It's No Secret, Collectors and Investors are
Fueling Current Bull Market in Rare Coins
Rusty Goe
Southgate Coins
5032 South Virginia Street
Reno, NV 89502 Reno, NV 89502
November 21 2007
Headlines of $30 million rare coin transactions flash across crawlers
streaming news on TV broadcasts. Blurbs such as these provide a
breath of fresh news to viewers who have grown weary reading the
endless drivel concerning Britney Spears, Barry Bonds, and O. J.
Simpson. But what is the average TV viewer with no prior knowledge
of the rare coin market to make of announcements about
multimillion-dollar coin deals?
It would indeed be difficult for a person outside the hobby of coin
collecting to comprehend why anyone would pay so much for small
discs of metal, with numbers, letters, and images imprinted in relief
on them. Those individuals inside the hobby view the upward trend in
prices as a long overdue phenomenon. For it has always been
acknowledged by those who call themselves numismatists, that rare
coins tend to appreciate in value over time. But for a period of
approximately twelve years, between 1990 and 2001, the faith of
these diehard coin collectors was severely tested. Now, however,
their patience has been rewarded, and rare coin prices are ascending
at a rate comparable to Alex Rodriguez’s rising popularity. But why
is this occurring? What awakened the sleeping coin market out of its
decade-long slumber? There are reasons; and in this brief report I
will mention the most significant of them.
From 1990 through 2001, the rare coin market, also referred to as the
field of numismatics, experienced a severe bearish environment,
which resulted in plunging values, tapering off into a lengthy plateau
period, in which coin sales were sluggish. The recent rebound, which
began around 2002, is a normal cyclical reaction to this bear market.
Prices had declined to the point that many buyers who had been
sitting on the sidelines decided that the deals were too good to pass
up. This, along with a variety of factors, triggered the market we are
now experiencing. Here are a few of the more obvious causes to
consider:
1. Combined with the market turnaround in the early years of the
new millennium, was an influx of new collectors who were at first
attracted to the statehood quarter program launched in 1999, as well
as the massive advertising campaign conducted by the U. S. Mint
showcasing its huge offering of individual coins and sets.
2. Publicity about the sales of a few classic rarities such as the
1913 Liberty nickel, the 1804 silver dollar, and the 1933 $20 St.
Gaudens gold piece, also aroused much interest during this period.
3. During the past five or six years, there has been a broad wave
of interest shown in collectibles in general, almost as if Americans
have rediscovered the joy of collecting things, some of which are quite
expensive (Witness In 2004, for example, the sale of Eric Clapton’s
“Blackie” guitar which sold for $959,500). Rare coins just happen to
be one of the main areas targeted in this recent wave of collector-
mania.
4. Coinciding with the renewed interest in coin collecting has been
an emphasis on the investment aspect inherent in this field. This has
attracted a large number of individuals who have grown more
disenchanted with more customary investment mediums such as
stocks and bonds. These invested-oriented individuals for the most
part have learned the finer points of coin collecting, and are typically
relying on the advice of experienced numismatic consultants.
5. Fueling this interest in rare coins as investments has been the
hidden rise of inflation as witnessed in higher oil prices, as well as
higher prices of other commodities. Gold, silver and platinum are
beneficiaries of this kind of economic environment, and rare coins
have always performed well when the price of precious metals is on
the upswing.
6. One key factor intermingled with all of the above is the large
number of Baby Boomers controlling vast amounts of capital (some
estimates putting this aggregated wealth at $16 trillion). This
generation is the wealthiest generation in history, possessing more
discretionary cash than ever imaginable. After they have put their
kids through college, paid off their mortgages, and provided for the
care of their parents, they find themselves with loads of money to
spend as they please—At least many do. There are only so many
things on which people can spend their disposable money: vacations,
second (and third) homes, entertainment, hobbies, etc. It appears as
if under the hobby category, rare coins are attracting a lion’s share
of the loot. Many of the Boomers, who at earlier periods of their lives,
dabbled in coin collecting, are now returning to the hobby. This time
not with penny albums and inexpensive Proof sets on their want lists,
but rather the rare dates they once could not afford. This has resulted
in tremendous demand placed on legitimate rarities.
