When I woke up this morning, I found that Lehman Brothers filed for Chapter 11 Bankruptcy protection on Sunday. Merrill Lynch, another venerable Wall Street institution, is being purchased by Bank of America. Insurance giant AIG is asking the Federal Reserve for a bridge loan to weather its own fiscal issues. As the Dow Jones Industrial Average index drops 300 points after the markets open, it is not surprising that there are worries about the fundamentals of the economy.
Those of us in numismatics, we watch the prices of precious metals for indication as to how our market is going. In recent weeks, gold, silver, and platinum have been falling to levels not seen since early 2007. As I write this, gold is up $11.80 to $775.50 per ounce (1.5-percent) while silver is up only 20-cents and platinum is down $38.00.
The general rule of thumb is that when there are problem in the capital markets, investors try to convert their cash to precious metals. While gold is the most popular investment, the relatively stable prices and average trading volumes suggest that investors are not running away.
For the collector, this means that collectibles tied to the prices of precious metals should not move much. Even though the U.S. Mint has not changed its prices during this declining market, those using American Eagle and 24-karat Gold Buffaloes as investments can find coins from previous years at lower prices.
If you are collecting rare coins, the PCGS3000 Index (a market basket price of 3,000 rare coins) shows that prices are up $4.65 for the day (0.01-percent). The PCGS3000 index has trended upward since November 2007.
As a collector and not an investor, I will take the advice of Dave Harper and wait to see what happens to the market. The currents are much to rough for a collector to jump in head first!