When speculation replaces demand

as an upward price pressure on a numismatic item, how do you know?

It's an important thing to be able to inuit, I think, if you want to
avoid being the individual or dealer who opts in at the high-water mark!

1999 US Silver Proof sets, for example, continue to inch upward. An RCC
regular contributor recently realized more than $220 for one on eBay,
when only two years ago these sets were moving for less than $90.

All it takes for an upward pressure to exist is a couple dozen
collectors with internet connections and '1999 Silver Proof' saved as an
Ebay 'Favorite Search'. But I begin to doubt that this is the case,
now. I can imagine a scenario in which speculation has supplanted
'real' demand as the upward pressure. It's like a hot stock, which due
to it's performance, attracts buyers who have no real idea of the
company it represents, or an investor who bought 100 shares at $5,
another 100 at $10, and sees nothing but future growth as he figures his
profits to date and continues to acquire more shares even as the stock
passes any realistic value.

1999 Silver Proof Sets where made by the hundred of thousands. Are the
buyers chasing them now, supporting the continued rise in price, really
acquiring *their first examples*? Or are they speculators, banking on a
continued rising premium? Middlemen, knowing they have an end customer
willing to pay *over the going rate*?
And how can you tell?

The very first month I posted to RCC I made a rash statement about the
skyrocketing prices of 2001 Buffalo Dollars. Offered one at $85 as a
favor, I turned it down. I insisted that my target price of $65 would
return (and like an idiot, I gave a specific date). So far, it has not,
but they are inching closer each month now. I believe that demand has
been satisfied, largely. The price pressure against that issue now
could be seller's reluctance to take a bath, to not dump at $65 what
they acquired at $120.

All my very uninformed opinion, of course. What's your take?

Alan
'taking what they're giving'

Alan & Erin Williams wrote:

as an upward price pressure on a numismatic item, how do you know?

It's an important thing to be able to inuit, I think, if you want to
avoid being the individual or dealer who opts in at the high-water mark!

1999 US Silver Proof sets, for example, continue to inch upward. An RCC
regular contributor recently realized more than $220 for one on eBay,
when only two years ago these sets were moving for less than $90.

All it takes for an upward pressure to exist is a couple dozen
collectors with internet connections and '1999 Silver Proof' saved as an
Ebay 'Favorite Search'. But I begin to doubt that this is the case,
now. I can imagine a scenario in which speculation has supplanted
'real' demand as the upward pressure. It's like a hot stock, which due
to it's performance, attracts buyers who have no real idea of the
company it represents, or an investor who bought 100 shares at $5,
another 100 at $10, and sees nothing but future growth as he figures his
profits to date and continues to acquire more shares even as the stock
passes any realistic value.

1999 Silver Proof Sets where made by the hundred of thousands. Are the
buyers chasing them now, supporting the continued rise in price, really
acquiring *their first examples*? Or are they speculators, banking on a
continued rising premium? Middlemen, knowing they have an end customer
willing to pay *over the going rate*?
And how can you tell?

The very first month I posted to RCC I made a rash statement about the
skyrocketing prices of 2001 Buffalo Dollars. Offered one at $85 as a
favor, I turned it down. I insisted that my target price of $65 would
return (and like an idiot, I gave a specific date). So far, it has not,
but they are inching closer each month now. I believe that demand has
been satisfied, largely. The price pressure against that issue now
could be seller's reluctance to take a bath, to not dump at $65 what
they acquired at $120.

All my very uninformed opinion, of course. What's your take?

Alan
'taking what they're giving'

I have 2 of the proof buffalos up now and 1 of the uncirculated. If
they go for $65, then so be it. I did make good money on the 1999
silver set. If you win the buffalos or any of the others that I have
up, you can have free shipping too (and insurance).
I'm not waiting on the coins to cycle, I can't see them well enough to
enjoy them so everything will bring what it brings. Win some, lose
some.
Cliff

Cliff wrote:

(snip)

I have 2 of the proof buffalos up now and 1 of the uncirculated. If
they go for $65, then so be it. I did make good money on the 1999
silver set. If you win the buffalos or any of the others that I have
up, you can have free shipping too (and insurance).
I'm not waiting on the coins to cycle, I can't see them well enough to
enjoy them so everything will bring what it brings. Win some, lose
some.

