The Effect of the Economy on Coin Value
Not so long ago, the image of the typical coin collector in the popular imagination might have been the child pursuing a hobby enjoyed by young people over many generations, or, at the opposite end of the age spectrum, the elderly antiquarian obsessed with the prospect of finding error coins or other rare currency. At the same time, people imagined that the average coin dealer probably occupied a little shop on some back street, waiting patiently for one of his regular clients to come by and make a small purchase. The interest in rare currency was placed alongside photography, angling and countless other hobbies pursued primarily for pleasure as opposed to financial gain. The idea of the coin collector as a cool, calculating businessperson, or the bullion dealer doing a roaring business in coin sales from their plush business premises, was not yet hot coin news.
A Hobby Become a High-earnings Business
Many of the traditional collector coin buyers of earlier times were drawn to make their purchases by the historical interest, the artistic quality or rarity appeal they found in gold and silver coins. Certainly they were aware of coin value issues, but the idea of buying coins for value alone did not seem to be the predominant motivation. Without doubt there are still many buyers today whose main motivation is the interest they find in completing a collection of all the coins of a particular year, or all the coins of a certain denomination. However, the dramatic rise in the prices of gold and silver on world markets has attracted many more people who view coin collecting in a different light. Although it is hard to believe that a good number of purchasers of gold bullion coins, or silver proof sets, are not attracted by the look of the coin, or the story behind it, the prime reason they want to buy gold bullion coins, platinum coins or any other rare currency is now because these investments have proved to be a rock of stability in a turbulent economy.
Collector Coins as Refuge in Hard Times
The collapse of so many well-established businesses, and in particular, the failure of many US banks, have led many people to search for safer options for preserving and hopefully increasing the value of their private or business funds. It is interesting to observe that with all the technological and communication advances of the past century, a collapse of confidence in the economy drives people back to traditional sources of personal financial security - gold and silver coins. Archaeologists of ancient sites across the world frequently come across a hoard of gold or silver coins buried by their owner fleeing from an invading army, or the anger of a local ruler. Probably there are not so many people in the twenty-first century who bury their savings in their back yards, but their interest in buying gold and silver bullion represents a search for security in precious metals comparable to the interest demonstrated by their ancient ancestors.
Many Coin Collectors but Few Brick Collectors
To understand how numismatic coins of so many different varieties have become “hot” financial propositions, several factors need to be taken into consideration. Gold coin dealers and silver coin dealers benefit from selling items whose value is determined by more than a single variable. Compare this with, for example, the case of a business dealing in building supplies. People do not normally collect building supplies, but buy them as needed for their construction projects. When the economy is in a downturn, and building slows down, demand for building supplies is seriously affected. So what are the multiple determinants of coin value that have been driving the prices of numismatic coins through the roof over the last few decades?
Coin Value Propellers
If you ask the proverbial “man in the street” what is the main determinant of coin value, error coins, or perhaps rare currency, are likely to be popular answers. Searching for mint errors, and very limited coin issues for particular years has been a foundation of coin collecting since its very beginnings. The chance of finding a valuable 1864 two cent piece, or some other rare US coins is still a hope of many browsers in coin dealers shops and markets. The chief source of these coins’ value to the collector lies in their rarity. Thus you can find that while the metal of the coin is still worth only a few cents, the fact that few examples exist, or the coin was not properly struck in the mint, inflates the worth of this coin far beyond its metal value.
While the search for sound investments has made the purchase of rare quarters and many other kinds of rare currency attractive to a wider of buyers, many are also now attracted by the rising value of bullion to buy even common and contemporary gold and silver coins from bullion dealers. The fact that an ounce of gold that would have cost about $300 in 2002 costs about $1,800 in 2011, provides irrefutable evidence that investments in gold bullion coins, platinum coins and even silver coins, have been earning higher returns with less risk than most other legitimate investment opportunities. Even if a major new gold mine would be discovered and opened tomorrow, it seems unlikely that coin values will take a significant plunge. Although a significant fall in the price of gold coins for sale could affect contemporary or relatively common coin values, the added value brought by error coins and other items of rare currency would maintain a healthy clientele for gold and silver coin dealers.
2012-02-20 10:59:23