Legend Market Report - Sept. 08 Long Beach Show

By Laura Sperber


“Lackluster” is how we would best describe activity at the show. Dealers definitely had some cash flow issues and we heard several major generic/bullion dealers had margin calls on gold while others battled just to pay their ANA auction bills. Take away the roll coaster ride of the financial markets and gold, and even with poorer cash flows, it was hard to distinguish this Long Beach Show from any other held during the same time period.

Typically, the fall show has always been the weakest. Attendance was surprisingly strong Thursday, but on Friday you roll a bowling ball down the isles. We really don’t think this show is a good representation to fully gauge the market, but we’ll try to comment on all significant happenings we saw.

CLEAR YOUR HEAD AND TAKE A DEEP BREATH
Too many people do not see what is happening. It is amazing to us how many people are in total denial that the roaring bull market is over for now. In our last Market Report we spooked many people (and had many dealers angry at us) for telling it like it is-that a correction was underway. What everyone failed to read was that the correction was occurring primarily in the following 3 areas: *”inferior”, *”product”, and *”widget” coins. These are clearly off by a full 10-20%. See the end of this report for our definitions of those areas.

The three groups listed rode the bull market harder and longer than they ever should have. They actually did hurt the pricing on “better’ and “rarer” coins for a long time as pieces lingered on the market and sapped cash flows. Now that a huge separation between quality and lesser coins is occurring (like with MS66 Saints, CAC stickered pieces are WHOLESALING for $2,750.00 while NON CAC coins are selling for $2,250.00) the better coins are finally free to move up in value with out being dragged down by an inferior piece.

There is no question, the truly rare and NICE coins are still bringing all the money and then some. So long as you have true quality and can sit through a potential short term correction, you will be fine and your coins will produce the sensational returns you expect.

THE CURRENT LEVELS
From what we experienced in our own little orbit in the coin galaxy, price levels overall (save for generics and the three areas we posted above) were either slightly lower or mostly unchanged. There wasn’t a huge amount of activity that took place wholesale to pass full positive judgement. However, we do know that when nice, fresh, and eye appealing rarities hit the floor, they were immediately sold for what ever the asking prices were so long as they weren’t totally stupid.
Price guides are still BELOW reality (example: we just bought and sold a PCGS MS65 1875CC 20C. WE PAID $17,250.00 for it. CDN WHOLESALE BID is only $8,900.00. We will buy them all for that!). Also, as usual, auction prices were hit or miss-with real coins bringing real money.
We were amazed that prices seemed to remain firm even with all the craziness in the world around us. Again, understand that when we say the market is correcting, we are talking about the shift to pure quality. Quality coins ALWAYS sell for more period. Junky coins are off by 10-20%. To a small degree they have slowed the entire market as well. A correction like this was percolating for a very long time.

PROOF THE MARKET STILL IS THERE FOR GREAT COINS
There is no question great coins still trade like there is no tomorrow. The key is the quality. Even if you have a tremendous rarity, if the quality is off, so will be the price. Coins like that are clearly off by as much as 20% since the ANA Show.

The Goldberg sale probably was the best of all the auctions to discuss. They started with the ultimate fresh deal: GEM Large Cents from the Nafzger Collection. Bidding was so intense and furious, we sat there like children just given detention and told to keep our hands on the chair seat at all times! Prices did what they should have-went insane. Here are 3 examples;
1C 1793 WREATH PCGS MS64BN $224,000.001C 1796 PCGS MS66RB $690,000.001C 1803 PCGS MS66BN $241,500.00 (and we were thinking a $150G hammer bid would make us hero’s)

We knew they would go for at least 5X the low ball estimates. How can you put a price on a coin that’s so fresh and unlike any other anyone has seen in decades? If the market were truly hurting, the room would not have been packed and these coins would not have brought anywhere near what they did. All of them were acquired by deep pocked collectors. It also proves out our favorite tag line” “there is no substitution for quality”.

The Ohringer Collection was a mishmash of great and not so great rarities. Here is where the market definitely gets proved out. Even though all the coins had low reserves, several ‘inferior” pieces failed to sell. Of course the great coins brought strong money (NOTE: none of the coins here were really fresh).

