I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
Many opinions to the contrary, but....I.... think the stickered coins would acquire ADDITIONAL premium if or when CAC changed hands or personnel.
Similar to a desired provenance.
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
He's charging $15 for coins valued under $10,000. if you're a collector member and not a dealer, if your coin does not CAC you get that $15 fee back in full!!!!! For re-stickering, the cost is only $3. They now added on a "whopping" $5 handling fee.
With this fee structure I can't see them doing a lot of wining and dining, fancy travel for themselves, etc. I agree with @Gazes.
This fee structure of CAC is nowhere near the fee structure of our hosts (but which i feel our hosts fee structure is WELL WORTH IT, regardless).
A day without fine wine and working on your coin collection is like a day without sunshine!!!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
@CoinJunkie said:
CAC as a brand will be sold before it would simply close up shop. IMHO, of course.
It might get sold...but that's the same as closing up shop. The CAC premium is John Albanese's eyes.
CAC will have to evolve and probably change the sticker to prevent collectors simply rejecting them wholesale.
I'd be curious to know how often JA and his graders disagree.
Interesting question. But I'm 99.9999% sure that JA always wins the argument. LOL.
Well I'd posit that there would have to be a high level of agreement between JA and his graders before he would turn it over to someone else and let them continue to use his name.
It doesn't matter if he trust the graders to "use his name". The market needs to trust it. And if they don't, and if the stickers are indistinguishable, then the value of CAC goes to zero immediately.
This is very different than a TPGS. PCGS value, even with changing graders and management and finalizer, exists in the guarantees that come with it. CAC offers no guarantee of anything. The value of CAC now is 100% in the market trust of JA's opinion. Because, unlike a TPGS, all you get is an opinion from CAC.
I'm not saying it has to go to zero when JA retires. But people are underestimating the difficulty in continuing operations under different leadership. CAC value is all about trust in one man's eyes. A different set of eyes may not be trusted as much.
@marcmoish said:
Not sure why there is so much push against it here -
CAC provides a level of safety for those who are not confident in their grading abilities, making it easier for them to buy coins they might not have considered otherwise and increasing the number of collectors interested in such coins. People who aren't depending on a third party to identify better coins for them are now having to compete with more potential buyers than they were used to doing in "the good old days", often leading to higher prices. And most buyers don't care much for higher prices.
@marcmoish said:
Not sure why there is so much push against it here -
CAC provides a level of safety for those who are not confident in their grading abilities, making it easier for them to buy coins they might not have considered otherwise and increasing the number of collectors interested in such coins. People who aren't depending on a third party to identify better coins for them are now having to compete with more potential buyers than they were used to doing in "the good old days", often leading to higher prices. And most buyers don't care much for higher prices.
Just a thought...
It's not just people who lack confidence in their grading abilities. I find it really helpful when buying coins sight unseen. It essentially gives met two expert opinions on the coin so I don't have to simply trust my ability to decipher photos. I will always bid more for a 65 CAC than a 65 NO CAC for that reason.
You can avoid many of these problems by not buying coins sight unseen, unless there is a no questions asked return privilege, something which is increasingly rare these days.
CAC often provides a more ready market with higher prices for coins in the same grade with, versus without the sticker. The fewer of such coins which are stickered, the higher the premium for them. What a potential buyer should ask is what premium is he paying for the sticker, and does he think he can get it back when he wants to sell such coin. This will depend on the venue in which the coin is purchased: ie., which dealer, auction, how strong is the market for that particular coin at said point in time, etc.
"Vou invadir o Nordeste, "Seu cabra da peste, "Sou Mangueira......."
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
I agree.
I don't think he's losing money on the stickers, by the way. But I think he's probably running it at break even.
@marcmoish said:
Not sure why there is so much push against it here -
CAC provides a level of safety for those who are not confident in their grading abilities, making it easier for them to buy coins they might not have considered otherwise and increasing the number of collectors interested in such coins. People who aren't depending on a third party to identify better coins for them are now having to compete with more potential buyers than they were used to doing in "the good old days", often leading to higher prices. And most buyers don't care much for higher prices.
@marcmoish said:
Not sure why there is so much push against it here -
CAC provides a level of safety for those who are not confident in their grading abilities, making it easier for them to buy coins they might not have considered otherwise and increasing the number of collectors interested in such coins. People who aren't depending on a third party to identify better coins for them are now having to compete with more potential buyers than they were used to doing in "the good old days", often leading to higher prices. And most buyers don't care much for higher prices.
Just a thought...
It's not just people who lack confidence in their grading abilities. I find it really helpful when buying coins sight unseen. It essentially gives met two expert opinions on the coin so I don't have to simply trust my ability to decipher photos. I will always bid more for a 65 CAC than a 65 NO CAC for that reason.
You can avoid many of these problems by not buying coins sight unseen, unless there is a no questions asked return privilege, something which is increasingly rare these days.
CAC often provides a more ready market with higher prices for coins in the same grade with, versus without the sticker. The fewer of such coins which are stickered, the higher the premium for them. What a potential buyer should ask is what premium is he paying for the sticker, and does he think he can get it back when he wants to sell such coin. This will depend on the venue in which the coin is purchased: ie., which dealer, auction, how strong is the market for that particular coin at said point in time, etc.
Yes, you could never buy sight unseen. But YOU DON'T HAVE TO because of the sticker.
And, in the last 3 months, ALL major sales which included some MAJOR COINS have been sight unseen.
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I totally agree again.
[Is anyone writing this down?]
I didn't write it down, but I did report the account as hacked.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little need for addition real estate etc...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
@BAJJERFAN said:
The best thing about CACSUS TAXUS is that it's 100% voluntary and optional.
