December 2010

Comments on the coin market? Anyone who follows this particular market recognizes the counter-flow with respect to other markets. Prices are high; demand is great; inventories are low.

This is true of the finest pieces, the rarities, the coins with exceptional provenances, historic significance, top condition. Instabilities and uncertainties or limited potential in the traditional markets--stocks, bonds, certificates of deposit, currencies have also fed into rapid rises in the value of silver and gold. With respect to coins, there are fewer sellers and more buyers, a factor in the increase in prices in other classic collectible areas as well.

Why sell if you do not need the money? One answer is the answer of the contrarian--the time to sell is when prices are high. But I can well understand why people may not want to sell if there is no particular reason at the moment. I have turned down discount offers on a few of the better coins left over from earlier auctions on the same basis. I believe the value is there and choice material need not be sold hastily.

Accordingly, why buy when prices are high?

It is at this point that the issue of why we collect becomes important. For most of us, the pleasure of collecting trumps the financial aspect. The spread between what you can pay for something and what you can sell it for is substantial. Having coins auctioned results in a 20% or more difference between what someone pays and what you net. Looking at exceptional coins over the past decade shows some remarkable increases that make a 20% commission a non-issue. Yet, it is unrealistic to expect increases over the next decade to match the decade just ended.

The underlying strength of the coin collecting market has always been the collector who starts small and gradually grows in knowledge as well as capacity to buy better material. High prices on choice coins may make headlines but the collector is happier when coins are acquirable without a major cash outlay. Numismatics as a hobby needs appealing and affordable material as a foundation. We are in a market where even coins that are more or less common are realizing high prices. I recently paid nearly a thousand dollars for an Edward Confessor hammer cross penny, nearly twice as much as I would have expected to sell the piece for not that many years ago.

This is another element with respect to British coins that I have noticed over the recent past--more British buyers are pursuing high quality coins. There was a time when the American market was responsible for more than half the sales of British coins. I doubt that this is still the case.

Many of the collectors we work with have been collecting for as long as we have been in business--our computerized mail list goes back to the early 1990s and looking through our mailing list shows that we have been working with a substantial number of collectors since then and before. Markets go up and down. Choice material comes and goes as well. Some years there have been several exciting sales. Other years, what is offered by dealers or at auction lacks any ongoing excitement. Sometimes a collector pays strong prices. But sometimes collectors get bargains. When you collect over a long period of time you are bound to "win some" and "lose some" if you are talking in terms of money spent.

But the collection, even if some prices seem particularly high at times, can still be a "win" situation because of what you have put into it. A coin that fits with your interests and goals is an item of pleasure and satisfaction. The financial aspect is important but it is not the principle reason for acquiring the piece. Perhaps you will buy fewer pieces with high prices and limited availability but there are still opportunities. Maybe it is a good time to rebalance a bit--sell a few things that are tangential to your main interests and use the proceeds to pursue something else.

And, need I add? We are particularly interested in buying better British coins, tokens and medals.

Best wishes for the holidays and the upcoming new year!

Allan Davisson, Ph.D.
December 2010