"Of course, another powerful factor is the industry's own huge stake in the market. It has even been said that so much money is involved now that the market makers will never let it collapse; that investment coin trading has become so institutionalized, on such a giant scale, that its death is inconceivable.
"But history teaches that even the biggest, most powerful institutions can collapse when the conditions that sustained them end. Look at Communism! And the coin investment market is especially vulnerable because it requires a condition not of stasis but of continual advancement. Investment coin prices have to keep rising (faster than inflation) to keep up the crucial track record that stimulates more investment to expand the pyramid's base.
"Reason tells us this cannot go on forever, because coin prices would eventually outpace the financial ability of even the most avid and wealthy buyers. The pyramid cannot expand indefinitely; and when it stops, no amount of support and promotion by the numismatic industry will be able to keep the investment delusion alive. All the king's horses and all the king's men won't be able to put Humpty Dumpty together again.
"I wince to invoke that old chestnut, the Dutch tulip bulb mania, but the analogy to the coin investment market is so perfect. Centuries ago, tulip growing became very popular in Holland, and prices for rare and unusual bulbs naturally rose. Then a speculative frenzy ensued, and prices reached levels which made no sense in terms of planting bulbs to grow tulips. But of course people were not buying bulbs not to plant in gardens. Instead - bedazzled by that notorious old fooler, `track record' - they expected to sell their investment-grade bulbs at a profit to buyers who would in turn expect the same thing. Predictably, the market ultimately collapsed, and bulbs fell back to being worth only what people would pay to plant them in their gardens.
"Today, people aren't buying investment coins to plant in their gardens - that is, to put in collections and enjoy them. They're buying to sell to investors. They're buying tulip bulbs. In the end, prices will inevitably fall back to levels that true collectors - buying for pleasure and not investment - are willing to pay. If any collectors are left."
While I suggest that if you become a collector, a connoisseur, you will derive many benefits, it is also the case, as implied by the preceding commentary by Mr. Robinson, that numismatics needs you. If you become a collector, then investors everywhere owe you a debt of gratitude!
PCGS Coin Guide Table Of Contents
