Collecting as a Long Term Work In Progress
By Doug Winter
follow economic news in even the most cursory
fashion you are, no doubt, aware of the fact
that the news has been pretty grim for the last
few days. Lehman Brothers is gone, Merrill Lynch
has been sold in a distress situation to Bank of
America, AIG is looking perilous and the stock
market yesterday had its single worst day since
immediately after 9/11. How does this affect the
rare coin market?
The first thing to remember about the coin
market is that no matter how ‘big’ we’d like to
say it is, in reality it is a tiny, tiny blip on
the financial horizon. Most investors don’t know
that there is a coin market, let alone
understand the actual dynamics behind it. So
from the ‘drag down’ perspective I don’t think
we have a lot to worry about. In other words,
your set of Gold Dollars isn’t going to lose X%
of its value because AIG stock is in the
It is pretty obvious to me that the short term
affect of the meltdown of the financial sector
is not good for the coin market. When the stock
market loses close to 5% of its total value in
one day and the economic picture looks painful
(to say the least), many people’s focus turns
away from pursuits like coins. By the same
token, you could say that in these times, people
turn to pleasurable pursuits like coins exactly
because of the fact that it helps them forget
about the Big Picture.
I think the medium to long term outlook for the
coin market may be better than most realize.
Once things settle down (at least until the next
round of consolidation in the financial sector)
people are going to be seeking new asset classes
and markets like precious metals and coins may
possibly prove appealing to a new wave of
If you have read this blog over the last few
years, you know how I feel about short-term
investments in coins. I still do not like being
short in any area of numismatics, but if gold
continues to drop I would strongly consider
buying something like generic double eagles to
have a position. It seems to me that the
long-term outlook for gold is rosy and given the
scary things that we are seeing right now with
banks and financial institutions, having
something tangible like a little gold position
might not be such a bad decision.
I do not expect to see really good coins getting
cheaper any time soon. If you are a serious
long-term collector, this is a good time to
reflect on what your goals are. Hopefully, you
didn’t expect to be in and out of the market in
a year or two and, hopefully, you will not panic
and decide to dump your coins.
I think this is an important point to address.
Panic selling is never a smart thing to do and I
think anyone who takes their collection to the
next major show and announces that they “have to
sell” is setting themselves up to get sliced and
diced. Yes, the economy looks scary right now.
But hopefully you haven’t been buying coins with
funds you need for essentials (food, clothing,
shelter, etc.). Just sit back, take a deep
breath and enjoy what you’ve got.
I’ve stated repeatedly that your coin collection
needs to be viewed as a long-term work in
progress. If the market goes up, that’s great.
You’ll make some money on your purchases and
everybody likes some paper or actual profits. If
the market goes down, you might be able to buy
the key date that seemed pricey a few months ago
for 75 or 80 cents on the dollar. We’ve been in
a bull market that’s lasted a long time and many
new collectors are spoiled. Just ask a collector
who was active in the 1980’s and 1990’s what it
was like to slog through a seemingly unending
The bottom line is I’m not ready to call an end
to the Good Times in the coin market. I think
people will be more tentative in the next few
weeks because of the financial crisis and the
overall weakness in precious metals but we’ll
continue to see strong prices for nice coins
whether at auction or via private treaty sales.
The 4th quarter of 2008 is certainly going to be
interesting, to say the least.