Not really. Unless you as a seller decide you want to take a LOT less money for your coins. And for decent looking NGC coins it's almost imperative to get them looked at by CAC. The price spreads can be quite large. Anyone who is thinking of recouping the most they can, pretty much have to do this. It was not such an issue into mid-2008 when NGC coins brought within 5-15% of PCGS coins. Now with PCGS to NGC spreads at 10-40% for non-generics (stickered or not), it's almost a necessity for your $500 and up MS/PF coins make a visit to CAC.
I was referring to collector buyers since 99% of the bitching here comes from them.
It may be voluntary and optional. But what I said applies equally to collector buyers, if not more so.....as there will come a time to sell your coins....usually way sooner than most think possible. Or get them CAC reviewed even before you sell your coins just in case something unforeseen happens to you....and the coins have to be sold off. Most submitters are often surprised at coins they thought were "all there" getting rejected. Been there, done that.
I learned early in 1988 not to rely on the TPG grade of the holder. When you can receive multiple different grades in 2-3 submissions it showed me early on how variable grading really was. That has not changed, especially for non-generics. I'm not surprised that CAC has "only" seen 1.7% of all slabbed coins. But for those of us that are into choice and gem type, rarer dates, etc. they have probably seen 50% or more of the coins out there. Look at Hansen, Gardner, Pogue, etc. Nearly every significant coin worth 4 figures and up has probably been reviewed by CAC....or the owner didn't even bother knowing the coin would be soundly rejected. Anyone buying a choice/gem pop top or condition census seated/bust/Barber coin will want to know what CAC thought of it. No sticker? The assumption is it once failed.
The price hierarchy of a gem rare coin from 0 to 100% value might go something like this: NGC 65 - 50%, PCGS 65 - 75%, NGC CAC 65-80%, PCGS CAC - 85-100%. For a generic MS65 1881-s Morgan it's NGC 65 - 80%, PCGS 85%, NGC CAC 90%, PCGS CAC 100%. Not nearly as much need for a sticker in that case.
There are relatively few "serious numismatists" out there building powerful sets today. And while today's "serious" player is probably a better grader (or a more informed one) than they were 10-15 yrs ago, there are probably even less of them today. I'd use that same 1.7% number from above. It's the other 98.3% of collectors spending over $100 per coin that really need the help of a slab and/or a sticker.
@amwldcoin said:
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little or need for addition real estate...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
@amwldcoin said:
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little or need for addition real estate...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
@amwldcoin said:
I agree and that is one of the points I am making! Just how much start up cost was involved in CAC? The most expensive part was probably a trademark!
@amwldcoin said:
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little or need for addition real estate...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
You need quality graders. Those aren't necessarily cheap. You also need shipping and receiving.
You are right that you need less equipment than PCGS, for example. You don't need an electron microscope or access to one. You don't need to be able to sonically seal a slab, you just slap a sticker on it. Etc.
But your fixed costs are spread over a narrower base.
I would suspect that they run pretty much break-even. I'm sure he doesn't want to lose money on the operation either.
I see JA’s CAC business as a loss leader in that it feeds his profitable market maKing business while simultaneously slowing down grade inflation that hurts the overall market.
So just how much do you think it costs per year to operate CAC? On the low side their gross revenue is well over a million a year averaged out since the beginning! I suspect it is leaps and bounds higher now.
@amwldcoin said:
I agree and that is one of the points I am making! Just how much start up cost was involved in CAC? The most expensive part was probably a trademark!
@amwldcoin said:
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little or need for addition real estate...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
You need quality graders. Those aren't necessarily cheap. You also need shipping and receiving.
You are right that you need less equipment than PCGS, for example. You don't need an electron microscope or access to one. You don't need to be able to sonically seal a slab, you just slap a sticker on it. Etc.
But your fixed costs are spread over a narrower base.
I would suspect that they run pretty much break-even. I'm sure he doesn't want to lose money on the operation either.
@BryceM said:
The point has been made many times, yes. Despite that, there are many who seem to believe that the entire reason CAC’d coins cost more is that they have a green sticker, not that they were already nicer coins to start with. On average mind you - it’s pretty easy to find mistakes and weird pricing occurrences.
I didn’t say anything about who should be the arbiter of nice coins. Collectively, over time, the market decides what’s nice. Individuals influence the collective consciousness of course, but that’s a whole lot bigger than even the most revered thought leaders.
JA seems to have a pretty good finger on what the market likes and his ability to leverage that knowledge gives him credibility and widespread (but not universal) acceptance. Others are pretty darn good at it too but lack the same ability to project their perceptions to such a large audience.
If what the market “liked” suddenly shifted (it is always shifting), JA would either shift with it or eventually become irrelevant. If gradeflation progressed to the point that he would only sticker one in ten thousand coins, people would stop paying attention.
Just random thoughts.......
Interesting observations. I generally agree with most of your post (as usual), but have never gotten the sense that JA is a slave to market trends. Based on what I've read, he has certain attributes that he looks for based on longstanding personal convictions/beliefs/biases. Rub on high points of a coin graded MS63 or higher as a bean disqualifier would be one example.
@amwldcoin said:
So just how much do you think it costs per year to operate CAC? On the low side their gross revenue is well over a million a year averaged out since the beginning! I suspect it is leaps and bounds higher now.
@amwldcoin said:
I agree and that is one of the points I am making! Just how much start up cost was involved in CAC? The most expensive part was probably a trademark!
@amwldcoin said:
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little or need for addition real estate...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
You need quality graders. Those aren't necessarily cheap. You also need shipping and receiving.
You are right that you need less equipment than PCGS, for example. You don't need an electron microscope or access to one. You don't need to be able to sonically seal a slab, you just slap a sticker on it. Etc.
But your fixed costs are spread over a narrower base.
I would suspect that they run pretty much break-even. I'm sure he doesn't want to lose money on the operation either.
Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.
