Soft Spots in the Collectible Coin Market

Analysts for the fine art market recently forecast that, beyond the top-tier paintings about to be sold, their market is becoming increasingly soft. Higher interest rates, inflation, and the uncertainty of financial markets were cited as being problematic.

This analysis appears to have become a co-incidence barometer for the coin market. The top tier, the true rarities that come with a history and are accompanied by serious demand, continue to sell for strong and sometimes for new record prices. Once you get beyond these rarities, the market for collectible but reasonably available coins continues to do well, but there are soft spots. Among these soft spots are lower-grade Morgan and Peace silver dollars, silver American Eagles, extinct minor coin denominations, and the secondary market for modern non-circulating legal tender commemoratives.

Interest rate hikes by the Federal Reserve Bank impact everyone. Coin dealers leveraging their inventory are challenged by these higher rates, but so are many collectors who finance rather than pay cash for their purchases. Some dealers are trimming their inventory accordingly. Some collectors are trimming their buying habits for the same reasons. Not only have charge card rates increased, but so have rates on home equity loans.

Gold recently rebounded to around the $2,000 an ounce level, but the surge in bullion gold coin buying was more modest than might be expected despite the so-called flight to gold predicted by economists.

This should not set off alarm bells. This is the normal ebb and flow of any market. Coins are increasingly being recognized as an asset class as well as the subject of a hobby. Even the most attractive of asset classes will fluctuate in value. With the “Fed” interest rate tightening appearing to be coming to an end, the rebound in the softer areas of coin collecting will see a turnaround as well.