I am in daily contact with WCM contracted rare coin dealers, and all signs of a strengthening bull market in rare U.S. coins have been evident throughout 1998. Historically, the November through March period displays very strong activity on the part of investors and collectors, and to date, the year should close out on a very strong note of overall gains in the 10% to 15% range for MS65 grades. I follow "the Coin Dealer Newsletter" (CDN) each week to determine what prices are doing at the dealer or wholesale level on "sight-seen" certified rare coins without any distortions caused by varying markups at retail, and published reports of a solid rare coin market are supported by the data. Remember that this new bull market started around December, 1994, and in the almost 4 years since has advanced a modest 25% to 35% depending on the type and series of rare U.S. coin. This places the majority of investment grade, uncirculated coins at a bargain level still almost 35% below their all-time highs in late 1989. And in the long history of documented prices spanning over 8 decades, bull markets in U.S. rare coins usually provide price appreciation in the 300% to 500% areas before the cycles peak.

Within the 12-Piece Gold Set, the $1 Gold, Type II, and the $3 Indian Princess are the top performers with 15% average year-to-date gains, while there has been some softness this year in the $2.50, $5.00, and $10.00 Indian series. The nominal softness in the Indian Gold series, with their generally matte finishes, may be partially due to new investors'/collectors' preferences for the more reflective fields of the Liberty series for these gold denominations, as well as some of the difficulties in grading this unique incuse designed coinage. I actually consider these short-sighted perceptions to be creating a buying opportunity for serious collectors, especially in the $2.50 and $10 Indian golds. Complete sets of the $2.50 Indian in MS63 and MS64 are possible at today's prices, and offer a long-term investment potential that has weathered the test of time. Buying a sector of a market when it is temporarily out-of-favor is a time tested investment strategy that works well with virtually any asset class.

Naturally, gold bullion has not contributed much to price momentum so far this year in numismatic gold coins, but dealers are having great difficulty in keeping inventories of circulated $20 Double Eagles and circulated Morgan & Peace Dollars. This latter situation is due to investors seeking a bullion-type coin for barter purposes to safeguard against sporadic failures in the banking system brought on by the Year 2000 Millennium Bug. However, the premiums over spot gold and silver have well exceeded the 20% range, suggesting that traditional American Eagles and low-denomination essayed bars offer greater value to the Y2k hedger.

The Morgan Silver Dollar, and to a lesser extent, the Peace Silver Dollar have had stellar performances in 1998 partially due to these two series' popularity with both old and new investors. Many better-date Morgans have gained 25% to 40% this year, with the Deep Mirror Proof-Like (DMPL and DPL) sector showing equal or greater gains on a higher percentage of dates and mint-marks. Even common-date Morgans have gained 15% to 25%, showing that affordability can often be a criterion in determining which types and series of rare coins do best in the early stages of a new bull market cycle.

In closing, the U.S. rare coin market is showing not only promising opportunities for investors seeking greater asset diversification, but sustained price gains as well. Nothing makes a forecast of higher prices ahead more believable than the month-to-month price gains since the summer of 1997.