@BillJones said:
One post on this, and I am done. I am done with buying U.S. coins that cost more than a couple hundred dollars because of CAC. I love the U.S. coins I have and don’t plan on selling them soon, but when one man controls the market and controls the selection of coins that should be added to your collection, it’s time to go.
I hope and pray that CAC will leave the market for hammered British and Imperial Roman coins alone. Many collectors in those areas prefer raw coins, myself included, in any case. Maybe that will discourage the spread of the virus.
One man doesn’t control the market...
Unless you couldn’t care less about losing large sums of money, his opinion absolutely controls the market.
The “market” is comprised of a great many different types, varieties, qualities and values of coins, some of them graded and others, not. No one even begins to influence all of that, much less, “control” It.
He is like Apple (iOS) and Android put together of the coin market. To me that is exerting significant influence which is tantamount to "control." Yes there are others, but those market segments consist of a small market volume and are pretty much irrelevant. In all segments that matter to experienced collectors, JA reigns.
@amwldcoin said:
So just how much do you think it costs per year to operate CAC? On the low side their gross revenue is well over a million a year averaged out since the beginning! I suspect it is leaps and bounds higher now.
@amwldcoin said:
I agree and that is one of the points I am making! Just how much start up cost was involved in CAC? The most expensive part was probably a trademark!
@amwldcoin said:
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little or need for addition real estate...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
@amwldcoin said:
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
@Gazes said:
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
You need quality graders. Those aren't necessarily cheap. You also need shipping and receiving.
You are right that you need less equipment than PCGS, for example. You don't need an electron microscope or access to one. You don't need to be able to sonically seal a slab, you just slap a sticker on it. Etc.
But your fixed costs are spread over a narrower base.
I would suspect that they run pretty much break-even. I'm sure he doesn't want to lose money on the operation either.
Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.
@BryceM said:
These discussions are always some combination of fun and interesting. Somehow there's a particular point that always seems to be forgotten.
Ever since coins were first assigned grades there has always been a subset of coins that are particularly nice or desirable compared to the others. Long before the arrival of CAC or even TPGs these coins sold for more than the others due to properties the potential buying pool recognized and desired. A large part of the supposed “CAC tax” is nothing more than paying up to acquire the best coins. How you identify and stratify those has changed over time and will continue to do so.
The CAC premium will endure for no other reason than they tend, on average, to sticker nicer coins.
As I said, I don't think anyone questions that a superior coin should sell for more money. In many cases that it is a CAC coin. I've gladly paid this premium in the past for coins that were incidentally stickered. In this example, the $16k premium cannot be attributed to the quality of the coin as the sales are for the same coin. I think venue, timing, and other factors are extraneous in this context and what we are seeing is a premium based on CAC alone. That is what I find so perplexing. This isn't new either. I'll never forget the thread where TDN openly mulls over the pricing of an expensive coin based on its specific plastic and sticker combination. At no point had the coin changed. To me numismatics has evolved in many segments to be so focused on plastic and stickers that the metal disc in the middle is only of secondary importance.
As for your other point about nicer coins, this is another area that has always baffled me. In many graduate/professional schools (with some exceptions) as you know, a "B" is the lowest passing grade. Could it be that by coupling "A" and "B" coins together that collectors are paying premiums for middle of the road pieces that aren't really special? The under graded and "A" coins are cherry picked by advanced numismatists and specialists and do not trade as frequently so the many of the stickered coins we see are going to be "B" coins. Isn't it time for a silver or bronze sticker?
...To me numismatics has evolved in many segments to be so focused on plastic and stickers that the metal disc in the middle is only of secondary importance...
Forgive the extreme edit of your post but I'd like to opine on that particular sentence.
While I may shop for PCGS/CAC coins to consider for purchase, I....scrutinize.... the "metal disc" with as much observation as I can from photos. If I have ....any.... questions, I ask em before purchase.
The sticker may be a starting point, but the coin is the meat.
Oh....also.... I look at unstickered metal discs, too.
@BryceM said:
These discussions are always some combination of fun and interesting. Somehow there's a particular point that always seems to be forgotten.
Ever since coins were first assigned grades there has always been a subset of coins that are particularly nice or desirable compared to the others. Long before the arrival of CAC or even TPGs these coins sold for more than the others due to properties the potential buying pool recognized and desired. A large part of the supposed “CAC tax” is nothing more than paying up to acquire the best coins. How you identify and stratify those has changed over time and will continue to do so.
The CAC premium will endure for no other reason than they tend, on average, to sticker nicer coins.
As I said, I don't think anyone questions that a superior coin should sell for more money. In many cases that it is a CAC coin. I've gladly paid this premium in the past for coins that were incidentally stickered. In this example, the $16k premium cannot be attributed to the quality of the coin as the sales are for the same coin. I think venue, timing, and other factors are extraneous in this context and what we are seeing is a premium based on CAC alone. That is what I find so perplexing. This isn't new either. I'll never forget the thread where TDN openly mulls over the pricing of an expensive coin based on its specific plastic and sticker combination. At no point had the coin changed. To me numismatics has evolved in many segments to be so focused on plastic and stickers that the metal disc in the middle is only of secondary importance.
As for your other point about nicer coins, this is another area that has always baffled me. In many graduate/professional schools (with some exceptions) as you know, a "B" is the lowest passing grade. Could it be that by coupling "A" and "B" coins together that collectors are paying premiums for middle of the road pieces that aren't really special? The under graded and "A" coins are cherry picked by advanced numismatists and specialists and do not trade as frequently so the many of the stickered coins we see are going to be "B" coins. Isn't it time for a silver or bronze sticker?
Your comment that superior coins should sell for more money is true. Going back to the OP, that 1914-D is gorgeous. If you compare to other coins graded 65 it clearly is at the very top end. Add to that it is in an OGH and it may be a 65+ . Right now there are no 65+ or anything higher. A strong argument could be made that this coin is the top 1 or 2 or 3 1914-D in a very popular series. Forgetting CAC that would explain the price. Further, i would not be surprised if it shows up for auction down the road if it brings in excess of 30,000.
