Is the coin market woefully inefficient, and are we collectors unfortunately bearing the burden as a
Longacre
Posts: 16,717 ✭✭✭
When I was a wet-behind-the-ears newbie on these boards, I thought that the coin market was clean, crisp, and precise, sort of like the pristine, manicured fairways of The Country Club of Darien that Longacre played at yesterday afternoon.
However, now as a grizzled veteran on these boards, I have come to learn that the coin market is inefficient and more akin to the burnt-out fairways at an underfunded local muni.
Dealers have to travel all over the country on an almost weekly basis to meet up with other dealers to transact business. Dealers then have to work with wholesalers, who are peculiar animals, and have particular needs. Dealers then have to work with the retail public, who have completely different needs. Inventory has to be stocked, a website maintained through which business is transaction, and auctions constantly monitored for sources of inventory. The market does not seem very centralized or streamlined, and the “supply chain” for numismatic coins does not seem very efficient.
Do you agree that the coin market is a very inefficient market? And are we collectors bearing the brunt of that inefficiency through higher prices?
However, now as a grizzled veteran on these boards, I have come to learn that the coin market is inefficient and more akin to the burnt-out fairways at an underfunded local muni.
Dealers have to travel all over the country on an almost weekly basis to meet up with other dealers to transact business. Dealers then have to work with wholesalers, who are peculiar animals, and have particular needs. Dealers then have to work with the retail public, who have completely different needs. Inventory has to be stocked, a website maintained through which business is transaction, and auctions constantly monitored for sources of inventory. The market does not seem very centralized or streamlined, and the “supply chain” for numismatic coins does not seem very efficient.
Do you agree that the coin market is a very inefficient market? And are we collectors bearing the brunt of that inefficiency through higher prices?
Always took candy from strangers
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
0
Comments
<< <i> And are we collectors bearing the brunt of that inefficiency through higher prices? >>
It makes the hunt more interesting for a collector.
The thought of McDonalds style efficiency in the coin world makes me think that I might instead take up model trains or basket weaving instead as a hobby.
<< <i>Do you agree that the coin market is a very inefficient market? >>
No. Look at eBay. People all over the world can check out the coins I have for sale without leaving their homes. How much more efficient can you get?
Do you mean to say, because the coin I sold to an eBay buyer went through three previous owners/dealers before finding its home on the other side of the world, that the process is inefficient? How much more efficient would it be for that buyer in Norway to come here to the US and track down that one specific guy in Seattle who originally owned the coin in order to buy it from him before he sold it to the local coin store (who sold it to another dealer, who sold it to me)? Not very, I'd think.
Here comes the little old lady with her late husband's collection now ...
When my grandmother was collecting coins from ca. 1940 to 1975, she didn't have anywhere near the amount of information available to her that we have. The internet, in particular, is a tremendous resource for collectors AND dealers regarding the acquisition of coins.
Collectors are paying increasingly higher prices because there are plenty of people who think that they can scoop up 'investor-grade' coins, generic gold, etc., to reap fat profits. This has driven many collectors out of MS levels, forcing up prices for AU (and sometimes XF) classic coins. I also happen to this that this has helped to fuel the rise of market grading.
An 'efficient' supply chain would be very bad for coin collectors.
<< <i>"Efficiency" is sort of predicated on interchangeable parts. Coins worth owning are usually unique. >>
State controlled markets are commonly very inefficient because they lack incentives for innovation and initiative. They also do not foster (or tolerate) spin-off businesses (which is a primary growth area for capitalist economies).
<< <i>When I was a wet-behind-the-ears newbie on these boards, I thought that the coin market was clean, crisp, and precise, sort of like the pristine, manicured fairways of The Country Club of Darien that Longacre played at yesterday afternoon.
However, now as a grizzled veteran on these boards, I have come to learn that the coin market is inefficient and more akin to the burnt-out fairways at an underfunded local muni.
Dealers have to travel all over the country on an almost weekly basis to meet up with other dealers to transact business. Dealers then have to work with wholesalers, who are peculiar animals, and have particular needs. Dealers then have to work with the retail public, who have completely different needs. Inventory has to be stocked, a website maintained through which business is transaction, and auctions constantly monitored for sources of inventory. The market does not seem very centralized or streamlined, and the “supply chain” for numismatic coins does not seem very efficient.
Do you agree that the coin market is a very inefficient market? And are we collectors bearing the brunt of that inefficiency through higher prices? >>
First off, kind sir, I need to point out that you should have a talk with your secretary... as there is a rather disturbing typo in the third paragraph. A slow review should expose the gaffe to a keen mind such as yours.
In the meantime, I might suggest you discuss with your associates in the Consortium, the possibilites of beginning a new enterprise. Perhaps you can come up with a business plan to help streamline the supply side of the numismatic industry.
From what I recall in posts from earlier this year, you already have business contacts in China. With their help, I'm quite sure you can alleviate the need for dealers to have to search for their scarce stock. Instead they could simply provide their want/need lists with your new enterprise and you can then simply have your contacts in China fill the orders.
This, I'm sure, would make for a much neater and efficient marketplace... don't you agree?