7. The best part about this new bull market is that collectors
desiring truly rare coins—rather than just the common dates and
generic brands which so dominated the last bull market in 1986
through 1989—are driving it. Today’s collector, for the most part, is
savvier than was his counterpart of fifteen to twenty years ago. And
today’s collector has the collective strength of mature grading
services (PCGS & NGC), almost assuring that no major purchasing
mistakes will be made, at least as far as the grades are concerned.
Not to mention the wealth of information available on the Internet.
8. You can’t emphasize the point about collectors rather than
investors dominating the current market enough. This removes a
certain element of volatility from the coin market since in many
instances the end users, so to speak, are not influenced by the
fickleness so often prevalent in investors.
As long as the conditions described above remain in place, the bull
market in rare coins appears to be unstoppable; at least for the
foreseeable future. Even if Baby Boomers earmark just a fraction of
the $16 trillion they possess for coins, the market should remain well
capitalized. And, then there’s always the possibility that the coin-
collecting bug will bite Generation Xers, which would certainly
vitalize an already robust market: especially when members of this
generation begin receiving their inheritances from their Boomer
parents.
We can summarize the above conditions as follows:
Rusty Goe is a rare coin consultant and the owner of Southgate Coins in Reno,
Nevada. He has authored two full-length books on the subject of the Carson City Mint
and the coins produced there. For more information concerning the rare coin
market, liquidation of rare coin portfolios, “CC” coins, or scheduling interviews with
Rusty Goe, please contact Southgate Coins at 5032 S. Virginia St., Reno, NV 89502,
or by phone (775) 322-4455, or email to mariesgate@sbcglobbal.net. Please ask for
Marie or Amy.
Rusty Goe (mariesgate@sbcglobal.net)
Southgate Coins
5032 South Virginia Street
Reno, NV 89502
Phone : (775) 322-4455
Fueling Current Bull Market in Rare Coins
Rusty Goe
Southgate Coins
5032 South Virginia Street
Reno, NV 89502 Reno, NV 89502
November 21 2007
Headlines of $30 million rare coin transactions flash across crawlers
streaming news on TV broadcasts. Blurbs such as these provide a
breath of fresh news to viewers who have grown weary reading the
endless drivel concerning Britney Spears, Barry Bonds, and O. J.
Simpson. But what is the average TV viewer with no prior knowledge
of the rare coin market to make of announcements about
multimillion-dollar coin deals?
It would indeed be difficult for a person outside the hobby of coin
collecting to comprehend why anyone would pay so much for small
discs of metal, with numbers, letters, and images imprinted in relief
on them. Those individuals inside the hobby view the upward trend in
prices as a long overdue phenomenon. For it has always been
acknowledged by those who call themselves numismatists, that rare
coins tend to appreciate in value over time. But for a period of
approximately twelve years, between 1990 and 2001, the faith of
these diehard coin collectors was severely tested. Now, however,
their patience has been rewarded, and rare coin prices are ascending
at a rate comparable to Alex Rodriguez’s rising popularity. But why
is this occurring? What awakened the sleeping coin market out of its
decade-long slumber? There are reasons; and in this brief report I
will mention the most significant of them.
From 1990 through 2001, the rare coin market, also referred to as the
field of numismatics, experienced a severe bearish environment,
which resulted in plunging values, tapering off into a lengthy plateau
period, in which coin sales were sluggish. The recent rebound, which
began around 2002, is a normal cyclical reaction to this bear market.
Prices had declined to the point that many buyers who had been
sitting on the sidelines decided that the deals were too good to pass
up. This, along with a variety of factors, triggered the market we are
now experiencing. Here are a few of the more obvious causes to
consider:
1. Combined with the market turnaround in the early years of the
new millennium, was an influx of new collectors who were at first
attracted to the statehood quarter program launched in 1999, as well
as the massive advertising campaign conducted by the U. S. Mint
showcasing its huge offering of individual coins and sets.