...To me numismatics has evolved in many segments to be so focused on plastic and stickers that the metal disc in the middle is only of secondary importance...
Forgive the extreme edit of your post but I'd like to opine on that particular sentence.
While I may shop for PCGS/CAC coins to consider for purchase, I....scrutinize.... the "metal disc" with as much observation as I can from photos. If I have ....any.... questions, I ask em before purchase.
The sticker may be a starting point, but the coin is the meat.
Oh....also.... I look at unstickered metal discs, too.
I think, setting aside personal coin attractiveness, the concern about plastic/sticker obsessiveness is when the PRICE PAID for the coin (for generics) is way outside the “nice for the grade” value for that grade. It’s evidently gotten to the point where JA is having trouble buying his stickered coins!
amwldcoin, just out of curiosity, what about the below copied post from jmlanzaf, did you find so funny that you laughed out loud?
“Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.”
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Hmmm, I guess you didn't read my reply! $200K salaries are pretty much a thing of the past for coin graders. I would also say there is no way the other 2 supposed graders(going by what I've heard about the CAC process) are making 200K a year! There work load is way less than a TPG grader. Even if they are...you scale the business from start up to now...the Gross for the business is probably 3 or more million a year now as the 1st few years were probably way less busy. The 1st estimate I made of gross income is the absolute lowest it could possibly be if they have evaluated 1.2 million coins as is advertised. You add in all the coins that did not sticker that dealers submited...which from what everyone seems to think is very high....that number could easily double!
I am a number cruncher and have been all my life. I drew a salary from my dad's company at the age of fourteen for doing 90% of his accounting work. Daily Ledgers, balancing the checkbooks, and monthly ledgers. It was not a small business either as there were probably around a 1000 checks or more per month.
No one here is going to convince me there is no monetary gain from the CAC business....NO ONE!
Edit to correct after thinking...I was 14, not 12 when my Dad gave me the job.
@MFeld said:
amwldcoin, just out of curiosity, what about the below copied post from jmlanzaf, did you find so funny that you laughed out loud?
“Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.”
@amwldcoin said:
Hmmm, I guess you didn't read my reply! $200K salaries are pretty much a thing of the past for coin graders. I would also say there is no way the other 2 supposed graders(going by what I've heard about the CAC process) are making 200K a year! There work load is way less than a TPG grader. Even if they are...you scale the business from start up to now...the Gross for the business is probably 3 or more million a year now as the 1st few years were probably way less busy. The 1st estimate I made of gross income is the absolute lowest it could possibly be if they have evaluated 1.2 million coins as is advertised. You add in all the coins that did not sticker that dealers submited...which from what everyone seems to think is very high....that number could easily double!
I am a number cruncher and have been all my life. I drew a salary from my dad's company at the age of twelve for doing 90% of his accounting work. Daily Ledgers, balancing the checkbooks, and monthly ledgers. It was not a small business either as there were probably around a 1000 checks or more per month.
No one here is going to convince me there is no monetary gain from the CAC business....NO ONE!
@MFeld said:
amwldcoin, just out of curiosity, what about the below copied post from jmlanzaf, did you find so funny that you laughed out loud?
“Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.”
No one has said there is "no monetary gain". It just isnt driven by revenue from submissions apparently
@amwldcoin said:
Hmmm, I guess you didn't read my reply! $200K salaries are pretty much a thing of the past for coin graders. I would also say there is no way the other 2 supposed graders(going by what I've heard about the CAC process) are making 200K a year! There work load is way less than a TPG grader. Even if they are...you scale the business from start up to now...the Gross for the business is probably 3 or more million a year now as the 1st few years were probably way less busy. The 1st estimate I made of gross income is the absolute lowest it could possibly be if they have evaluated 1.2 million coins as is advertised. You add in all the coins that did not sticker that dealers submited...which from what everyone seems to think is very high....that number could easily double!
I am a number cruncher and have been all my life. I drew a salary from my dad's company at the age of twelve for doing 90% of his accounting work. Daily Ledgers, balancing the checkbooks, and monthly ledgers. It was not a small business either as there were probably around a 1000 checks or more per month.
No one here is going to convince me there is no monetary gain from the CAC business....NO ONE!
@MFeld said:
amwldcoin, just out of curiosity, what about the below copied post from jmlanzaf, did you find so funny that you laughed out loud?
“Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.”
I did read your reply to jmlanzaf and it was quite short on details. I have copied it below for you. But based on your reply to my question, apparently you disagreed with him and thought his post was really funny, so you clicked on “LOL”.
Now, I’ll disagree with you. But I’ll refrain from clicking on “LOL”, as I think that would be rude.
“ Better not let the current PCGS Graders see that post!”
» show previous quotes
Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
A couple of replies: "I saw an advertisement in The Numismatist offering up to $300,000.00 for a " senior grader " a year or so ago."
"The same advertisement that offered the $300,000.00 for a senior grader offered $75,000.00 for an intern."
Half a million for three graders doesn't sound excessive.
A couple of replies: "I saw an advertisement in The Numismatist offering up to $300,000.00 for a " senior grader " a year or so ago."
"The same advertisement that offered the $300,000.00 for a senior grader offered $75,000.00 for an intern."
Half a million for three graders doesn't sound excessive.
A couple of replies: "I saw an advertisement in The Numismatist offering up to $300,000.00 for a " senior grader " a year or so ago."
"The same advertisement that offered the $300,000.00 for a senior grader offered $75,000.00 for an intern."
Half a million for three graders doesn't sound excessive.
So, you think the salary of a senior grader has dropped by 70% in the last 13 years?
@BryceM said:
Based on prior experience, I predict we're within 24-36 hours of the thread going off the rails and being closed.
Tick,
Tick,
Tick......
