Challenging a cliche
Gazes
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Numismatics seems to be full of cliches. Some more helpful than others. I started to think about one cliche which states to collect a series in the optimal grade. The optimal grade is defined as the highest grade before a big jump in price. The thinking is if the coin is $500 in 63 and $700 in 64 and $2500 in 65----buy in 64. You get the best quality at the most reasonable price.
I thought about this and began wondering if the opposite is true? The question is in these cases of "optimal buying" how many times has the spread between the two grades actually grown rather than diminish (dont include modern coins)? In other words, maybe it is wiser to buy the coin at the grade where the price actually leaps?
I dont know the answer to this but curious what others think.
Comments
IF your grading skills are strong and IF you’re willing to try and try again you can buy the best 64 you can find with upgrade potential and have at it.
That's an interesting question. That advice makes sense, but it is sort of the opposite of the cliche that tells you to "buy the keys first".
I'm not sure I subscribe to either cliche. I mean, isn't that the problem with cliches? They tend to be over-simplifications by their nature.
In the case of your cliche, I think buying the nicest 64 you can find would probably define the best bargain. But you are somewhat changing the question by asking which one will appreciate more rather than which one is the "optimal price". It is possible for a coin to be the "best quality at the most reasonable price" while also not being the "most likely to appreciate".
With a discerning eye, there are some really nice 64's to be had. IMO. Peace Roy
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Interesting thought, thanks for posting it
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I will ponder this
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Sorry to disappoint any strategists, but I think it depends far more on the coin. For example, if a 65 sells at a large premium to a 64, some 64’s will still be bad deals and others will still be good deals. And the same can be said for any grade.
What counts as much as or more than the spread between grades, is the quality within the grade.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I have long thought that 64 coins, especially proofs, are a good value.
....if you have a good eye and can pick out PQ coins.
I like this question. I have noticed the highest graded coins of a certain issue also tend to leap the furthest in value. Since this is the U.S. Coin Forum, let us use the St. Gaudens as an example for discussion. An MS 66 might be the optimal grade, but the MS 67 and above might actually go higher in value at a much faster rate. There is a huge price difference between MS 66 and MS 67. I collect the MS 66 because the lower graded ones are close to or at melt. Now I wonder if an MS 67 or higher would have been better.
I have not tracked these coins recently except that I know the MS 66 did take a leap when gold prices started to go up last year. Maybe someone with more knowledge on this subject can enlighten further.
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In the ops example, I wouldn’t rule out the 65 but I’m gonna have to Love it for more reasons than just a point on the label.
Like if you covered up the labels and put it with a bunch of 4s could I pick it out or not. If it really is a standout and it sheets at 2500 maybe
If the seller is asking north of that, I still wouldn’t rule it out but I’d really really really have to Love it. I tend to think that with a huge price jump involved, it pretty much has to be all there and then some to get awarded the next level, . With that said, on large price jumps, my experience has been that it’s not out of the question to land the piece somewhere below a guide price if a serious offer is made....relationships matter and results vary.
From my perspective, those two cliches seem completely orthogonal. A key date coin can also have a major price jump at a certain grade level. Unless I'm missing something...
One question is whether the collector is going for the same exact grade across the entire series or whether the price jump rule should be applied to each individual issue at whatever grade it may occur. There are too many possibilities to make a blanket statement, IMHO.
I've never heard this cliche but I don't think it is useful. I would suggest to buy what you can afford and what makes you happy. I think most people who can easily afford the MS65 won't be happy with a MS64. Many people who can buy the MS64 will be happy with it because a MS65 is clearly out of reach.
If you really want to optimize appreciation potential, buy stocks.
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I always called the coins after the jump investor grade coins. They carry a higher risk of loosing money and at the same time a better chance of increasing in value.
Wish I'd have bought the keys 1st in some of my sets.
Hay, Tom, I tried that for my seated dimes, the problem is that when I got all the keys first; I really didn't care about the every day common dates that I could buy anywhere, anytime, didn't really matter anymore and I never finished the set. In other words I lost interest in getting the common dates. I know from experience in putting together many date mm sets that my interest stayed as long as I needed key dates. I have known since I started collecting to get the keys first if possible, but when you see a common date you need that meets your standards, you are most likely to buy it because it is available.