I've never felt I've lost by having your voice in RCC, Cliff. ;-)

Alan
http://cgi6.ebay.com/ws/eBayISAPI.dl...s&userid=n5gwu

as an upward price pressure on a numismatic item, how do you know?

It's an important thing to be able to inuit, I think, if you want to
avoid being the individual or dealer who opts in at the high-water mark!

1999 US Silver Proof sets, for example, continue to inch upward. An RCC
regular contributor recently realized more than $220 for one on eBay,
when only two years ago these sets were moving for less than $90.

All it takes for an upward pressure to exist is a couple dozen
collectors with internet connections and '1999 Silver Proof' saved as an
Ebay 'Favorite Search'. But I begin to doubt that this is the case,
now. I can imagine a scenario in which speculation has supplanted
'real' demand as the upward pressure. It's like a hot stock, which due
to it's performance, attracts buyers who have no real idea of the
company it represents, or an investor who bought 100 shares at $5,
another 100 at $10, and sees nothing but future growth as he figures his
profits to date and continues to acquire more shares even as the stock
passes any realistic value.

1999 Silver Proof Sets where made by the hundred of thousands. Are the
buyers chasing them now, supporting the continued rise in price, really
acquiring *their first examples*? Or are they speculators, banking on a
continued rising premium? Middlemen, knowing they have an end customer
willing to pay *over the going rate*?
And how can you tell?

The very first month I posted to RCC I made a rash statement about the
skyrocketing prices of 2001 Buffalo Dollars. Offered one at $85 as a
favor, I turned it down. I insisted that my target price of $65 would
return (and like an idiot, I gave a specific date). So far, it has not,
but they are inching closer each month now. I believe that demand has
been satisfied, largely. The price pressure against that issue now
could be seller's reluctance to take a bath, to not dump at $65 what
they acquired at $120.

All my very uninformed opinion, of course. What's your take?

Alan
'taking what they're giving'

I find this to be an interesting subject. I was reading an article a few
days ago about the California housing market. At the end of 2003 the
average price of a home in California was $404,000. It was $339,000 a year
ago. So in 12 months the average price of a home in California inflated by
$65,000. And that is after inflating $57,000 the year before.

And if you watch CNBC many commentors will argue there is no housing bubble
in California, but it is too small a supply for the given demand. I say
they are full of it and the housing market in California is going to crash
someday. If housing is inflating at 15-20% per year and you can borrow
money for a home at 6% a year, this just invites speculation.

As far as the 1999 silver proof set is concerned I have no idea if this
price increase is being fueled by speculation. I don't think we have enough
information to tell. I bought a dozen of them in 1999 from the mint and
sold ten of them this year for around $180 each. I was guessing that this
would be the peak (and I needed a down payment for a car). My opinion is
that times in the US are relatively good. And people have that kind of
money to spend on pretty collectibles. If times were to get worse, large
numbers would go back on the market and the prices would go down.

Jack

"Cliff" wrote in message
...
I have 2 of the proof buffalos up now and 1 of the uncirculated. If
they go for $65, then so be it.

I can guarantee that the Unc won't go for $65. I don't know about the
Proofs.

--
Stujoe
Email: http://tinyurl.com/wu00
Grading Challenge,Daily Coin News, Virtual Coin Museum and mo
http://www.CoinPeople.com

"Alan & Erin Williams" wrote in message
...
as an upward price pressure on a numismatic item, how do you know?

It's an important thing to be able to inuit, I think, if you want to
avoid being the individual or dealer who opts in at the high-water mark!

1999 US Silver Proof sets, for example, continue to inch upward. An RCC
regular contributor recently realized more than $220 for one on eBay,
when only two years ago these sets were moving for less than $90.