I hope not. I thought the thread provided an opportunity for some thoughtful analysis and discussion. There were multiple thoughtful posts on both sides of the issue.
Assuming a 63% pay cut since 2007, the cost for three graders would be half a million dollars today.
Once again, half a million for three graders doesn't sound excessive. Just sayin'.
If they cut the salaries any lower, the CAC graders have the worst eyes in the game. A set of professional grader eyes could easily make $100k per year cherry picking the coin show circuit.
Yes, you could never buy sight unseen. But YOU DON'T HAVE TO because of the sticker.
And, in the last 3 months, ALL major sales which included some MAJOR COINS have been sight unseen.
Sorry. If you or someone you trust hasn't seen the coin, you're buying sight unseen. Period. If you are okay with that, have at it. Return privileges at auctions for slabbed coins are minimal at best, so if you want to walk on that tightrope, it's on you. I'll bet someone screened these expensive coins for the buyers.
When you are buying a slabbed coin, you are paying for an insurance policy on the product in the form of an expert opinion. You are paying for an additional insurance policy on the coin if it is also stickered.
Coins are like artwork; they are all different and you need to find the one that fits your taste. If you are a collector and not a dealer, the way to get the best fit in addition to getting expert opinion(s), is to see it for yourself and then decide.
Again, if you are convinced that you will like everything JA and CAC likes, have at it.
"Vou invadir o Nordeste, "Seu cabra da peste, "Sou Mangueira......."
So all he employees are senior graders?(2 not 3 from what I understand) Are there that many senior graders out there? What qualifies a person to be a senior grader? I'm going to check out of this conversation. You all can believe what you want. If you don't think CAC is not making money....well don't I know what to say!
A couple of replies: "I saw an advertisement in The Numismatist offering up to $300,000.00 for a " senior grader " a year or so ago."
"The same advertisement that offered the $300,000.00 for a senior grader offered $75,000.00 for an intern."
Half a million for three graders doesn't sound excessive.
So, you think the salary of a senior grader has dropped by 70% in the last 13 years?
Yes, you could never buy sight unseen. But YOU DON'T HAVE TO because of the sticker.
And, in the last 3 months, ALL major sales which included some MAJOR COINS have been sight unseen.
Sorry. If you or someone you trust hasn't seen the coin, you're buying sight unseen. Period. If you are okay with that, have at it. Return privileges at auctions for slabbed coins are minimal at best, so if you want to walk on that tightrope, it's on you. I'll bet someone screened these expensive coins for the buyers.
When you are buying a slabbed coin, you are paying for an insurance policy on the product in the form of an expert opinion. You are paying for an additional insurance policy on the coin if it is also stickered.
Coins are like artwork; they are all different and you need to find the one that fits your taste. If you are a collector and not a dealer, the way to get the best fit in addition to getting expert opinion(s), is to see it for yourself and then decide.
Again, if you are convinced that you will like everything JA and CAC likes, have at it.
I never said anything different. Yes, you are buying sight unseen.
@amwldcoin said:
So all he employees are senior graders?(2 not 3 from what I understand) Are there that many senior graders out there? What qualifies a person to be a senior grader? I'm going to check out of this conversation. You all can believe what you want. If you don't think CAC is not making money....well don't I know what to say!
A couple of replies: "I saw an advertisement in The Numismatist offering up to $300,000.00 for a " senior grader " a year or so ago."
"The same advertisement that offered the $300,000.00 for a senior grader offered $75,000.00 for an intern."
Half a million for three graders doesn't sound excessive.
So, you think the salary of a senior grader has dropped by 70% in the last 13 years?
30% of $300k is $90k. If you think 3 professional graders are much cheaper than half a million you need a senior at $100k or so and two juniors at $60k or $70k. That gives you a total payroll of over $300k with benefits. That's where I got my "70%". If the senior makes $150k and the juniors make $70k, you are already at $400k.
You asked about the expenses of the operation and mentioned that his gross is over $1 million. All I said is that if he has 7 or 8 employees, his total payroll is around $1 million. I don't know what his rent is. I don't know how many employees he actually has. I don't know what his utilities are. I don't know his advertising budget. Etc.
If you have 1 senior grader making $150,000 to $200,000 and two junior graders making $75,000 each, your total payroll is close to half a million when you include benefits. I think that is a reasonable estimate.
I also said that if he has 7 or 8 employees, possibly including himself, then it is easy to get to a $1 million payroll. That works out to about $80,000 to $90,000 average salary + benefits.
This is not a packing and shipping operation where you can pay everyone $15 per hour. You need trustworthy people. In the case of the graders, you need people with very good eyes. If I were CAC, my 3 graders would all be senior graders. As the only finalizer, I don't think JA has the time or interest to be constantly mediating disagreements between the 3.
@jmlanzaf said:
If you think 3 professional graders are much cheaper than half a million you need a senior at $100k or so and two juniors at $60k or $70k.
If you're offering a service to evaluate coins graded by the TPGs more precisely than the TPGs do, I'd think you'd want to stick with senior graders. But that's just me.
@jmlanzaf said:
If you think 3 professional graders are much cheaper than half a million you need a senior at $100k or so and two juniors at $60k or $70k.
If you're offering a service to evaluate coins graded by the TPGs more precisely than the TPGs do, I'd think you'd want to stick with senior graders. But that's just me.
I agree. As I said, if I owned CAC, I'd have 3 senior graders.
If you're offering a service to evaluate coins graded by the TPGs more precisely than the TPGs do, I'd think you'd want to stick with senior graders. But that's just me.
