COIN COLLECTORS AND INVESTORS ARE STILL IN THE MONEY
Higher Gold and Adapting to the Internet Have Created Stunning Interest
The global pandemic has changed the economic landscape of virtually every industry in every corner of the world. The coin marketplace is certainly no exception to this rule. Since the pandemic walloped the United States in late winter 2020, the numismatic industry has been thrust into a bizarre reality in which coin shows and club meetings are cancelled and brick-andmortar stores are essentially all but closed.
In this era, the internet has served as a lifeline for the numismatic industry, connecting collectors and dealers to keep the industry humming. The success with which the hobby has adapted to using the internet for almost every business and social function is stunning, at least by the standards of our otherwise analog hobby. While auction firms and dealers began trickling onto the information superhighway in the 1990s, several collectors and dealers were still working largely off the digital grid until the start of the pandemic. Granted, many of these digitaltechnology holdouts didn’t necessarily need the internet to engage in the hobby before the global pandemic clenched its death grip on society.
But now?
Well, without the internet, it’s a pretty lonely existence for many hobbyists. And for dealers? No internet generally means no or very little revenue. The nationwide coin shortage that reared its ugly head during mid-summer hasn’t helped. Fueled by a stop in production at the United States
Mint, reduced distribution of new coinage by the Federal Reserve, and critical interruptions to the flow of coinage in daily commerce, the coin shortage has put a temporary end to most circulationbased roll searching. Banks are all but out of coins, and they’re doling them out on a limited basis to merchants and other essential businesses.
Profitability During Pandemic Times
All of this begs the question: How is the numismatic hobby remaining profitable? It’s easy to say that the internet is helping coin dealers stay afloat, but to leave the answer at that oversimplifies what is really complex. While the virus has interrupted business for so many players in the industry – particularly those who relied on coin shows and storefronts to pay the bills and put the kids through college – it also has done something else. It has kept millions of Americans at home and closer to the very thing that drives our industry: coin collections.
Many folks who long ago abandoned their coins have had the time to revisit their long-lost
numismatic love. Others have suddenly taken up a new interest in the coins sitting within their jars and piggy banks, wondering if any of the coins are worth more than face value. And then we can’t forget the fact that the economy, robust in December 2019, fell to shambles by the spring as businesses large and small, far and wide closed up shop. Millions were laid off before the holidays of Easter and Passover. Many of these same individuals remain furloughed today.
Economic stimulus efforts by the Federal
Reserve have pumped trillions of dollars into the United States economy. However, in a fiat-based monetary system as we have in the United States, you can’t print trillions of dollars without affecting the perceived value of this money. And as the value of the dollar stands for a beating in the world economic ring, something else rallies by the ropes: precious metal.
As of publication, gold set all-time price records exceeding the $2,000 mark (per ounce). Silver has surpassed the $27-per-ounce threshold and could be screaming for $30 – who knows? Other areas of the bullion scene are also lighting up.
And this helps lure people into the precious metals investing arena. Oftentimes, when investors pour into the metals markets, they start poking around in the related sector of numismatics.
Dealers who buy and sell bullion coins have been particularly busy these days as more and more speculators turn to precious metals.
“Traffic spiked in early March and has remained fairly strong since then,” reports Gainesville Coins precious metals specialist, Everett Millman. “We’ve seen a resurgence of past customers who have generally not been as active as they were during and after the 2008 financial crisis.”
Millman explains customer enthusiasm spiked during the pandemic. “The most common sentiment we’ve been seeing from buyers has been reminiscent of the 2008 financial crisis (and the bull market for bullion that accompanied it): Many people are buying gold and silver as a hedge against elevated risk in the financial markets and the heaps of economic stimulus coming from the Federal Reserve and U.S. Treasury.”
Creative Connections With Customers
While Millman and his team operate a walk-in showroom at their headquarters outside of Tampa, Florida, the company has international offices in London, Singapore, and Finland, and has maintained its robust internet existence since the company’s founding in 2006. “Foot traffic has been impacted due to local regulations and stay-at-home orders,” remarks Millman. “But with the economy gradually re-opening, those numbers have been trending higher once again. Our online presence has been a huge benefit, not only amid a pandemic but also because we have many customers and wholesale partners located internationally in addition to other parts of the country here in the U.S. So that would be more challenging to maintain without a strong presence online.”
