The Trend Is Your Friend

Here are 5 clearly discernable, long term trends that every coin collector should consider when making purchases in 2010.
By Scott TilsonScott Tilson

Each New Year seems to naturally breed a whole new slew of predictions and prognostications about what surprises and fascinations are in store for the coming 12 months.

Unless you, or someone you know, is in possession of extra sensory predictive powers, your best bet may be to assume that many of the following entrenched, multi-year trends will continue to assert themselves.

  1. Gold will continue to rise in value.

Here are the year-end closing prices for gold for each year since 2000.

  • 2000- $273.60
  • 2001- $279.00
  • 2002- $348.20
  • 2003- $416.10
  • 2004- $438.40
  • 2005- $518.90
  • 2006- $638.00
  • 2007- $838.00
  • 2008- $889.00
  • 2009- $1,096.50

2009 marked the 9th straight year that gold has ended the year higher than the year prior. This trend began after a brutal 20 year bear market that required serious force and fundamental change to finally reverse.

Not coincidentally, this new bull market in gold directly correlates to the upswing in rare coin values that we have witnessed during the same period of time. Gold will always be the "bellwether" for tangible assets. The past year's historical financial crisis, coupled with our government's efforts to print fiat money at historic record levels, bodes well for the likelihood that gold will continue it's positive price trend in the coming year

  1. Big Money will Continue to Discover Rare Coins.

Over the past several years, rare coins have become increasingly popular among wealthy investors. The potent mix of portability, confidentiality, third party grading, price and census transparency, history and beauty, and non-correlation to financial assets has proven to be a seductive and impossible to replicate alternative for many new market participants.

There is no doubt that some collectors will invariably be forced to sell their collections in response to the total collapse of their other assets, and this could very well lead to some short term softness in prices. (and opportunity to acquire coins you rarely see)

However, the money in our economy always needs to go somewhere and investors won't soon forget the devastation they witnessed to their paper financial assets. If rising gold continues to provide a wind at our backs, look for the long term strengthening of coin values to continue after a brief pause.

  1. The Flight To Quality Will Continue.

It is now widely recognized that each and every coin is unique, and therefore coins that are graded the same will still continue to have their own traits and characteristics. This means that collectors have become increasingly focused on the coin, not the holder.

While the grade assigned to a coin may be a good place to start, collectors are now selecting coins for purchase that meet their own personal criteria for strike, color, luster and eye appeal. This trend has richly rewarded the picky, educated buyer of "high end" pieces who has carefully and methodically selected pieces for their collection. This strategy makes eminently perfect sense and I see no reason for it not to continue for the foreseeable future.

In the late 1980's when PCGS and NGC were first founded, the concept of third party grading was so revolutionary and so needed, that virtually anything round and made of metal in a PCGS or NGC holder was highly sought after.

Now that two decades have passed and tens of millions of coins have been graded, dealers and collectors are using the wealth of knowledge embedded in the population reports and online auction archives to select their new purchases.

Over the past 10 years there has been an ever-increasing focus on the interesting and desirable. There is intense demand for first year of issues, one or two year types, proof only issues, famous errors, "top pops" and acknowledged "keys" to the series. Buyers of more common issues want pieces with special strikes, color, luster and eye appeal.

In short, collectors today seek to build collections that will be highly desirable and interesting to the next person when the time comes to sell. It's important to face facts. Many rare coins are just not that rare. Common coins will continue to surface in quantity while special and interesting pieces in all series, grades and price points will continue to grow in popularity and value.

  1. The Participation and Popularity of Auctions will Continue To Grow.

Over the past 5+ years, public auction has become the venue where a rapidly growing part of the rare coin market takes place. The power of the internet has made it possible for hundreds of thousands of collectors to view, research and bid on coins interactively from the comfort of their own homes — at the very same time that the live bidding is taking place on the auction floor! This has been a revolutionary change that has positively benefited both buyers and sellers of rare coins.

If you are a buyer, you now have a far greater selection of coins to consider for purchase. Every collector can now choose from literally hundreds of millions of dollars worth of coins that are readily available for purchase through auction online. This compares very favorably to the limited resources of any single dealer's inventory.

Secondly, you can research what similar coins have brought at auction before and you can view coins online without expending even a penny in travel expense. Lastly, you are guaranteed to be buying at a current market price, where a dealer who owns a coin may be slow to lower their prices in a soft market environment.

If you are a seller of coins, you no longer have to accept or trust what a single dealer is willing to pay for your coins. A dealer's offer can vacillate widely and will be based on that dealer's knowledge of your coins, his current customer base and his short term cash position.

At auction, you are guaranteed to obtain the very highest price available from thousands of bidders from around the world, less the agreed upon fees to the auction company.

Given these incredible benefits for both buyers and sellers, I see no reason for the popularity and growth of rare coin auctions to diminish anytime soon.

Scott Tilson is a long time client of Heritage Auctions and has been involved in the rare coin market for the past 30 years. His main collecting interest and focus is early U.S. Type. For the past several years Mr. Tilson has been busy establishing the Psychedelic Art Exchange which allows collectors to participate in a new ground floor collectibles opportunity...1960's Psychedelic Rock Concert Posters. Mr Tilson welcomes your comments on this article and can be reached c/o Jim@HA.com.