The Changing Numismatic Marketplace

NGC - With the world and rare coin market continually changing, every collector, dealer, and investor should try to understand what tools are available to make sound purchase and sales decisions.

A few days ago I was reading the latest issue of Coin World and noticed an interesting article that featured the biography of Greg Rohan, President of Heritage Auctions. The article contains a great photograph that was taken at the September 1979 Long Beach Show. Several of my close friends are in the picture, all looking like the young kids that they were. The market was hot in 1979, and these guys were wheeling and dealing. One of my friends sent me a text laughing about how little we knew and how much we thought we knew about rare coins. I kidded him that in those days we thought a 1909-D Half Eagle was pretty scarce in Mint State. A lot has changed in the rare coin market over the last 35 years!

The 1979 market was riding a wave of exploding bullion prices. Prices for some coins soared to levels that have never been reached again. The classic "bubble coin" was Proof Three Cent Nickels. These peaked at around $2,000 in Gem condition and can now be purchased for less than $500 each. Collectors and investors had inadequate data to determine actual rarity for most issues. The aforementioned 1909-D Half Eagles being a good case in point. This was before you could check pop reports and auction records with a few clicks of your mouse. This was actually before about anyone even owned a computer. The best source of information in those days was the Red Book and Greysheet.

In 1979, scarce collector coins sold for relatively modest premiums to that of common dates for most series. Checking the price list from those days is remarkable. Early gold coins, rare dates of everything, Colonials, early copper and silver, and so many other great coins were vastly underappreciated. This is particularly true of Gem condition coins. The market was focused on generic gold coins, type coins, commemoratives, and common silver dollars. Savvy collectors who understood rarity in 1979 profited handsomely from the ignorance of the general market. Many of the great collections that are now being offered at auction were assembled during this time period and later.

As most know, the market completely crashed in 1982. The rare coin market had not dropped that much before or since. Many of the instant rare coin millionaires of the late 70s and early 80s were wiped out. The merger of New England Rare Coins and Steve Ivy Rare Coins into Heritage Rare Coins was a survival play—one that worked out pretty well in the long run. The market in the early 1980s was dominated by investors with little guidance on actual rarity. Most purchased coins that sounded good, but were in fact rather common. This led to market speculation and the subsequent crash. Other factors came into play as well. Interest rates soared to around 20% and the national economy was terrible. Finally, rare coins lacked the liquidity that third-party grading would soon provide.

Third-party grading was a major development in the market for rare coins. When certification was introduced in the late 1980s many were quite skeptical. No one was sure if the idea of having another company grade your coins would be accepted. It soon became evident that third-party grading was the most powerful concept ever invented for the rare coin market. The liquidity factor for rare coins attracted thousands and ultimately millions to the hobby. Very few realized that 10, 20, and now 30 years later, the information gathered from submissions would become the most accurate gauge of true rarity. Proof Three Cent Nickels became much less desirable when everyone realized how common they are in comparison to other issues.

For the first 10-15 years most of this population information was available in a printed format. This brings up the next giant change in the rare coin marketplace—the Internet. Most of us now take for granted the ease of locating information about rare coins. We can check out websites for population information, auction records, history, price lists and just about anything you need to make a purchase decision. NGCcoin.com is an excellent example. Collectors can now shop for rare coins from home and attend auctions as if sitting in the audience. This has attracted an incredible number of new collectors into the hobby. Geographic location is no longer an issue for collectors. In years past, collectors were limited to buying coins from a local dealer or were forced to travel to make purchases.

Just about every rare coin dealer in the country has adopted the Internet as an important part of their business. What will be interesting is how this will evolve in the next few years and beyond. The current craze for mobile Internet shopping will most likely be the next big step. Social media is also beginning to play an important role in the hobby. One thing in my opinion is a certainty; the rare coin market will continue to evolve as technology improves. Those who adapt will prosper and those who do not will probably have a tough time. This can already be seen at most coin shows. Small dealers have very little inventory and seem to struggle keeping up with the big guys.

The same information that dealers use is also available to every collector. I was reminded of this earlier in the week. Someone called about selling some rare coins and made an appointment. The person had an impressive group of Carson City Silver Dollars in original GSA holders. Included in the group was an 1890-CC and 1891-CC Silver Dollar. Both are quite scarce in original GSA holders and worth multiples of similar coins not in GSA holders. My first attempt to purchase them based on Greysheet bids proved very unsuccessful. The collector had done his homework on the Internet and had a good idea of the coins true value. It was a learning experience for me, and a profitable one for my client.

The world and the rare coin market continue to change. Being aware of these changes and utilizing them to your advantage is highly encouraged. Every collector, dealer, and investor should try to understand what tools are available to make purchase and sales decisions. Those who adopted third-party grading and the Internet early had a great head start on other collectors. No one knows what the next big thing will be, but being open to change is the first step.