Numismatics and Precious Metals Could Not Be Better Positioned
If you are comfortable with drifting through life, accepting events as they arise you are probably not a planner.
However, if you are like me you will occasionally take stock of where you are, which direction you are heading and plan where you go next. For this reason, I also like to straddle the years and understand where we are in the numismatic market.
In January 2007 we were attending the Florida United Numismatists show in Orlando anticipating a record-breaking auction of a 1913 Liberty head nickel. This legendary asset, the finest know example, had a reserve of $5,000,000.
In the event, the coin failed to receive a single bid.
Far from dampening market sentiment 2007 will be recognised as an incredible year for numismatics.
Just ten or twenty years ago there would be perhaps 15-20 major auctions worldwide which accounted for around $100,000, 000 of fresh supply. During 2007 $100,000,000 was an average month. Heritage galleries conducted a single weekend sale close to $80,000,000 alone.
From Sydney to Hong Kong, Europe and the USA collectors with deep pockets ruled the floor.
How the financial crisis sweeping the world will affect trade in during 2008, nobody can tell. However, in reality the so called “Credit Crunch” is in fact an ASSET CRUNCH.
With Bank of England and ECB money supply running at record levels, not seen since the early 1980’s there is plenty of money sloshing around looking for a home.
Credit, whether a bank note or mortgage is only as good as the faith in the asset behind it. With more than $500,000,000,000 of debt valued at only 10 cents on the dollar, and only twenty per cent of this debt accounted for there is an additional $400,000,000,000 waiting to turn up in pension funds, banks and insurers.
Without question, the world is awash with cash, unfortunately it is mostly worthless paper.
- In modern economics, inflation is described as prices rising.
- In traditional economics, inflation is defined as an increase in the stock of money.
In July it was reported the ECB was running the printing press at a 25 year high. 11.7% fresh money supply created, up from 10.6% in June. Statistics for euro money supply are calculated back to 1981, only in 1982 was more printed.
To maintain price stability official ECB policy is a rate of 4.5% money supply.
To compound this miscalculation, on August 9th the ECB injected an unprecedented E95,000,000 into the credit markets dramatically followed in December with an additional E500, 000,000.
So looking forward to the next 12 month, we will continue to read and hear strange, exotic sounding headlines from the financial world. Politicians will continue to claim inflation is only 2%, and the price of gold should soar through $1,000 per troy ounce.
In fact is, as I sit here, I cannot think of better prospects for the numismatic market.
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