FMF - Friends of Minerals Forum, discussion and message board

[rocknut]

The mid to upper end of the mineral market looks like a bubble that's bursting. Parabolic price rises and excessive “animal spirits” are classic signs of a bubble. John White pointed out that a Spanish Pyrite normally worth about $200 went for $20,000 at a Heritage auction in January. Someone else mentioned the stratospheric prices realized at the Stack's February auction in Tucson. Had anyone predicted a year ago that a common Chinese hemimorphite would sell for $8,000, they would have been laughed out of the business.

One of my favorite sayings in the financial world is “things that can’t continue won’t”. When dealers start adding 0s to the price of minerals, it’s a sign the end is near and in fact, the end has arrived. Heritage galleries had about 150 collector minerals in their June Natural History auction and less than 1/3 of them sold. The weak economy was the catalyst. The affluent have been immune to economic cycles for years, but not this time. They aren’t bothered by $4.00+ gas or soaring food prices, but when their houses,stocks, and hedge fund investments are all in the tank they notice. It’s even worse if they’re in the financial or real estate industries which are close to a depression. High end retailers are hurting for the first time in many years. Williams Sonoma for example reported profits off 42% from a year ago. Even sales of multi million dollar yachts have collapsed.

Whether this is a temporary dip as in the 2002 recession or the beginning of something more serious depends on a couple of things. First, how many collectors need or want to sell some of their minerals? How many bought minerals as "investments" or planned to trade up as they bought more? In other words is this going to add to the supplies. The ones that try to sell are going to get a nasty shock. The 0 that was added on to the sales price will be the first thing to come off when the collector tries to sell. Most dealers carry a pretty large inventory and if their goods aren’t selling they aren’t going to be interested in buying more. Second, what will the higher end dealers do when sales and prices decline. I assume they've made a lot of money and perhaps they can afford to wait it out. On the other hand, if they’ve financed their inventory and the value is declining they may be motivated to price it to move. I don’t know enough about the business to answer these questions but I do know that minerals have to follow the laws of supply and demand just like everything else that’s bought and sold. Eventually they have to be priced at a level where supply and demand come back in balance.

rocknut

[Gail]

I recently attended a preview of a mineral/fossil/petrified wood auction and saw the "value" under each piece. It is the norm in Auctions to suggest a higher value and this is true worldwide. I saw nice pieces, very pretty...but few were stellar. I heard that many sold for above their value price by considerable amounts.
I also know that most of those buyers are not mineral people, per se. Lots of those buyers are wealthy foreigners from Asia and India, high dollar interior decorators, art enthusiasts who wish to delve into the natural "green" art.
I don't worry about it, to me it means that many people are testing the waters and starting a journey into minerals, or not. Many might own a pretty decent mineral specimen and never learn about it.
I think this is another way to ensure the continuation of mining. We can't all own the best or even the worst minerals...too many of them out there.
And if this is what the prices are going to be then think of the value of what you already own...perhaps you can sell off your culls and buy a vacation home in Hawaii !!!
Anyhow I am not losing sleep over any of this as we have little to no control over the auction market.
I don't see it as a bad thing personally.

[rocknut]

Hi Gail,

The thought of a bubble doesn’t bother me either. I love rocks, and cheaper prices mean I can buy higher quality for less money. I am interested in markets and there’s definitely been some irrational exuberance at the upper end of the mineral market. However there are a lot of minerals that haven’t moved up to ridiculous levels and there are dealers like Jordi who sell nice rocks at reasonable prices. We should get a better feel at the East Coast and Denver shows which attract a lot of high end dealers. Anyway it’s just a theory and it hasn’t changed my behavior as I just bought a gorgeous shattukite/malachite from Jordi. Some things are too beautiful to pass up.

Rocknut