A word on the Market
Some Recent Events
  • Recently A Honus Wagner Baseball card sold for $6.6 Million.
  • A 1933 Saint-Gaudens double eagle $20 Gold Coin sold for $18.8 Million
  • A Jean-Michel Basquiat painting sold for $110.5 Million
  • There are NO (none, nada, zilch) MS 68 Morgan dollars for sale on eBay at the time of publication
  • American Silver Eagles have a $7.50-$8.50 premium over spot
  • Proof American Gold Eagles have premiums of $350 premium over spot.
 
What do these seemingly unrelated things have in common? Two words, scarcity, and demand. And what do these record-breaking exponential price increases signpost for the collectibles market? Here is one for the graph geeks. Linear graphs (think supply and demand) tend to go exponential when they are pulled on by both axis. Ok, now in English. The market is experiencing BOTH Scarcity and an increase in Demand!
About a month ago, I was reading the PCGS Chat boards and there was some discussion about how “I will just wait out these crazy price increases” or “Remember the mid-80s bubble, I am not going to fall for that again” as rationalizations to waiting out the current (well overdue in my opinion) price increases in collectibles. They sound very rational, right? We see it with Houses, Stocks, or other financial instruments. Except for one little thing that blows that Keynesian approach to collecting, think of it like "dividing by zero" i.e., it does not work. That’s scarcity. The thinness of the market.  Look, when you are schlepping things you can make, they are never really scarce, they may be in short supply, but that does not make them rare. You can just make more. Supply and demand mentality manages this quite well. But last I checked, all the Honus Wager cards ever made, are already out there. You just cannot make more (at least real ones). 
I sold a coin yesterday that represented a population 28 known pieces in that condition or higher. With only 11 known higher. Think about it, it only takes 28 collectors, out 31,000 or so “collectors” in the United States. And if You add the number of US Coin Collectors outside the US (You would be surprised at the quality of some Morgan Dollar Collections in Japan, and the UK), it can be safely guesstimated to be about 60,000. If only 29 of those collected the series, someone will not be able to play.
OK, so why now? I really think that COVID, and its massive counterforce, technology (imagine what would have happened if we did not have the internet and could not work from home), has given us all some time to explore and get a bit savvier about the world we live in. And people are finally figuring out that while having a lot of money in the bank may give them security, at the end of the day we are creatures that are wired with self-esteem and nothing gives that to us like objects of beauty and desire. For those that want to keep waiting for the $ CAC MS67s to come back down, good luck. New Collectors without that mental baggage are created every day, and they are not making any more of the coins. . .