In addition to Mark's comment, one must consider increasing pops over the years. Most coins in most series I have noticed have dropped in price over the last 20 years. A horror story scenario was buying an all there 1896 Liberty Nickel, pop 4 in 2004. It was a $17-$18K coin. In late 2014, it was still a $14K coin. I passed on one in Sept. 2016 for $6K. It was a pop 17 at the time.
Hadn't thought of it that way. Just can't seem to pull the trigger on my last empty space in my Kennedy set. The 2014 gold. If I'd bought it when I started the set it was $600 cheaper.
This discussion reminded me of a Hansen interview. If interested in his thoughts of the two theories, then listen to 5 min mark to about 10 min. We now know the theory that he landed with.
My 20th Century Gold Major Design Type Set ---started : 11/17/1997 ---- completed : 1/21/2004
I split the difference. My one and only St. Gaudens is PCGS 66+ with a CAC.
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
As a collector of limited means, buying the highest grade before the big jump in price has always made sense to me. If I was extremely wealthy, I certainly wouldn't hesitate to buy the highest grade I could find.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Agree. A lot of this particular cliche / recommendation / approach seems to come down to budget.
I'd say there are very few high end saint collectors who could tell the difference between a nice 66+ & a real 67
Duckor, Simpson & Kutasi come to mind as those that could.
Fox actually dumped all his non-CAC coins because they didn't have a sticker.
Most of the others just buy the highest graded coin and it usually looks pretty good.
The higher graded coins hold their value and maybe even go up because the buyers aren't really interested in cost.
For me it would be like buying a Lola T70 Mk3-B and never driving it because you can't operate a manual transmission.
Test yourself here with the common 1924 saint
https://www.pcgs.com/coinfacts/coin/1924-20/images/9177
The 67 is worth $13,500 & the 66+ is worth $4,100
My Saint Set
Seriously, how could you or most anyone else know if those collectors (or most dealers) could tell the difference?
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
The Lola analogy doesn't work for me because driving a car is not just looking at the car, like spending a coin is not just looking at it. But not only is no one spending these coins, often times no one is even holding them raw. To me, not driving a car is more like not holding a coin raw and running your fingers over the surfaces to feel the artistry of it.
To me not being able to understand a coin's grade is more like not being able to rate a car on the Concours d'Elegance 100 point scale, or grade a wine on the Wine Spectator rating.
I look at their collections...A lot.
Exactly
BTW...I heard a story about a guy loosing several points on a 1928 Duesenberg Model J at Pebble Beach because of a non-functioning clock.
He was angry with his mechanic. The mechanic asked if he remembered to wind it up. Some people just have money & that's about it.
My Saint Set
Many collectors have great collections, without, for example, knowing how to distinguish a 66+ from a 67. And each of the ones you mentioned didn't/don't do it without significant assistance.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I agree. I personally don't think it's necessary to be able to tell a 66+ and a 67 to build a great collection.
Bob Simpson said he buys coins on eye appeal, not grade. It just so happens many eye appealing coins also have high grades. If you can buy coins that are visually better than most other coins, does the numerical grade matter as much?
Another variable would be whether you are a collector, dealer or investor.... I am a collector, therefore, I buy what appeals to me. An investor or dealer would be looking more at the financial side (i.e. resale, potential for value increase etc.). I enjoy the hobby. Cheers, RickO
If your objective is simply to collect, then collect and don't worry about future "value". Coins and most other collectibles are not good "investments" anyway. There is too much emphasis on price appreciation in coin collecting. The days of significant price appreciation of the great majority of US coins are probably past. This is a very mature hobby with and aging population of active collectors. The young collectors in their 20's and 30's are now after big profits in sports, magic and Pokemon cards. Many of these young collectors don't even use coins. They just pull out their smart phones and buy.
Yes. Eye appeal is only part of the numerical grade. I have an AU Indian cent that I adore and it just pops for me. It is the only Indian Cent in my "collection". But the fact that it has eye appeal (to me) does not give it a high technical grade nor make it worth what a less attractive 66 would be.
Sounds nice! I sold my lower MS Saints and bought a single MS65+ CAC.
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I'm sure they were all offered "significant assistance".
I've been offered it also.
