Interesting article that came in the NGC e-Newsletter regarding dealing in 2005.
Hello All and Happy New Year 2006,
Was coin dealing really that easy in 2005? Did you merely have to find the right collector and just make the price approximate for the grade? Was it truly a situation where you can just throw coins against a wall, and almost all of them would stick somewhere?
Did the Internet make it much easier to find the right collector? Or are good, old-fashioned relationships still useful?
If sales were really that easy, what does that say about the connoisseur level of collectors? Have the expectations of collectors been sufficiently reduced so that all coins can sell, no matter what the look, so long as the price is approximate for the grade?
Has collecting become more price oriented as a result of the bull market (in a negative way)? In other words, is the market so hot that almost anything will sell, assuming that the price is not substantially out of whack?
If things are that easy, why aren't more people entering the dealer ranks and raking in millions of profits per year?
A Year of Quantity and Quality
A guest article from NumisMedia
Looking back upon 2005, if you are a coin dealer and did not have your best year ever (or reasonably close), you may want to consider another profession. Last year was simply an historic event in itself. Collectors have become so enamored with numismatics that all you have to do is find the "right collector" for the coins you have and make the price appropriate for the grade. There are buyers for just about everything and the Internet has made it possible for you to find the "right collector" that much easier.
The coin business is a very difficult industry to measure gross annual sales. There are so many companies that are privately owned, actual figures of total sales for the year are not available. But when you see a company like Heritage realizing $50 million in business in two separate auctions alone and overall about a half billion dollars, we may conclude that the coin business had gross sales in excess of two billion dollars in 2005. And this figure may be low. Add Superior Galleries, American Numismatic Rarities, Bowers and Merena and a few other auction houses such as Stack's and David Lawrence Auctions, and that can add millions to the overall total.
So what did the FMV do over the last year? We are quick to say that we found the year to be just awesome. With the depth of the market as authentic as it has ever been, we are finding more competitive buyers than the market has ever experienced. There are buyers out there so anonymous that some of the major dealers don't even know about them. This is a far cry from the early 80s, when everybody's secret buyer came from the same pool of five to 10 advanced collectors with the means to buy just about anything. This number has grown immensely over the last 25 years to the point that every major dealer has at least one secret buyer and some dealers have several. It is no longer a game for just the best known dealers; everyone can participate, especially if you have expertise and experience.
This past year has seen some phenomenal advances to the FMV and it will go down in history as the turning point in identifying true rarities. Advanced collectors are demanding coins that are not readily available all the time. They want coins that have low populations, not only in a specific grade, but in all grades. Therefore, we have seen some major market makers trying to buy these coins and realizing that they just are not that attainable. Since the coins are not in the dealer marketplace, they have to offer to pay much higher prices to entice collectors to take their profits. Many of these coins are the common type coin for the series. In some cases, as we can see in various auctions, this strategy has worked. In most, it has not. It has only served to advance the FMV prices to heroic levels. Yet, at these levels, we are still seeing a major interest in these coins if they become available. For example, the Capped Bust $10 Gold has moved from an AU50 FMV of $30,000 in January, 2005 to $48,130 in this issue. The MS60 has advanced from $55,630 in 2005 to $85,630. The Small Eagle Bust $5 Gold has shown the same kind of results. In January, 2005, the FMV for an AU50 was $21,880 and today it is $30,630. In MS60, the FMV has increased from $40,940 to $53,130. What about the $3 Gold? For common dates, the FMV has moved from $2,560 in MS60 to $2,970 and the availability of these coins is about as thin as any series you can identify. This is an extremely popular series with thousands of collectors trying to locate coins. Many years ago, you could find these orphans in many showcases and inventories at any coin show. Not so today. In MS63, these have climbed to an FMV of $11,500 from $5,840.
How about some of the more popular key date issues that continually trade? The 1909 S VDB in MS60 Brown has shot up from $1,250 to a current FMV of $1,470. In MS63 Red, the FMV has persistently moved higher throughout the year from $1,660 to $1,970; and this is a coin that has traded many times because there are still lots of coins in and out of dealer inventories. The 1914 D Lincoln in MS60 Brown jumped from $1,400 to the present FMV of $1,680. In MS65 Red, it has advanced from $13,000 to today's $19,500. The 1916 D Mercury Dime is always an easy seller if priced according to the accurate grade. In AU50, it was $5,790 last January and today it stands at $7,200. The MS63, 64 and 65 have all advanced at least 20% and there are plenty of buyers looking for these coins. You can pick out the key dates in every series and you will see that these coins are still primary on most want lists.
With so many coins moving to dramatic higher FMV levels this past year, long-time numismatists are beginning to look at the relationships of one series to the next and how they fared in comparison to each other 10 to 20 years ago. There are many areas that have not seen the movement we are finding with the more active areas. What about Barber coinage? We can assure you that there is a very quiet movement in this area. You may not notice the collecting activity but it could suddenly jump up and get real hot. Also, we have not seen major advances in Seated Type as of yet. There are buyers putting these coins away for the next big push.
What about all those million dollar coins that sold last year? There were 11 known million dollar coins changing hands in 2005. From Brasher Doubloons to a 1927 D $20 Saint to a 1894 S Barber Dime, these record-setting coins brought the news media out in force adding even more interest to numismatics. The history, the lore, the collecting spirit has taken the country by storm and we veterans of the industry are the beneficiaries. We are in a position to view all the glamour and glitz that has been present in the art world for so many years. If we are not careful, we may start to be mentioned along with stocks and bonds.
Further, 2006 looks like it has the potential to outperform an historic 2005.
Happy New Year to all.
NumisMedia is the Official Price Guide of NGC.
Thomas M. Pilitowski
U.S. Rare Coin Investments
P.O. Box 496607
Port Charlotte, Florida 33949 Tel: 941-629-4765 Fax: 941-629-6532 Toll Free: 1-800-624-1870 Email:firstname.lastname@example.org