Technically, they are not really grading more precisely than the TPG's did. The TPG did the HEAVY lifting by assigning a single grade out of a 70 pt spectrum. The easiest part of "post TPG" coin grading is determining where in the single grade point spectrum does the coin fall....low end....mid to high...or next grade. And there is no huge downside because you have the TPG grade as your support level. Less than "senior" level graders could do that pretty accurately. If CAC has to somehow independently come up with a grade (ie certified grade is covered over) before even proceeding....what a mess that would be. So it's not a process that's more "precise" than the TPGs....but just "different." It's sort of like predicting a Jury Verdict when you already know how the jury voted.
Comments
I have no idea what JAs plan is for the future but here is what i do know. If i listen to what he says 1) he doesnt make money off submissions 2) he primarily started it to identify coins he would be comfortable buying and 3) he has seen a large majority of classic coins. Given those statments it would make no sense for him to sell the business to someone else who had a different standard. If they used identical stickers and loosened their standards his primary purpose would evaporate. I highly doubt any future plans involve the sale of cac to someone using identical stickers for that reason. And even if that did happen, the resources we have now would help identify pre and post sticker sales. For instance, 1914-D in the OP no matter what will have the cache of being a coin stickered under JAs original very stringent standards.
Many opinions to the contrary, but....I.... think the stickered coins would acquire ADDITIONAL premium if or when CAC changed hands or personnel.
Similar to a desired provenance.
At one time, I believe Ms Sparber stated that there was a succession plan already established by JA.
I find it very hard to believe he doesn't make money. If that were the case our hosts would probably have gone bankrupt years ago. There is very little capital outlay(think slabbing equipment which is very expensive), a little sticker is way,way cheaper than a slab, no where near the travel expenses(although that might be covered by show submissions), no where near the employee costs, no where near the liability due to no guarantee that I am aware of, and another point just slipped off my tongue! I'm sure there are other differences as well. I can't think of a single aspect of his business model that costs more than our hosts!
He is now charging about what I used for an economy submission and more than double some bulk submission rates I've had in the past!
He's charging $15 for coins valued under $10,000. if you're a collector member and not a dealer, if your coin does not CAC you get that $15 fee back in full!!!!! For re-stickering, the cost is only $3. They now added on a "whopping" $5 handling fee.
With this fee structure I can't see them doing a lot of wining and dining, fancy travel for themselves, etc. I agree with @Gazes.
This fee structure of CAC is nowhere near the fee structure of our hosts (but which i feel our hosts fee structure is WELL WORTH IT, regardless).
My collecting “Pride & Joy” is my PCGS Registry Dansco 7070 Set:
https://www.pcgs.com/setregistry/type-sets/design-type-sets/complete-dansco-7070-modified-type-set-1796-date/publishedset/213996
I don't find it at all, hard to believe. By design, their volume is a fraction of what PCGS does. And their average charge per coin must be considerably smaller, as well. You compared their fees to PCGS economy and bulk submission rates, but omitted services such as express, walk-through, etc.
While I don't expect you (and others who don't know him) to feel the same as I do, I also believe it because he said so.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
It doesn't matter if he trust the graders to "use his name". The market needs to trust it. And if they don't, and if the stickers are indistinguishable, then the value of CAC goes to zero immediately.
This is very different than a TPGS. PCGS value, even with changing graders and management and finalizer, exists in the guarantees that come with it. CAC offers no guarantee of anything. The value of CAC now is 100% in the market trust of JA's opinion. Because, unlike a TPGS, all you get is an opinion from CAC.
I'm not saying it has to go to zero when JA retires. But people are underestimating the difficulty in continuing operations under different leadership. CAC value is all about trust in one man's eyes. A different set of eyes may not be trusted as much.
You can avoid many of these problems by not buying coins sight unseen, unless there is a no questions asked return privilege, something which is increasingly rare these days.
CAC often provides a more ready market with higher prices for coins in the same grade with, versus without the sticker. The fewer of such coins which are stickered, the higher the premium for them. What a potential buyer should ask is what premium is he paying for the sticker, and does he think he can get it back when he wants to sell such coin. This will depend on the venue in which the coin is purchased: ie., which dealer, auction, how strong is the market for that particular coin at said point in time, etc.
"Seu cabra da peste,
"Sou Mangueira......."
I totally agree again.
[Is anyone writing this down?]
I agree.
I don't think he's losing money on the stickers, by the way. But I think he's probably running it at break even.
Yes, you could never buy sight unseen. But YOU DON'T HAVE TO because of the sticker.
And, in the last 3 months, ALL major sales which included some MAJOR COINS have been sight unseen.
I didn't write it down, but I did report the account as hacked.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Of course I did! Do you think PCGS prices those at a level where they lose money? Another point which can be made...which I don't know for sure. Isn't this just an add on for his coin business....ie little need for addition real estate etc...maybe an office or 2. I'm sorry, I've been self employed all my life...and if CAC isn't making money at that pricing level he is very poor at handling finances. Maybe it's not making money on paper...but I wager some nice salaries come out of it!
It may be voluntary and optional. But what I said applies equally to collector buyers, if not more so.....as there will come a time to sell your coins....usually way sooner than most think possible. Or get them CAC reviewed even before you sell your coins just in case something unforeseen happens to you....and the coins have to be sold off. Most submitters are often surprised at coins they thought were "all there" getting rejected. Been there, done that.
I learned early in 1988 not to rely on the TPG grade of the holder. When you can receive multiple different grades in 2-3 submissions it showed me early on how variable grading really was. That has not changed, especially for non-generics. I'm not surprised that CAC has "only" seen 1.7% of all slabbed coins. But for those of us that are into choice and gem type, rarer dates, etc. they have probably seen 50% or more of the coins out there. Look at Hansen, Gardner, Pogue, etc. Nearly every significant coin worth 4 figures and up has probably been reviewed by CAC....or the owner didn't even bother knowing the coin would be soundly rejected. Anyone buying a choice/gem pop top or condition census seated/bust/Barber coin will want to know what CAC thought of it. No sticker? The assumption is it once failed.
