Activity across the market (June 2020 Greysheet)
The numismatic market has carried on with resilience in the face of unprecedented business conditions due to the coronavirus pandemic. While it is hoped that multiple states will have at least partially re-opened by the time this issue reaches reader’s hands, there has been much discussion about how the industry may be forever changed.
The numismatic market has carried on with resilience in the face of unprecedented business conditions due to the coronavirus pandemic. While it is hoped that multiple states will have at least partially re-opened by the time this issue reaches reader’s hands, there has been much discussion about how the industry may be forever changed. Fortunately, the market has been fueled by a return to physical assets on behalf of many buyers. Looking forward, there is much debate amongst economists about whether the future is going to be inflationary or deflationary. This is relevant to the rare coin market. Back in 2008, many predicted that the U.S. dollar would face inflationary pressure due to the various bailout programs that were enacted at the time (QE, TARP, etc.). However, this did not materialize. Instead the following years were deflationary, marked by falling consumer prices and stagnant wages.
This time around, the size of stimulus is much larger and much more widespread, and many economists are predicting an inflationary future. There is a technical aspect to this as well. One of the aspects that has marked this crisis is an unprecedented dollar shortage: i.e. liquidity, in the market. This is the reason the Federal Reserve has had to monetize such a tremendous amount of debt, to keep the funding markets from freezing up. This insatiable demand for dollars must—at least according to traditional economic principles—become supply at some point in time. The world will then be awash in dollars, leading to inflation. It should be noted that asset price inflation fueled the rare coin bull market of 2000 to 2007. Each outcome would impact the rare coin market. There is little doubt demand for coins will be there; an issue that may face dealers is supply.
Type Coins: Readers will see more price decreases than increases this month for common date type coins across multiple series. This has the looks of being the short-term reaction to the disruption of business (coin show cancellations, rescheduled auctions, etc.) that should show a form reversal going forward. Remember there is a natural lag in the data; Greysheet reports what has already occurred, not future expectations. As I mentioned above, it will be very interesting to see if and when the coin market reaches a turning point in terms of supply. It is already known that items such as key dates, very high-grade type, and CAC gold sell very quickly and are challenging to replace. What is not known is if this demand will trickle down into more common items as others become more and more difficult to find. This has already happened in bullion. Ideally, as more and more individuals seek to add tangible assets as part of their portfolios the rare coin market can step in and satisfy some of this demand with established, staple products such as short sets of gem Walking Liberty halves, Morgan dollars, etc. The key is to retail these items at market-fair prices, especially to those who are new to rare coin buying. Charging exorbitant prices for these items is the best way to turn people off from rare coins, as has happened in the past.
Liberty Head Gold: Demand for generic Liberty head gold coinage has been very strong the past month and a half, particularly for double eagles and eagles. Many of the non-generic price updates this month are results of our continuing efforts to delineate CAC and non-CAC pricing. In the circulated grades, many early dates and especially mintmarked coins have market spreads that are important to understand when analyzing this market segment. As always, we encourage dealers to look at the whole picture when pricing a coin, including grades not appearing in print using our online resources.
Author: Patrick Ian Perez