Get ready to be shell shocked when your winter heating bills arrive. I have seen a number of estimates of the expected percentage increase for the average home owner. None is encouraging. They are all very large. They all will pinch the average budget. The one that most sticks in my mind forecasts a 70 percent hike. As with all forecasts, it could be more. It could be less. I am betting on more, or more correctly phrased, I will suck in my gut when the bills start arriving and will try not to be shocked at the large numbers. Good luck to all readers trying to meet the expense. We will all need to make adjustments.
How will Americans pay these bills? Some will simply be overwhelmed. Virtually everybody else will be cancelling or scaling back other expenditures. Any collector going through this exercise might be tempted to scale back his hobby expenditures. I cannot fault this sense of responsibility, but I would like to point out some other factors to consider.
I started thinking about this when I heard word around here in Iola that a fellow (a noncollector, or at least not a regular collector) was supposedly selling off some coins that he had inherited from his mother to get some cash to pay his expected heating bills. You know how small towns are. We talk. Word gets around. Notice I am not naming names.
Is selling off coins a good idea? Is suspending your regular hobby purchases a good idea? I don’t think so on both counts.
I have historical reasons to answer no to the first question and I have what I think are compelling personal reasons for answering no to the second.
Coin prices went up during the 1973-1974 oil pinch and again in the 1979-1980 crunch. Wouldn’t you feel somewhat upset with yourself if you sold off some coins to meet current bills only to see them jump higher by substantial amounts in future years? I would. If we indeed are condemned to repeat the pattern of the 1970s, it would be far better to hang onto your collection and get the benefit of the general inflation that likely will accompany rising oil prices. Sure I know some pundits think that oil can somehow be walled off from the rest of the economy and its increasing price will not feed a general inflation. I don’t buy it. In fact I wrote a column dated Oct. 12, 2004, on the day oil first hit $50 saying the lesson of the 1976-1980 gold boom was that we shouldn’t be surprised if oil went substantially higher. I got a “aren’t you cute (read gullible)” type reaction from a stock broker, but the unhappy news is that so far I have been right. (Naturally, it would have been easier to swallow being wrong in that column rather than experience my current weekly encounters at the gas station.)
The good news, though, is if I am wrong about a general inflation, it would likely mean that oil (and natural gas for that matter) is no longer spiking. If that is the case, the proper response again is to keep your coins. Either way, the historical record says keep your coins.
That takes care of the selling your coins question. Now how about suspending purchases? I have written many times in the past that the best financial outcomes for any collector is to methodically assemble sets over many years.
These collections sell for more money than hodgepodge accumulations. Your cost basis is also likely to be more reasonable because you aren’t chasing hot items at market tops and you don’t give up buying at market bottoms. You just keep working at it. This diligence is rewarded at the end of your hobby career. If you suspend your buying now, you are acting counter to this natural dollar cost averaging. It also leaves you open to the possibility that you won’t start again at a good time, or you might never restart at all. That wouldn’t be good. This is your hobby. You derive pleasure from it. It helps you relax. It keeps your mind sharp. While these benefits may be unprovable by me, in your own heart you know the answer.
My answer is put on a sweater and escape into our hobby world. Don’t drag that world into the cold, and I do mean cold, problems of the coming winter. You’ll thank me in the year 2023.