During The Next Recession, Will Classic Coins Go Up Or Down In Value?

Over 300 views and only 28 people voted? What's up with that?

It's anonymous voting folks. I can't see who voted and I suspect admins can't see either. No one is going to call you out for offering your opinion. This was my first poll but was hoping for participation.

OK Mike I went back and voted, and I voted yes. Why I voted yes is because yes comes across as the glass half full. I really have no idea what coin prices will do during the next recession. However your poll does open up an interesting dialog. I'm no economist or soothsayer but what I do know is that coin prices have always increased over a period of time. One of our fellow members recently handed over some of his first price guides. The oldest one being a 1958 Brown and Dunn and several between 58 and present day. The classics have always increased and I see no reason to believe this trend won't continue.
What is upsetting to me is seeing the LCS slowly disappear, attendance declining at the coin shows, TPGing and the disgusting counterfeit invasion. I personally don't want to purchase coins from a picture or believe some description written on plastic holder. I prefer to reach across a counter or table and shake the hand of a gentleman or lady, pull out my fancy looking glass and strike a deal. The marketing aspect of the industry concern me as much if not more than the economy.
Sorry all for the rant but that is my Two Cents worth.

Worthless? Compared to what? To what it was a hundred years ago? Sure it's worthless. To what it was worth last week? No. And as bad as it is, it is still one of the strongest in the world. Is it a Ponzi scheme? No I'm not sure you understand what a ponzi scheme is.

Views are not unique. Every time you open this thread, it is a view. So, if thirty different people each viewed the thread ten times, 300 views.

On a side note, only 14 different members have posted in this thread. What is up with that?

The conventional definition is 2 consecutive quarters of negative gdp growth but the start and end of a recession is determined by the national bureau of economic research usually well after one has begun or ended. They do look at gdp growth but not as the sole determinant. The last recession began in December 2007 when gdp growth was still positive.

Historically it doesn't seem like there is a clear cut correlation between coin prices and the economic environment. A quick glance at some historical greysheets, there seems to be a few more pluses than negatives during the 1974 and 2001 recessions but few more negatives than pluses in the 1980-1982, 1991, and 2008 recessions. Also if you look at how they do during economic expansions, you get a mixed picture. Coins did poorly during the 1990's and good for most the the 2000's.

When you look at history, coins even those that have little or no intrinsic value seem to correlate better with bullion prices. Most of the 1970's and 2000's were good for bullion and coins. Most of the 1990's and 2010's were bad for bullion and coins. The exception seems to be the 1980's which was bad for bullion but mostly good for coins. I think the creation of TPG's helped drive the influx of wall street money into rare coins driving up prices.

My feeling is prices are maybe a bit more likely to move lower than higher during the next recession. Should the recession be severe, I think you might get some forced selling by people having to choose between holding on to a coin or paying for necessities like food and shelter. Then you have the demographics which seem to be aging and retiring. I remember reading a 2016 Numismatic News article which said the average age of ANA members is over 60 but it was about 51 a decade ago. It suggest to me that it is mostly the same group of people but just 10 years older with some new younger members mixed in. Many like to say that stamp collecting is dead. The american philatelic society surveyed their members several times between 1982 and 2007. In 1982, their average age was 44. In 2007, it was 63. I think it's okay as long as the average age is stable even if it may be in the 50's or 60's. If it's rising, then that is a problem. There is also the greater usage of electronic forms of payment. We all know the saying "out of sight, out of mind." So you have the back drop of these trends. When the next recession hits, I think there is a possibly that bullion and in particular gold will rise. Gold tends to perform well in periods of uncertainty and we might see a flee to the safety of gold during the next recession. Since coins have a tendency to do well when bullion is strong, we might see an underlying bid to coins should that happen. Buying typically begets more buying. Overall, I see a few more headwinds than tailwinds but I could be wrong. Maybe people will see coins as a good thing to buy when the prices of everything else is falling apart.

Who would be buying coins during a recession?

Lots of times, rookie investors and uninformed collectors panic and sell off when they see prices/values falling as demand slackens due to recessionary pressures and supply rises due to those same folks pursuing cash in hand -- try paying your mortgage with Morgan dollars in slabs. To use the stock market parlance, they "sell low." This creates a great opportunity for buyers willing to ride it out, so to speak, and wait on the next expansionary cycle.

It is worth noting that this requires a great deal of faith in the numismatic market and its ability to rebound. This is why high-end coins that are truly rare and always in demand are exceptionally attractive buys when sellers flee the market, because risk is greatly lessened.

Go back and look at the market for popular key date coins in popular series but remember to set your focus back 50 or 100 years, or even 30 years, instead of looking at short-term data like 3-5-10 year trends. The collectors who "buy and hold" for the long term almost always come out ahead, and even more so if they bought when the market was down and everyone else was selling.

A 10,000 share investment ($175000) in United Airlines 7 days after the 9-11 attacks in 2001, if held through today, would be worth $670000, a gain of almost $500000. In any market, coins or otherwise, it takes confidence, fortitude, and a large dose of optimism to open your wallet when things are at their worst and everyone's preaching doom and gloom.

Some guru = Baron Rothschild





(Quote from Investopedia)