2. Publicity about the sales of a few classic rarities such as the
1913 Liberty nickel, the 1804 silver dollar, and the 1933 $20 St.
Gaudens gold piece, also aroused much interest during this period.
3. During the past five or six years, there has been a broad wave
of interest shown in collectibles in general, almost as if Americans
have rediscovered the joy of collecting things, some of which are quite
expensive (Witness In 2004, for example, the sale of Eric Clapton’s
“Blackie” guitar which sold for $959,500). Rare coins just happen to
be one of the main areas targeted in this recent wave of collector-
mania.
4. Coinciding with the renewed interest in coin collecting has been
an emphasis on the investment aspect inherent in this field. This has
attracted a large number of individuals who have grown more
disenchanted with more customary investment mediums such as
stocks and bonds. These invested-oriented individuals for the most
part have learned the finer points of coin collecting, and are typically
relying on the advice of experienced numismatic consultants.
5. Fueling this interest in rare coins as investments has been the
hidden rise of inflation as witnessed in higher oil prices, as well as
higher prices of other commodities. Gold, silver and platinum are
beneficiaries of this kind of economic environment, and rare coins
have always performed well when the price of precious metals is on
the upswing.
6. One key factor intermingled with all of the above is the large
number of Baby Boomers controlling vast amounts of capital (some
estimates putting this aggregated wealth at $16 trillion). This
generation is the wealthiest generation in history, possessing more
discretionary cash than ever imaginable. After they have put their
kids through college, paid off their mortgages, and provided for the
care of their parents, they find themselves with loads of money to
spend as they please—At least many do. There are only so many
things on which people can spend their disposable money: vacations,
second (and third) homes, entertainment, hobbies, etc. It appears as
if under the hobby category, rare coins are attracting a lion’s share
of the loot. Many of the Boomers, who at earlier periods of their lives,
dabbled in coin collecting, are now returning to the hobby. This time
not with penny albums and inexpensive Proof sets on their want lists,
but rather the rare dates they once could not afford. This has resulted
in tremendous demand placed on legitimate rarities.
7. The best part about this new bull market is that collectors
desiring truly rare coins—rather than just the common dates and
generic brands which so dominated the last bull market in 1986
through 1989—are driving it. Today’s collector, for the most part, is
savvier than was his counterpart of fifteen to twenty years ago. And
today’s collector has the collective strength of mature grading
services (PCGS & NGC), almost assuring that no major purchasing
mistakes will be made, at least as far as the grades are concerned.
Not to mention the wealth of information available on the Internet.
8. You can’t emphasize the point about collectors rather than
investors dominating the current market enough. This removes a
certain element of volatility from the coin market since in many
instances the end users, so to speak, are not influenced by the
fickleness so often prevalent in investors.
As long as the conditions described above remain in place, the bull
market in rare coins appears to be unstoppable; at least for the
foreseeable future. Even if Baby Boomers earmark just a fraction of
the $16 trillion they possess for coins, the market should remain well
capitalized. And, then there’s always the possibility that the coin-
collecting bug will bite Generation Xers, which would certainly
vitalize an already robust market: especially when members of this
generation begin receiving their inheritances from their Boomer
parents.
We can summarize the above conditions as follows:
- recovery-cycle dynamics,
- publicity-inspired interest in coins in general,
- a shift from securities-based investments to tangible asset
investments,
- affluent Boomers returning to their childhood passions,
- and savvier, more protected collectors in the marketplace.
Rusty Goe is a rare coin consultant and the owner of Southgate Coins in Reno,
Nevada. He has authored two full-length books on the subject of the Carson City Mint
and the coins produced there. For more information concerning the rare coin
market, liquidation of rare coin portfolios, “CC” coins, or scheduling interviews with
Rusty Goe, please contact Southgate Coins at 5032 S. Virginia St., Reno, NV 89502,
or by phone (775) 322-4455, or email to mariesgate@sbcglobbal.net. Please ask for
Marie or Amy.
Rusty Goe (mariesgate@sbcglobal.net)
Southgate Coins
5032 South Virginia Street
Reno, NV 89502
Phone : (775) 322-4455
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