This is a topic I’ve been meaning to make for our international collectors to gather some sort of feedback/thoughts/opinions on the impact of a weakening USD.
Most recently, the FED announced it will run the economy “hot” and a method of doing this will to keep interest rates low/into negative territory. With interest rates in negative territory it will significantly weaken the USD as investors can get a better return elsewhere.
As Pokemon is denominated in USD, foreign collectors are at the mercy of this factor. To demonstrate I’ve created a table showing the value of 10k currently vs the low of 2011 (April 2011). Why April 2011? Well that’s around the time the USA started recovering out of a recession and from there onward the USD strengthen. From 2008 to 2011 the Fed didn’t cut interest rates into negative territory, indicating if they were to go negative the USD may weaken more than it did in 2011 (it is all relative to the strength of the other country; so take this statement with a grain of salt).
In the long run a weak USD is excellent as demand from international collectors will increase as it’s cheaper to buy stuff while US collectors won’t be affected. Resulting in higher prices.
My question to the community is: With an inevitable retracement looming in the the new year and the grind to a weaker USD, international collectors will be hit with a double whammy of decreasing pokemon prices. How do you think this will affect the international market in the short term?
Personal thought are: There will be a slow down in international collector community with liquidity really drying up.
Please don’t drag the conversation to this will pop the bubble, or bring down the market. I suspect the international market is nothing in comparison to the American market and doesn’t play a big role in prices.
@cosrob, super hard to generalize to be honest. The market is definitely the biggest in the US, and no amount of activity abroad will be able to move the market substantially. Your point, I believe, implies that the international market needs to sell somewhat in order to keep growing their collection (hence being affected by decreasing prices + lower USD)?
If international collectors need to sell in order to buy, then yes, the market should slow down in the short term. The problem is, I’m not sure whether that’s the case. If you’ve got collectors based in countries which typically save more, they probably don’t need to liquidate in order to survive. I believe the propensity to save is much higher in Asia. If you’ve been collecting low value stuff, liquidating wouldn’t help you anyway as compared to taking some minimum wage job.
It also depends on the type of product - chances are, if you can afford to buy bigger ticket items (this is a very relative term for each person), you wouldn’t need to sell in order to live. My baseless, gut feeling is that the % of flippers over total population of people in the pokemon market (flippers + collectors + investors) is much higher in the US than in Asia.
I can say for sure that I don’t min-max in terms of exchange rate. It really depends on card availability for me at this point in time. If there’s something that I want to finish off my collection goals at a rate of 1.5 SGD to 1 USD, then I will pay the premium to get it.
when the SGD weakened to 1.45 vs USD earlier this year i did think about it for a bit, in that i thought about selling some non-core cards which i was planning to sell already but never got to. it didn’t really affect the buying however. but it did affect the net buying.
in the world of 10% ebay fees, 4% paypal g&s fees, 4% ripoff paypal fx fees, a few % points in exchange rates is more of a nudge than a push in terms of affecting buying or selling activity
@thatblastoiseguy , Agree it’s hard to generalize or even simplify these factors into a nice little post. Even myself trying to figure out the optimal play for these circumstances I couldn’t get an answer that satisfied me.
The idea behind the thread was more wealth preservation than collection expansion. I suspect a lot people, particularly, low to mid tier collector have a substantial amount of their wealth tied up in Pokemon. If they were to see it erode would they continue to hold is my question.
Personally, I can’t say I’ve had too much exposure to the asian market but it wouldn’t surprise if the propensity to save is significantly higher. Anecdotally, quite a few of my sales between $100-1k have been meet with: “can we I pay x day as its pay day” or “hide it from my partner”, so I suspect the Australian market is over extended. Granted it could be just my sample size.
@sgbased, that same time, I saw so many rarer items hit the local market trying to cash in on that drop from .68c aud to .55c aud (34% increase in value), myself included. Which leads me to suspect if the dollars ever legs up significantly we will a big influx of international buyers.
