While Martin's book is set in the New York City art scene, the discussion reveals his personal and private connection to art as a collector. Charlie Rose asks "What happens when you decide to sell?". Steve Martin responded "Sometimes it's because you want to build a little war chest to buy something else, sometimes the time is up for that object", "maybe it didn't quite fit anymore with your other things and with your head". Nothing was mentioned of selling because of the market, or a fear of changes in the market, as a collector's decision to sell is often the result of personal events that have little to do with price levels. Family expenses, college expenses, and retirement are all common reasons to sell a collection. Sometimes, a coin collector simply loses interest in favor of some other pursuit. However, for a collector, at no time is it simply a matter of money.

But collectors are not the only players in the coin market, as the commercial side of numismatics attracts both speculators, euphemistically called 'investors', who look to profit from changes in preference or in general market price levels, and dealers who profit from trading with collectors, investors, and even other dealers.

So that there is no misunderstanding, let's be clear that there is a role for investors in the coin market. Investors fill the void when collectors step aside, providing liquidity when collectors wish to sell more than the market can absorb, and investors serve as a warehouse when preferences change for a time and certain series temporarily lose favor.

For investors, contrary to the decision process of a collector, there is no room for emotion. Investing decisions are a matter of weighing competing opportunities, adjusted for their risks, with no consideration for the passion of a collector. For investors, the answer to the question "When is it time to sell?" really is only about money.

Now, from my experience, there are very few pure coin collectors or pure coin investors, as most buyers are a hybrid between the two extremes. Nearly all of my long-term clients are collectors who simply don't want to lose any money. They see value in what they're buying, yet their collecting passion is the overwhelming priority. It's up to each coin owner to know his or her own priority. Is it 'passion' or 'money'? If the balance scale tips toward 'money', then I believe that it's safe to call you an 'investor'.

If you consider yourself mostly an investor, a strong argument can be made that you should have already sold during the auction frenzy of 2008. Nevertheless, most rare coin prices have rebounded from the early 2009 sell-off with prices for the best coins back at record levels. So, while you may have missed investment opportunities in other markets over the past 18 months, including commodities, stocks, and even depressed real estate, it's still a very good time for investors to sell coins.

Through the reporting of financial events over the past couple of years, the terms 'black swan' or 'tail risk' have become more widely recognized as descriptions of events that were ignored due to their low probability of occurrence, yet came to fruition nonetheless. The coin market has its own unique set of risks, some of which carry a low probability, yet all of which should be recognized and understood by coin investors.

1099 Reporting Still On Track

Beginning January 1, 2012 businesses of all kinds will be required to submit 1099 forms to the IRS reporting all expenditures for goods or services paid to individuals or other companies in amounts over $600 per year. For the coin market, this means that beginning January 1, 2012 coin dealers will be required to collect your personal information including your taxpayer identification number, usually a social security number, every time that you sell a coin.

While efforts are currently underway to repeal this reporting requirement, we need to consider the risk that it remains in place in some form. My expectation is that there will be run of sellers in late 2011 in order to avoid reporting, which could have a depressing effect on many areas of the coin market. I have been advising my clients to accelerate their selling plans so that we can complete any planned sales prior to mid-2011.

Economic Uncertainty

While rare coin prices have largely rebounded from their early 2009 free-fall, the fact remains that demand in many areas remains thin, with many previously active buyers now forced to the sidelines as rare coin budgets take a back seat to other financial needs. Regardless of the excess monetary liquidity and the Federal Reserve's attempts to encourage inflationary expectations, both of which are usually positive for the coin market, an extended period of high unemployment and below trend growth will continue to dampen mid-term expectations.

"Coin Doctor" Publicity

"Coin Doctors" are those who alter the appearance of coins through artificial means in order to trick the grading services into awarding a higher grade. While PCGS's legal pursuit of some coin doctors is a positive step in the long term, in the near term, more coin owners may begin to learn that many of these "problem coins" actually reside in their collections. My expectation is that this matter will continue to be a cloud over the market, and the risk is that traders will take an increasingly defensive posture, creating more selling pressure in the short to mid term.

Unrealistic Expectations

The simplest observation may be the most telling. The coin market is getting its second wind from a psychological connection to activity in the precious metals markets. New found gold experts, armchair economists, and self-proclaimed financial advisers are sprouting in our midst as dandelions in the spring. Their marketing message is loud and pervasive - gold and silver have only begun their ascent, and U.S. Rare Coin market is sure to follow.

I argue that in the short term, gold and silver are looking like a crowded trade. Furthermore, consider what damage could be inflicted on the psyche of coin market participants with a relatively small $200 drop in the gold price. The coin market's confidence is but a thin veneer. The market for the best coins is real, with multiple buyers willing to pay aggressive prices for the right property. Unfortunately, this demand is concentrated within a tiny sliver of the market. Next there are a few small areas that enjoy strong collector and specialist support, but the rest of the market is highly sensitive to price and prone to "forced sales". Even mainstay coins of the past few years such as EF Flowing Hair Dollars are meeting buyer indifference. Can a market be considered "strong" when only a small segment is participating and only a small percentage of the players are benefiting?

What Next?

If you are a collector, knowledgeable about the area that you collect, and you have a long term horizon - five, ten years plus - then carry on. Prices will rise, prices will fall, yet the years, even decades that it takes to build a great collection flatten out the market's volatility over that time. However, if you are a self described investor, or a collector with a short term time horizon, recognize the risks, then consider this your second chance at a graceful exit.