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Trophy coins rise with economy


It is common as a new year begins for various writers and speakers to opine on what they anticipate for markets in 2015. Let me start off first by saying that I don’t know what will happen to the numismatic and precious metals markets in 2015. However, I do have some opinions on what factors will directly and indirectly impact these markets this year.

Of overriding impact, especially on the U.S. markets will be the overall strength or weakness in the economy. I am already seeing stories proclaiming how well the U.S. economy will do in 2015. To the extent that this may occur, the market for high-end (what I call “trophy”) numismatic items should continue to do well. There may be a reversal of some weakness in other U.S. numismatic markets. And, if the U.S. economy is strong, gold and silver prices may languish.

However, the various reports I have already read about what is coming for the U.S. economy in 2015 have serious flaws. Let me take as an example a story that appeared in my local newspaper yesterday. It was titled “Why the U.S. will power the world economy in 2015.” The author is Christopher S. Rugaber writing for the Associated Press.

In my judgment, Mr. Rugaber has about half of his information correct. As for the other half, unfortunately, he reports at face value U.S. government statistical data accurately, but he apparently doesn’t realize that this data used for the basis of his conclusions is inaccurate. This is not to pick on Mr. Rugaber. It is what mainstream financial writers do.

Let me give you some examples. He reports that the Bureau of Economic Analysis stated that U.S. Gross Domestic Product grew 5 percent in the third quarter of 2014 and that this is positive for the 2015 outlook. What Rugaber missed is that the Commerce Department changed the methodology to calculate GDP, beginning in the second quarter of 2014. The result of this change was to report a GDP that was about three percent higher than the old methodology. Yet, the author did not discount the result for the change in methodology in order to make his data comparable to prior periods. Further, Rugaber also missed that the largest component in the rise in third quarter 2014 GDP was a 20.7 percent increase in health care costs. I don’t see how paying higher medical bills translates into people being better off.

Although the author does state that U.S. exports only account for 14 percent of GDP, the lowest percentage among the world’s developed nations, he thinks lower oil prices will only have a positive impact on the United States. He doesn’t acknowledge the financial difficulty that lower oil prices will have on the formerly fast growing U.S. shale oil industry, which was largely financed by debt instead of equity. There is a significant risk that many billions of dollars of such debt will default in 2015, with the result that banks, directly or indirectly, could suffer like amounts of losses.

As workers at shale oil companies, oil industry support companies, railroad oil tanker car manufacturers and the railroads themselves lose jobs as operations are trimmed, how does that help the U.S. economy grow in 2015?

The U.S. dollar was the world’s strongest global currency in 2014, with gold coming in second strongest. There are major efforts under way to eliminate the use of the U.S. dollar from many more international transactions that will come to fruition in 2015. Others, including Rugaber, totally ignore how much this will hurt the U.S. economy this year.

The foregoing just scratches the surface of misleading financial data that is being fed to the media and eventually to the public, including investors. To the extent that the resulting forecasts paint such a rosy picture, American consumers will tend to spend more than they would if they were presented with accurate overall shaky financial numbers. So, to start 2015, I anticipate that the numismatic market will hold steady or improve slightly over 2014. Precious metals prices will likely be quiet – until it becomes obvious that the economy and the U.S. dollar are not as strong as touted.

However, as the year progresses, it will become obvious that the U.S. economy has deeper financial problems than the public are being led to believe. Government officials can claim that the number of Americans with jobs is increasing, but the lack of increase in Internal Revenue Service payroll tax collections belies that claim. What the politicians and bureaucrats are not telling the public is that there was a huge loss in full-time jobs in 2014 while there was a large increase in part-time employment.

As the U.S. economy fails to meet the rosy 2015 forecasts, consumers will pull back on spending even further. When this happens, the discretionary numismatic purchases will suffer along with almost every other discretionary expenditure over the balance of the year. When the US dollar weakens, as I anticipate, that will spur demand to acquire physical precious metals.

Unfortunately, there are a few positive and many negative developments that could come to pass in 2015. I expect much more financial volatility this year than normal. Traditional rules of thumb about investing strategy will be almost useless this time around. When the Chinese wish you, not necessarily in a positive spirit, to live in “interesting” times, I think 2015 will turn out to be such a year.

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at Other commentaries are available at Coin Week ( and He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” ( radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at

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