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Use your collector edge

The connection between the bullion coin market and the numismatic coin market has always been about cash flow.

When the commercial sector of numismatics is busily selling gold bullion coins and earning money, the funds generated often flow into collectible coins as well.

But because there are two major motivations to buy gold and silver, the impact on the numismatic market varies.

The better impact comes from the inflation trade. When buyers are busily planning their hedges against price hikes in the general cost of living, the psychology seeps into numismatics.

Why not buy a few more collectible coins as well? Their prices often rise with inflation.

The impact that is less helpful and depending on degree can be outright harmful to the numismatic business is the fear trade.

When gold and silver are being bought as a hedge against future calamities, prices can rise strongly. But fearful people do not tend to buy collector coins to the same degree as they would buy them in normal times or inflationary times.

Worse, they tend to overpay for what bullion they are buying because reason goes out the window.

Why worry about a few extra percent when the sky is falling? Give me the bullion now.

Well, those few extra percent often make a big difference over time.

What kind of trading is going on now?

Fear seems to be the operative word on the financial websites.

This is confirmed because copper has been falling in the past week while gold and silver were rising.

Copper benefits from improving demand in both a normal and inflating economy, but who needs it for long-term economic improvements when the general outlook is catastrophe around the next corner?

Fear is no friend of copper.

For coin collectors, it is time to look for deals. It is time to rely on long experience. It is time to be wary of markups that are too high.

It might also be time to look at the coin series that are not made of precious metals. The crowd is paying less attention to them now.

But the basic collector impulse continues. The hobby that existed 10 years ago or 50 years ago will also exist 10 years from now and 50 years from now.

In times of fear, that and the edge provided by long experience are reassuring.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper “Numismatic News.”

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