All it takes for an upward pressure to exist is a couple dozen
collectors with internet connections and '1999 Silver Proof' saved as an
Ebay 'Favorite Search'. But I begin to doubt that this is the case,
now. I can imagine a scenario in which speculation has supplanted
'real' demand as the upward pressure. It's like a hot stock, which due
to it's performance, attracts buyers who have no real idea of the
company it represents, or an investor who bought 100 shares at $5,
another 100 at $10, and sees nothing but future growth as he figures his
profits to date and continues to acquire more shares even as the stock
passes any realistic value.

1999 Silver Proof Sets where made by the hundred of thousands. Are the
buyers chasing them now, supporting the continued rise in price, really
acquiring *their first examples*? Or are they speculators, banking on a
continued rising premium? Middlemen, knowing they have an end customer
willing to pay *over the going rate*?
And how can you tell?

The very first month I posted to RCC I made a rash statement about the
skyrocketing prices of 2001 Buffalo Dollars. Offered one at $85 as a
favor, I turned it down. I insisted that my target price of $65 would
return (and like an idiot, I gave a specific date). So far, it has not,
but they are inching closer each month now. I believe that demand has
been satisfied, largely. The price pressure against that issue now
could be seller's reluctance to take a bath, to not dump at $65 what
they acquired at $120.

All my very uninformed opinion, of course. What's your take?

Alan
'taking what they're giving'

YEAR MINTAGE GS bid-1/30/04 GS bid-1/1/01 Change

1992-S 1.009 #10 $13.50 lowest $ 9.50
+42%
1993-S 0.570 #2 30.50 #8 25.00
+22%
1994-S 0.636 #5 33.00 #7
43.00 -30%
1995-S 0.550 #1 80.00 #3 33.00
+242%
1996-S 0.624 #4 40.00+ #6 24.50
+63%
1997-S 0.605 #3 72.00 #4 21.50
+335%
1998-S 0.638 #6 28.00 #9 26.00-
+8%
----------------------------------------------------------------------------
--
1999-S 9 coin 0.804 #7 210.00 highest
2000-S 10 coin 0.965 #9 26.75 #10
2001-S 0.849 #8 84.00+ #2
2002-S 60.00 #5
2003-S

Well now, isn't that interesting. 1992 is the only year that makes sense to
me and perhaps it tells us there is no demand to match the one million+
mintage. At least, as of the present. I could also conclude a lot of
people are collecting just the state quarter sets and nothing else in
regards to silver proof sets. At least, as of the present. It would seem
the 2000 mintage is satifying demand pretty much. At least, as of the
present. It looks like there is definitely two different sets of
collectors. At least, at the present.

I really don't think speculation has much to do with the prices. At least
at the present. Distribution may be causing the price fluctuation, and, for
some reason, there is not enough 1999s on the market to take care of the
seekers. At least, at the present. Or maybe there are more than 804,000
and less than 965,000 collectors of the silver proof sets dated 1999 and
later.

Sell your years ending in odd numbers, buy all you can afford of the years
ending in even numbers and hold for a number of years. I would say 1993-S
looks good for speculation. 1994 was either vastly overpriced four years
ago or underpriced today. As the years go by, things should settle out to
make more sense than the above, with regards to available product versus
demand. "Should" does not equal "will".

I know less now than when I started putting this post together. Bill

Bill Krummel wrote:



YEAR MINTAGE GS bid-1/30/04 GS bid-1/1/01 Change

1992-S 1.009 #10 $13.50 lowest $ 9.50
+42%

Just as a 'for what it's worth', the issue price on these, if I read
Redbook correctly, was $21. Subsequent mintages by year of silver proof
sets were reduced by about 40%. ;-/

I don't understand the fluctuations between years of similar mintage,
like 1994 and 1995 unless you believe in some very fine tuning...it
suggests that supply dampens future 'growth' at mintages over 600,000
pieces, pre statehood quarter. I do agree with you, Bill, that the
intro of SQ's creates a break, two different collector populations. I
do not own and have not sought any Silver sets older than 1999.

I think I'm going hunting for a 1992. If it's selling for $8 less than
the mint charged, it causes me to want one.

