CoinForum.com Homepage
Forum Home Forum Home > US Coins & Paper Money > US Coin Main Forums
  New Posts New Posts RSS Feed - Real Term Growth
  FAQ FAQ  Forum Search   Events   Register Register  Login Login


Real Term Growth

 Post Reply Post Reply
Author
Message
ERICJ96 View Drop Down
New Member
New Member


Joined: 31 May 2006
Location: United States
Status: Offline
Points: 10
Post Options Post Options   Thanks (0) Thanks(0)   Quote ERICJ96 Quote  Post ReplyReply Direct Link To This Post Topic: Real Term Growth
    Posted: 02 Aug 2010 at 7:41pm
The New Generation Of Collector

Well respected collectors and numismatic commentators such as David Bowers and David Hall have publicly voiced concerns about the graying of our fine hobby and among certain series the aging of the collector base is likely a justifiable concern but there are two important bright spots on the horizon whose impact will likely be felt for the next 30 years or more and the direction they carry the market may not be obvious at first glance.

The US Mint is successfully using circulating collector series like the Fifty States & Territories Quarters, National Parks Quarters, Presidential Dollars, Native American Dollars, Westward Journey Nickels, and Life of Lincoln cents to develop a new generation of collectors. The Mint has estimated that up to 100 million US citizen have or do collect these changing design series in various forms. That’s staggering market exposure by almost any measure even if the number is a little optimistic and its training new collectors to expect a high level of design differentiation in their sets. Much of the World has a design and denomination rich coinage history to draw from that stretches over thousands of years.   They tend to stress collecting by type as a result.

It takes time for new collecting habits to show up in the broader market just as it took about 40 years or one generation for collecting by date to fully give way to collecting by date and mint mark. Similar changes are afoot now and its showing up clearly in silver proof Washington Quarters because they have had a little time to mature. The present market value of the 800,000 1999 silver poof quarters sets is roughly equal to that of every silver proof quarter issued from 1936 to 1998 combined! If the new design based quarter collectors were migrating back to pick up the early date based issues they should be trading at an all time high indexed to inflation but nothing could be farther from the truth. Even America with its short and by and large intentionally design static series has walked this road before.   Oregon Trail, Arkansas, Texas and Washington halves enjoy about the same number of series members as the $2.5 gold Indians do but their extremely low mintage key dates never developed the way they should have because they were lost in a sea of design change that we call type collecting.   We don’t want series we collect by date and mint mark to become collected by type.

Another source of collector growth is the publics justifiable desire to own hard liquid assets that are not paper promises issued by governments whose long term financial commitments are nothing short of frightening.   Silver gold and platinum eagles have been flying out of the Mint at an astonishing rate lately into the hands of the public and many of these individuals are buying every year. We don’t start collecting something until we have one of them.   Buffalo gold buyers that already have part of their savings deployed in 2007, 2008, 2009 and 2010 $50 issues are prime candidates to want at least one 2006 and 2008-w to go with them. Massive attractive populations in the hands of the public are a gift to any set because they are silent series advertisements that have the tendency to develop collector followings.    Static design series that can be completed and have massive series populations will likely pull through the design tsunami successfully.

If you look back over coinage history its clear that the greatest collecting opportunities tend to present themselves when a newly struck extremely low mintage type coin with good looks or a very low mintage member of a massive series with significant public exposure showed up.   A couple dozen coins issued by our friends at the United States Mint in the last 15 years fit this description exactly and are moving from their infancy into the rapid growth phase of their life cycle. At the time of series maturity over half of the entire series value is contained in the 4 rarest coins in the set.   The time to pick tomorrows great classic coins is while they are trading well below the 50 to 100 times melt commonly seen in mature series.

Yes collecting will pull though just fine and part of the fun is learning to see great coins before they have great prices to go with them and are still low risk.
Back to Top
Sponsored Links


Back to Top
ERICJ96 View Drop Down
New Member
New Member


Joined: 31 May 2006
Location: United States
Status: Offline
Points: 10
Post Options Post Options   Thanks (0) Thanks(0)   Quote ERICJ96 Quote  Post ReplyReply Direct Link To This Post Posted: 02 Aug 2010 at 7:43pm
Even those of us that collect strictly for the fun of it have the tendency to be concerned about the price performance of our collections not only because its fun to beat the market but also many of us have a significant portion of our savings in our collections.

As we are all fully aware the value attributed to any coin we chose to buy or collect is dependent primary on two components. The first is the face or melt value of the coin that serves as its unquestioned long-term value floor and the second is its numismatic premium. Its this premium that frequently carries better date coins price to 10-100+ times its base worth by the time it matures. Over the last 15 years most major classes of classic coinage covered by the PCGS 3000 have done poorly when indexed to constant dollars or any of the precious metals they have a history of being struck on. There are a few exceptions to this but they tend to be ULTRA RARE headline coins that come to market infrequently. Why is this the case?

By and large the values we see in the price guides are a direct reflection of the disposable income of US citizens and their interest in any given series. If anything were to happen to change how the typical collector puts together sets or reduce real disposable income, the current real term drift in high multiple of melt valuations could accelerate. Richard Nachbar a very respected high dollar numismatics dealer has been running one page adds in coinage magazines for several years suggesting that his clients exit high valuation numismatics and buy precious metals to replace them specifically because he is concerned about real disposable income in the United States going forward. The record over the last 10 years proves that he has been giving his clients sound advice.

