Author Topic: It may take a catastrophic meltdown to jolt people back to sensibility  (Read 176 times)

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Offline badon

"Liquidity" is the dirty word in this article:

One dirty word keeps popping up as Wall Street weighs the next market crash — and it should strike fear into the hearts of investors everywhere

The phrase "It may take a catastrophic meltdown to jolt people back to sensibility" comes from the last lines of the article, and I think it is likely to be correct. 2008 was the year the last "catastrophic meltdown" occurred, and exactly 10 years later in 2018, history seems to be repeating itself. The mainstream stock markets (etc) are riding high, while nobody cares much about hard assets like precious metals and rare coin investments. Everything is telling me this is an excellent time to add some more nice coins to my collection.

Poor liquidity affects everyone, and in this political climate where a trade war is brewing with China, liquidity could vaporize overnight. China is the richest nation in the world, and one of the most powerful sources of liquidity when Chinese money steps in to support markets when they show signs of weakness. With a trade war, Chinese money will be blocked, and that's very bad news for mainstream investments, because it will allow markets to drop deeper, with no quick recovery.

The #1 downside to coin investing everyone should know and how to profit from it

The one big downside of coin investing is poor liquidity, but that feature of coin investing is already priced into the coin market. If liquidity gets worse in the coin market, it won't be a big shock like it is when liquidity gets worse in the stock market. People expect liquidity to be poor in the coin market, so patient investors could be totally unaffected by changes in liquidity.

Dealers are more affected by worsening liquidity because they must drop prices to attract buyers, but that's their problem, not ours. In fact, even if prices don't drop, the poor liquidity can force dealers into a position where the only coins they are able to sell are the best ones they have been keeping for themselves. The best investment grade coins can break all the rules and ignore everything else going on in the world markets, and actually rise in price even if everything else is dropping! That's amazing, and it's one of my most favorite things about focusing my investing on the best coins I can afford.

Prices can't rise until there is a sale, so when dealers are forced to release their best coins to the market, everyone will notice when they see the new higher prices in actual sales, while everything else is dropping. Attention-getting sales for rare coins will make the entire coin market look more attractive to investors and collectors. When the finest investment grade coins are AVAILABLE, and easier to buy at good prices, the rising tide will lift all boats, and the entire coin market will benefit from it.

I am often quoted for saying the best time to buy rare coins is when they are available. The price you pay isn't as important as the length of time you hold them in your collection. That is why I'm never afraid to "overpay" for a very rare top-quality coin. Dealers don't like to sell their best coins publicly for discounted prices, because even if it's only one sale, it will become a data point that everyone will use to place a value on that coin type, and a public low price could devalue the dealer's remaining inventory.

Get the coins at the best price you can find, but above all, just get the coins. Don't haggle too much about the price, as long as it's fair, and you have a good relationship with your dealer. Make sure your dealers know who to call first (you) when they decide they must sell one of their best coins.

Draft version originally posted 2018-Aug-05-Sun here:

It may take a catastrophic meltdown to jolt people back to sensibility : r/CoinInvesting
« Last Edit: 2018 Dec 31, 09:08:42 AM by badon »