Inflationary Bubbles, and How They May Relate to the Market for Rare Coins
I was introduced to an author by a colleague a few months back, one whose theories and observations I find are resonating with me to various degrees. The gent's name is Harry S. Dent, himself a demographic economist (that's my description which is probably a somewhat inaccurate summation of their approach). In their own words:
"HS Dent is an economic research and forecasting company .... based on the study of and changes in demographic trends and their impact on our economy. It works by showing how predictable consumer spending patterns combined with demographic trends allow us to forecast the economy years or even decades in advance."
I've been sagely advised by friends and family in the past 12 months that business will boom for our industry prety shortly, as people will be turning away from shares and property, and will be looking for an alternative investment that can help keep their plans for retirement in play during relatively lean economic times. Turns out the premise for their view is one shared by others with far more experience in observing markets at play. The blog post that I'm referring to can be found here, where the author states that, regarding the question of where investment funds may turn to next now that equities and property in the US have taken heavy hits:
"We don’t have experience with this one; we are breaking new ground. Never has there been a time when so much accumulated wealth could move so quickly among investment choices. If we are correct in forecasting an extended period of slack global demand, which in turn would mean paltry earnings for financial securities, where will capital fly to next in the great chase for returns? Cash is not a very attractive alternative if your future depends on earning 7-8% per year. This question will haunt us as individuals, and many professionals as pension managers, in the years to come."
The economies of the US and Australia are different in many ways, however the similarity that I believe we share is in the need or obligation of many investors to generate funds for their retirement years. I don't have my head across the latest statistics related to the growth in superannuation contributions across Australia, or the ongoing growth in the number of SMSF's being started up each week, but I have little doubt they continue to rise.
The kernel of an opportunity for the numismatic market is that even if a modest portion of these funds turn to the numismatic market, demand will not be a problem we'll need to concern ourselves with too greatly.
The main barrier to entry is market knowledge however, and as easily as we experienced players buy and sell our chosen numismatic items, our market is certainly foreboding for many novice buyers that see that tangible assets as being an area they could get into. I'm furiously pounding away at my next book on the business of trading coins, which I hope and believe will address a gap in the market for information that's being sought by folks such as that, keep your eyes peeled for news on the first section being released soon.