Alan
'won't mention Onion Formation'

I might have phrased it "When speculation, rather than fundamentals, drives
demand", but it sounds like you've correctly identified "irrational
exuberance" in the cases of both '99 silver proofs and '01 buff dollars.
Driven by media coverage, advertising, rumor, and maybe other short-term
effects, markets stray (sometimes far) from long-term trends, which in the
case of proof sets, aren't terribly attractive.

The losers in this game aren't likely to be experienced dealers. They tend
to limit market risk by turning inventory quickly. And as you hint,
collectors who bought just one aren't much at risk, either. It's those who
buy multiple sets with the plan to sell after long-term appreciation who get
burned. In many cases, human psychology being as it is, the ultimate loss
will be taken (unknowingly) by their heirs.

--Chris

"Alan & Erin Williams" wrote:
as an upward price pressure on a numismatic item, how do you know?

It's an important thing to be able to inuit, I think, if you want to
avoid being the individual or dealer who opts in at the high-water mark!

1999 US Silver Proof sets, for example, continue to inch upward. An RCC
regular contributor recently realized more than $220 for one on eBay,
when only two years ago these sets were moving for less than $90.

All it takes for an upward pressure to exist is a couple dozen
collectors with internet connections and '1999 Silver Proof' saved as an
Ebay 'Favorite Search'. But I begin to doubt that this is the case,
now. I can imagine a scenario in which speculation has supplanted
'real' demand as the upward pressure. It's like a hot stock, which due
to it's performance, attracts buyers who have no real idea of the
company it represents, or an investor who bought 100 shares at $5,
another 100 at $10, and sees nothing but future growth as he figures his
profits to date and continues to acquire more shares even as the stock
passes any realistic value.

1999 Silver Proof Sets where made by the hundred of thousands. Are the
buyers chasing them now, supporting the continued rise in price, really
acquiring *their first examples*? Or are they speculators, banking on a
continued rising premium? Middlemen, knowing they have an end customer
willing to pay *over the going rate*?
And how can you tell?

The very first month I posted to RCC I made a rash statement about the
skyrocketing prices of 2001 Buffalo Dollars. Offered one at $85 as a
favor, I turned it down. I insisted that my target price of $65 would
return (and like an idiot, I gave a specific date). So far, it has not,
but they are inching closer each month now. I believe that demand has
been satisfied, largely. The price pressure against that issue now
could be seller's reluctance to take a bath, to not dump at $65 what
they acquired at $120.

All my very uninformed opinion, of course. What's your take?

Alan
'taking what they're giving'




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Chris S wrote:

I might have phrased it "When speculation, rather than fundamentals, drives
demand", but it sounds like you've correctly identified "irrational
exuberance" in the cases of both '99 silver proofs and '01 buff dollars.

I agreed with Greenspan when he used that phrase in public, in a
different context, a few years back. One of my good friends, a much
younger man, continued to buy into the dot-com expansion. He has a good
long working life in front of him to pay back those losses. ;-/

Driven by media coverage, advertising, rumor, and maybe other short-term
effects, markets stray (sometimes far) from long-term trends, which in the
case of proof sets, aren't terribly attractive.

The losers in this game aren't likely to be experienced dealers. They tend
to limit market risk by turning inventory quickly. And as you hint,

I don't hint. If I blundered up against something true, it was
unintentional. ;-)

collectors who bought just one aren't much at risk, either. It's those who
buy multiple sets with the plan to sell after long-term appreciation who get
burned. In many cases, human psychology being as it is, the ultimate loss
will be taken (unknowingly) by their heirs.

Therein lies my hope for getting a Buffalo Dollar at what I considered
to be a 'reasonable price' when comparing that coin to Modern Commems of
similar mintages. Speculators who laid in multiple examples in a market
ramping up can only drive the price in one direction if, and when, they
divest.

Alan
'unless HSN/QVC slurp up the difference'

"Alan & Erin Williams" wrote:
I don't understand the fluctuations between years of similar mintage,
like 1994 and 1995 unless you believe in some very fine tuning...

It could be sampling error.

--Chris




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