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The FUN Show 2009
By Legend Numismatics

The best thing about the show this year-was the weather! Finally, it was not rainy or cool. For the 11 total days we were there, we were stuck inside during beautiful sunny and warm days. Of course, we come home to NJ during a raging ice/snow storm.

This show and the pre auctions were exactly as we had predicted. The great bull market of the past 6+ years is now over, leaving many in denial and confused. Yes, prices are off, however rare coins have still held there values better than ANY equity, real estate property, or financial type of holding.

First we will answer the two most asked questions to us (note all information is written from Legends perspective of the marketplace, it does not apply to everyone):

HOW WAS THE SHOW?

True to form, the FUN Show people put on one of the BEST shows around. It is large, well attended by major dealers, has terrific exhibits (the PCGS exhibit of the Sunnywood Colored Morgan Collection was awesome), and you certainly should be able to find just about any coin you need.

This year, much to our surprise, there seemed to be as big of a crowd as ever. We saw MANY major collectors there as well as many people who are just getting started in coins. The most heavily attended day seem to be Thursday. This was definitely a positive.

Our show was slow at the table, but strong out on the floor wholesale wise. We did have a totally new customer simply walk up and write us a check for $145,000.00 for a single coin! Generally, that kind of fantasy deal happens only at a FUN or ANA. Besides that, we did not retail any coins higher than $10,000.00. We knew we had to move old inventory-and unlike so many dealers in denial, we took our losses. So for us, this show was the first FUN Show in 10 years we lost money. Its hard to stomach, but it set us up for where we want to be starting off 2009.

We can’t say how dealers did overall. We think some did really well (one told us he did $1.5 million and made six figures) while others just moaned it was bad. Everything seemed hit or miss to us. It for sure seemed like there were two camps: group number one had been around in 1991 and remembers how badly coins collapsed. Those dealers were the ones doing business. They knew to dump the old and trade with the new no matter how much pain it took to clean things up. The newer, younger dealers were more stunned and a confused state of denial. They grew up in a “bull” run like we have never seen before and now are almost totally panicked. They do not believe in losses and many of them are heavily leveraged. Those guys seemed to be the ones having the worst shows. Crackout dealers didn’t fare well either, we heard reports of 1 for 72, 3 for 48, etc. Seemed like the grading services have solidly adopted tougher standards (or old standards). So far in this market, there is one major player who is rumored to be on the skids and could be gone shortly. Otherwise, the majority of dealers seem stable enough to out last the correction-if they can adjust to the program.

Many people seemed to be walking around with their hands in their pockets simply asking us: how is the market? They were in shock that coins have held up so strongly while all other areas are in the tank. Even though many of there people we spoke to wanted reassurance, they still were trying to buy something-either they were looking for a particular coin (instead of being willing to buy anything) or had placed bids in one of the auctions. Money clearly has become less free flowing at the shows.

HOW IS THE COIN MARKET?

This was the second question everyone asked.

First, we warned everyone for at a few months that the money would slow and when it did people would become more selective. We stressed (and still do) you clean out anything old, duplicated, unwanted, overgraded, or whatever BEFORE the lesser quality or commoner coins fall in price to levels you won’t believe (especially if you are going to need cash in the upcoming months).

The FUN SHOW of 2009 was finally the show where prices actually proved they had fallen. The rare coin market is officially in a correction. We’d guess ALL prices are off a good 10-20% from the summer peak at the ANA show. There is now a HUGE disparity (as clearly proven in the auctions) that if you do not have a coin that is 100% ALL THERE, it could be worth as much as 60% or even 75% LESS! How can this be? As we have said before, the euphoria of the market is now gone. Gradeflation coins are now unwanted. We do not have those crazy “investors” around buying anything at random. We now have a more educated and demanding public who insists on getting their monies worth. They also have a more solid “comfort level” and never liked the crazy prices we saw over the past year. The best line we heard from along time dealer who really just traded plastic for the past few years: “gee, now I have to look at the coins again”.

What amazes us is many dealers (and even some collectors) just don’t get it. In October when the stock market really burned down, coins were still trading strong. At that point many dealers (especially) felt coins were invincible. Coins actually continued with out a serious hiccup until early Dec. Now, everything else in the world markets have fallen even further. The smarter money involved in the coin market knows there is still possibly another 10-20% of adjusting to hit us. Until the world markets stop falling, do not expect the coin market to have many(if any) price increases. But then you also need to remember, coins are a LONG TERM hold.

