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Positive changes in the collectable coin marketplace

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Where is the numismatic marketplace right now? How did we get here? This article draws some light on these questions. In order to understand what will happen in the future we need to look at what happened in the past.

Are antiques’ markets still the main source for collectables hunting?

History of collectables' investment

So called passion investments (fine art, jewellery, coins, wines etc.) were for long exclusively pursuits of the aristocracy and intellectual elite. With the post-WWII emergence of a wide middle-class with disposable income these pursuits became known to the rest of the population, thereby increasing demand from a handful collectors to larger groups. Globalisation grew the demand further from local collectors (such as Brits collecting British coins, Germans collecting German coins etc.) to international collectors, especially in emerging markets.

Need for alternative investments

The world’s economy is still recovering since 2008

In the financial crisis of 2007/8 investors were reminded of the importance of diversification into uncorrelated assets. Investment capital flowed in to passion investments and these are now widely accepted as high-grade alternative investments. Because they are uncorrelated to conventional markets they provide diversification in the modern investors portfolio of assets, thereby reduce downside risk.

Main factors of coin marketplace change

Traditionally seen as a difficult to enter niche market with a lot of unserious players in the marketplace, coins have been criticised for the high number of scammers, lack of regulation etc. However, this is quickly shifting, mainly due to

The Internet – price information availability, research on specific coins, compare prices/photos between dealers, marketplaces etc. Easy to research and do due diligence on dealers.

Amazon – although not selling coins in the UK and Europe yet (US Amazon does) Amazon has had massive influence on what consumers expect from online sellers today. Detailed descriptions, customer reviews, next day delivery, no-questions-asked returns and high level of customer service have become requirements also in the coin industry.

Amazon is officially Britain's most influential retailer

Technology – high quality photos are now widely expected. Gone are the days of out-of-focus images, bad scans or potentially touched-up images. Today, bad photos mean only one thing: unserious hobby sellers. All professional dealers should have invested in proper photographic equipment and setup with the aim to produce images that show correct depictions of coins on offer.

Legislation – The Consumer Protection (Distance Selling) Regulations 2000 and The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 offer protection to online consumers and legally require online sellers to have a returns policy.

Trade bodies – IAPN (International Association of Professional Numismatists), BNTA (British Numismatic Trade Association) continuously work to make the marketplace safer. Membership in these require dealers to adhere to strict rules of conduct.

Grading standards – biggest being PCGS, NGC. Membership in these legally require dealers to adhere to strict grading policies and to guarantee authenticity of coins.

Ebay lost its name as a go-to source for collectable coins

Due to the above, the market is maturing quickly. Ebay is now losing market share due the emergence of more sophisticated seller networks, developed with the issues Ebay users were facing in mind. Biggest in Europe is the German platform MA-shops, which perform rigorous checks and a strict application process on dealers before accepting them to list on their platform. Repetitive issues with same dealers will lead to suspension.

The Coin Cabinet is a proud member of the BNTA (British Numismatic Trade Association) and PCGS (Professional Coin Grading Service). Their strict policies of conduct, including grading, photography, return policy etc. have been deeply ingrained in the company’s vision ever since The Coin Cabinet was incorporated in 2012.

The typical collector today has more of a collector-investor's mindset, are resourceful internet users with a high expectation on online offerings and know what a coin is worth. It's only a matter of time before the industry sees further restrictions and consumer protection measures. We are looking forward to being part of making this happen. At the end of the day, increasing trust in all levels of trade will massively benefit all participants.


 

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