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Market Matters: Just Add Three Zeros


Market fundamentals, regardless of the particular market itself, are pretty straightforward. Is there demand for a product or a service? Is someone (or a company) able to provide that product or service at an acceptable price to the market while still making a profit?

Product and service types tweak this demand/supply curve. Rare coins fall into a limited-availability end of the spectrum versus a good or service that can be easily manufactured, produced, or provided. Like many natural resources that are or will be in short supply, rare coins aren’t being made anymore. Yes, there is the exception of modern mint products, but we’re talking about (mainly vintage) rare coins here.

Rare coins are limited in supply. Some coins while advertised as rare are not – they are merely scarce or unusual. Yet, even these scarce and unusual coins often bring exceptional prices depending, once again, on the demand and if there are any available at that particular moment in the market.

Many collectors and dealers would pay more than book value to acquire a premium-quality coin like this 1928-S Walking Liberty Half Dollar graded PCGS MS66+. Courtesy of PCGS TrueView. Click image to enlarge.

Who cares if the price guide for an item is $1,000 and you know it’s undervalued? If you can’t buy one, what’s the point? On the flip side, who cares if you can get $1,000 each for a supposed common item if none are available at that price? It’s a moot point – no business in either direction.

At some point, the demand pushes the price to a level acceptable to a seller. Most of the time, it’s a combination of the seller wanting to realize a profit and the buyer willing to pay a premium over the supposed market rate. Rare coins don’t fit perfectly in this model either.

It all comes down to the supply. Especially with condition-census coins, the top 10 coins, of a particular date and type, don’t appear on the market often. Unprecedented demand often accelerates the number of condition-census coins to be offered. We’re seeing great coins come into the market because the conditions are great!

So what’s different about the market now? The single-largest factor driving the rare coin market today is the sheer amount of money available to buy coins. The rare coin market in decades past had some millionaire collectors and investors. Now we have billionaire rare coin collectors – in other words, just add three zeros!

The surge in price for other high-end collectables too is no surprise either. Collectors and investors both are vying for historically significant items because they represent tangible value. Maybe collectors buy rare coins because they love them. Maybe investors buy coins because coins are undervalued. Regardless, they are both buying.

Because the supply is limited, there are particularly elusive coins that are sought in all markets. The savvy collectors and investors know that if a particularly rare coin, almost always condition census, appears on the market the coin will bring a strong price, often despite the overall rare coin market itself. With rare coins, it often comes down to when… When will you be able to buy another?

The success or failure of a market, too, is dependent on timing. As long as the economy remains in an inflationary mode as it is now, the rare coin market will continue to be a safe harbor for most collectors and investors.

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