The price hierarchy of a gem rare coin from 0 to 100% value might go something like this: NGC 65 - 50%, PCGS 65 - 75%, NGC CAC 65-80%, PCGS CAC - 85-100%. For a generic MS65 1881-s Morgan it's NGC 65 - 80%, PCGS 85%, NGC CAC 90%, PCGS CAC 100%. Not nearly as much need for a sticker in that case.
There are relatively few "serious numismatists" out there building powerful sets today. And while today's "serious" player is probably a better grader (or a more informed one) than they were 10-15 yrs ago, there are probably even less of them today. I'd use that same 1.7% number from above. It's the other 98.3% of collectors spending over $100 per coin that really need the help of a slab and/or a sticker.
Don't forget to separate fixed costs from incremental costs. Anyone can actually slab a single coin for an incremental cost of a few dollars. That's why PCGS does moderns for a few dollars. But, before you can do that, you have to cover the fixed costs of the operations: real estate, utilities, salaries, etc.
PCGS does tens of thousands of moderns for bulk submitters at $5 or less per coin. They could NOT do that if that was their sole business.
I agree and that is one of the points I am making! Just how much start up cost was involved in CAC? The most expensive part was probably a trademark!
You need quality graders. Those aren't necessarily cheap. You also need shipping and receiving.
You are right that you need less equipment than PCGS, for example. You don't need an electron microscope or access to one. You don't need to be able to sonically seal a slab, you just slap a sticker on it. Etc.
But your fixed costs are spread over a narrower base.
I would suspect that they run pretty much break-even. I'm sure he doesn't want to lose money on the operation either.
I see JA’s CAC business as a loss leader in that it feeds his profitable market maKing business while simultaneously slowing down grade inflation that hurts the overall market.
So just how much do you think it costs per year to operate CAC? On the low side their gross revenue is well over a million a year averaged out since the beginning! I suspect it is leaps and bounds higher now.
Interesting observations. I generally agree with most of your post (as usual), but have never gotten the sense that JA is a slave to market trends. Based on what I've read, he has certain attributes that he looks for based on longstanding personal convictions/beliefs/biases. Rub on high points of a coin graded MS63 or higher as a bean disqualifier would be one example.
Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.
@Catbert said:
I hope she is not part of that succession plan.
He is like Apple (iOS) and Android put together of the coin market. To me that is exerting significant influence which is tantamount to "control." Yes there are others, but those market segments consist of a small market volume and are pretty much irrelevant. In all segments that matter to experienced collectors, JA reigns.
Psssst...A little secret the dealers aren't telling you....
They already cracked all upgradable ones
Just like they did with the rattlers & OGH before that.
My Saint Set
Better not let the current PCGS Graders see that post!
As I said, I don't think anyone questions that a superior coin should sell for more money. In many cases that it is a CAC coin. I've gladly paid this premium in the past for coins that were incidentally stickered. In this example, the $16k premium cannot be attributed to the quality of the coin as the sales are for the same coin. I think venue, timing, and other factors are extraneous in this context and what we are seeing is a premium based on CAC alone. That is what I find so perplexing. This isn't new either. I'll never forget the thread where TDN openly mulls over the pricing of an expensive coin based on its specific plastic and sticker combination. At no point had the coin changed. To me numismatics has evolved in many segments to be so focused on plastic and stickers that the metal disc in the middle is only of secondary importance.
As for your other point about nicer coins, this is another area that has always baffled me. In many graduate/professional schools (with some exceptions) as you know, a "B" is the lowest passing grade. Could it be that by coupling "A" and "B" coins together that collectors are paying premiums for middle of the road pieces that aren't really special? The under graded and "A" coins are cherry picked by advanced numismatists and specialists and do not trade as frequently so the many of the stickered coins we see are going to be "B" coins. Isn't it time for a silver or bronze sticker?
...To me numismatics has evolved in many segments to be so focused on plastic and stickers that the metal disc in the middle is only of secondary importance...
Forgive the extreme edit of your post but I'd like to opine on that particular sentence.
While I may shop for PCGS/CAC coins to consider for purchase, I....scrutinize.... the "metal disc" with as much observation as I can from photos. If I have ....any.... questions, I ask em before purchase.
The sticker may be a starting point, but the coin is the meat.
Oh....also.... I look at unstickered metal discs, too.
Your comment that superior coins should sell for more money is true. Going back to the OP, that 1914-D is gorgeous. If you compare to other coins graded 65 it clearly is at the very top end. Add to that it is in an OGH and it may be a 65+ . Right now there are no 65+ or anything higher. A strong argument could be made that this coin is the top 1 or 2 or 3 1914-D in a very popular series. Forgetting CAC that would explain the price. Further, i would not be surprised if it shows up for auction down the road if it brings in excess of 30,000.
I think, setting aside personal coin attractiveness, the concern about plastic/sticker obsessiveness is when the PRICE PAID for the coin (for generics) is way outside the “nice for the grade” value for that grade. It’s evidently gotten to the point where JA is having trouble buying his stickered coins!
amwldcoin, just out of curiosity, what about the below copied post from jmlanzaf, did you find so funny that you laughed out loud?
“Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.”
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Hmmm, I guess you didn't read my reply! $200K salaries are pretty much a thing of the past for coin graders. I would also say there is no way the other 2 supposed graders(going by what I've heard about the CAC process) are making 200K a year! There work load is way less than a TPG grader. Even if they are...you scale the business from start up to now...the Gross for the business is probably 3 or more million a year now as the 1st few years were probably way less busy. The 1st estimate I made of gross income is the absolute lowest it could possibly be if they have evaluated 1.2 million coins as is advertised. You add in all the coins that did not sticker that dealers submited...which from what everyone seems to think is very high....that number could easily double!
I am a number cruncher and have been all my life. I drew a salary from my dad's company at the age of fourteen for doing 90% of his accounting work. Daily Ledgers, balancing the checkbooks, and monthly ledgers. It was not a small business either as there were probably around a 1000 checks or more per month.
