're worth while they could. Any dealer worth their salt should have or did know that things were no where near as rare as they were being hyped to be and that even with Wallstreet money the prices that common as dirt things were fetching would never last

 

BB, I don't know about that.

In the span of a few years, you just had the TPG's verifying the coins real grade...you had electronic buying/selling and quotes among dealers....compare this to 20 years earlier with phones and the CDN price guide and it was revolutionary.

Now...add in the possibility that there is a buyer for THOUSANDS of generic Saints....maybe TENS OF THOUSANDS....and similar buying power for other popular coins like Morgans....and I can certainly see the stampede.

I think I even posted some of the old newsarticles here in recent years somewhere.

Today, the price rise would be more muted....you'd want some of Ronald Reagan's old axiom..."Trust But Verify"....or at least Jerry Maguire's "Show Me The Money."

 

Problem is either of those numbers is just a drop in the bucket of the overall numbers as just one example. While everyone wasn't engaged in it, there was no doubt tons of people just hanging buyers out to dry because they could.

Still happens today from some, but there's a reason why Wallstreet ran away and tons of people got completely hosed and it wasn't because the overwhelming majority of dealers were operating in good faith

 

The market rose parabolically for a few years. The price was what it was.

You're not saying that if the market price for an MS65 Saint was $3,000 that a dealer should have sold it for $1,500 because in 10 years it would be under $1K, are you ?

The funding dried up after Drexel Burnahm went under and Kidder Peabody's big backers couldn't come through. Maybe some people had second thoughts but $300 MM even in 1988-1990 was NOT alot of $$$.

It wasn't a scam, it was real. Maybe the move up in prices even led to the lack of $$$ being raised -- the market ran away too far, too fast.

Happens.......

 

I'm saying that common date essentially bullion should have never gotten to those prices and wouldn't have without marketing. The dealer community in general played a role hyping things to not only the Walstreet guys but all other buyers as well. People were more than happy to milk the big money and then hang others out to dry as a result.

Buyers didn't have the info they have today, or the ability to see things. At least enough of the community decided money meant more than anything.

 

Look, people priced things where they thought they should trade. The market is often wrong: Pets.com, ProPlayer.com, Enron, etc.

I don't know if the retail public really was the victim of false marketing....if the same thing happened today, with the Internet and Social Media, it'd be a different story. You want to see exaggerated marketing, look at the SSCA hype and initial pricing. Gold is up 5-fold since they hit the market and most of the stuff is flat-to-down. Certainly the $50 "restrikes" are, one of the few affordable things to the general public.

But back then, aside from stories in the weekly and monthly coin mags, I don't know where someone would have been misled.

You guys who were there...what was CDN saying during the parabolic rise ? What about CoinWorld and CoinWeek ? What were the dealers at Long Beach and FUN and ANA saying ?

 

Markets are right far more than wrong, it wasn't Walstreets fault but many of the dealers did/should have known exactly what they were doing.

They definitely got hosed as well during that time, even more so most likely since many couldn't afford the losses

Thankfully today it is very unlikely. We have TPGs, CAC and internet price history/research ability that people can use to protect/educate themselves.

Any conversation at a show/shop. Same thing still happens today it just isn't as effective. Plenty of people have heard the nonsense that PMs will only go up and they're doing you a favor selling to you type nonsense as a general example.