My Saint Set
Its about quality for the grade. Price points just may not produce the best outcome in buying the right coin.
Experience the World through Numismatics...it's more than you can imagine.
Here is another thought why the idea of optimal grade may be "pushed". Lets say a specific coin in 64 has a population of 60. The price quadruples in 65 and there is a population of 10 in 65. Certain dealers say the 64 makes more sense---much cheaper and almost same grade. However, maybe the optimal grade also reflects the reality that dealers may have for sale many more coins in the "optimal" grade (because there are more of them) than the next higher tier. Why push a coin that you rarely have for sale? Just a thought.
The question is about the coin in contrast to the surviving population of that coin. Part of the question is what really is the surviving population of the coin in that grade in an unmolested state of preservation? I suspect the answer would likely be quite alarming... especially for certain types... No Motto Gold,,, Seated Dollars and the list goes on. And part of my problem with all of this is simply this is the question that is seldom asked and even less defended.
Experience the World through Numismatics...it's more than you can imagine.
There is truth in the above statement. After hunting and purchasing the good stuff first, I also tend to start to ignore the remainders.
Don't know why.
"The Thrill is Gone". BB King
Pete
I never done the " buy the Keys 1st " Just wish I'd have done it on the Gold Kennedy. I understand that is a different situation, only gold in a silver / clad set. But in 2015 I could have got it for less than a thousand.
My collecting strategy hasn't always been the smartest. The cliche " buy the best you can afford " ......yea, I didn't do that either. Started working on an ms65 set of Roosevelts, changed to FB, then 66FB. Completed that set with a couple 67FB's mixed in. Well guess what ? I'm now 1 away from a 67FB set.
I still have the 65 and 66FB set. Not the smartest move, but I do love my Roosies.
Honest question: does that Kennedy go for much over melt?
My thought on this is so you want to be the top of the bottom, or the bottom of the top. I’ll equate it to cars: do you buy the highest trim level Chevy, or the lowest level Cadillac? There’s value on both. And each one can make sense, depending on what you actually get and what the differences actually are.
When there’s a big jump in price from one grade to the next, you’ve got to decide where the value is for you in each option.
The Caddy may cost more to get into and maintain, but does it have a higher floor and ceiling down the road?
And I don’t think most dealer/collectors can tell the difference between a 66+ and 67.
Can most professional graders? We're talking about hair splitting here.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Condition Census might also be another factor. If the best value grade gives you no shot at a CC coin vs. one that does, this will impact supply. The best value grade might also be a function of the overall population and the condition census. It's somewhat of a multi-dimensional problem. Lastly, when a plus grade moves you to a much small population such as in the case of indian quarter eagles, this could also be a factor.
Sums up my thoughts exactly, I'm a collector.
Great question in the OP but for me, if I love the coin I'll tend to buy it regardless of grade, not looking for the "flip for profit" and I tend to hang on to what I buy. I'm in the hobby, not the business. On another note, Kudos to the dealers out there, the time, effort and expense you put into the shows is appreciated.
I think they can, but probably not with 100% accuracy. It would be an interesting experiment. I wonder if PCGS tests their graders that way. Send the same coin through every few months and see how consistently it is graded.
I don't think the dealer really cares either. Dealers aren't trying to hold on waiting for appreciation. A dealer needs to understand the market as it is now. Even if MS66 is the "better value" or "most likely" to appreciate, I'm not going to buy it to sell unless I have a buyer and the right price point. I'll much more happily buy an MS64 of the same series that I can sell than an MS66 which is "better" in some way if I don't have a customer.
Not really in a ms69. Small premium for a ms70.
So far as saints go, I like to compare the coin to a 1909 proof. (they didn't have the matte finish)
If it looks really close, It's a 67 (allow toning & a less than perfect strike)
(disregard the rim)
The difference in price for a 66+/67 1924 is about 10K & for a 1909-D it is 275K
My Saint Set
LMAO, All dealers are holding and waiting for appreciation. Arent you? If not why not?
That’s absurd. Some dealers, sure. Many aren’t “holding and waiting for appreciation” - they’re buying and selling.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Dealer aren't speculators. They want to turn inventory quickly for a reasonable profit. They certainly prefer appreciation to the alternative while holding inventory that isn't moving, but that definitely is not the intent.