Will the Public Need to Liquidate?

September 25, 2020

By Patrick A. Heller

America’s two main political parties have set new records in 2020 of higher government spending and taking on new debt. However, this multi-trillion-dollar spending surge may stall, or even reverse, once we pass the Nov. 3 election day.

Among the strategies adopted to temporarily put more cash in the public’s wallets and purses were higher unemployment compensation and pauses in making student loan, mortgage, and rent payments. At some point, most or all of these will end, possibly before the end of this year.

Unfortunately, governments enacted these welfare programs to enable more Americans to continue spending. That means that these funds were spent rather than being saved to pay off the growing amounts that would be due when the programs expire.

When the forbearances on paying rents, mortgages, and student loans come to an end, millions of people will be faced with suddenly having to pay several months of amounts in short order—but not have funds to cover these amounts. Don’t be surprised if there is a major clamor for more government relief.

Even if the politicians then enact new spending programs, there will almost certainly be an abrupt decline in consumer purchases coupled with a surge of people selling assets to try to meet their obligations. Rare coins and precious metals are among the easiest assets to sell quickly. Therefore, it is entirely possible that there will be a significant increase in numismatic and precious metals liquidation by the end of 2020 or, at the latest, by the spring of 2021.

For numismatic collectors, the increase in material coming onto the market could result in some price declines for items not already trading near to their precious metal value. Thus, a buying bargain opportunity may be near at hand.

For those collectors considering the sale of their holdings in the not too distant future, it might make sense to beat the rush by selling sooner rather than later. Alternatively, they could just hold on to their treasures for at least another one to two years.

In 1983, the automotive industry suffered a major sales decline. As a result, tens to hundreds of thousands of workers lost their jobs in Michigan. That year, Michigan collectors sold an extraordinary quantity of coins and paper money; they were lucky. Most of the rest of America’s economy was healthy, which continued to support numismatic prices. This time around, the surge in liquidations could be a nationwide phenomenon. As such, there may not be another sector of the U.S. economy to support current numismatic price levels.

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