Here are a few examples:
G $2.5 1821 PCGS MS64 $149,500.00G $3 1873 OPEN 3 PCGS PR65 DCAM $212,750.00 (purchased by Legend)G $20 1870CC PCGS XF45 $345,000.00G $20 1887 PCGS PR65 DCAMEO $161,000.00
If you also notice, cost was NOT any barrier to buying a coin. There was tremendous strength exhibited in the Goldberg Sale for expensive rarities.
The Superior Sale saw a 20C 1876CC PCGS MS62 sell for $270,000.00 to a dealer! A monster 1824 1C PCGS MS64RB sold for a dizzying $57,500.00. We could go on and on.
The B+M and Heritage sales did well too (B+M Sold a fresh Octagonal Territorial for $460,000.00).
So unless a coin was so/so, the auction scene remained very solid.

THE BIGGEST SURPRISE
We hate surprises. We still can’t believe this-one of the softest areas at the show was generic gold. Save for a small mad rush on Thursday (we saw people buying AU58-MS62 gold), there was NO influx of orders. We expected to hear that dealers needed hundreds of coins. Every buyer for a top telemarketer told us they still had more than enough supply to handle the current demand. They said orders had not picked up except for straight bullion.

We still think there is time to buy gold while the premium over “melt” is still small. Or, in cases of higher grade generics, since most major market makers got hit with margin calls, they were not stocking up at all. So even there you’ll be able to find decent values in higher graded Saints, Libs, and Indians.

As time goes on and people realize their heads are still on their shoulders, we think orders will dramatically increase for generics. People will never again 100% trust the banks. It could be very interesting for generic demand and prices in the next 3 months.

COLLECTORS SELLING
Even though we have been swamped with collectors selling, there is no mad rush to the exit. We see mostly smart selling. People are heeding our advice and selling off their excess to get in cash positions. We still are getting fresh deals every day either on consignment or for outright purchase (just wait until you see the monster deal we are doing the first week of October). No one has said to us they had to sell due to the financial markets mess. We did have one customer who sold us a mid six figure collection (he took some lumps too) so he could buy gold. He makes our Hall of Fame as he bought gold last week near its recent low. WOW!

NOTE: You are far better off SELLING your excess or “lesser” coins now even if there is nothing around you want to buy. Having cash will always reduce your risk and set up to be in a better bargaining position when that”right” coin comes along. When you are rushed to sell, you rarely will get the prices you need. Your best deal is always for cash.

When selling these days, note that if you expect auction prices-sell in auction! Dealers need to make 10% and also have expenses and the costs of money to deal with. However, you should always get the most money if you go back to the dealer who sold you the coins. If they don’t support what they sell-time for a new dealer! An honest dealer will always pay the most they can. But if you expect unrealistic prices, don’t blame the dealer for not bucking up!

TO SUM UP
What do we think?
The sky isn’t falling. Hard assets will be sought out once everyone quits being so afraid.
On Wed. we thought for sure gold was going to hit 1,000 by Friday. Oops! We also thought the stock market was crash to 8500 (still a possibility). After neither happened we realized we still had all our extremities, were still breathing, and people still DID very much want to buy and sell coins. So our focus went back to sorting out the best values available.

It is our strong opinion the average buyer is taking a “wait and see” approach. So the faster the financial markets calm down, the faster we’ll be back to a healthier business as usual. We think coins will become extremely bullish by the end of the year.

Dealers will suffer for a little while with bad cash flows, but you won’t see any implosion or mass dumping. There are so few great coins on the market these days, it would be impossible for prices to fall. if it were to happen, that would mean the entire economy is kaput.
Sure, this will sound like hype, but now is probably the BEST buying opportunity all year!

WHAT IS HOT?
Early type-even Early Copper in true quality is on fire. MS Seated coins in 64 and finer. Blast white GEM “better” ($5,000.00 an up) Morgans with clean cheeks have high demand. And yes, even lowly Commems in GEM are in demand again.

WHAT IS NOT?
Still can’t believe no one cares for generics. GEM MS Liberty and Buffalo Nickels have been thrown aside due to massive coin doctoring. Low end widgets still linger-dealers want to much still.

DEFINITIONS
INFERIOR; A coin that is over-graded in a holder, low end, or unattractive in a holder.
PRODUCT: Decent B/C level coin that has no outstanding eye appeal or anything else.
WIDGET: A COMMON COIN YOU CAN FIND IN ANY GRADE ANYTIME. generally when we discuss these, we are talking about product pieces. Exceptional coins do sell strong. Example: a high relief in any grade is an expensive widget. An 82CC in MS66 is also a widget.