Jeff Garrett: Trump and Numismatics

By almost anyone’s measure, the world has changed a lot in the last week or so. The United States presidential election was anxiously anticipated for months by people on both sides of the political spectrum. Democrats and Republicans were equally optimistic about their chances of winning. Many Democrats could not picture a world with Donald Trump serving another term and most Republicans viewed a Kamala Harris victory as a disaster waiting to happen. The battle lines had been drawn and someone had to win, and someone had to lose.

With an Electoral College landside and a narrow popular vote margin, Trump will be the next United States president. The polls had predicted a much closer race, and many are still in bewilderment after the outcome. There had been a few interesting clues earlier about who would win the White House. In the last few weeks, the online betting world had Trump as the clear favorite. In the future, pundits may pay more attention to where people are putting their money instead of polls.

The reasons for the outcome of the election will be debated for years to come, and I will leave it to the political analysts to dissect what happened. As mentioned above, the US and the world will be changed in very significant ways by the election. The Republicans also have control of the White House, Senate and House of Representatives. The change of leadership will have profound effects on many issues, including some that will impact numismatics.

Because of the substantial margin of victory, the results of the election were not contested. This has been a huge relief for the business world. About two weeks before the election, I received an email solicitation from our insurance company offering "civil unrest" coverage. Thankfully, there were no major demonstrations, and the US and the world can begin planning for business in a world with Trump as president.

The day after the election, the stock market surged to new highs on the hopes of a more regulatory-friendly business environment. The crypto currency markets have also surged for the same reasons, now up more than 30% in one week. With interest rates nudging lower, the stock market has many reasons to be optimistic about the near future.

The rare coin market will be impacted by all of the above macro-economic developments. Below are some of the ways the rare coin market may change based on the election results.

How the election will impact numismatics

The surge in stock market prices will create a very positive "wealth effect" for many Americans who purchase rare coins. The rich keep getting richer, and this will undoubtably help boost prices for the top end of the market.

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As stock prices continue to surge, there will also be some investors who seek alternate investments. Like art, rare coins are an ideal alternate investment that can be enjoyed and appreciate in value. Even though gold and silver dropped sharply after the election, neither presidential campaign addressed the massive US deficits and the national debt. Worries about these issues will continue to motivate buyers of precious metals as a way to protect their wealth. With cutting federal spending on anything being unpopular, don’t look for this to change anytime soon.

The surge in crypto currency prices could inspire some investors to consider digital assets as a replacement for gold and silver as a hedge against inflation. The crypto currency bulls are extremely excited about governments regulating their sector and the ensuing capital that might come their way. The long-term impact of crypto currency versus gold will be very interesting in the next few years. Investors in the general age demographic that buys rare coins (65 and up) are solidly in favor of gold.

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The international demand for gold and silver may accelerate under a Trump presidency. The Chinese government has been a favorite target of Trump's ire about unfair trade practices. The Chinese government has been reportedly buying massive amounts of gold in the last year or so and selling dollars. This would lessen China’s financial ties to the US and protect the country against pressure in the case of conflict. The same can be said for several other major countries buying gold recently.

One of Trump's favorite strategies for dealing with unfair trade deals (his opinion) will be the use of trade tariffs. He has broadly discussed the use of trade tariffs as a tool when dealing with international trade. This could have an impact on the import of collectible coins from the many world mints who consider the US one of their most important markets. I'm sure this will be a hot topic at the upcoming World Money Fair in Berlin.

In addition to the older age demographic of the hobby, the majority of coin collectors (the exact percentage can be debated) were Trump supporters. They will undoubtedly be encouraged by the results and will be optimistic about spending more on their hobbies.

Regardless of whether you are happy or sad about the election results, the contest is over. Everyone can now plan accordingly. For several months, other dealers have relayed to me that their business was slower than usual, and they blamed the uncertainty of the election as one of the reasons. The country has been very distracted by this election, and hopefully the rare coin business can resume its upward trajectory.

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