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Scared Money Flows to Coins?
By Patrick A. Heller
April 01, 2013



With Canada, New Zealand and the Eurozone nations announcing plans to implement or study the idea of confiscating at least some portion of the checking and savings accounts at faltering banks, I anticipate that worldwide use of banks in general could see a falling demand in the next couple of months.

However, just because funds are withdrawn from banks doesn’t mean that they disappear. The owners of these funds will have to stash their funds somewhere, or else use them to purchase assets. I have heard repeated reports that citizens in the Eurozone are again stuffing mattresses with paper money. But that is not the only option that former bank account holders are selecting.

Doubtless some of these funds are being used to purchase other paper assets such as stocks and bonds. But, there is a definite increase in demand across the Eurozone nations of people acquiring bullion-priced gold and silver coins and ingots.

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In late 2008, when the prices of gold and silver fell sharply, demand for physical gold and silver soared. People were so eager to buy live gold and silver products that once it became difficult to find bullion-priced coins and bars, some of them then moved on to purchase lower premium circulated U.S. $10 and $20 gold coins and all manner of common-date circulated and Mint State Morgan and Peace dollars.

In my judgment, we could see a repeat scenario of such demand in the next few months. Right now premiums on circulated U.S. gold coins and circulated common Morgan and Peace dollars are higher than they were before the surge in demand in late 2008. However, demand could still take off from customers who simply must take immediate delivery – and there were many of these buyers in late 2008.

Unfortunately, the risk of confiscation of funds in bank savings and checking accounts is also likely to make people more aware that the cash in hand will also be needed to buy groceries, gasoline and daily necessities if a bank holiday hits close to home. So, while demand for semi-bullion numismatic coins might remain strong, there could be a noticeable decline in interest for strictly collector coins and paper money.

The rare coin market has been relatively strong thus far in 2013. However, it could experience a major slowdown if people once more are worried about how they are going to buy a loaf of bread, gallon of milk, or a tankful of gas. This is just one more factor for collectors to keep in mind as they try to forecast the trends in numismatic demands.



Patrick A. Heller is the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Coin Week (http://www.coinweek.com and http://www.coininfo.com). He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” (http://www.lansingbusinessmonthly.com/articles/department-columns). His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.




 

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