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My annual forecast looks good after six months

Gold dropped $9 yesterday and silver fell also.. It got me thinking about the Class of ’63 column from the Jan. 30 issue of Numismatic News. I made 10 predictions for 2007.

These predictions were delivered Jan. 6 to a meeting of the Sarasota Coin Club held in conjunction with the Florida United Numismatists Convention in Orlando.

I am feeling pretty good about the list so far. I nailed the sellout for the First Spouse coins, but I hedged the big one, the possibility that the coin market has topped out and the boom is over. I stated it as a question.

My sense of gold and silver weakness I am also still comfortable with. I don’t like forecasting weakness in precious metals because I know what weakness does to the coin business, but it is what it is. I won’t get a medal for it even if I am absolutely right down to the last decimal point.

Weakness in current gold Buffalo proof coin sales is also what I predicted back in January. Will it finish out at a level I forecast? We have a long way to go yet.

At the end of this blog I will put the full text of my Jan. 30 column so you can see for yourself.

Nothing is absolutely out of the question yet. That’s not bad for six months into the forecast period. What do you think?

What follows is the column text:

I had the privilege of speaking to the Sarasota Coin Club Jan. 6 during the Florida United Numismatists convention in Orlando. This is my second year in a row. That means either they liked what they heard last year enough to invite me back, or I’m just a soft touch.

Perhaps it is my friend, Bart Bartanowicz. He is a member. He made the arrangements. He asked that I offer 10 predictions for the year 2007. I said OK.

Sarasota is a great club. More than 100 members came up to Orlando on a bus that FUN paid for, one of two clubs for which this was done. I appreciated a large audience and their attention and participation.

I hope you find what I told them to be interesting.

My first forecast I put in the form of a question. I said when you have grey hair, you have memories. One of mine is the peak of the market in 1980. I asked whether we would see the end of the current run-up this year. To illustrate, I said the 1913 nickel did not sell in the Jan. 2 auction. While nobody rings a bell when the market peaks, we tend to look backwards and find something to pin it on. In 1980 it was the January peak of gold and silver prices. At the time, we did not recognize it as the end of the boom. However, by the time the Central States convention rolled around in April in Lincoln, Neb., it was obvious the game was up for a while. Poor Lincoln got the reputation as the place the market died and Central States has never been back.

For prediction No. 2, I said that the consolidation of the industry will continue and may even accelerate. This is a phenomenon of prosperity, where the big firms gobble up the smaller ones. It is also an action of a firm that is in trouble. David Hall at his lunch Jan. 5 warned the attendees not to borrow money to hold inventories/collections. If a warning is needed, do we have a problem?

I picked my Jan. 2 column bullion forecasts for No. 3. I said gold would end the year at $600. This looked a little bit daring when I wrote it in December, but a $35 drop in gold at the start of 2007 made it seem almost like yesterday’s news.

Prediction 4 was my silver forecast of $12 by the end of the year.

Forecast No. 5 is a plunge in the number of proof Buffalo gold one-ounce coins in 2007 as compared to 2006. I said sales will run at about one-quarter the rate of sales in 2006 because of the first-year-of-issue demand disappearing. This puts the sales total at 60,000 pieces. If I take the maximum number for 2006 of 300,000, a quarter of that is 75,000 pieces.

Forecast No. 6 is a market feeding frenzy for the First Spouse half-ounce gold coins in May. Their limited mintage to be set by the Treasury will attract the low-mintage, new-issue crowd.

No. 7 is that average collectors are going to have a great year. With book and Internet initiatives set by my company and others in the field, there has never been a better time to be an average collector. There is more information and shared knowledge out there than ever before.

Forecast No. 8 is the likelihood of more lawsuits. Legal actions follow profits. The coin business has been good in recent years and there will be attempts by some to use the legal process to share in the bounty.

My predictions 9 and 10 are tied together. I said this year will see the adoption of new compositions for the U.S. cent and the nickel. I further went out on a limb and said there is a strong likelihood that the new compositions will have steel centers, using a Canadian bonding process. Perhaps the U.S. Mint will not like its suppliers to use licensed technology, but worse, the Mint and its congressional overseers do not like spending more than face value to produce the denominations. Both denominations will continue to be made.

What do you think? Am I off the wall? Am I too cautious? Only time will tell, but I was pleased by the reception given me by the members of the Sarasota club. They are a great group.