What’s the best thing that can happen to the coin collecting hobby?
What’s the worst thing that can happen to the hobby?
Gold and silver stop soaring.
How can that be?
I think of this paradox when metals move dramatically in one day as they did on Friday.
I would say that anybody who lived through 1980 can’t help himself. When the upturn ended, it really ended and the fall was swift and severe. The thought that a drop like that is still possible crosses my mind on any day bullion prices swing lower by more than a few dollars in the case of gold or a few cents in the case of silver.
Survivors of the stock market crash after Lehman Brothers failed in 2008 will understand this especially well since their financial wounds are fresher.
However, for the hobby, during a prolonged metals up trend, dealers get used to the cash flow generated by buying scrap gold and silver and selling bullion coins to investors.
Collectors get used to every purchase of every new gold or silver issue eventually looking like a stroke of genius.
In this environment, price swings in metals can almost overwhelm the collector impulse.
This does not mean that collectors stop collecting, but they can get distracted. Why buy a Buffalo nickel today for your collection in the expectation of doing well over a 20-year hobby career when you can put the same money into something of gold or silver and make the gain in six months?
Rapid price drops, on the other hand, feel like burned fingers. Buyers who bought too much bullion denounce the numismatic hobby in no uncertain terms and declare they are swearing off collecting – forgetting that making bets on bullion is not collecting.
The best conditions for collecting are when precious metals are in a mild up trend. Buyers then tend to focus on the underlying collector values and act accordingly. Dealers have more time to sell collector coins. Their shops aren’t packed by people seeking investment advice
It is the best of both the bullion sphere of interest and the collector realm.
But does this perfect world ever last long?
Ah, that’s the problem. It doesn’t.
Buzz blogger Dave Harper is editor of the weekly newspaper “Numismatic News.”