<< <i>
<< <i>When I was a wet-behind-the-ears newbie on these boards, I thought that the coin market was clean, crisp, and precise, sort of like the pristine, manicured fairways of The Country Club of Darien that Longacre played at yesterday afternoon.
However, now as a grizzled veteran on these boards, I have come to learn that the coin market is inefficient and more akin to the burnt-out fairways at an underfunded local muni.
Dealers have to travel all over the country on an almost weekly basis to meet up with other dealers to transact business. Dealers then have to work with wholesalers, who are peculiar animals, and have particular needs. Dealers then have to work with the retail public, who have completely different needs. Inventory has to be stocked, a website maintained through which business is transaction, and auctions constantly monitored for sources of inventory. The market does not seem very centralized or streamlined, and the “supply chain” for numismatic coins does not seem very efficient.
Do you agree that the coin market is a very inefficient market? And are we collectors bearing the brunt of that inefficiency through higher prices? >>
First off, kind sir, I need to point out that you should have a talk with your secretary... as there is a rather disturbing typo in the third paragraph. A slow review should expose the gaffe to a keen mind such as yours.
In the meantime, I might suggest you discuss with your associates in the Consortium, the possibilites of beginning a new enterprise. Perhaps you can come up with a business plan to help streamline the supply side of the numismatic industry.
From what I recall in posts from earlier this year, you already have business contacts in China. With their help, I'm quite sure you can alleviate the need for dealers to have to search for their scarce stock. Instead they could simply provide their want/need lists with your new enterprise and you can then simply have your contacts in China fill the orders.
This, I'm sure, would make for a much neater and efficient marketplace... don't you agree?
I see the typo. I am walking over to can her now.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>The market does not seem very centralized or streamlined, and the “supply chain” for numismatic coins does not seem very efficient. >>
Yes, I'm sure central planning is much more efficient than having individuals making decisions for themselves.
On a related note, the Committee for Proper Dispersal of Numismatic Material will be arriving at your home shortly to confiscate (reallocate, I meant to say) your current collection and replace it with your authorized Colorized Statehood Quarter set, which will be your new specialty. You do realize, of course, no appeal of this decision is permitted, as the Really Smart People in charge of this new program know better than you do what's in your best interest.
Enjoy.
Ray
If we were not a free society, then you might have a more efficient market, but then you would have to pay retail for everything and the previous owners would get less, by a defined amount.
Having the freedom to choose is why the supply is fragmented.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
eBaystore
Why should we consider reselling to other dealers for the 20+% cut when we could sell among ourselves? The coin industry seems to be completely inefficient when it comes to collector to collector sales. I'm not criticizing dealers business ethics, but rather the general practices of collectors.
Imagine all the better deals we could get if everyone wasn't accepting the dealer's reduced price or giving a cut to the auctioneer, but instead working on Buy/sell boards like this one or even meeting up at coin shows to do so?
Just my thoughts...
<< <i>Imagine all the better deals we could get if everyone wasn't accepting the dealer's reduced price or giving a cut to the auctioneer, but instead working on Buy/sell boards like this one or even meeting up at coin shows to do so? >>
Sure- you could probably get better deals if you did it collector-to-collector, but as Julian said, "the coins are everywhere", so what's the proposal- do you (and a bunch of other collectors) plan to travel around the country looking for them? I doubt you'd save any money doing that. And buy/sell boards? How much time are you ready to devote to photographing/emailing potential trading partners/packing & shipping coins? It's not as easy or cost-free as you might think.
I disagree with the proposition that the market is inefficient in some sort of a "burnt-out fairways at an underfunded local muni" way, but if your ideal is a sort of ESP-like thing where one collector would just automatically know the exact best other colletor to sell his coin to without having any middlemen, then maybe you're right.
I can't speak for anyone else, but IMO, the opportunities for finding coins today are better than they've ever been.
BTW, the coin market is both. The transactional inefficiencies are a drag on overall market activity and do not add value, but they do drive up costs. The informational inefficencies are where dealers make their money, which, of course, results in higher costs to the collector. But no collectible market will ever be informationally effiicent - and besides it would be a lot less fun.
merse
It is all a mess.
<< <i>There is a big difference, economically speaking, between the operationally, or transactionally, inefficient market that Mr. L opined on, and the informationally inefficent market that some subsequent posters are commenting on.
BTW, the coin market is both. The transactional inefficiencies are a drag on overall market activity and do not add value, but they do drive up costs. The informational inefficencies are where dealers make their money, which, of course, results in higher costs to the collector. But no collectible market will ever be informationally effiicent - and besides it would be a lot less fun. >>
Good post, although I wouldn't necessarily agree with your final sentence, given the inevitable forward progress
of coin photography and information technology. The question will be whether any party will be motivated to do
it.
<< <i>Isn't it clear that most markets in the world are woefully inefficient? Why else would we spend millions of dollars to pay farmers not to grow food...or dump trillions into "bail out," or perhaps fund forgien political campaigns so that when they come to power...they will sell us their goods.
It is all a mess. >>
I don't know, buying and selling shares of stock is pretty efficient nowadays.
it depends on who you ask.
``https://ebay.us/m/KxolR5