CNP Inc, Customized Numismatic Portfolios, Inc.

Special July 2020 edition

IMPORTANT UPDATE: Rare Coins and the Economy, Special July 2020 Edition

Rare Coins and the Economy, July 6, 2020

Coins, Covid, and Confusion

To many, the world seems upside down. The impact of Covid-19 infections, the even more impactful economic shutdowns, demonstrations and riots that followed, the upcoming national elections, and the endless 24/7 news feed on radio, television, and social media combined with the stress and strain of population lockdowns, and a seemingly endless cascade of statistics, studies, predictions, self-promotions, and political agendas have created an atmosphere of fear, overwhelm, and uncertainty.

Let’s put this all in perspective. The world is not going to end. Armageddon is not happening.

As we witness these historical events, bear in mind that this too will pass. All of it. Reality recreates itself every moment. The law of unintended consequences remains in effect, and will continue operating, just like gravity and the other laws of physics. I am reminded of a letter the poet John Keats wrote to his brother about what he called “negative capability,” defined as when someone “is capable of being in uncertainties, mysteries, doubts, without any irritable reaching after fact and reason.” We could all use a big dose of that!

All things are not necessarily explainable at all times. That goes double for the myriad “expert” opinions and predictions that often contradict each other, prove untrue, or defy logic. The good news is that there is no need to explain them, at least not now. Let’s leave that to the historians. The real need is not to understand the flow of this river of events, but rather to inflate your life jacket, and stay on top of the rapids. How does this impact the rare coin and precious metals markets? Let’s start with some facts.

There have been virtually no coin shows since early March. A handful of small (i.e. vastly scaled back) shows are scheduled in July, but whether they will happen or not is uncertain. In any event, it is doubtful that any major shows will happen until September at the earliest, and perhaps not for the rest of 2020. This has put a major crimp in the system of buying and selling of coins because shows are where wholesale trading between dealers helps dealers obtain the coins their collector and investor customers want, and also enables dealers to turn the coins their customers are not demanding into cash which they can use to buy the coins their customers do want. Thus, wholesale (dealer to dealer) trading helps with what is perhaps the most difficult part of a dealer’s job: finding the right buyer.

One result is that most dealers have experienced significantly reduced sales numbers, which means their customers are not getting the coins they want. The inevitable second result is pent up demand on the part of collectors, and this is growing greater as time goes on, because dealers simply do not have sufficient inventory of the right kind for their customers. This has incentivized dealers to empty their vaults of all those coins they have purchased, but up until now, have not taken the time to prep for sale.

One note to insert here: Despite the fact that 20 million people or so are out of work, the main impact has been at the lower economic rungs. While there are some coin buyers here, especially for low end coins, the economic turmoil does not appear to have financially affected the vast majority of coin buyers in any permanent way. This is causing increasing collector pent up demand.

Meanwhile, the Fed is pushing literally trillions of dollars into the economy through the stimulus and loan programs. The number could potentially reach as much as $10 Trillion. Even a strong economic recovery will not be able to absorb all the increased liquidity. The almost certain result is monetary inflation, which could lead to a strong upward surge in gold and silver prices, and I expect that rare coin prices would also push up correspondingly, not just with high grade generic gold, and better date Morgans and Walkers, but across the board.

Meanwhile, despite day to day volatility, precious metals prices have remained relatively stable. Because of the disconnect of spot prices to physical prices, it seems that each time gold and silver drop in price, the premium for physical metal increase, and each time gold and silver rise, the premiums decrease. This is how supply and demand markets are supposed to work, and they are hard at work in the precious metals area. This stability despite the economic challenges indicates that as the economy opens up, and consumers feel more confident, demand for precious metals are very likely to rise.

This could be a truly strong move, because it would reflect not only inflation, but also the pent up collector demand which, when we dealers figure out how to navigate the wholesale market more efficiently, is likely to soak up a tremendous amount of inventory, forcing dealers to raise their buy prices in order to obtain the coins their customers desire. Some dealers are already taking advantage of a very slight softness in price caused in large part by the changes in the way business is transacted to buy desirable coins in anticipation of upcoming price increases. However, many of those low bids are simply not being filled, and rare coin prices, for the most part, remain steady.

Until we send out the next copy of the Rare Coin Report, I will be sending periodic updates by email. And despite all the craziness, Customized Numismatic Portfolios, Inc. remains in business, buying and selling rare coins and precious metals. For the time being and until further notice, I am keeping regular office hours from 9am to 12, Monday through Friday. However, I am often in the office in the afternoons, and due to the current environment, I have arranged to pick up on weekend calls as well.

Stay strong, stay resolute, and when you can, please put a smile on your face!

My Regards,

Lawrence Goldberg
Owner
Customized Numismatic Portfolios
800-334-3325
Lawrence@CNPcoins.com

Customized Numismatic Portfolios, Inc.

Customized Numismatic Portfolios, Inc. is a proud member of the following professional numismatic associations

Website: Computer Therapist Consulting