We do NOT think the coin market will crash and burn or even come close. There really is still too much demand. However, we do think a 10%, even 20% further correction is possible. It is critical to understand that correction is NOT for everything. THIS CORRECTION IS BEING LEAD BY THE INFERIOR COINS NO ONE REALLY WANTS. No real collector EVER wanted this junk, nor should it have ever been graded. It was being bought/sold in huge sums through incompetent dealers, auction houses especially, and crooked telemarketers. The past year when coin values rose almost daily, the market had attracted the dreaded general public who sought coins out as an “investment” and people just following the herd. Yet again, that proved to be the peak of the cycle.

The bottom of the current market will be when the junk has hit levels so low it can be taken off the market for good. Until then, many dealers will suffer liquidity issues and not let prices fall on this stuff to clean themselves or the market up. You will see pricing disparities up of up to 75% for the same coin, same grade. Be prepared. It really was the coin markets dirty little secret.

Incredible and fresh coins have survived the turmoil just fine. Prices for coins like that have held firm-with one or two stepping out at record prices. With the overall market not running up and up, for the next few months you’ll see fewer and fewer of these great coins being sold. Its the junk that is flooding the bourse floors and auctions and is the anchor holding the market down now.

Legend Numismatics does not expect nor is trying for a record year. We are in the process of cleaning out all the old inventory we didn’t pay attention too (mostly remnants of deals) and expect to have reduced the size of our inventory for the next several months. Our turnover still is strong, but we have decided to remain in a cash position. If we see any incredible coins, we will be as strong as ever in our efforts to buy them. As proof, we can tell you the fact we represented 15 different players in the auctions (a record for us). Our customers desires for great coins have not diminished.

THE AUCTIONS

We attended all the major sales except Superior (sorry guys, nothing there for us).

Our general comment holds to ALL the sales: COIN SOLD FOR WHAT THEY ARE WORTH. IT WAS ALL COMENSURATE TO THE QUALITY OR HOW REALISTIC THE RESERVE WAS.

We see many people talking about how poorly the auctions seemed to do. When you price coins out of the market, they will never do well.

The B+M sale was the first sale we attended. Absent were one or two major buyers who always sit there and try and scoop up bargains. We were able to buy only a few nice coins really cheap. We did notice many “average and lesser” quality coins with high reserves. None of those sold. Overall, we felt the B+M sale was soft, not horrible, but then it did not have a ton of fresh to the market coins.

The Stacks sale was a near disaster. They had a large group of Patterns from a dealer going against one of the worlds largest, FRESHEST, and UNRESERVED Collections in another sale. Needless to say, in that area they did not fare well. Also, they allowed another major dealer to put his personal coins in at nearly insane reserves. The 73CC No Arrows Quarter did bring a record $400,000.00-but many of his other coins did not sell. In fact, it turned many people off prior to the sale. There seemed to be an huge amount of dealers coins in this sale with high reserves. We’d rate this sale as poor.

The Heritage Auction, in our opinion was strong and VERY realistic. We represented a record 15 different collectors! Our total purchases exceeded $4,000,000.00! Heritage unquestionably has a reach well outside of the numismatic realm as well as the largest reach within. They sort of had their own market with in a market. Any lot that did not sell either was too seriously poor quality wise, or had reserves too high for the marketplace. Do keep in mind, many of their collectors consigned when the market was stronger. ALL THE NICE FRESH COLLECTIONS SOLD STRONG-with many UNRESERVED!

Legend Numismatics on behalf of one customer spent $3,000,000.00 on the patterns alone (as many of you know you are exclusively involved in building the greatest pattern Collection EVER)! Legend also spent another $250,000.00 on coins for inventory. We did buy the Copper Union $50.00 (one of the most beloved coins in the world) for a record $575,000.00 to be included in our customers amazing collection. Our competitor in the end was another deep pocketed collector who does not do much in Patterns but felt it was important enough of a piece to add it as a trophy to his world class collection. When truly rare and great coins like this appear, regardless of the market, they sell for record prices. We were the underbidder on the GOLD Pan Pac which sold for a whopping $345,000.00. Also, it totally blew our minds that the room was packed and there was extremely heavy bidding through the session. Even we were NOT prepared for the strength this particular segment showed. Even in this softer market, nothing stops the power of a world class, unreserved, and fresh collection loaded with cool stuff!

