CAC Tax?
cameonut2011
Posts: 10,062 ✭✭✭✭✭
I often hear collectors justify paying more for a CACed coin because of the purported higher quality that a CAC sticker represents. Certain dealers push that argument very hard. I don’t think anyone here would dispute that a higher quality coin should sell for more irrespective of the label. However, some coins sell for premiums larger than seem proportional to any putative differences in quality. Indeed sometimes the same coin can sell for a substantial premium by the mere addition of a foil sticker like the coin below:
1914-D PCGS MS65 $2.50 OGH, Stacks-Bowers, 01/11/2017, realized $10,281.25: http://auctions.stacksbowers.com/lots/view/3-6KVQO/1914-d-indian-quarter-eagle-ms-65-pcgs-ogh
1914-D PCGS MS65 $2.50 OGH CAC (exact coin, same plastic), Heritage, 03/2018, realized $26,401.20, http://coins.ha.com/itm/a/1273-3132.s
Both Stacks-Bowers and Heritage are world class major auction houses and excellent venues. In the intervening year, the coin market including for 20th century gold went down yet the coin sold for 2.5x its prior appearance from a year before. The only material difference was the addition of a green CAC sticker. Some will undoubtedly call this a one off, but I am seeing this happen more and more.
1.) Would you pay more for a coin based on the sticker alone (I.e. pay a premium over a comparable quality or even the same coin without a CAC sticker)?
2.) As a prospective buyer can you justify paying $26k for a coin that sold for less than 40% of that a year earlier? Same plastic, same coin, same grade.
3.) Are there, as at least one other poster theorized, CAC keys such that the sticker alone adds collectibility?
4.)If your answer to #4 is yes, then is the creation of CAC condition rarities/keys creating irrational exuberance and inflated prices just like the advent of registry sets?
Comments
Irrational exuberance? In this hobby? Perish the thought!
Keeper of the VAM Catalog • Professional Coin Imaging • Prime Number Set • World Coins in Early America • British Trade Dollars
That's nothing compared to paying $130K for a coin with a PCGS Price Guide price of $13K. Welcome to the land of monster toned CAC!
Regardless of where anyone stands on CAC or such, there is a saying that I have heard between dealers on the bourse and that is "Buy at Stack's...sell at Heritage". Obviously, this is not a hard and fast rule, but the perception, and perhaps some of the reality, is that Heritage overall has more traction per lot and more traction at the higher bid levels.
In honor of the memory of Cpl. Michael E. Thompson
Fair enough, but does the disparity in venue really account for 250%? If the difference in selling potential was consistently higher, wouldn’t Stacks-Bowers have gone under by now? I think more than half of the premium is likely due to the sticker.
As always, thanks for the thoughtful and interesting points.
Agreed, but at least I can understand that - there is an eye appeal premium.
and PCGS CAC registry Sets
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
1) No
2) No
I've taken the time to go through this issue a little bit and I will post here what I am thinking and why I am thinking it.
This isn't a common coin in this grade, which made me assume that the depth of data would not be as robust as something like a gem 1881-S Morgan dollar. Therefore, I decided to track all the sales recorded on the PCGS CoinFacts site until I reached at least five sales from each major grading service (NGC and PCGS). Further, I wanted to go back in whole years, not fractions of years. I put these parameters in place before I looked at the sales data and the fifth NGC coin was sold four-years and five-months ago while the fifth PCGS coin was sold four-years and six-months ago, which meant that I looked at the previous five years of sales. Over the course of that time I found the following-
1) Five NGC certified coins, all with relatively new holders and none with CAC stickers. The average sales price was $9,737.
2) Eleven PCGS certified coins, which consisted of nine coins without a CAC sticker and two coins with a CAC sticker. The average sales price of the nine coins without a CAC sticker was $12,726 while the average for the two coins with a CAC sticker was $30,826.
Obviously, the shallow pool of data is showing a very large increase in auction "value" for this issue with a CAC sticker and that appears to be what folks are up-in-arms about at this time. However, if we twist the question a little bit we can ask why a coin in PCGS plastic is "worth" at auction 31% more than a similar coin in NGC plastic. True, they are not identical coins, but don't we hear over and over and over again (especially on this site) that to maximize value of a certified coin it should be certified by PCGS vs. NGC? That's written all the time and the coins that it is written about are not all identical, either.
