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Forecast Remains Bullish for 2007 Coin Market
By Mark Ferguson
COIN VALUES Market Analyst

While a few segments of the economy may be struggling, like the housing sector, the Federal Reserve is keeping its eye on inflation, which it reports to be the greatest concern at present. Comparatively lower energy prices are now helping to quell the inflation risk, but it's nevertheless a concern that's underlying the economy.

Because of this continuing risk, many investors are again turning to precious metals and rare coins as inflationary hedges, as these items tend to increase in value as inflation heightens. Many professional gold analysts say that central banks of several countries are working in coordination with each other to artificially keep the price of gold stable or to try to cap the price. Some believe the price will soar in the near future as natural market forces overtake planned economic controls.

2006's volatile gold market resulted in a price correction that forced many pre-1934 gold coin values significantly lower as the premiums over their melt values dropped. So this may be a good time to purchase common numismatic gold coin issues.
Coin dealers are reporting the market to be very active again at this time. Those who handle the high-powered coins report that market segment has not slowed down in several years. People who purchase coins in the tens and hundreds of thousands of dollars are usually quite sophisticated in money matters and wouldn't spend this kind of money if they perceived a serious risk of falling coin values.

However, on the other end of the population spectrum, television news programs report that about two-thirds of Americans are living from paycheck to paycheck. Most people just can't seem to get into a savings mode. By building coin collections people are able to have fun and build equity in their collections that's reasonably liquid.

We see this happening as values for circulated coins continue to grow, and as high-end coins and circulated coins have continued to experience strong demand. It's the coins in the middle - the low to mid-grade Uncirculated coins, those grading from Mint State 60 to MS-65 - that haven't shown much action for a while in general.

These days, collectors generally want coins that grade higher than MS-65, except for modern issue coins, for which people want the MS-69 and MS-70 grades. Registry collecting is still a strong influence in this collecting arena. The Wall Street Journal reports "online registries of graded coins tap into collectors' competitive sides and help drive prices higher."

The Internet has also been credited with helping to greatly expand the coin market by allowing traders to more easily buy and sell coins and to study them. However, it's also publicity from outside the market, like the recent Wall Street Journal article, that's helped to attract new buyers and collectors.

The United States Mint has also been a huge factor in helping to create new collectors. The State quarter dollars program, which began in 1999 and runs through 2008, and the new designs for the Jefferson 5-cent coins, introduced from 2004 to 2006, have greatly stimulated collector purchases. Now the market is poised for the introduction of the Presidential dollar coins beginning in February. Mint officials are hoping they, too, will attract strong demand from the public.

NEW COIN DESIGNS like the State quarter dollars and the Westward Journey 5-cent coins, like that above, have helped promote collecting among a larger population. The impending start of the Presidential dollars program may have similar results.

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