The recent turmoil in the markets is often a time of panic among both new and experienced buyers.  It’s quite understandable and also is something I’ve learned to expect in times like these.  That’s why it’s important that you map out your strategy before engaging clients about the merits of owning coins in a volatile market.  And to assist you in this area I thought I’d throw in a few of my favorite ideas on how and why our clients should be involved at this precise time.

Gold is at a Crossroad.  For the past several years gold has retained its link to the value of world currencies, especially the Dollar.  The control levers for all currencies are the interest rates set by the central banks.  In our case that’s the Federal Reserve Bank.  US interest rates are in a downward trend and that has traditionally meant gold will rise as the dollar drops.  But what would happen if all major countries began to lower their interest rates at the same time.  You would have a situation where the major world currencies were inflating together, and causing global inflation.  This would be a disaster for all world markets.    

You see, as long as gold moves inversely to the Dollar, the system is functioning normally.  Should gold break away from the other major currencies as well (Euro, Yen and Yuan) it would imply that the world economic system had broken down.  In such a world all asset classes, from real estate to stocks and bonds, could loose value quickly.

This is the doomsday scenario that we all hope never happens, but if it does you had better own some gold.

What can we expect to happen to Rare Coins?  You see as insiders we have a window on the coin market that most dealers and promoters never get to look through.  Right now we’ve been limiting our purchases to early gold type, rare date low pop gold, Carson City and other branch mint gold, higher grade generic $20’s and proof gold.  I believe based on my experience with past bear markets that many higher grade generics, the favorites of big promoters and good for trade-ins, will not hold their value should gold keep rising and our economy enter a recession.  On the other hand it’s almost a no brainer that the better coins that are mentioned above will hold their value going forward.  They are in a stronger position to weather downturns over generics because they usually reside in the hands of stronger buyers.  The usual run of collector coins such as Morgan Dollars and Key Dates will likely remain in demand and we expect to continue buying these items.  We are however going to lighten up on many of the Modern certified issues once their “newness factor” wears off.

Additionally we have our own In-house quality control advantage, which includes the cherry picking of inventories from the many coin dealer suppliers.  We continue to sharpen our standards and acquire only attractive eye-appealing coins for our clients.  This is a very big advantage that we will never compromise. 

Bargains appear in Bear Markets.  Finally my recollection from every downturn that I experienced in rare coins always comes back to the great deals I could have made if I just had the money to buy them.  Now I’m not talking about all the little coins, just the ones that are now bringing millions at auction.