Headlines of $30 million rare coin transactions flash across crawlers streaming news on TV broadcasts. Blurbs such as these provide a breath of fresh news to viewers who have grown weary reading the endless drivel concerning Britney Spears, Barry Bonds, and O. J. Simpson. But what is the average TV viewer with no prior knowledge of the rare coin market to make of announcements about multimillion-dollar coin deals?

It would indeed be difficult for a person outside the hobby of coin collecting to comprehend why anyone would pay so much for small discs of metal, with numbers, letters, and images imprinted in relief on them. Those individuals inside the hobby view the upward trend in prices as a long overdue phenomenon. For it has always been acknowledged by those who call themselves numismatists, that rare coins tend to appreciate in value over time. But for a period of approximately twelve years, between 1990 and 2001, the faith of these diehard coin collectors was severely tested. Now, however, their patience has been rewarded, and rare coin prices are ascending at a rate comparable to Alex Rodriguez?s rising popularity. But why is this occurring? What awakened the sleeping coin market out of its decade-long slumber? There are reasons; and in this brief report I will mention the most significant of them.

From 1990 through 2001, the rare coin market, also referred to as the field of numismatics, experienced a severe bearish environment, which resulted in plunging values, tapering off into a lengthy plateau period, in which coin sales were sluggish. The recent rebound, which began around 2002, is a normal cyclical reaction to this bear market. Prices had declined to the point that many buyers who had been sitting on the sidelines decided that the deals were too good to pass up. This, along with a variety of factors, triggered the market we are now experiencing. Here are a few of the more obvious causes to consider:

1.Combined with the market turnaround in the early years of the new millennium, was an influx of new collectors who were at first attracted to the statehood quarter program launched in 1999, as well as the massive advertising campaign conducted by the U. S. Mint showcasing its huge offering of individual coins and sets.

2.Publicity about the sales of a few classic rarities such as the 1913 Liberty nickel, the 1804 silver dollar, and the 1933 $20 St. Gaudens gold piece, also aroused much interest during this period.

3.During the past five or six years, there has been a broad wave of interest shown in collectibles in general, almost as if Americans have rediscovered the joy of collecting things, some of which are quite expensive (Witness In 2004, for example, the sale of Eric Clapton?s ?Blackie? guitar which sold for $959,500). Rare coins just happen to be one of the main areas targeted in this recent wave of collector-mania.

4.Coinciding with the renewed interest in coin collecting has been an emphasis on the investment aspect inherent in this field. This has attracted a large number of individuals who have grown more disenchanted with more customary investment mediums such as stocks and bonds. These invested-oriented individuals for the most part have learned the finer points of coin collecting, and are typically relying on the advice of experienced numismatic consultants.

5.Fueling this interest in rare coins as investments has been the hidden rise of inflation as witnessed in higher oil prices, as well as higher prices of other commodities. Gold, silver and platinum are beneficiaries of this kind of economic environment, and rare coins have always performed well when the price of precious metals is on the upswing.

6.One key factor intermingled with all of the above is the large number of Baby Boomers controlling vast amounts of capital (some estimates putting this aggregated wealth at $16 trillion). This generation is the wealthiest generation in history, possessing more discretionary cash than ever imaginable. After they have put their kids through college, paid off their mortgages, and provided for the care of their parents, they find themselves with loads of money to spend as they please?At least many do. There are only so many things on which people can spend their disposable money: vacations, second (and third) homes, entertainment, hobbies, etc. It appears as if under the hobby category, rare coins are attracting a lion?s share of the loot. Many of the Boomers, who at earlier periods of their lives, dabbled in coin collecting, are now returning to the hobby. This time not with penny albums and inexpensive Proof sets on their want lists, but rather the rare dates they once could not afford. This has resulted in tremendous demand placed on legitimate rarities.

7.The best part about this new bull market is that collectors desiring truly rare coins?rather than just the common dates and generic brands which so dominated the last bull market in 1986 through 1989?are driving it. Today?s collector, for the most part, is savvier than was his counterpart of fifteen to twenty years ago. And today?s collector has the collective strength of mature grading services (PCGS & NGC), almost assuring that no major purchasing mistakes will be made, at least as far as the grades are concerned. Not to mention the wealth of information available on the Internet.

8.You can?t emphasize the point about collectors rather than investors dominating the current market enough. This removes a certain element of volatility from the coin market since in many instances the end users, so to speak, are not influenced by the fickleness so often prevalent in investors.

As long as the conditions described above remain in place, the bull market in rare coins appears to be unstoppable; at least for the foreseeable future. Even if Baby Boomers earmark just a fraction of the $16 trillion they possess for coins, the market should remain well capitalized. And, then there?s always the possibility that the coin-collecting bug will bite Generation Xers, which would certainly vitalize an already robust market: especially when members of this generation begin receiving their inheritances from their Boomer parents.

We can summarize the above conditions as follows: Recovery-cycle dynamics, publicity-inspired interest in coins in general, a shift from securities-based investments to tangible asset investments, affluent Boomers returning to their childhood passions, and savvier, more protected collectors in the marketplace.

Rusty Goe is a rare coin consultant and the owner of Southgate Coins in Reno, Nevada. He has authored two full-length books on the subject of the Carson City Mint and the coins produced there. For more information concerning the rare coin market, liquidation of rare coin portfolios, ?CC? coins, or scheduling interviews with Rusty Goe, please contact Southgate Coins at 5032 S. Virginia St., Reno, NV 89502, or by phone (775) 322-4455, or email to mariesgate@sbcglobbal.net. Please ask for Marie or Amy.