2007 has been a transitional year in the coin market in terms of the focus of activity and changing values.

Some values that had risen too high have since fallen, adjusting earlier gains. Many other values have continued to rise. Such mixed activity is normal in a bull market, especially in a market that has lasted as long as this one.

In historical terms, this is a lengthy bull market, having started in 2003. Most of the past cycles lasted just two to three years before running out of momentum.

This four-year longevity is a reflection of long-term fundamental advancements in the market: the advent of third-party grading more than 20 years ago; the influence of the Internet on trading and information exchange; the introduction of new circulating coin designs starting in 1999; and the set registry programs operated by Professional Coin Grading Service and Numismatic Guaranty Corp.

In addition to these innovations and natural long-term coin market trends, changing precious metals' prices have also affected the coin market, including the market for certain gold coins. The spot price of gold bullion has bounced around in 2007 from a low of nearly $600 per ounce in January to a high that approached $700 in April.

The fall from 2006's high of $725, reached during May, caused "generic" gold coins (common-date pieces with values closely tied to their bullion content) across most grades to fall in value. For example, common-date Indian Head $2.50 quarter eagles have dropped from $8,500 last year in MS-65 to $4,500 at this time (the prices for these quarter eagles had simply risen too high).

Other factors account for falling prices. Many prices have languished because the market focus has been on other areas. Twentieth century circulated coins are a good example of a dormant market with the retreat of a great number of collectors who had been purchasing high-grade modern Mint State and Proof coins.

It's obvious from watching advancing values that many people who've been collecting contemporary coins are now collecting earlier 20th century coins, like early Lincoln cents, Liberty Head 5-cent coins, and Standing Liberty quarter dollars. The 1921 Standing Liberty quarter dollar in About Uncirculated 50 is a good example; it advanced from $750 in July 2006 to $1,100 today.

Additionally, an increasing number of circulated coins are turning up at auction graded and encapsulated by third-party grading services. Previously, most of these coins appeared in auctions and dealer inventories "raw," not graded by the third-party services. The encapsulation of circulated coins is a natural market phenomenon when values rise.

The evolution of third-party grading during the past 20 years has been full of fits and starts. PCGS was the first service to begin "slabbing" graded coins in 1986. The concept was received with much skepticism in the beginning. But the grading and encapsulation of coins really began taking hold in 1989 when a short bull market took place. Once that short market was over, the coin market remained in a lull during most of the 1990s.