By Laura Sperber - Legend Numismatics

For every person who is a seller, we have found a buyer who thinks now is a good time and coins are cheap. The reasons are varied as to why people are selling. Very few have said to us they needed the money to live off of. We think the weakest players dropped out last year. Right now we see significant asset management occurring. The collectors we deal with want to move into the better material and are pretty much cleaning out their closets. One or two have also told us they want to be in cash positions in case opportunities come up (in either coins or real estate). It is a pure fact though, in August, we saw a substantial amount of ‘net” sellers.

Every major customer we have seems to be aggressive buyers right now. However, they don’t want widgets or inferior gradeflation ravaged pieces. They will pay what it takes to buy the “right” coin. Also lurking heavily are investors. In our opinion they actually make up 40% or so of the market today. That is a VERY dangerous sign to us the market may be topping out (we do think overall its off 10-20%). Not just the big players are buying. Its really a matter of what coins you have to offer and at what level. Big money is not stupid money. They sense the market is off and try harder to buy when they sense a little desperation.

Interestingly, many of the long time smaller players who still want to play feel “priced out” right now. The bad news is, if you stand back and look at things, coins really have been too cheap overall for the past few years. Granted the “ubber players” maybe dominating a bit more now, but the average collectors need to readjust their thinking. Coins maybe taking a brief hic-up, but they aren’t going to stay down for long at all!

Always remember, coins are a LONG TERM buy. Yes, there can be short term gains, but there also can be short term losses. Coins are NOT like stocks. If you crave action, go buy stocks then! The BEST returns we have ever witnessed come from people who buy the best and hold (look at Pittman, Norweb, or any great long time collector). Getting in and out because you completed a registry set most likely will NOT yield you substantial profits-especially now with the market topping and even correcting.

A CORRECTION?

We strongly believe we are in the middle of a correction. The current market is bigger, smarter, diverse, and more stable than at any other time in its existence. So this correction is different. The players are now International and since the advent of of the Internet, a huge wave of money (far larger than we have ever dreamed about) has come into coins. It has become impossible to know who is building what anymore. Now that a huge portion of middle America is spent out, the other side (investors and very wealthy collectors) are stepping up and pretty much filling the gap. However, we do believe the market overall is OFF 10-20%. And, the biggest area of correction is with the coins themselves. If you don’t have nice and accurately graded coins, no matter how cheap you paid, you will learn cheap is not cheap enough. In the past 6 months, we have seen the spread between nice coins and junk grow huge. We predict in the next six months, that gap will grow even larger. We think the “stuff”, widgets, and/or junk problem coins make up as much as 50% of the overall coin market. That’s a huge bite to clean up-and it will cost a lot of people money, thus a correction must occur.

If you follow auctions, watch as prices don’t go for Godzilla way too stupid moon money anymore for just any coin-especially the non quality pieces. Sure, a fresh collection will bring zany prices, but it won’t be as stratospheric as before. Also, you’ll see the % of dealer retreads grow significantly in the auctions too (a sign that stuff just isn’t moving). This is why we believe the craziness and advancement of the market for now is over to a degree.

Are we at the very top? If we knew the exact answer, we’d be on a beach in Hawaii. However, if you are smart, you’ll play it safe and assume we are near the top (as many people are). As we said before, we think the market is actually quietly correcting by 10-20%. Buy ONLY the coins you need for your set. Sell off your inferior coins no matter how much of a hit you’ll take (your first loss is your best loss), buy ONLY true quality pieces. Do not sit on duplicates-when a great coin comes up for sale, dealers frown on trade-ins when they know they can get immediate cash for their piece (you get better deals as a cash buyer).

IN OTHER WORLDS

The rare collector car universe sort of parallels the coin market. At the recent Pebble Beach Concourse in August, a record $130,000,000.00 worth of cars SOLD. Here is a quote from an MSN article: Twelve cars did top the $1 million mark, with two above $2 million. The chart-topper was a 1961 Ferrari 250 GT SWB Berlinetta that sold for $4.51 million.

Its not just cars, we drive around the Jersey Shore and still plenty of mansions selling-including many that are $3,000,000.00+ tear downs. Our partners in the auction business-Morphys tell us they are still getting record prices for things like Toy Banks and anything GEM original fresh Tiffany.

For the “right” items, there is still plenty of money out there buying.