The following is reprinted from Maurice Rosen's annual Crystal Ball Survey. Warren was one of five nationally recognized experts asked to answer Maurice's questions and give his picks for the upcoming year. His answers for the first half of the survey appear below with the second half coming next month.
In the introduction of the participants Maurice introduced Warren Mills as "a past panelist here, is known for his high ethics and outspokenness."
Maurice Rosen’s “Crystal Ball Survey.”
Answers by Warren Mills, Rare Coins of New Hampshire, Inc.
1. What's your outlook for the coin market in 2011/2012?
It should be strong. However, the $600 Form 1099 reporting issue could be a huge negative for the future. 2010 has been a bit disappointing due to consumer interest in protection and with fear of many things as a motivation for buying. The consumer is geared more to bullion and don’t want to be educated in rare coins. If bullion becomes tougher to acquire, coins as an alternative could become very hot. Even a case for diversity could lead to a good market in 2011 and 2012.
2. What areas will be the strongest in 2011/2012? Why?
Due to the monetary based nature of gold, virtually any U.S. gold issues including gold commemoratives in many grades should be very strong. I would focus on solid original MS-64 to MS-67 issues and nice proofs too! Their premiums have fallen way off and true solid coins for the grade are now a bargain and could also gain in a major promotion.
3. What areas of the market look to be the weakest for 2010/2011?
Buffalo nickels and Mercury dimes could remain weak. They are great coins but smaller denominations could suffer in 2011. Cents have such a huge collector base that they should be fine….and Two Cent & Three Cent issues have an interesting allure to them as denominations.
4. If gold continues to rise, say to $2,000+ by the end of 2012, how best would you advise a client to profit?
Always take a diversified approach. Gold bullion has had a 50% increase in a little over a year. Not bad by any standard. I’d also buy junk silver. With gold at $2,000+, silver could be close to $50 which would be a 100% increase from its’ current price. Mix in $20 Saints in MS-64 to MS-66 grade. If increased gold prices lead to regulated trading of bullion, these coins could double. True MS-66 Saints are a joke at today’s prices.
5. Given that gold has been such an out-performer for years while, for the most part, rare coins haven't done nearly as well, are coin prices undervalued and ready to play catch up or is their under-performance reflective of something else?
They are undervalued. But if the consumer is not educated, you could sing that song for years while other investments slaughter coins. Many of the old school coins buyers and dealers have retired or passed away. Most dealers now are label readers and have no idea about how to educate buyers. Their motive is to simply sell whatever is available. I believe rare coins will only play catch up if the amount of bullion traded is regulated to smaller amounts or if the bullion supply dries up. There are compelling reasons for rare coins, but most dealers don’t know how to deliver the message.
6. Over the last year premiums over melt for gold type have come down. Might this trend continue if gold rises or is this an opportunity for today's investors? If an opportunity, how best to play it?
It is a great opportunity to acquire fresh original skin solid for grade MS-64 to MS-67 gold. The premiums have been cut drastically due to investor focus on bullion and low quality pieces entering the market. Go to a major show and look for true gem plus gold, it is very hard to find. Better yet, find undipped proof gold, almost impossible. Label readers find all they need….numismatists don’t.
7. What are the primary concerns that worry seasoned investors the most? What about the concerns of new investors? What is your advice to both groups about their concerns?
As the old political statement says, it’s the economy stupid! Investors are worried about an economic collapse and dollar devaluation. With those concerns, the premiums on numismatic coins don’t make sense for new or seasoned investors. My advice is to always diversify, gold & silver could correct at any time. If this happens you could have a frenzy of selling. Then coins will be great. Diversity gives you many options. A mix of bullion and rare coins is very prudent.
8. What are your thoughts on how PCGS and NGC are currently grading coins?
They are a bit tougher overall except on gold. Due to the financial power wielded by large gold submitters, the services have to make it worthwhile for them to submit coins. That is why true gem plus gold is so tough. Gold coins are the most commercially graded area in the coin business and strict pieces could get stars, pluses or future upgrades.
9. The proposed "1099" regulations for the reporting of sales exceeding $600 looms over the coin industry. A) What are your thoughts on this? B) What effects would its passage have on the coin market? C) What advice would you give your clients if it passes?
A) It has the potential to be a huge problem for privacy oriented people.
B) In our industry, privacy is a paramount concern. You could have huge collections piecemealed out by friends and relatives all over the country.
c) Remember the 1099 reporting requirement is already law. It was passed as part of the health care reform law. I would advise my clients not to be too worried about it since I believe that it is so onerous that politicians will acquiesce to business interests and amend or rescind the requirement in whole or in part.
10. New York Representative Anthony Weiner has taken a stand against alleged abusive dealer selling tactics and prices of gold coins and is in favor of regulations for the coin industry. A) Are there any regulations which you favor? Why. B) What impact would Weiner's regulations have on the market?
A) It would be nice if all dealers had to be P.N.G. even if just associate members. PNG does an excellent job of setting ethical and financial requirements in addition to having every member agree to binding arbitration. I realize that every dealer cannot meet PNG’s strict membership requirements but I’m sure something could be designed for smaller brick and mortar and vest pocket dealers.
B) It would be bad! This industry is riddled with its’ share of unethical boiler rooms taking advantage of the elderly and uneducated. My fear is that the politicians have no knowledge about this industry or how it works and that if they regulate it the rules will be so overwhelming that many dealers will be driven out of business.