What does the explosive growth in the issuance and sale of colorized precious metals coins mean for numismatics?
That question was on my mind for the entire week I was in Germany to attend the World Money Fair in Berlin.
These coins often are made of silver. They have clever design themes. They are beautiful. I can’t say enough good about them.
But they usually have high price tags to go with all of their beauty and history and I wonder if the buyers of these coins are true long-term collectors, or if they are newcomers to precious metal investing and don’t know any better.
Collectors who buy what they like will make long-term assets of these colorized collector coins. Untested bullion investment buyers could become a running aggravation.
The office still gets telephone calls from buyers of Franklin Mint medals made in the 1960s and 1970s. The callers want to know the value of what they have been sitting on for four decades or so. We tell them bullion value. During periods when bullion is high, this is enough. When bullion is low, it is a reply to a question that devastates.
Will future callers be concerned with 50 or 100 colorized silver coins that they bought in 2013 for two or three times bullion value?
That haunts me.
Silver will have to go to $100 a troy ounce to help these buyers do better than break even. I know investment advisory letter writers solemnly declare that this will happen. But it might not – at least for a very long time.
The collector market could step in and fill the gap. If colorized coins are this generation’s big thing, all of my worries will be for absolutely nothing. A secondary market will develop. Some coins will be scarce and have values to match. Others will be more common and have lower prices. Still others will be worth the bullion they are made of. But all that at least is due to the workings of a mature and defensible secondary market.
But that market has not yet had much time to develop, so as an old-timer I can both be dazzled by the creative energy that is fizzing through numismatics and worried about it. It is exciting. I can feel it.
Everything about it makes me want this story to have a happy ending. Newcomers become old-timers like me if they stick with it.
Exciting innovations become the new normal. Remember, third-party grading had to prove itself when it was introduced in the United States. Ironically, many Europeans are of the skeptical mind set about graders that would be familiar to an American collector of 1985.
New things like third-party grading have become necessities.
Will the same happen with colorized coins marketed during the present bullion boom?
I cannot say with any certainty.
I know I am not the primary buyer of colorized coins. All I am is a collector who is impressed with something new and I hope it is a great success.