No one here is going to convince me there is no monetary gain from the CAC business....NO ONE!
Edit to correct after thinking...I was 14, not 12 when my Dad gave me the job.
No one has said there is "no monetary gain". It just isnt driven by revenue from submissions apparently
I did read your reply to jmlanzaf and it was quite short on details. I have copied it below for you. But based on your reply to my question, apparently you disagreed with him and thought his post was really funny, so you clicked on “LOL”.
Now, I’ll disagree with you. But I’ll refrain from clicking on “LOL”, as I think that would be rude.
“ Better not let the current PCGS Graders see that post!”
@jmlanzaf said:
» show previous quotes
Just the salaries, with benefits, of 3 reputable graders could push half a million per year. You also need someone in shipping and receiving. I don't know if JA himself takes a salary or not. If they have 7 or 8 employees (farming out IT and HR?), salaries and benefits alone would be in the $1 million range.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
$500,000 / 3 = $166,666
Salary is roughly 2/3 of total employee compensation, so...
$166,666 * 2/3 = $111,110/yr. salary.
A post on this forum from 2007 asked: so what do pcgs graders get paid as an annual salary?!
https://forums.collectors.com/discussion/609931/so-what-do-pcgs-graders-get-paid-as-an-annual-salary
A couple of replies:
"I saw an advertisement in The Numismatist offering up to $300,000.00 for a " senior grader " a year or so ago."
"The same advertisement that offered the $300,000.00 for a senior grader offered $75,000.00 for an intern."
Half a million for three graders doesn't sound excessive.
That was then...not now!
Assuming a 63% pay cut since 2007, the cost for three graders would be half a million dollars today.
Once again, half a million for three graders doesn't sound excessive. Just sayin'.
So, you think the salary of a senior grader has dropped by 70% in the last 13 years?
Based on prior experience, I predict we're within 24-36 hours of the thread going off the rails and being closed.
Tick,
Tick,
Tick......
I hope not. I thought the thread provided an opportunity for some thoughtful analysis and discussion. There were multiple thoughtful posts on both sides of the issue.
If they cut the salaries any lower, the CAC graders have the worst eyes in the game. A set of professional grader eyes could easily make $100k per year cherry picking the coin show circuit.
Sorry. If you or someone you trust hasn't seen the coin, you're buying sight unseen. Period. If you are okay with that, have at it. Return privileges at auctions for slabbed coins are minimal at best, so if you want to walk on that tightrope, it's on you. I'll bet someone screened these expensive coins for the buyers.
When you are buying a slabbed coin, you are paying for an insurance policy on the product in the form of an expert opinion. You are paying for an additional insurance policy on the coin if it is also stickered.
Coins are like artwork; they are all different and you need to find the one that fits your taste. If you are a collector and not a dealer, the way to get the best fit in addition to getting expert opinion(s), is to see it for yourself and then decide.
Again, if you are convinced that you will like everything JA and CAC likes, have at it.
"Seu cabra da peste,
"Sou Mangueira......."
So all he employees are senior graders?(2 not 3 from what I understand) Are there that many senior graders out there? What qualifies a person to be a senior grader?
I'm going to check out of this conversation. You all can believe what you want. If you don't think CAC is not making money....well don't I know what to say!
PS how you get 70% even with 3 is a stretch!
I never said anything different. Yes, you are buying sight unseen.
30% of $300k is $90k. If you think 3 professional graders are much cheaper than half a million you need a senior at $100k or so and two juniors at $60k or $70k. That gives you a total payroll of over $300k with benefits. That's where I got my "70%". If the senior makes $150k and the juniors make $70k, you are already at $400k.
You asked about the expenses of the operation and mentioned that his gross is over $1 million. All I said is that if he has 7 or 8 employees, his total payroll is around $1 million. I don't know what his rent is. I don't know how many employees he actually has. I don't know what his utilities are. I don't know his advertising budget. Etc.
If you have 1 senior grader making $150,000 to $200,000 and two junior graders making $75,000 each, your total payroll is close to half a million when you include benefits. I think that is a reasonable estimate.
I also said that if he has 7 or 8 employees, possibly including himself, then it is easy to get to a $1 million payroll. That works out to about $80,000 to $90,000 average salary + benefits.
This is not a packing and shipping operation where you can pay everyone $15 per hour. You need trustworthy people. In the case of the graders, you need people with very good eyes. If I were CAC, my 3 graders would all be senior graders. As the only finalizer, I don't think JA has the time or interest to be constantly mediating disagreements between the 3.
If you're offering a service to evaluate coins graded by the TPGs more precisely than the TPGs do, I'd think you'd want to stick with senior graders. But that's just me.
I agree. As I said, if I owned CAC, I'd have 3 senior graders.
Technically, they are not really grading more precisely than the TPG's did. The TPG did the HEAVY lifting by assigning a single grade out of a 70 pt spectrum. The easiest part of "post TPG" coin grading is determining where in the single grade point spectrum does the coin fall....low end....mid to high...or next grade. And there is no huge downside because you have the TPG grade as your support level. Less than "senior" level graders could do that pretty accurately. If CAC has to somehow independently come up with a grade (ie certified grade is covered over) before even proceeding....what a mess that would be. So it's not a process that's more "precise" than the TPGs....but just "different." It's sort of like predicting a Jury Verdict when you already know how the jury voted.
The TPGs assign a grade and CAC sorts those into "low" and "mid to high". Not more precise- just different. Okay.
JA is the finalizer.
He has Bill Wetzler, Bill Shamhart & Steve Blum working with him. (as of July 2019)
Not sure what they do.
https://www.greysheet.com/news/magic-beans-how-green-gold-stickers-sprouted-a-new-marketplace/
My Saint Set
200
Bet they are paid well.