Rusty told me that he had been causing a ruckus on the thread, so I figured I'd burn some of my evening attempting to read it.
(I got stuck with a very slow connection to the internet when I moved, but that should be fixed in the next week or so! So they say...)
Here are my thoughts:
Prices are going up on a lot of stuff. Look around... Prices are going up on gas, property, etc... Take, for instance (since we just bought a new house) the prices of houses in the area I live in - they have literally doubled in two years! (Average price of $300K to now an average of $600K!) Now that you've looked around, look at your paycheck. If it's doubled in the last two years, congratulations! For me, it's gone up a whopping 5% (roughly). Last time I figured it out, doubling was 200%, and considering my pay raise at 5%... Something isn't adding up here!
So I've got my 5% raise paycheck and I collect Soviet awards... Last year, I sold a beautiful, complete, researched group that had a Kutuzov 3rd for $1200. I advertized it for several months before I got a buyer. Now, I could have parted out the Kutuzov alone to Rusty and walked away with $800 more!
The question is: What is the reason for this? Certainly it's not that I'm making more money (Rusty probably is so he can lay out the dough on the Kutuzov 3rds)
Seriously, I think there are several reasons, which also contribute to the price of houses in my area going up too:
1 - The interest rates are low. What's that mean? That means that a lot more people can take loans for a lot more money than they could before. That's the way folks are able to afford paying $600K for one of these houses, when two years ago, they were probably maxed out at paying $300K.
2 - There's significant uncertainty in the global climate. Afghanistan, Chechnya, Iraq, and terrorism in assorted climes and places... When people have a situation like that, they tend to like stability. Stability = not selling stuff. Not selling stuff = lessing the available stock, which leads to raising prices on the stock that is available.
3 - A lot more awards are staying in Russia. While that's a bad thing for me as a collector here, that's honestly a great thing (if the awards are respected). Heck, I wouldn't want to see my country's awards being bought up by the Russians in mass quantities! What that also means is that there's less available stuff over here, and thus, raises prices.
4 - Another reason for # 3 is that in some areas of the FSU, the border guards are really cracking down on awards leaving the country. Some of my best contacts that I've been dealing with for years are reporting to me that they can't get groups out of their respective countries, even by the "normal" routes (and no, I don't know what they are).
5 - There is also artificial inflation of the market. If [name deleted], a major dealer, asks $700 for a Type 6 Lenin, all of a sudden to those collectors not savvy in the market, it's worth $700. And wouldn't you know it, sooner or later, there's an idiot out there who will buy it. At the same time, I bought a complete WW2 Lenin group with multiple other orders, medals and documents last month for $800. Strange how that works.
On the same price inflation theme, I recently got a list from a major dealer who has a group with a wartime Red Star and a PW2nd with documents and jubilee medals for $1000. Artificial inflation? Actual value? You tell me!
Also, Alexei is exactly right when he says that some dealers would rather sit on their stock forever than lose a buck or two. The Kutuzov group I mentioned above I paid $1500 for. I couldn't sell it for the life of me at that price, so I finally settled at $1200. I needed the dough, and was willing to take a loss on the group. Such is the life of collecting this stuff... I know some dealers who have had groups for sale on their websites for three and four years now. They keep raising the price of the groups, but the groups still don't sell. (Something else I find strange... Why would you raise the price of a group that isn't selling? Doesn't that fact alone mean that it's already overpriced????)
My last comment about price inflation is that I think some of the overseas sellers do it on purpose. The awards don't sell, but it makes for a good "fish story". How 'bout the story last year about the Ushakov medal that "sold" for $600 in Kiev? That's the story that got distributed, but that was entirely untrue. I can stick a common Type 4 Red Banner on my website for $200, and then (watch out!) mark it "sold". It obviously didn't sell, but it would be interesting to see how fast the rumor spreads! "Dave just sold a Type 4 Red Banner for $200!!!" Before long, the story would be: "Type 4 Red Banners are selling for $200 everywhere!" Trust me, that WOULD happen, too. Thus the reason I'm suspicious when I see a seller list an award on their website for an insane price, and then remove it shortly thereafter. Hmmm... Did it sell? Or did the consigner just want it back??? (Sorry to burst anyone's bubble, but many "major" dealers simply have stock on consignment, which sometimes has to be returned to the actual owner, but gives the impression to all that it sold...)
6 - With regard to "big money" buyers, they've actually been around for a while, but normally stay "under the table". I know of a guy who has a policy of buying groups priced at no less than $5000. He'll drop $100K on a group, no problem. And, he's been doing this since the early 90's. Nice collection? You bet!
There are, however, more people now particularly in the FSU, with money to spend. Even when I was living in Moscow in 1996, they went over 1000 people that were true no-joke "cash-in-the-bank" millionaires. That was nearly 10 years ago; I'm certain the 1000 number has increased exponentially since '96.
7 - People in Russia with money ties several of the other themes together. First, there are quite a few willing to lay out dough for awards, thus raising the price which awards will sell at. That, in turn, increases the price that US dealers have to buy at, which then drives up their prices, which they, in turn, inflate. It's a vicious cycle.
8 - I agree with Alexei that there are also people (see # 2) that are hoarding awards as a way of keeping money tied up in something. Currencies are too wishy-washy at the moment to really get a good feeling for who's going up, and which one's going down. The Euro's up today, but next week... Who knows? If you had to put your money into something 1) that involves precious metals (always a good investment) and 2) is interesting... What would you choose?
9 - Will the prices stay up forever? I have to respectfully disagree that Soviet awards will EVER reach the same status or trading volume as TR awards. Sorry, that's just not going to happen, at least in our lifetimes. There are 100 TR collectors (maybe more) to every 1 Soviet collector. The laws of physics, nature, and common sense all dictate that an equal trade in Soviet awards just ain't gonna happen.
So the question is: Will the prices remain high? Or will they top out? Or will they decrease? Honestly, I'm not sure. I can't imagine them going up too much higher. Just like houses here, they are WAY overpriced at $600K. Will they sell for $800K or even $1M in two years? Heck no! That's just not going to happen, and I'll bet good money on that.
Does it look likely that next year that the "market price" on a Kutuzov 3rd is $3000? Highly doubtful. Look at the prices on HSU groups right now... You can't touch them for less than $5000/$6000 for a complete one. At some point, they will be out-of-touch for 99% of collectors out there, who simply can't peel away $6K out of the family budget to pay for some small bits of precious metal and paper. Yes, I can envision people paying $85 for a PW2nd from WW2. Scary, but I can see people doing it, because that's still "reasonable" to a lot of collectors. You can still get a LOT of $85 PW2's for the same money you'd be putting out on a $6K Hero group.
My prediction is that, at some point, the prices will top out. The number of guys that can afford to pay out over $5000 on an award is VERY finite, and gets much smaller the faster you go up the price levels, so I'm guessing that a lot of the stock for sale at the greatly inflated prices will simply sit at those prices, though may very well "travel" extensively, providing the illusion that they are actually selling, when in reality, they're not.
Just my two cent's worth...
--Dave
