I have some of my best ideas in the early morning between the time I take my first sip of coffee until I finish shaving. I often come into work and start a conversation with co-workers with the preface that I had an idea while shaving.
If you want to know how often that happens, I guess you will have to talk to Dave Kranz.
Anyway, this morning a number of things were rattling through my brain as the Monday morning routine unfolded.
One of the interesting comments made by Dwight Manley during his hearing testimony in Long Beach, Calif., May 29 ,was that he regularly loaned money to Don Kagin so that he could do deals. Interestingly, he said he loaned the money at “high rates of interest.” He did not say how high was high. It was a point that didn’t play a role in the greater question at hand, but it found a hook to hang on in the back of my mind.
This particular hook was right next to the hook where remarks made by David Hall in January were mentally placed. At a talk at the Florida United Numismatists convention, Hall warned against buying too much on borrowed money and noted that he was a lender.
There is nothing unusual in the lending of money in this business. The question is what percentage of the business is financed in this way this year as compared to 10 or 20 years ago. If the percentage of the business financed with borrowed money is greater now, that would make numismatics more susceptible to the ebb and flow of business conditions generally.
I remember when gold buyers and coin buyers used to scoff at every increase in the prime rate in the late 1970s. Rather than retard their business, rising interest rates seemed to egg buyers on. Prices kept rising. Deals kept getting done. Of course, when rates hit 20 percent, even the scoffers got brought up short, but this was more the secondary result of the free-fall in the economy than with buyers cutting back because the money that financed their deals cost more.
So what’s my point? Well, if numismatics is dependent on borrowed money to a larger degree than formerly, then the fact that interest rates jumped last week to 5.10 percent on the benchmark 10-year Treasury note might be a signal that the current party might be closer to ending than what similar financial conditions might have induced years ago.
Are you a more enthusiastic buyer today than you were last year at this time or six months ago? Let me know at firstname.lastname@example.org.