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Economic Conditions Impact Rare Coin Market
By Mark Ferguson
COIN VALUES Market Analyst
Images courtesy of HeritageAuctions.com
1920-S Gold Eagle
When the Finest Known Indian Head gold $10 Eagle, PCGS Mint State 67, changed hands March 16, its new buyer paid $1,725.000. In 1979, Dr. Steven Duckor paid $85,000 for it. The most profitable collections mature over several years.

Most experienced coin collectors seem to have developed a fair grasp of economic changes and conditions, even though few of us are qualified economists.
For the most part, collectors and dealers have learned to think for themselves, evaluating economic changes as they occur.

April 25, the US. stock market posted a new milestone as the Dow Jones Industrial Average reached 13,000 for the first time. Just 25 years ago it was lower than 1,000. Sales in the housing sector have slowed considerably during the past year and prices have fallen. And now we have the dollar near a record low compared with other major currencies, such as the euro, the British pound, the Japanese yen, etc.

And as we all know, oil prices, and hence gasoline prices, have skyrocketed during the past couple of years. Other costs of living are rising, such as grocery items and insurance costs. But most of the population seems oblivious to the major factors underlying the worldwide economy.


Some say precious metals are very much overpriced, while others predict gains at multiples of todays prices. Who do we believe? The best answer may be to read and think for ourselves. Of course, the Republicans, now in the White House, will paint a rosy economic picture as the presidential election nears, and most mainstream investment specialists talk down rare coins and precious metals in favor of the traditional investment products they sell.

The bull market in rare coins, as well as for high-grade contemporary coinage, that has lasted during at least the past four years has given us proof positive that coins are great investments. Even most collectors who purchase coins just to enjoy building a collection, not to invest, secretly hope their collections will bring much more money at resale than what they've paid, and that's generally the case if one can ride out the long-term market trends.

Most astute collectors instinctively know that well-formed collections will be in demand, bringing strong prices at the time of resale, if they work at it with a good long-term plan. Savvy, big-money participants know this. They've been lucky to see major rarities climb in prices from a few hundred thousand dollars 10 to 15 years ago to mul-timillion dollar prices today.

Other collectors of more average means have had similar percentage gains with many other lesser-priced coins. The most successful collectors, in terms of earning profits, take a long-term approach, over many years, not just in a couple of years of trading in and out of the coin market.

Economic conditions change, sometimes very quickly, and other times barely noticeably during many years and decades. The coin market doesn't follow set patterns as the economy changes, except that during times of high inflation, coin prices generally rise. However, there is no general "rule" for coins, such as when stocks are up coins are down. We've seen diverse occurrences as both markets change.

Probably the best areas to read about in relation to how economic changes affect the coin market are what's happening to the dollar in relation to other currencies and precious metals industrial usage, as well as their historic economic trends and what's going on with the underlying trends in the worldwide economy.

COIN WORLD, Monday, May 14,2007


1920-S Eagle - 1920-S Gold Eagle - Finest Known Indian Head Gold Eagle

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