Thursday, March 17, 2016
How to buy Coins and Medals
The easiest thing in the world is to look up old auction prices. They are available at Coin Archives and AC Search. They will tell you everything you need to know about what coins and medals used to sell for at some point in the past. It is information everyone has.
And it is totally useless.
A. because everyone has it, so there's no advantage in it.
B. because it is knowledge about the past. Which, if you have any mathematical background, you should know, tells you nothing - or very little - about the future.
If you were looking, for example to by a house in Bed Stuy Brooklyn and the last time the building you're looking at changed hands was three years ago, and then it sold for $640,000, and now the new owner is asking 1.2 million, you might say, gee that's a terrible price. But if you take into account all the gentrification in that neighborhood, and the recent price inflation in Brooklyn in general, you might say, well that's market price but still, we must be in a bubble. But then if you look at the fact that everyone on earth wants to live in Brooklyn right now and that trend seems to be accelerating, and you consider that the building is pretty nice, nicer than most with original details etc, and much cheaper than the buildings going in the neighborhood just ten blocks away, then you might think, gee, that's a pretty good price. And then you consider the Fed just indicated that tightening is over so the whole mortgage market is likely to be supported and you think, wow maybe that's a bargain
So it is with numismatics. It's where the price will be in a year, two years, five years that counts. It where prices are heading for similarly rare coins, similarly beautiful coins, coins in similar condition , but perhaps from different periods, or from different areas. It's where the price is headed for all high end hard assets in relation to world monetary policy.
You need an overview.
You need to see where all hard assets are heading vis a vis currencies with which they are purchased.
You need to have a view of which currencies are likely to appreciate and which are about to crash and who that affects and what that implies for hard assets of different types.
Like stocks you need to understand sector rotations: You need to understand which areas of your particular interest are simply out of fashion and which are being bid up to speculative heights.
Then within the numismatics sector you have to have some understanding of supply and demand. Which areas are currently oversupplied or under-supplied and how likely are those trends to continue - or not.
In other words if this is more than just a hobby - you need to treat it as such. And the first thing to do is forget about what stuff cost last year - or five years ago - or ten years agao - or even last week.
It is entirely irrelevant to numismatics - just as it is irrelevant to all forms of investment.
You need to start thinking about where prices will be in the future. It's not easy. If it were easy everyone would do it.