He notes that the pandemic hasn’t necessarily affected the company’s sales strategy, but there has been much adaptation to emerging challenges, such as delays in the production of bullion coins and precious metals bars, impaired supply chains, and other issues. And it all has a bearing on customer service demands.
The biggest challenge there? “Managing our customers’ expectations about what products are available and how long it may take to replenish our inventories of sold-out items,” replies Millman. “Social media is a great tool for communicating that to our customers and to the general public. Staying connected with folks and building trust should hopefully lead to that organic growth.”
He believes a successful business model involves having many “pathways” to reach and engage with customers. “An online platform should be one of those pathways. It helps you stay better connected with existing customers but also helps a dealer appeal to a much larger audience. Sure, it also allows you to more easily continue doing business in unforeseen situations like the pandemic, but it’s well worth the time and investment even under normal circumstances.”
Bullion dealers have great impetus to focus on improving their customer experience, especially at a time when more and more buyers are paying attention to gold and silver on their reach for multi-year highs. “All roads lead to gold,” proclaims “daredevil investor” James Passin, a hedge fund manager and the executive chairman of Tracesafe, Inc., who accurately predicted breakout returns for rhodium and Bitcoin cryptocurrency.
“With gold finally cracking the $1,800 level, the gold market is starting to accumulate upside energy. My view is that gold will spend some time consolidating between $1,800 and $1,900 before it ultimately breaks out and resolves to new all-time highs later this year.”
Meanwhile, Passin foretells a lustrous future for platinum. “In my view, the most undervalued hard asset is platinum. While platinum tends to have a positive correlation with gold over time, platinum remains near its 15-year low.” One reason he sees the platinum gaining in strength is its great rarity – all the platinum ever mined could fit inside a typical living room. Yet it’s an important industrial metal that could see expanded use as a catalyst in fuel cells.
“While only a tiny amount of platinum is consumed in the individual fuel cell, the aggregate demand for platinum will increase as the hydrogen economy
continues to expand exponentially.” According to SibanyeStillwater, the world’s largest platinum producer, there will be a 500,000-ounce deficit in the platinum market by 2024.
“My personal strategy is to continue to accumulate one-ounce platinum coins certified by the Professional Coin Grading Service (PCGS) or Numismatic Guaranty Corporation (NGC), as well as 10-ounce platinum investment bars at modest premiums over melt,” Passin added.
Eyeing the Long-Game In Collecting To Invest
As platinum builds in market strength, gold has taken center stage in our COVID-19 world, and Passin says many mainstream media outlets are chalking up the gold run to pandemic fears. However, in reality, gold’s strength is a result of what he calls “the complete degradation of the global fiat monetary system,” which he says has been occurring for decades and is being exacerbated now due to “unorthodox monetary policies” by the Federal Reserve and central banks.
“The de facto adoption of ‘modern monetary theory’ by central banks, which are now effectively directly monetizing sovereign debt issuances, has opened the Pandora’s box of inflation; the likely hijacking of these novel monetary tools by the cult of extremist environmentalism – aka the Green New Deal – or other ridiculous variants around the world, will ensure that the era of infinite monetary expansion will coincide with an epoch of fiscal waste, leading the world into the black hole of hyperinflation.”
He adds: “In this environment, regardless of the technical short-term action in the gold market, there is no price at which I would be willing to loosen my grip on my inventory of Mint State U.S. Treasuryissued vintage gold coins graded by PCGS and NGC and bearing a Certified Acceptance Corporation (CAC) sticker. This holds for the semi-numismatic coins such as commondate Saint-Gaudens double eagles, as well as for rare dates.”
Passin notes that while the numismatic market has benefitted from increasing gold coin prices, premiums on gold coins remain small and provide speculators with a relatively affordable opportunity to buy common-date vintage double eagles at prices little above spot. Gram for gram of gold, it’s currently much cheaper to purchase vintage gold double eagles than to purchase modern-date American
Gold Eagles. “While the numismatic market has benefitted from an increase in the gold price, gold coin premiums remain modest, as it will take some time for the numismatic market to adjust to the new gold market dynamics.”
As the numismatic market and gold market sync, CAC president John Albanese notes that the vintage coin industry is proving remarkably resilient despite the jarring shifts in the world economy. “I’ve noticed some changes in my business, with submissions down about 10%, and
I’m surprised we’re not down much more,” he notes.
