An article over on the COINLINK news website posted a few weeks ago is really timely for those of us that have funds tied up in a collection of rare coins or notes - how to relate to your collection when other investment markets take a significant hit (which they obviously are at present, in the States at least). Titled "Collecting as a long term work in progress", it covers the likely effects on the numismatic market in the US from what is now regularly being termed "The Credit Crisis". The author's position is that just because a stock sich as AIG or even an index such as the NASDAQ drops 5% or 90% in one day, that doesn't necessarily mean that a collection of any type will also drop concordantly in value.
The author's position is that if the financial markets really go sideways over there, a lot of people will look for alternative assets that: they can understand (somewhat less complex than a CDO or other deriviative financial instrument); are tangible (and not likely to disappear magically due to the efforts of a genius banker or broker); in demand with like-minded individuals (and thus reasonably easy to re-sell when the time comes). The results up at the IAG auction on the Gold Coast last week certainly bears that out - there's no way those prices could have been as consistent unless the buyers had confidence in the market for the items being purchased.
A great quote in the article is that "Panic selling is never a smart thing to do and I think anyone who takes their collection to the next major show and announces that they “have to sell” is setting themselves up to get sliced and diced.". One of the first steps I reckon that anyone that invests in our markets should take before they go out and start acquiring items for their collection or portfolio is to ensure that they have a sufficiently deep cash reserve to ensure they can get through any unforseen calamities (whether they be personal such as the loss of a job or serious injury, or more widespread such as an economic downturn), and that way we aren't forced into selling quality items at fire-sale prices. I'm starting to see this forced selling take place in the banknote market, albeit for notes in the mid-grade range, ie for generic notes from VF - A UNC. A lot of folks that get into that sector of the market don't do a lot of homework (it is pretty difficult to learn about grading etc so we can't judge them too harshly), and panic easily because they don't understand the way the market works over the long term.
There's no doubt that if or as discretionary spending eases in the coming months, demand for certain categories of coins & notes will ease also. It's interesting to note the author's interest in collectible precious metal coins, particularly gold coinage. I also believe that the type of collector that is active in this market is already a contrarian type of buyer / investor - many or most have seen these current events coming for years, and have been steadil;y building a collection of gold coins as a means of building a safety cushion against adversity in other markets.