Wednesday, August 26, 2009

Whistling past the graveyard

Posted by Dave

Nobody likes bad news. Nobody likes to be tagged as the bearer of bad news. That is what makes it so hard to deal with the current soft market in coins.

The market is down from its peaks in 2007 and 2008. But it is hard to quantify.

Better coins simply stop trading when business conditions weaken. Those that do trade can still generate headlines.

Then the chorus sings, “See, the market is still strong.” But is it?

It is to make this determination that I await more definitive evidence.

I remember the serious recession we had after the peak of the market in 1980. We had an internal debate at Numismatic News as to what we should do with the coin prices listed in Coin Market.

Instead of outright price declines, dealers just refused to purchase coins.

Instead of saying it in some straightforward manner that they could not resell the pieces at current price levels and taking a pass, dealers began to say that the coins didn’t make the grades they claimed to be. Coins that were MS-65 at the peak of the boom were suddenly -64, then -63, etc.

This infuriated the owners of the coins. While they would feel the injury of not being able to sell some coins when they wanted to, they also suddenly felt the sting of being told in an offhand fashion that they somehow had purchased overgraded coins.

Thems fightin’ words in this here business.

Bad feelings multiplied. Dealers began haunting the room where the American Numismatic Association board of governors met. They were the official keepers of grading standards. They were finally forced to declare in 1985 that grading standards had changed.

This gave everybody a black eye.

Wouldn’t it simply be easier to adjust prices downwards in a slow market?

We didn’t in the early 1980s. I won’t hold my breath waiting for it now.