This appears to be the next step in the evolution of US numismatics. We might think of it as the whisper in our ear so many of us hear when we see an otherwise valuable coin that isn't certified and many wonder what is wrong with it and/or will not pay the same as a certified example. This continues with a valuable coin certified by NGC and the howling chorus that often follows it demanding why it isn't in a PCGS holder and that it would likely never cross-at-grade. Now we are seeing those valuable, upper end coins in PCGS holders that might be viewed with suspicion because they must have gone through the CAC review process and failed if they don't have a sticker. Even more damning would be those PCGS OGH coins that live in this economic strata yet don't sport a PCGS sticker. After all, they were in their PCGS OGH long before CAC came around, perhaps a dozen-years ago, which means they had ample opportunity to be CAC reviewed.
I'm not stating it all makes sense and I'm not stating that this is the only explanation, but if only 5% of the certified population for a five-figure coin (in this case MS65 1914-D Indian QEs) has a CAC sticker then many (most?) experienced folks might wonder why. If it is simply a matter of the coin never having gone through the CAC process then multiple representatives for the owner failed in their fiduciary duties. The other explanation may be that this pool of potential buyers believes the nicer coins are in PCGS holders and the nicer-nicer coins are in PCGS holders with a CAC sticker and their money pursues those pieces.
In honor of the memory of Cpl. Michael E. Thompson
CAC Premium (not similar to a Tax).
It's been observed for quite awhile now.
You can think of it as a "+" grade, or like the premium for PCGS over NGC.
Also, in the auction setting, the CAC sticker can encourage more online bidders to participate,
who were not able to view the coin in person.
CAC Liquidity could be another term as it makes CAC coins easier to sell.
I've always found it interesting that it had the unforeseen side effect of making coins harder to buy for John Albanese .
Sample of 1 pairing. There is a CAC premium for sure but it is generally not the 100% plus shown with this example.
Latin American Collection
I only buy PCGS OGH coins with gold CAC & Eliasberg pedigree off Legend Numismatics.
My Saint Set
a few thoughts
This is not uncommon. It happens all the time. The exact coin goes for far more money because the label is on the holder has changed. A PCGS coin sells in a 63 holder and shows up later in the 64 holder and sometimes even later in a 65 holder. Like it or not, this is not unique to the coin in the OP---same coin but different label matters to price
As ive said before, many sharp dealers have told me CAC is an opportunity for those with the best eyes. Many coins arrive at auction houses at the last minute and some will slip through the cracks and not go to CAC. If you can find such a coin, your sharp eye will be rewarded.
The auction price of the coin in the OP with CAC approval makes perfect sense. There are price guides for CAC coins and the price it sold for is consistent. JA is incredibly selective with his stickering of gold and especially the gem Indian series. If you want a gem 1914-D approved by CAC that is the price the market calls for. If you could care less about CAC there are plenty of examples without the sticker that you can pay half the price.
There are many people that collect quarter eagle indians (a very popular series). There are also many people who try to collect coins with CAC approval (you dont have to agree but that is a fact). If you want to build a gem series of indian quarter eagles in cac ---there are only 4 available. That means only 4 collectors can build a set of QE indians in pcgs 65 CaC (there are more 1911-d in 65 cac than 1914-d) The coin in the OP is one of them. My guess is that number will not change much and the price paid for 1914-D CaC will be a bargain down the road.
You could say the same about a “PCGS” tax. However, whether with respect to CAC OR PCGS, “tax” seems to have more of a negative connotation than “premium” does. Why not just use the word “premium”?
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
@TomB....You have presented a very logical and evidentiary study of the situation. Your logic exposes the lack of logic in the numismatic market. That lack of logic is defined as the human drive to have the perceived best in possessions. This of course is amply demonstrated in other possessions as well, such as cars, houses, art, clothes - whatever demonstrates superiority to others. We humans are strange beings...Cheers, RickO
I'll never understand all the wringing of hands here on this subject. No matter one's feelings about the issue, it is the reality of the marketplace today. Get over it.