Numismatic authors have correctly told us over the years that the rare issues in any series have a tendency to appreciate much faster than the common dates do until the series matures but they don’t bother to tell us that most of the time series are mature in real terms within 30-50 years after they are no long available from the government. Sky-high markups over intrinsic value for series keys and semi keys discourage new collectors from starting the series in question.   It’s probably the combination of high cost, falling real disposable income and attrition that’s showing up in PCGS’s valuation composites indexed to inflation.

The flip side of this scenario is the modern eagles. Series collectors of these coins typically have about 70 percent of their sets purchase price backed by precious metal content and their very young keys and semi keys are still trading for 2-4 times melt in most cases. This combination of attractive high grade sets with high money content (yes the precious metals are a form of cash), multi million total series populations out building collector base for the sets and key dates that produce amazingly tight bottlenecks is driving their keys price behavior.

These low risk high material content series with relatively inexpensive keys whose mintages run in the 2,200-10,000 coin range are absorbing new collectors at a rapid rate and its showing up in the number of moderns being encapsulated by the grading services and key issue bid prices. Ultimately its collector base expansion in a price range they can afford or feel comfortable paying that drives numismatic premium growth. Silver gold and platinum eagles are a land of opportunity and their keys have a LONG way to go before they top out over the next 30 years. Just as wise collectors 80 years ago took an early interest in the wonderful modern coins in production from 1906 to 1936 we need open minds to see the opportunities present in our lifetime, for they are many.




These articles are pulled from topics covered in KP's new book called Modern Commemorative Coins by Eric Jordan. Each new article will be posted as its published in Numismatic News.

Edited by ERICJ96 - 02 Aug 2010 at 7:49pm
Back to Top
cladking View Drop Down
Coin Aficianado
Coin Aficianado
Avatar

Joined: 29 Sep 2006
Status: Offline
Points: 101
Post Options Post Options   Thanks (0) Thanks(0)   Quote cladking Quote  Post ReplyReply Direct Link To This Post Posted: 03 Aug 2010 at 5:30pm
Thanks.
 
Very interesting. 

Man fears time, yet time fears the pyramids.
Back to Top
ERICJ96 View Drop Down
New Member
New Member


Joined: 31 May 2006
Location: United States
Status: Offline
Points: 10
Post Options Post Options   Thanks (0) Thanks(0)   Quote ERICJ96 Quote  Post ReplyReply Direct Link To This Post Posted: 06 Aug 2010 at 4:38pm
Clad King,

Do you have a good feal for the MS-63 through MS 67 values of circulating state quarters and persidential dollars? I need to work on a multi grade price list for all modern issues 1986 to present. I have the gold and paltinum issues more or less in had but I need help on the circulating material. Can you help me?


Thanks

Eric Jordan

PS: Are you going to the Boston Show?
Back to Top
cladking View Drop Down
Coin Aficianado
Coin Aficianado
Avatar

Joined: 29 Sep 2006
Status: Offline
Points: 101
Post Options Post Options   Thanks (0) Thanks(0)   Quote cladking Quote  Post ReplyReply Direct Link To This Post Posted: 06 Aug 2010 at 9:31pm
No.  I'm not very familiar with the states and presidential coins. 
 
I don't even feel competent with circulation issues after about 1994. 

Man fears time, yet time fears the pyramids.
Back to Top
just carl View Drop Down
Coin Expert
Coin Expert
Avatar

Joined: 02 Jun 2006
Location: United States
Status: Offline
Points: 1229
Post Options Post Options   Thanks (0) Thanks(0)   Quote just carl Quote  Post ReplyReply Direct Link To This Post Posted: 07 Aug 2010 at 3:17pm
Not sure of others but I suspect if you keep your posts down to a little less than a complete novel, you'ld get a lot more responses. Starts out good reading but if you'll notice mose people on these coin web sites just ask a simple question, sometimes get simple, yet complete answers. I see you new so I suggest you check out many other posts as examples. Maybe there are those that will read it all but I think most here want short, to the point statements, questions, answers, etc.
Just my opinion since I'm one of those that if I see a really long, drawn out post, I just pass on most of it.
just carl
Back to Top
ERICJ96 View Drop Down
New Member
New Member


Joined: 31 May 2006
Location: United States
Status: Offline
Points: 10
Post Options Post Options   Thanks (0) Thanks(0)   Quote ERICJ96 Quote  Post ReplyReply Direct Link To This Post Posted: 14 Aug 2010 at 10:25am
Thanks for the constructive comments.

Eric
Back to Top
coinshop.com View Drop Down
Coin Groupie
Coin Groupie
Avatar

Joined: 12 Jun 2010
Location: Great Northwest
Status: Offline
Points: 73
Post Options Post Options   Thanks (0) Thanks(0)   Quote coinshop.com Quote  Post ReplyReply Direct Link To This Post Posted: 16 Aug 2010 at 5:05pm

My opinion (for what it's worth)

Most of the modern coins that are "high grade"  are just expensive pieces of plastic.
They made a Gazillion of each year and type..  (Gazillion is a technical term for "boat load") Geek
Back to Top
 Post Reply Post Reply
  Share Topic   

Forum Jump Forum Permissions View Drop Down