“During the beginning of the pandemic, we were in a wait-and-see period. And then dealers began seeing sales climb because people were at home and buying up inventory to fill their collections. But now we are getting to a point where dealers are running out of inventory because coin shows aren’t happening.” He adds that major interruptions in the in the supply chain are reflecting in the current marketplace. “There is no flow of inventory coming in,” Albanese states. “And it’s not just happening
with coin dealers but across many industries. I know one guy who is a bike dealer – he can sell bikes all day, but if he isn’t getting any new bikes in, he has nothing to sell. The same goes for one of my friends in the video market; demand is there, but there is no supply. You must have an equilibrium and need to see action on both sides for there to be success – you need to feed the beast!”
While the small coin shops may be economically nimbler, Albanese believes the larger companies with more than 50 employees are probably having a more difficult time presently. “It’s been tough out there for many.” However, he did note that one benefit of supply drying up is that dealers have more opportunity to take account of what lay deep in their inventory. “Dealers have the time to clean out their closets and vaults, which is something they’re often too busy to do.”
Still, time rolls on with less and less available material on the market. With all of this still unfolding, Albanese sees a new market condition emerging. “As inventory grows tighter, it’s becoming a seller’s market.” So what advice does he have for collectors? “Be extra careful about what you’re buying online. Since you can’t view coins in person, you’ve got to take more time to look at photos of a coin, read descriptions, and make sure you’re buying from reputable dealers who have a return policy. And that’s sound advice whether we are in a pandemic or not.”
Yet as the pandemic presses on for those on both sides of the coin case, it’s becoming evident that the most
successful coin dealers are those who already had websites before the virus hit. “[They] have been doing well in keeping revenues coming in through online business.
But those who didn’t have [a website running] had a harder time. Many dealers are now focusing on building websites, but it can take months and months to build a website and then years and years to build a following.”
Keeping Pace in the auction space
That hasn’t been a problem for Stack’s Bowers Galleries, a major numismatic auction firm founded in
1933. Stack’s Bowers Galleries has kept pace with the rapid changes in the numismatic industry over the years, jumping online in 1996 and building a significant virtual presence with its internet bidding and auctions. Even before COVID-19 forced auction companies to become essentially online-only operations, Stack’s Bowers Galleries had been experiencing ever-increasing sales from its internet auctions and dynamic online bidding platform.
At 92 years old, Harvey Stack not only remembers the buzz of coin auctions before the coronavirus, but he vividly recalls “the old days.” The days when bidders had to physically travel to and attend auctions examined raw coins in person and sat in large rooms bidding on coins they had previewed beforehand.
“As an auctioneer for decades, I remember watching the audience, seeing the enthusiasm of the live bidder, who sometimes relied on the bidding of the competitor for the lot and seeing the excitement generated, lot after lot, of the buyers and competitors,” he says. “There was great excitement during a public sale, which is missing from the electronic sales of today.”
Stack says that while Stack’s Bowers Galleries does have “personal viewing” sites around the country for rarer and more valuable coins that can be examined by the public by appointment, he feels buyers have become accustomed to third-party grading and bidding from catalogs delivered in the mail and online photos. “As Stack’s Bowers Galleries has great photos, superior to decades ago, and the printing process is superior, the buyer has a good idea of what he will be getting.”
He believes previewing a coin in-hand enhances the buying experience, but that the ongoing ordinances restricting public gatherings are necessary. “I agree with the ‘stay-athome’ suggestions we are all living with – catalogs and advertising, and the beautiful and instructive catalogs we are continuously producing is helping fill the gap [that] no ‘live audience in the room’ contributes to all sales. Someday I hope when this epidemic is over, we will be able to return to a ‘public sale’ where the excitement is as the lots sell.”
And the lots are selling. When the pandemic began spreading in the United States during late winter, Stack’s Bowers Galleries turned plans on a dime. They moved its headlining sale slated for the Whitman Baltimore Spring Expo in March to an online event based out of the company’s headquarters in Santa Ana, California. Despite the major changes to the auction setting made virtually overnight, the auction firm managed impressive results on the thousands of lots traded in the sale. Among these were the famous Berg-Garrett Class III 1804 Draped Bust Dollar grading PCGS PR55 that took $1.44 million and the Eliasberg-Pogue 1854-S $5 Liberty Head Half Eagle certified PCGS AU58+, which realized $1.92 million.
