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Coin Market Fundamentals: Shifting Winds

By Victor Bozarth - October 2, 2023

Bullion coins have become a hub of numismatic business these days, with American Eagle coins, including American Silver Eagles, American Gold Eagles, American Platinum Eagles, and American Palladium Eagles, among the market leaders. Courtesy of PCGS TrueView. Click image to enlarge.

Evolution is real, but to most, it’s invisible.

Over the last four decades, I’ve personally seen the rare coin and bullion markets transformed by both third-party grading and the internet. No longer are most rare coin (or bullion) transactions conducted in person. Because trust in both the product in terms of authenticity and grade as well as safe delivery, which can be insured, anyone can buy coins or bullion from the comfort of their recliner if they wish.

The majority of rare coin and bullion business is now done via the internet. First, I’ll discuss some of what is going on currently. But later in this article, I’ll examine some interesting marketing changes in the rare coin auction business. No longer do in-person auctions draw the attention nor the attendance they once did. Bidders are still quite active, but most bid virtually.

Late this past spring, the gold and silver bullion markets really amped up. Going into the summer, though price levels moderated somewhat, the overall volume had been tremendous. Rare coins, too, are very active when they are available, but there is some market softness in more-generic coins.

When talking to wholesale dealers, the most common theme has been overwhelming bullion business. Sure, many dealers would prefer to buy and sell rare coins, but the comments of one smaller regional dealer probably sum it up best: “I’m making too much money right now on bullion. If a nice coin deal walked in, I would certainly look at it. But especially with the capital I have to use, I have to stay on it.” The “it” this dealer is referring to is the highly active two-way market in bullion we’re currently experiencing.

Looking at the market from a long-term perspective argues for stability and strength in terms of both capital available and widespread demand for most items, with pricing dependent on the market. Market strength, and indeed its overall health, can often be measured in terms of what should be in demand versus what shouldn’t be in demand because it’s common. Most often, softness in any market occurs first to items that are most common or available.

For example, dealers know rare coins are just that: rare. Often the most important aspect is locating the rare coin. Dealers are in business to make money. Often the financial impact of bullion transactions, in terms of overall business, far outweighs their rare coin business volume.

Whether you are interested in numismatics, bullion, or both, you’ll see that trading is active. For bullion, the physical supply of many items is always a factor in the premiums charged. For example, American Silver Eagles continue to carry a large premium over their melt value. Meanwhile, premiums are much more modest on one-ounce generic silver rounds. Will the premiums one pays for an American Silver Eagle be recouped at the point of sale?

Ultimately, if you want to pay the smallest premium for silver you must consider both form and quantity. Currently, U.S. 90% silver coinage is an option. Silver in bar or ingot form is another option, too. One must consider both the premiums they pay for a bullion item as well as the premium (over melt) they might expect to receive when the bullion is sold. When you want to sell, if you won’t recoup most of the premium paid at the point of purchase, look to other bullion options.

Carrying that argument a step further, the premium paid over the melt value is critical when considering any bullion purchase, regardless of whether it’s silver, gold, platinum, or another precious metal.

The rare coin market evolution hasn’t happened overnight. While coins were being sold via the internet in the 1990s, customers hadn’t jumped on the bandwagon yet. Going forward, most collectors and dealers realized that PCGS products enhanced the peace of mind one can have on matters of authenticity and quality, building on the sight-unseen market trust that began building in the late 1980s after PCGS emerged into the marketplace. This gave more collectors and dealers comfort in buying and selling right from home – or just about any place else they wanted.

Many like myself, who traveled extensively for decades, often miss the bourse and seeing our colleagues in person, but we don’t miss the stress or time away from home. Regardless of the logistical challenges, the rare coin market has been surprisingly resilient and quite able to reinvent itself when needed.

One of the biggest changes made in marketing U.S. rare coins has been the increased number of auctions. Weekly auctions, once considered unimportant by many because of their lower-priced items, have gained increasing attention. The trend over the last 20 years has seen an increased number of great coins being sold in weekly auctions. No longer are the majority of rare U.S. coins sold in only the big showcase auctions. While the great rarities still rate a big sale, thousands of “meat and potato” coins are being sold in the weekly auctions.

Most auction houses have realized smaller weekly auctions cost less to produce, and their weekly schedule continues to satisfy both consignor and buyer desires. Consignors are often paid more quickly, too.

Many of the largest U.S. auction houses have come up with an innovative solution. They’ve warehoused immense coin inventories over the last decade. With these inventories and the fresh consignments they receive, they are able to have merchandise for weekly auctions for years to come!

Evolution indeed…

Article provided by PCGS at
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