Coinlearner, Ahrensdad, Nolawyer, RG, coinlieutenant, Yorkshireman, lordmarcovan, Soldi, masscrew, JimTyler, Relaxn, jclovescoins
Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't an optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
Yep..........Same Ole......Same Ole!!!!
Very well put Ricko.
Buy the coin at a price you are comfortable paying based on attributes you appreciate. It's a personal decision that could be based on any number of factors. It's nobody else's business.
You may say that such a purchase inflates the market for similar coins, and that may be true...but in the end it still comes down to your personal decision to buy a coin or not.
I've paid more for coins than others would pay. I've also refused to pay as much as someone else would pay. That shouldn't matter to you.
Label fever, maintain social distance
Give Me Liberty or Give Me Debt
Or maybe the addition of a motivated bidder or two, ya think?
1 – The CAC approval is a requirement. CAC is a ‘go/no go’ and is not directly related to price.
2 – Likely not. That is a big push, 40%. If the coin is a ‘must acquire’, then I would.
3 – Yes. Especially for the CAC registry sets.
4 – Yes.
Really like the TomB description of the hierarchy of coin desirability. Though unofficial now, someone may establish a means to document the final top category – PCGS CAC with high eye appeal.
Really like the MidLifeCrisis post; describes the strategy well.
I find it interesting that JA has said the CAC may not be around forever... A green sticker may bring more of a premium in the future.
There is truth to this extreme strong pricing on coins that count with CAC. In a series that I follow, seated CC quarters. Recently GC had threee CC seated Keys the 70-cc In NGC F and the 71-CC NGC 35 and a 73-cc PCGS NON CAC. I have been following these for years so I am familar with pricing. The 2 CAC issues went incredibly high, nothing even remotely close over the past few years in prior auctions. On the other hand the 73 cc which was pcgs, but no sticker actually sold quite low vs past recent years auctions.
Prior to that the 1796 dime in rattler CAC gold sold for nearly 65 money
I would predict just the opposite. People will be chasing coins with the new cowbell.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
This is a BAD EXAMPLE of the "CAC tax".
I'm not sure why no one has yet pointed out that the population of this coin in 65 is 55/0. If you consider the CAC to be the equivalent of a "+", you have a top pop coin.
So, I don't think you can simply look at it and say that the CAC sticker alone raised the price. IF the population of this coin was 55/5 then I don't think you see anywhere near the sticker premium that you see here.
Does the coin market really need more cowbell?
I'm going to agree with you and add that there are no 66's. That essentially makes those 4 CAC coins tied for "finest known"
Cowbell works---it is an important driver in the coin market, at least the business end of it. The question should be about whether collectors need more cowbell. I don't think so, but I am a dinosaur.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
LOL
Exactly
My Saint Set
I will now summarize everything that hasn't already been said 100 times about CAC:
.
Buy the coin in the grade/plastic/sticker you want at the price you think is fair and just know the person you eventually sell to will be doing the same.
If you could work eBay, USPS, and Buyers' Premiums into this, we could probably fold up the forum and go home.
Add Legend's Hot Topics into it, too, and the internet might just explode.
In honor of the memory of Cpl. Michael E. Thompson
sometimes a green CAC coin will sell for more than the next grade up, a fact that I find ridiculous. also, there are two facts which cannot be denied --- a coin with a CAC sticker has been submitted there and approved, nothing can be said about a coin without a CAC sticker unless the owner admits it was submitted and failed. 20 years ago the chant was "if the coin is raw there must be a reason" which was akin to believing that every coin had been submitted to a major TPG. that has changed today, it now reads "if the coin doesn't have a CAC sticker there must be a reason" and it makes no sense.
in certain ways things were much simpler before 1986, a collector just had to be smarter and pay closer attention to what they were doing. today it's too easy to be lazy and just open up your wallet.
Is buyer perception equivalent to reality when buying collectibles? In many cases, if not most, the answer is no.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
You can take the OPs arguments and substitute PCGS with another TPG on all 4 points and have the same arguments.
You can look at all the data you want but PCGS graded coins tend to sell for more than any other TPG. "Would you pay more for a coin based on the holder alone (I.e. pay a premium over a comparable quality or even the same coin in a non-PCGS holder)?"
People do it all the time where they cross-over another holdered coin in favor of PCGS. Even if the coin goes from AU-58 to PCGS AU-55 the value is perceived to be the same.