“It wasn’t the first time our team had to react to an emergency situation at one of our auction venues,” recalls Stack’s Bowers Galleries Founder Q. David Bowers of the time just after the 9/11 terror attacks in 2001 that similar changes in the itinerary were swiftly executed. “So, we pulled up our sleeves and focused on making the sale happen with amazing record-breaking results. In today’s world of the internet and virtual reality, it is not necessary at all to have in-person attendance for an auction to be dynamic.”
Bowers remarks that the astonishing evolution of technology in just the past 20 years has made what once would’ve been thought technologically impossible absolutely essential to running a business today. “Our award-winning website and live bidding technology allow for participation from bidders all over the world – which would not have been possible a generation ago. Also, the Stack’s Bowers images are superb, removing the desire for most bidders to examine the lots in person. However, participating in a sale as part of a gallery, in person at a convention, is always a nice experience for bidders.”
Even as the pandemic has put the kibosh on most of the in-person lot viewing and bidding that once defined the numismatic auction experience, one thing that hasn’t had to
change at Stack’s Bowers Galleries is how lots are described. Bowers says that even before the pandemic sent people away from in-person lot previewing, it was a company’s goal to make sure lot descriptions painted a thorough and accurate picture of a coin’s most important elements. The parts about which bidders most want to know.
“If any bidder has a further question, the staff is right there to help!” says Bowers. “Our desire is to make each sale a win-win situation for consignors and bidders alike. This has worked very well for many years. The pandemic has closed numerous public events, but I have not seen any reduction in interest and excitement as virtual reality seems to take care of nearly everything today.”
One way that Stack’s Bowers Galleries is keeping potential bidders and the general numismatic community engaged with its many sales and offerings is through a vigorous social media campaign. “In recent weeks, we have gotten a number of consignments via social media,” Bowers remarks. “One customer mentioned that he’d normally shop his items around coin shows but was forced to find other ways to sell now.”
He also says the company saw a “surge of new followers” on its Instagram platform. However, he acknowledges that even with their great embrace of internet bidding and social media channels, “based on comments and direct messages customers are eager to get back to the show floors and live auctions.”
Until the day comes that the arrival of a COVID-19 vaccine or advanced treatments makes the large auction events of yestermonth safe again, most collectors will need to continue bidding for coins through the phone and internet. But Bowers isn’t concerned. “As I mentioned earlier, our detailed, super-quality images can eliminate the need for seeing an item in person prior to purchase.”
Besides, he said the online bidding venue the company relies on allows for more bidding action. “The Internet has vastly increased the number of bidders in any given event. And, it allows anonymity to bidders who use the internet while actually sitting in the auction room.” This access can give buyers an advantage they wouldn’t have necessarily had physically sitting in a chair on the auction floor. “Numismatists now enjoy the convenience of participation from any venue rather than worrying about time away from home and work, travel, expense, and, today, worrying about COVID-19.”
Interestingly, Bowers says there hasn’t been a vast change in bidder demographics even with the greater expansion of – and reliability on – digital technology. Yet that doesn’t alter the company’s emphasis on offering a diverse array of material geared for numismatists of various ages, incomes, and collecting backgrounds. “I hasten to emphasize that our sales have something for everyone. Anyone starting on a collection of Morgan silver dollars, these being the most popular 19th-century specialty, can find a lot to like in nearly all of our sales.”
Offerings in the upcoming sales to be held later in the autumn include the Larry Ness Collection of Indian Peace Medals. At the same time, another collection will feature a complete set of proof Morgan dollars still housed in an old Capital Plastics holder and a variety of iconic key-date coins such as the 1856 Flying Eagle cent and 1907 High-Relief Saint-Gaudens gold double eagle. Other selections crossing the block soon are Dahlonega-mint quarter eagles, Capped Bust gold coins, and a complete set of proof Shield nickels. Many are uncertified while others are housed in vintage-1980s PCGS holders.
He asserts that the company’s auction program and its retail sales are as strong as ever. “Collectors are still collecting and seem to have more time on their hands to focus on acquiring pieces for cabinets or starting a new area of interest.”
Even so, Bowers is keenly aware that collectors pine for the days of waving their paddles in the air and meeting old friends on the bourse floor or in an auction room once more. “The camaraderie and fellowship of sharing time with friends and colleagues at a convention or other event is in suspension,” he says. “We all look forward to the day when we can get together in person again.”