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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Progression Of The "fever" Phase Of A Coin Market Cycle
Posted on 01/16/2008 11:33:15 | Link | Post Comment
We are in a Bull Phase in the Coin market, which I wrote about in 2006 with INVESTOR ALERT: A TURN IN THE COIN MARKET!
Let's look at the progression. Looks similar to how other financial bubbles form and then pop:
First, there is an increase in discretionay income, due to inflation, and a desire to invest this income in coins.
Second, a perception by a significant number of persons with money to spend, that coins are under priced.
Third, a subsequent increase in demand for coins.
Fourth, an increasing reluctance to sell by coin owners, who sense that higher prices are imminent.
Fifth, a subsequent reduction in the supply of coins available, at a time when demand is increasing.
Sixth, a series of increases of price indicators in the trade newsletters and magazines.
Seventh, urgency on the part of coin investors, who relax their buying criteria and expand the list of coins they are willing and want to buy.
And, eighth, an explosion into a "fever" market, where frantic, inexperienced buyers force "reluctant" sellers to part with coins at astronomical prices.
The "fever" segment of a coin market cycle, according to Wayne Miller, usually parallels a period of higher inflation, when money loses purchasing power at an alarming rate. A flight to tangible assets occurs. Anything is better than cash. The limited supply of coins soon produces a seller's market. The huge increase in coin values, trumpeted by coin companies in major investment media such as the New York Times, Barron's, etc. attract new investors. Prices usually include a factor for tomorrow's certain increases. Hysteria prevails; people feel that anything they buy will be a good deal.
Let's look at the progression. Looks similar to how other financial bubbles form and then pop:
First, there is an increase in discretionay income, due to inflation, and a desire to invest this income in coins.
Second, a perception by a significant number of persons with money to spend, that coins are under priced.
Third, a subsequent increase in demand for coins.
Fourth, an increasing reluctance to sell by coin owners, who sense that higher prices are imminent.
Fifth, a subsequent reduction in the supply of coins available, at a time when demand is increasing.
Sixth, a series of increases of price indicators in the trade newsletters and magazines.
Seventh, urgency on the part of coin investors, who relax their buying criteria and expand the list of coins they are willing and want to buy.
And, eighth, an explosion into a "fever" market, where frantic, inexperienced buyers force "reluctant" sellers to part with coins at astronomical prices.
The "fever" segment of a coin market cycle, according to Wayne Miller, usually parallels a period of higher inflation, when money loses purchasing power at an alarming rate. A flight to tangible assets occurs. Anything is better than cash. The limited supply of coins soon produces a seller's market. The huge increase in coin values, trumpeted by coin companies in major investment media such as the New York Times, Barron's, etc. attract new investors. Prices usually include a factor for tomorrow's certain increases. Hysteria prevails; people feel that anything they buy will be a good deal.
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