Some Thoughts on Numismatics and Changing Times

By Q. David Bowers
Numismatic Perspective

Quite a few years ago a numismatic magazine published an article by me, stating that I was an “economist from Columbia University”. This looked nice in print, but wasn’t true. I sent the editor a correction at which time he said that he had “heard this somewhere”. In actuality, I love economics and economic theory, have studied (via my library) the subject intensely, and at Penn State in 1960 earned a degree in Finance.

To me the combination of numismatics, economics and finance is a dynamic one. It is also quite useful in planning. This led me on the path to research the history of the coin market, leading to a series of articles on coin price and popularity cycles, first published in the early 1960s, and since then revised and expanded. In my latest book, published by Whitman, An Expert’s Guide to Collecting and Investing in Coins, you will find a lot of significant and interesting (hopefully) information on coin market cycles, with some general background given on other things.

Economics has been called the dismal science by some, and it may be. This one element of American and worldwide life can neither be predicted with accuracy nor understood clearly. I believe all of us were amazed during the Jimmy Carter administration in the 1970s when, in defiance of all standard economic theories, we had double-digit interest rates and double-digit inflation at the same time. High interest rates are supposed to dampen inflation and, hopefully, make it go away! All bets were off, all rules were broken. Then we had Ronald Reagan’s “trickle down” theory, called Reaganomics by some. No matter how it was viewed, it did straighten up the American economy, which seemed in dire peril and about to crash completely.

Today in 2005 we have interest rates being hiked by the Federal Reserve System (recently to 4%, the highest in four years, but still far below the levels of earlier decades), a real estate bubble that everyone predicts is about to pop, and rising costs everywhere, My own view is that interest rates will continue to rise, due to general worldwide prosperity as well as domestic prosperity, the latter encouraged by what many consider to be reckless spending and vast sums of government money thrown around, often without what the business sector considers to be effective management or oversight. I do not mean to be political, and we all have our opinions, so I’ll stop here. However, perhaps being a transplanted Yankee, my feeling is that if you want to spend a dollar, it’s good to have a dollar in the bank.

As to what the current American economic milieu means for numismatics, the coin market has been there, done that in various mutations over a long time, As I see it, increased inflation will bring with it increased costs of living and everything else.

Speculators in real estate property not being used for office space or actual residence will have their fingers burned- nothing new or unexpected- the same thing happened to stock investors in 2000. Remember those television scenes in which leading brokerage companies would give naive but well-to-do people desks so they could trade all day? That is, until their money ran out. Just like a casino.

Cost of services will rise, including transportation, energy, interest, medical care, and more. At the same time I do not see a corresponding cost in real take-home income. Companies are trying to cut costs everywhere- cutting medical benefits, reducing overtime, hiring cheaper labor, outsourcing, buying goods in third-world countries, and so on. The idea of using your home to borrow money from some distant television advertiser to “consolidate your debts” or to enjoy life more will come to an abrupt end, as anyone who had taken out an adjustable rate mortgage will find a particular squeeze: more interest to pay, but less income from which to pay it.

In all of this, numismatics will go on merrily. Collecting coins is one of the pleasures of life, and in the changing panorama to come, I cannot see people giving up driving their cars, buying iPods and other computer gadgets, and, in essence, enjoying themselves. Collecting coins has always been a refuge for the weary, a place to regenerate a tired mind. I could easily create a monograph of a couple hundred pages of essays from observers in the past who have stated the benefits of collecting, not the investment benefits, but the emotional benefits. And while it takes money to buy expensive rare coins, most coins are very affordable.

I am now in the midst of writing a 288-page book on Washington quarters for Whitman Publishing Company. I expect that there will be at least a couple of pages, with lots to read, on each of the state quarters from 1999 to date. I really enjoy my full and constantly growing collection, all MS-65 and Proof-65 (although they are ungraded and in albums) or finer. The total cost is just a few hundred dollars, plus $125, or whatever it was, for the fascinating 2004-D Wisconsin quarters- one with Extra Leaf High and the other with Extra Leaf Low. While I would dearly like to own an 1879 gem Proof Flowing Hair Stella at $200,000, 1 seriously doubt if I would enjoy it as much as my set of quarters!

In a world of changing economics and monetary situations, I predict that coins will continue to be an excellent store of value. Basic concepts should be kept in mind: quality, rarity, popularity, and eye appeal. While the rare coin market has always moved in cycles, and will continue to do so, a basic awareness of these cycles will help you avoid them. Always seek value in anything you buy, and you will do well.

We are indeed lucky to be in numismatics. I love it, and I know that you do, too. The world will change around us, but what we collect will remain as interesting as ever. A carefully assembled set of rare coins should remain a fine store of value, a treasure for the future. In the meantime you will have your own private museum of numismatic history and art to enjoy.