I'm not sure the exchange rate even has that much to do with the price of classic bikes and parts. I does of course impact the price of newly manufacturered classic-type items made outside the US. For example Brooks saddles and Mercian frames. But the recent price increase for Brooks saddles to the US market had more to do with the new Italian owners correctly recognizing that they are in a collector market rather than a commodity market and therefore can charge and get a luxury goods price, particularly for the top models like the Ti railed ones and the reintroduced Swallow. The weak dollar was a smaller factor.
And for items actually manufactured in the classic era, I think the exchange rate is relatively insignificant. Since these items were made 20 years ago or more and since there is usually no equivalent being currently manufactured, manufacturing cost is irrelevant, and it just becomes supply and demand. Maybe I underestimate UK and European collecting activity, but it seems to me the market for these items is overwhelmingly in the US and Japan. If that is true, then the relation of the dollar to the pound and euro doesn't matter much, since US bidders are usually competing against each other and the Japanese rather than UK or EU bidders. In this situation, an increase in the freight cost from Europe to the US has more effect than a change in exchange rate. I think the dominance of the US market is demonstrated by the number of European eBay sellers pricing their auctions in dollars and listing them in English.
And as for the Japanese, the relationship of the yen to the dollar still doesn't seem to matter. This is because the Japanese demand seems to be from a smaller but more dedicated number of collectors than in the US. These Japanese buyers repeatedly demonstate both the willingness and the financial ability to pay what it takes to obtain the items they want. They are much more selective about what they bid on, but once Japanese collectors get into the bidding, US collectors usually have no hope of winning, or at least are seldom willing to pay what it takes. So such auctions usually come down to bidding between several Japanese collectors, which makes the price of the US dollar irrelevant. I think I've only once ever won an auction against a Japanese collector. It was the formidable kauzo, no less, and I was shocked to win. But I believe it was only because he was quite uncharateristically dabbling in an auction for an item he wouldn't mind picking up, but didn't really have to have, and so for once did not bid aggressively. Goes to show even kauzo can be in a casual frame of mind now and again, but this certainly is very rare.
In short, I think the price of classic stuff has little to do with politics or even exchange rates, but is mostly determined by the perceived rareity and desirability in the major markets in the US and Japan, and by the disposable income among collectors in those markets.
As Lou pointed out, the aging of collectors into their peak earning years in their 50's and early 60's has an upward impact on price, as does the dwindling supply of NOS items. Maybe when we all retire we may have diminished available income and/or interest in collecting. So the prices may drop again, unless a younger generation of collectors maintains the demand for these items.
Regards,
Jerry Moos Big Spring, Texas
REClassicBikes@aol.com wrote:
Without charginging in to politic or economic theories, i will state the fact for those who watch ebay prices and wonder where it is going. The falling dollar against the pound and the Euro is having the greatest effect.
Don is wrong that UK traders are not crying. it is just that you can not hear us. (i think Hilary fixes his own exchange rates, so is probably immune!)
Martin Coopland, Scotland, BatesBicycles.com