Gold bugs make Long Beach a hot venue

Long Beach (held May 28-30) is a funny kind of show. The past few years we have been complaining how the show is dying – and that was during one of the strongest and longest bull markets we have ever experienced. Today, with a clearly weaker market, the show is starting to thrive again. Even management made an announcement on Thursday that attendance was up by 30 percent over last year. Go figure ...

Heavy Thursday public attendance definitely was the big surprise. It was the biggest crowd we remember seeing in three to four years. We saw many old friends. People we haven’t seen in years stopped by our table to chat or do some business.

Interestingly, most commented about the rise in the price of gold, the treacherous stock market, and the generally bad economy made them reconsider buying coins again. Also, they almost all felt that prices were reasonable again.

Legend had a great show
For us, the show action started Wednesday morning on a dealer-to-dealer level. The first two dealers we sat down and showed coins to bought well into six figures. By the end of set-up we had sold a record three coins over $10,000 and five coins over $25,000.
Wholesaling remained very strong for us through the closing of the show Thursday. We did a little bit on Friday and left early Saturday (yes, we are guilty – but we had been out in Los Angeles a full week already due to auctions). All the sales were a complete surprise as we had expected very light activity.

Selling for us may have been made easier by the fact we had many fresh, high grade, and rare gold coins from the extensive LV Collection of Gold Rarities we are exclusively handling. Dealers clearly wanted gold. All the coins over $10,000 we sold were gold rarities. Interestingly, none of the coins we wholesaled were “crack-outs” yet we were able to sell them for strong premiums.
Retail-wise, our sales were good. There too, most sales were for better gold coins.

2009 California gold rush
Of all the shows we attend, no other seems to have as many gold bugs as the Long Beach show. This show they clearly came out in force. These collectors, investors, or whatever you like to call them, are amazingly loyal to the gold market no matter where it is at. On Thursday of the show spot gold jumped to $960. The floor was just littered with gold bugs looking to buy. If you had any decent selection of gold (generics, rare pieces, whatever) you could have sold them! From our point of view, we did not see price as an negative or obstacle with the buyers.

Until the show, demand for most generics was soft and the premiums were slowly falling. With the retail demand at the show (and the fact gold jumped about $40 during the show) revived generic gold demand and prices. There is no major spike up, but more like a steady moderate crawl.

Buying
There were no big fresh deals that we know of from the show. Both PCGS+NGC were tight, thus few coins were made. If you got offered a good coin and walked away to think about it for even a little while chances are it was sold by the time you came back.
Even with over all prices off 25-30 percent the supply of neat coins is at its lowest level we believe we have ever seen. If a huge fresh, nice and rare collection worth something like $50 million were to hit the market, it would all be immediately bought up and not even cause the market to hiccup. Sometimes we feel all we are doing is spinning our wheels looking at recycled dreck. Our want lists are crazy huge and they have been unanswered for months.

Our keys to being successful buyers in today’s market are the same keys collectors should embrace; do not be afraid of the market, pay up for quality and never let a great fresh coin out of your sight. Also, do not burden the seller – make the purchase an immediate clean, cash transaction.

Finally – a more level playing field
Over the last few months the grading services have taken an extra strong stance on quality. It is now clear that dealers do not rule them anymore and the services are in a full war with coin doctors. We saw and heard more whining at this show about full downgrades from the crack-out dealers. The days of them having a great shot sending in a -65.6 or -65.7 coin for an upgrade are clearly over. That coupled with uneducated investors not buying like drunks allows for more reasonable and realistic pricing.
Many collectors who were phased into the background over the past two or three years due to soaring prices have certainly taken notice. A few are even buying again. Now collectors can go to an auction and buy what we call product (a nice -65.6 widget) for the proper money, not the top end of the next grade up. Plus, the crack-out dealers are so spooked they are not taking all the great coins like they used to on first shot from dealers inventories. Real opportunity has returned for the collector.

Dreck is still a major problem. As we have mentioned many times before, not only has the stuff dropped more than 60 percent, most dealers won’t even make offers. The services are making a strong effort to rid the marketplace of inferior product. Even the auctions (which are notorious dumping grounds for sludge) are shrinking in size. The dreck is still holding down the values of the good coins.

Summer should be OK
We still believe the Central States show will end up as being the bottom of the market. Activity at CSNS was nearly zero, even selling a stunning gem widget at the published bids was nearly impossible. You also had a major auction overshadowing the market. Dealers at that show were also desperate for direction as well as cash.

Obviously, the Long Beach show was the total the opposite. We did not hear any complaints about the market – just complaints about grading.

It is our opinion that the typical summer slowness this year will be light to moderate. Even though people are holding tight onto their money. They are still looking for places to put some. The coin market has now proven itself to have a much broader collecting base than previously thought and a strong resistance to price drops.

We only expect the time around July 4 to really be quiet. We do not see any major upcoming price rises unless the marketplace is suddenly flooded by a large group of whales or crazy investors come back.

What’s hot and what’s not
We have heard and read a lot of gossip about our comments in this section. Keep in mind, our observations are as we see the market at a specific show only. Legend is a full-time dealership that has extensive contacts with all major market movers and shakers. Plus, we attend every major auction. We do very much know what is selling, who has customers building sets and so on.
For someone to make a ridiculous comment like, “I know of an open offer of $150,000 to buy any 1909-S VDB in PCGS MS-67RD” does not make a market hot. If there is a line of several people wanting to buy 1909-S VDBs in MS-67RD and raise the price at a show – that to us represents a hot market. We can easily say we have two people who will pay $5 million for a Class I 1804 $1 – that does not make it a hot coin.

What’s hot
GOLD, GOLD, GOLD! Generics are even starting to dry up again. Better gold is selling extremely strong to both collectors and dealers. MS and PR Walkers in all grades. Commems. There are several major dealers who are finally trying to buy them in quantity. 20th century silver MS type in gem. Early original copper (half cents and large cents).

What’s not hot
Three-cent nickels MS and PR. Lincoln cents! Any dreck – this stuff hasn’t just fallen 60-70 percent – dealers don’t even want to make offers on the stuff! If you are paying a premium price, make sure what you are buying isn’t overgraded, messed with or low end.

Laura Sperber’s comments can be found online at the Legend Numismatics Web site at www.legendcoin.com.