An Open Letter to Wayne Homren
By Charles Morgan and Hubert Walker for CoinWeek ……
*For those of you who don’t know, Wayne Homren is the editor of the Numismatic Bibliomania Society’s weekly e-publication, the E-Sylum, which is always chock-full of fascinating information and reader commentary. Visit http://www.coinbooks.org/esylum/index.html for more information.
First of all, thank you for the work you do every week. Hubert and I are big fans of your eclectic, almost omnivorous newsletter. The E-Sylum is a frequent source of inspiration, constantly pointing out fruitful new avenues for us and our writing. Also, we collect books on coins just as avidly as we collect the coins themselves. So we were thrilled – THRILLED – at the handful of recent mentions and excerpts we’ve garnered.
Predictably, this inspired us to do even more thinking on the topics we’d already addressed. And before we get to the crux of our piece, let’s just say that there must be something in the air regarding the legalization of gold and gold-related numismatic collectibles. No sooner had we readied the Herb Hicks article for submission to Coinweek but the E-Sylum featured a bit on Grover Criswell and his efforts to legalize gold medallions. Maybe we should go for the trifecta and write a piece on James Blanchard?
Anyway, back to that crux. In the February 24, 2013 issue of the E-Sylum, you included an excerpt from our then-recent piece on Anthony Swiatek’s 1981 volume on classic commemoratives (“Booker T. On the Tarmac: A Story about First Coinvestors”). That excerpt really made us feel like we were on to something. We don’t care who knows it – validation is nice.
Not that we aim for that, really (if ever). We tend to be a little… contrary. For one thing, we’re obsessed with moderns in a market that only has eyes for silver and gold. For another, we like to write about the unsung heroes of numismatics. And we positively love to point out that the “good old days weren’t always good”, to quote the ever-quotable Billy Joel. And when we write, we try to reach collectors at all levels of knowledge and all kinds of budgets.
We have no doubt that experienced and sophisticated collectors aren’t surprised in the least by the blatant promotion that exists in such books as Swiatek and Breen’s commemorative opus. Modern collectors also have the benefit of hindsight and can see the far-off price predictions in that volume for what they are: hopelessly detached from current levels. Mind you, some of these projections were actually met before the commemorative bubble burst, so we’re not indicting the authors and publishers on those grounds, but one thing sticks in our craw. The Encyclopedia won the 1981 Numismatic Literary Guild award.
As a hobby, are we so jaded and cynical that such self-promotion in what advertises itself as a reference book is okay? Is it acceptable that such things are ignored by institutions within the hobby? Does everyone kind of assume that collectors are all on the same level, and can figure things out for themselves? Or do we assume that the gullible and less-experienced among us deserve to be taken in, and that maybe they’ll know better next time? We’ll come back to this in a bit.
For now, we guess the bottom line is that collectors should be leery of any numismatic work that predicts future value, especially if its methodology is unclear.
Swiatek actually handles the investment angle much more carefully in his 2012 book, citing reported population figures for higher grade pieces and offering the refreshingly honest advice that you should buy most commemoratives for no other reason than the simple joy of collecting them. If we’re honest, this can be said about most series, but the admonition is a 180° turnaround from his earlier work.
When we spoke with Swiatek originally, we wanted to get a better understanding of the history of the commemorative market to see what its boom and bust cycles could tell us about the coin market as a whole. We also wanted to know whether the decline in commemorative prices in recent years was a market correction or a trough leading to an eventual price increase. It all depended on one question: How many people actually collect commemoratives? We assumed someone in Swiatek’s position should have an opinion. Unfortunately, he didn’t feel that he could answer the question.
How then, could one have such fantastic optimism back in 1981? Was the hobby so flush with Wall Street money that there was no limit to buyer exuberance? Were the authors “true believers”, or were they, like the book’s publisher Stanley Apfelbaum, just trying to make a buck? How does one thread the needle between giving objective investment advice and personally enriching yourself as a dealer? These are serious questions with serious implications for the way the hobby conducts business. You can see how deep this all runs if the credibility of organizations like the Numismatic Literary Guild is at stake.
We can see many instances where a lack of governmental oversight has led to staggering losses on the part of investors. The rare coin industry needs the buyer’s assumption that coins have value and that this value will increase over time. So if coins are sold as investment instruments – which they are – then where is the oversight?
This leads us back to our first set of questions.
As far as investment advice on Wall Street goes, the SEC operates under a legal principle called “fraud-on-the-market”, which basically means that writing or otherwise broadcasting fraudulent or compromised investment advice, that someone, somewhere then uses as the basis for his or her own ruinous financial decisions, is a crime. In the coin industry, one can write a book, predict enormous financial rewards if some poor schmuck buys the product the author or author’s company is selling, and have no liability when the market crashes.
Is this not also “fraud-on-the-market”?
Having said that, please know that we feel no ill will towards Swiatek. He was generous with his time, and if you examine the entire body of his life’s work, you’ll see that he’s helped the hobby far more than he’s ever hurt it.
No, Swiatek as a bad actor was not the point of the piece. We wanted readers to see that dealers have many ways to acquire coins in volume and that not every issue is as “rare” as one might assume.
As for the viability of commemorative coins as something a collector should own if future profit is the goal, we have our hunches. We feel that the behavior of the market indicates demand far below the published distribution numbers of even the scarcer issues. This could change of course, if more collectors took Swiatek’s 2012 advice to heart and looked at classic commemoratives as the genuinely interesting series it is, with a beguiling history full of swindlers, shameless promoters, and political favors. In essence, everything that’s bad about the series is what makes it good. Swiatek’s writing on the subject clearly reveals that he’s in on this paradox.
Charles Morgan and Hubert Walker
© 2013 Charles Morgan and Hubert Walker