Rising interest rates just might be good for the numismatic auction market.
That is the point of a conversation I had with paper money auctioneer Lyn Knight yesterday.
I stopped by his table as I walked around the bourse floor of the Florida United Numismatists convention as dealers were setting up.
Knight very bluntly said paper money auction results were down in 2016. This is not because the market is weak and individual note prices are lower. Quite the contrary. Auctioneers like him would dearly love to be able to bring fresh matierial to the market. This material would bring good prices.
But in 2016 there was a general reluctance by collectors to put their holdings up for auction.
At this juncture in our conversation Lyn made his point about rising interest rates.
I was puzzled. I asked him to explain it.
He replied that I should imagine that I had a million dollar collection and that I was 70 years old.
I sell it. Where do I put the proceeds?
At such a time in life, most people look for safety.
If I deposit the auction proceeds in a bank, I would earn almost no interest income.
Since there is little to be lost in potential income, why not just hang onto the collection a while longer?
This was the decision being made last year by many potential paper money auction consigners.
So, if interest rates would rise and offer greater rewards for people who want a safe place for their funds, this might entice those fence-sitting collectors into finally consigning their notes.
Interest rates were not the whole story for last year's auction results. Lyn said life events like death, divorce and taxes also push notes into the marketplace.
But for those collectors who think they have the time to wait, 2016 was the year many did just that. They waited and auction sales results fell.
Things are going to be different this year, Lyn said. In his conversations with potential consignors show that people are thinking differently.
He will probably be right. Nobody can last in this business for over 40 years as he has without being on the ball regarding what his customers are thinking and doing.
Thanks to our conversation, I have learned something.