Let’s say it out loud: the coronavirus exists. You can catch it and you can die because of it. The coronavirus is spreading, it is new and there is very little research on it. That’s why people are afraid. Nonetheless, the panic that this disease is currently causing isn’t related to its actual potential danger when we rationally think it through. At least regarding countries with working health systems.
But whether we are afraid of the coronavirus or not, the measures that are taken in order to fight this disease affect our lives as coin dealers, too. The coronavirus is even likely to exert a lasting influence on the international coin market. This article dares to glance at the future and thinks about the consequences that the coronavirus might have for the coin trade.
The Coin Trade Is Booming in Times of Crisis
Let’s start with the good news – at least from the perspective of coin dealers: whenever stock prices fall, the gold price and the demand for classic numismatic investment products rise. For coin dealers, this means a greater demand and higher auction results. For collectors, this means more competition from investors. Therefore, coin prices might well increase if we did not have to worry about the Chinese market.
What Happens in Asia?
Currently, China and Hong Kong are absent from the German and Swiss coin trade. This isn’t because Chinese customers have already stopped ordering coins, but because many coin dealers are no longer able to ship their products to China. The German postal service has stopped sending packages and parcels to China. The Swiss Post goes even further: they don’t even accept letters anymore. Currently (3 March 2020) Fedex is still delivering. They use their own planes and aren’t dependent on the airlines that have stopped their regular flights to China for reasons of profitability.
Although these rather short-term measures are already annoying coin dealers, they need to be even more worried about how the long periods of plant closure in China will affect the country’s economic performance. Whereas companies in other countries (can) decide for themselves how to protect their employees while not causing too much economic damage, the country is the only decision-maker in China. And currently, the Chinese government has other priorities than the financial gain of its citizens. Over the next few months, the income of Chinese coin buyers is therefore likely to decrease drastically; and this group of buyers, which is usually so active, is likely to take a back seat for the time being.
Let’s remember the devaluation of the rouble in 2013 and 2014. It deprived Russian collectors of the means to buy coins. Even if especially rare coins still achieve record prices, the prices of Russian coins on the mass market have never recovered.
Regarding Chinese coins, one can assume a similar development. We don’t know about the consequences for the high-price segment. But mass products will certainly be more difficult to sell. The reason for this is that, in China, the development is exacerbated by the fact that coins and banknotes aren’t just bought as collector’s items but mainly as gifts. And that’s the area in which people are most likely to save money when their income is cut, isn’t it?
By the way, not only China is affected by the crisis but Japan, too. And the Japanese market is very important for the European and American coin trade regarding high-price objects.
An Acceleration Towards the Digital Coin Market
It’s especially shocking how fragile coin fairs are in times of the coronavirus. Numerous coin shows, particularly in Asia, were postponed along with the auctions taking place in the context of these events.
Whereas coin fairs are of essential importance as a meeting place for coin dealers, they are increasingly being replaced by the internet as a market where dealers and customers come together. Thus, the coronavirus promotes the digitalisation of the coin trade and, therefore, a development that all those who are attached to the traditional coin market strongly oppose. The coin dealer who used to travel from coin show to coin show and whose job description included the interaction with people becomes a lonely internet freak who doesn’t leave his little office and for whom the computer is the most important tool.
What Do You Think?
Every opinion depends on the author and his environment. Even this little article. And, of course, we are aware of the fact that people in other countries might have a completely different opinion on this issue. We would like to hear what you think. Will the coronavirus affect the coin trade? And if so, how?
We would like to publish your opinion here.
