The Pandemic and the Numismatic Market

In March, as everyone’s life quickly became dominated by the coronavirus pandemic, economies in every country contracted sharply and millions of Americans were suddenly unemployed because of the necessary implementation of social distancing measures, you probably had the impression that this would be a tough time for the numismatic hobby and the coin market.

As stock and bond values dropped sharply day after day in response to news of the virus and the economic dislocation, many investors sold gold to raise cash, which led to a temporary sharp drop in spot gold to below $1600 and an 11-year low in silver below $12 before both metals rebounded.

At the same time, mints around the world had to either shut down completely like the Casa de Moneda in Mexico or had to reduce their operations like the Royal Mint of the United Kingdom and the Perth Mint in Australia. And every day seemed to bring another announcement of a major coin show being cancelled in the U.S. and around the world.

As for the U.S. Mint, its West Point Mint had to suspend operations due to the high incidence of the virus in New York state, but as of April 21, it has resumed limited production and implemented social distancing measures. This is where all U.S. bullion coins are made, so expect ongoing supply shortages of American Silver Eagles and American Gold Eagle Coins.

And the San Francisco Mint, where operations where temporarily suspended on March 17, will resume operations on May 4 with reduced staffing in order to maintain social distancing. This is where silver and clad proof coins and commemorative coins and medals are made, so expect delays in the release of forthcoming products of those types. The highly anticipated 2020 Basketball Hall of Fame coins, which had been planned to be released in March, are now scheduled to be released on June 4.

Strong Coin Market

The reality today is that not only have bullion prices recovered, especially gold which continues to hover around $1700-1750, but demand for physical gold, especially coins, has exploded to levels most sellers have never experienced. This sharp rise in demand, an influx of new buyers seeking to buy gold as a hedge or safe haven, and the shuttering of gold mines and coin minting facilities have combined to create a major shortage of gold coins with silver coin supplies also constrained.

In fact, in March the Wall Street Journal covered the supply crunch in physical gold and said the Royal Canadian Mint had been swamped with requests from Wall Street to ramp up production of gold bars that could be send to banks and other facilities in New York. This sparked what the paper termed “unprecedented levels of demand”.

And that has pushed premiums on gold and silver coins, bars and rounds to the highest levels seen in years, while dealers struggle to process the greatly increased volume of orders, which has resulted delays in order processing. By the end of April, the situation had improved, especially with several mints reopening at least partially, but the overall trends remain the same.

With premiums on modern gold bullion coins, especially the perennially popular American Gold Eagles, as high as they are now, the price of old gold coins with varying degrees of numismatic value, especially nice quality pre-1933 U.S. gold coins, like $20 Saint Gaudens, have also risen but not as much, making them attractive to buyers. The same holds true for premiums on Morgan Silver Dollars and Peace Dollars. 

Meanwhile, although brick and mortar coin shops were closed in many states, online coin selling has ramped up. Major coin auction companies around the U.S. are reporting very strong sales of rare coins when those events are held online. And with so many people working from home, there are more people with the time to focus on their coin hobby and peruse auction and retail coin sites for possible new acquisitions.

In fact, in March the most valuable coin collection ever sold at auction, the D. Brent Pogue Collection, which has been sold in stages for several years, reached an amazing total of over $131 million! 

At the same time, one area that is likely to suffer during this crisis is collecting circulating coinage from change, including the new 2020-W V75 Privy Mark Quarter, which are West Point-mint marked quarters that include a “V75” privy mark to celebrate the 75^th anniversary of the end of World War II, which were planned long before the pandemic hit. Most people have sharply curtailed their use of cash, which was already in the process of being replaced to a great extent by credit and debit cards and other electronic payments.

Coronavirus vs. The Financial Crisis

Perhaps the best way to understand the current market for numismatic coins and how the ongoing health and economic crises are shaping that market is to consider how different the current situation is from the so-called Great Recession of 2008-2009. Back then prices for higher-end rare coins fell within months by 20% or more, many collectors who had financial resources stopped buying out of fear about where the economy was headed, and gold and silver bullion prices hit their lowest levels in years with gold and platinum both getting down to $800 or less in late 2008. Those days were great buying opportunities.

Then a stimulus was injected into the economy as part of the federal government’s efforts to increase demand and economic activity, but it was only a small fraction of the multi-trillion dollar stimulus being injected today because of the much more extensive nature of the current crisis. But even that smaller stimulus helped propel the numismatic market in 2010 to 2014 (even after gold and silver hit their all-time highs and then declined) to very strong levels for most coins except the most common ones. Ultra rare coins like the 1893-S Morgan Silver Dollar saw some of their best times. 

Today there is even greater reason to be optimistic about the coin market for several reasons, including the fact that the enormous economic stimulus will be spent in part on numismatic coins. Those still receiving an income have reduced expenses in many areas like gas, entertainment, etc., which frees up money for coins.

The explosion of demand for bullion coins is another important factor, which historically has helped to drive the prices for rare coins to higher levels. A bull market in bullion typically spurs a stronger numismatic market, and in this case the numismatic market was already in good shape overall before the crisis.

Then there is the influx of new bullion buyers with quite a few of them becoming interested in the coins themselves and not just the metal they are made of. While of course no one knows how long the crisis will last, the future of the rare coin market looks much brighter than it did in March.