I first thought about writing this last week and when the question of “what are my expectations for the September Long Beach show?” popped into my mind, the immediate answer was short and sweet: “Expectations? I have no expectations.” But that was before gold made its inexorable sprint towards $1,000. Suddenly, the no-go coin show might grow some legs.
Do I think that $1,000 gold is going to bring a stampede of buyers into the show? Possibly but this answer has a big asterisk. And this asterisk is as follows: there will probably be a larger than average crowd at Long Beach but that vast majority of these people will be browsers, tire-kickers and lookie-loos. Will some of these newbies (or resurrected buyers) come prepared to spend? Possibly but I would assume that the typical man-off-the-street at Long Beach is looking to buy a Saint or two and not a piece of Proof gold or even—gasp!—a Dahlonega half eagle.
The most noticeable effect of gold’s sudden spike will be felt on the wholesale level.
Many collectors don’t realize this but gold prices have been driving the wholesale coin market for quite a few years. The reasons are simple. Many of the biggest players in the wholesale rare coin market are also big players in the generic gold market. They have clients who are marketers and these marketers sell a lot of coins like MS65 Saints and MS63 Indian Head eagles. When the gold market is hot, orders for these generic coins skyrocket. The position of generics that the wholesale dealers own suddenly increase in value and cash flows improve accordingly. And fat, rich, happy coin dealers tend to buy more rare coins.
The retail segment of the market tends not to realize that dealers, in some ways, are the biggest coin weenies of them all. Every dealer has a list of dates or types that he/she is a sucker for and they will buy these coins purely on “spec” just because they like the coin. As an example, I am willing to support the market for a coin like an 1861-D gold dollar not because I necessarily have it pre-sold but because I like the story behind the issue enough that I want to own nice examples of this issue when they become available. But in a generics-on-steroids market like what we are in right now, dealers who typically might pass on an 1861-D dollar could have interest in this coin.
The serious, hard-core collectors that attend every Long Beach show are probably not going to feel a lot of difference between this show and any of the past ten editions. As usual, they will see a lot of “stuff” in dealer’s cases and very few neat or fresh coins will be available. When they go up to the larger dealer’s tables they might not get the undivided attention they got in the past because many of these dealers will be busy doing generic gold deals. And I predict that at least five collectors will storm away from the concession stand because they are outraged at paying $4 for a small bottle of tepid designer water.
For gold collectors, the pre-show and Long Beach auctions don’t have a ton of interesting material available. Now, if I were a Large Cent collector the coming week would be Penny Nirvana as Goldberg is auctioning two of the greatest Cent collections of all time: the Dan Holmes set of early dates and the Ted Naftzger late dates. I expect that prices in these sales will range from strong to absurd and with good reason: these are two simply amazing groups of Cents.
Most dealers I’ve talked to in the last few weeks say that their rare coin business has been pretty slow since ANA. I would attribute this more to the end of the summer/adjusting-to-get-the kids-back-in-school-time period than a slowdown in the market or the economy. While I don’t think the coin market has totally “recovered” from the slump of earlier in the year, I do think that the next few months will be strong(ish) especially if gold continues to increase in value. And I’m thinking that 2010 could be a very, very good year. But more on that in another blog....