Why aren't people making this same analogy? CAC is the popular topic now and any chance people have to post about CAC then they know they'll get 30-40 responses.
The market drives the value of coins. Right now CAC stickered coins have a perceived greater value than non-CAC. AND PCGS graded coins with a CAC sticker is the gold standard. In today's market if you want to protect the value of your collection then that's what you should strive for.
Taking your last statement, it has always been easy to be lazy and open your wallet. In whatever field. The world is your oyster. The rich do as they wish.
What CAC has done is allowed the ready identification of top quality coins, so opening your wallet is far less financially risky.
Finally, it is a definitive positive when there are more collectors in the coin market (lazy and rich, or otherwise).
Grading by the end user collectors is weaker today than it was 25-30 yrs ago. Could be getting weaker and weaker over time. They do need CAC.....even if they don't wish to pay the CAC price premium on lower pop coins. I have no problem with CAC's role in the market place...even if they were (and still are) the driving force in widening price spreads between non-generic PCGS vs. NGC coins. Their entry into the market in late 2008 to early 2009 was akin to FDR raising the gold price from $20.67 to $35.00/oz in Jan. 1934....an instant 40% devaluation to the USDollar.....and for CAC, an instant additional 10-30% devaluation for non-generic NGC coins that failed to sticker. Over 10 yrs later and that tsunami is still running its course.
I wonder when we will get a value added tax bill? No maybe not
Many people aren't happy with certain graded coins. Some people in the know here said that a Saint in MS 65 with a sticker is worth a premium because it is so much more eye appealing coin than one without a sticker. I don't collect them, so I'll take their word for it.
But it's similar to the analogy 15-20 years ago that an MS 65 Capped Bust Half in a PC holder was generally 1/2 point nicer than the MS 65 Capped Bust Half graded at NGC. I've seen enough of CBHs in both holders to know this is generally true. As a result, there's a large price difference between the two coins.
One thing I like about CAC is that if JA likes a coin, he'll sticker it. This lets you bypass trying to get a same grade cross of an NGC coin to PCGS, which in gem or better, I don't think is likely to happen.
Is it worth paying a premium for a stickered coin? It depends on you and depends on the coin.
I had a very nice stickered coin in a PC 6 holder that I upgraded to PC 7. As a 7, it didn't sticker. I agree with JA on that. I could see it in a 6 + holder, and it would have still been stickered. All of this said, it's still worth more in that 7 holder.
"Seu cabra da peste,
"Sou Mangueira......."
I am not too clear on what you are saying or asking. Can you state it in a different way? Thanks
what's a cowbell?
asking for a friend.
It's a bell that a cow wears. It's also sometimes part of a musical ensemble. It is also an SNL skit. Google "more cowbell".
My comment concerns something that I have repeatedly noticed over the years. Coin buyers frequently do not understand what they are buying. A grade/plastic/sticker does not always mean the truth. Roadrunner once noted that you sometimes don't get an accurate grade until you submit a coin multiple times and then analyze the results. What a buyer thinks and what is real, regarding a coin transaction, don't always coincide. This is how people get burned, especially if the coin is not sold until many years later.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
Time will> @Sonorandesertrat said:
Time will tell but i think if CAC closes shop the premiums will only grow for CAC stickered coins. Today they trade at a premium (i am referring mostly to old gold and coins above $5000 in value). If the supply of new CAC coins comes to a complete halt anyone wanting a CAC coin will have a fixed universe to buy one. In the case of the OP, the universe will be 4!
I have really never heard anyone question JA's ability to select coins strong for the grade (yes there will always be outliers) but a few dont seem to like that one person has so much percieved power (i have never head this complaint about Rick Snow' photo seal although the concept is similar). Bottom line is that those dismissing CAC until now have been wrong. The premiums seem to have grown, multiple magazines price CAC stickered coins differently and are dedicated to CAC, and now our host has even created a registry for PCGS CAC coins.
I wont pretend to know the future but i have seen CAC stick to its standards and not have any sticker inflation. Just like you cant mint "new" old rare coins and old slabs are sought after, i think condition census CAC coins will soar in value if CAC ceases stickering coins (just my opinion).