Prices are rising.
Whether you talk about the price of groceries, gas, or collectibles, prices are rising. So are the price of the collectibles markets, including numismatics.
According to the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) has been steadily rising for six months. While the prices are rising, unemployment has dropped from the beginning of the pandemic high of 14-percent to the 6.2-percent rate, BLS recently announced.
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Charting the Consumer Price Index during the pandemic
(Chart courtesy of the St. Louis Fed)
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Charting the Unemployment rate during the pandemic
(Courtesy of the St. Louis Fed)
With all of this economic stress, why are collectibles, especially numismatics, are seeing rising prices?
An auction industry source said that there is a pent-up demand for something resembling normal. Instead of the everyday routine, those with means are buying. In the last six months, the industry reports that prices realized for all sectors have risen at rates higher than seen in many years. Estate auctions are attracting new customers looking for unique items.
Numismatics is in the middle of the trend, with collectors and investors looking for something to do. Collectors are spending more time with their collections and looking to expand. Investors see the rise in values because of the rise in precious metal prices and have driven the market higher.
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One year gold spot price
(Graph courtesy of PCGS)
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One year silver spot price
(Graph courtesy of PCGS)
One of the areas where the price changes are noticeable is in the markets for precious metals. While the spot price for gold and silver has been relatively steady, the numismatic spread for coins has climbed. Dealers are reporting that generic gold and silver for numismatic items increased over the last six months.
(graphs courtesy of PCGS)
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- One year trend of generic gold coin prices
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- One year trend of Morgan and Peace Dollar prices
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- One year trend of 20th Century coin prices
Several industry reports note a higher demand for physical ownership of precious metals, putting pressure on the markets. But rather than buying bullion, investors are purchasing coins. Demand for American Eagle products has outpaced many dealer’s abilities to purchase supplies. When bullion coins were not available, investors purchase coins produced for the collector market, including proof and special issues coins.
Recently, the U.S. Mint set a 99 coin limit when they released the 2021-W American Silver Eagle Proof coin with the original reverse. The coin sold quickly. When asked, the U.S. Mint claimed they did not have the statistics about the number of 99 coin purchases they fulfilled. Collectors report that they were shut out of coin purchases while dealers have been slabbing and selling the coins mostly to investors.
If the predictions are true, economists believe that there will be a roaring 2020s similar to the roaring 1920s following the Spanish Flu Pandemic. Considering the current trends, the secondary market for numismatics may make it too expensive for the average collector to participate in the market.
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March 1, 2021
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Scott
People have more money to spend on numismatics because there are no shows to travel to. Money that would be needed for travel expenses are now being spent on numismatic items.
Once the Covid threat is over, many people will not go to as many shows as they have in the past. They will continue to buy via the internet as they are now. Shows will either get smaller, merge with another show or fold. There is no going back.
Sincerely
Bob