Our next biggest buying spree came in the Morgan area. The highlight of what we bought was the 1892S PCGS MS67. We paid a staggering $460,000.00 on behalf of a collector (we would like to mention this coin now resides with the Veremule 93S PCGS MS67-the absolute finest known). Our main competitor on the 92S also was a long time collector who loved the coin as much as we did and was determined to add it to his amazing set (needless to say our taunting him with pics of cute puppies calling his name did not make him leave before the sale).

The prices for Morgans were all over the board some because of the market-but mostly because of inferior quality. The perfect example is the 1881S PCGS MS69 CAC that sold for $48,875.00 (to a dealer who will hold it and probably not resell it) while another one (non CAC) which was not as high end in quality sold for $28,750.00. We also were thrilled that one of the coins we bought (which had recently been upgraded), we purchased at the next grade lower (or what it originally should have sold as). What is even funnier about it-we were prepared to pay MORE than what we paid for a REAL GEM in the lower grade (follow that?)! A killer 89CC in NGC MS65 sold for $253,000.00 in extremely spirited bidding. This piece clearly proved it was not about the holder of a coin, the sticker, or whatever-we are back to where the quality of the coin itself matters. At least in this session of the sale, ALL the prices paid were directly commensurate with the coins quality. Plus, BOTH of these collections had been assembled only fairly recently (within the past 1-3 years). So the overall freshness factor was not there. Also, the room was packed and there WAS much spirited bidding on the lots that were real nice.

A sale this large had many dealer coins. Just about every dealer we spoke to had coins that did not sell. No dealers we know had put anything fresh or reasonably reserved, so they kind of got what was coming.

Overall, we do rate this sale a huge success. We are concerned that people correctly understand the results-we see the gossip boards poo pooing the sale. The fact they did over $50 million, the fact, there were many record prices on the FRESH rare coins, proves the market IS still hungry and can afford to buy!

WHAT HAPPENS NOW?

This is easy for us to see. As we had mentioned before, we do see a strong possibly for the market to correct another 10%. There is still positive momentum, just less cash around. If you have ANYTHING less than 100% accurately graded, it will continue to lose value. We kind of know this is your last chance to blow out that sort of material before it heads into permanent oblivion (but don’t expect to receive anywhere near the sheets now from anyone for that kind of stuff).

It is now a pure buyers market. The long time collectors are starting to tickle back happy as can be. Just remember, the coins you bought yesterday are NOT going to go up in value for some time now. Last year is just that, last year. We back to the basic fundamentals of the real coin market. Buy the best quality you can afford, and be prepared to hold for the long term. Few people can afford to or want to be speculative investors any more.

Be very careful about what you buy in terms of quality. You want a coin that is 100% all there if you are going to pay any kind of a premium. NOTHING less is acceptable. If you do get offered a coin not 100% but it seems cheap, remember this rule we use: right now, cheap may not be cheap enough! BUT, keep in mind, you are not competing against the uneducated must have buyers any more. Now, the majority of buyers are collectors, and they know what they want.

We expect the coin market to bottom within the next 2-3 months so long as the overall economy does not worsen. Regardless of what some say, we believe the rubber band had to break. We needed a correction after years of impressive wild price rises. The fact the correction may be so minimal (for great coins) in the end is proof to how big and strong the coin market really is. The junk that is crashing each day and is now as much as 60% cheaper-that stuff NEVER should have been graded or valued where it was.

Do NOT be afraid to buy coins. Just buy them “right” in terms of quality and price. Now for sure is not a market peak! We definitely feel much better about the coin market today (even though there could still be some more turmoil) than we did back in November. You certainly will NOT see Legend passing on any monster coin!

WHATS HOT?
ALL Half cents. Most Large cents. Proof Barber material. MS Seated Type. Properly graded early gold. patterns.

WHAT IS NOT HOT?
Anything (no matter what grading service or denomination) not accurately graded is almost dead. Indian Cents, Buffalo Nickels, Peace Dollars, generic gold.
 



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