Sperber expects strong second half

This article was originally printed in Numismatic News.
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Editor’s note: The following market commentary was posted July 11 on the Legend Numismatics website at www.legendcoin.com/cgi-bin/inventory/cms2.pl?page=market_report.

Even though it was very volatile, the first half of 2010 was pretty amazing in the coin market. Gold hit an all-time record price in excess of $1,200. A new “world’s most expensive coin” was crowned when the 1794 $1 Professional Coin Grading Service MS-66 sold for $7,850,00. We witnessed many coins hit record price levels at auction. And the hobby took several huge steps forward to self police itself (we still have a long way to go in that area). In all, we saw a lot of positive events happening.

We’re going to step out on a limb with a bold prediction. The second half of 2010 will be the strongest on record barring any major catastrophes or gold suddenly taking a prolonged plunge.

We can say that with total confidence from being a real insider in the marketplace. If you thought that hamburger ad from years ago: “wheres the beef?” was dramatic, then just watch as time goes on and everyone asks, “where are the coins?”

Right now there are many series we could not start or even finish MS-64 or higher sets in. Gone are the days when we’d be offered one or two truly gem Bust halves or rare high grade Morgans at a show. Rare gold? First, you have to wade through all the dreck to find the nice properly graded coins. Even then you won’t find many that are truly rare. Demand is not slowing one bit. The hobby’s standards have changed back to the original ones that meant a gem is a gem.

To set the momentum, we believe that this year’s Boston American Numismatic Association show will be the best show ever. There has not been one held there since 1982 – and that was a great show. Pent-up demand in the area sure will help. People forget, back in the late 1960s to late 1970s, Boston had been the heart of numismatics. There are still many great collectors and incredible collections hidden up there. Plus, it seems everyone knows someone who lives there. We have heard of far more people going to attend than last years disaster in LA.

The coin market is actually quite healthy. Supply does not exceed demand. And demand is not weak. We think a small problem that does exist (and always has) is the fact no matter how many times you tell people, the coin market is not like the stock market. Yes, it is volatile on a short-term basis, but you cannot expect it do rise 10-15 percent every year. In reality, coins are a very long-term hold. Even we have said five years, but realisitically, its more like 10+ to feel the full effects. Just study the great old-time collections. They put coins away for 30+ years and they blew away all other investment returns when they sold. The better the collector, the better the return.

Our optimisim is not a case of a dealer hyping the market. In case you haven’t noticed, Legend’s customer base is affluent and can buck market trends easily, so we do not need to hype anyone or anything for sales. We see what really goes on and we report it to you like it is.

The first half of 2010 we unexpectedly had record sales. In June alone we sold $10 million! That’s a real number. In fact, in a few weeks (before the ANA show) we will be making the first of several major announcements concerning major acquistions or sales we have done recently. If we could find the coins (we’re not even talking about the big game trophy stuff), our sales would be $20 million immediately.

Gold
Geez is this market crazy. The swings gold has taken recently have even stumped the group we call “forever gold bugs” (if gold is up, they say it will never stop going up; if it’s down, they buy all they can). We have still seen the bottom line of the large players continuing to stay their courses and buy.

In the recent Heritage Summer FUN auction, all MS-66 CAC $20 Saints sold for $3,750-$4,000. In fact, all CAC gold sold well above the current levels. You know it was not dealers buying the coins (for a fact we know of two major groups who are buying only CAC MS-65 or better generic-semi-generic gold). The quality does indeed make a huge difference in the case of gold coins. These days its easy to tell why one MS-66 Saint is $2,700 while the others sell for $3,750 or more. Do not think for a minute the cheaper one is a bargain – we have a saying, “sometimes cheap is not cheap enough.”

Our feeling is gold is good to have to balance out a portfolio or as a safety to store some of your wealth. Several collectors we know have bought rare gold coins as their hedge. We all know the government is printing tons of money and is just adding to its debt load every day. Still, you must be aware, that gold can have a very bad day or week and lose a heavy percentage. Only buy if you can stomach the ride. As of today, all the major players who were buying before July 4 are still in and have not changed their purchasing goals.