@Nap said:
You are assuming that the irrevocable bid was the winning bid, but this is not certain...
The evidence points to just that being the case. Why else would they have re-calculated the buyer’s fee?
The irrevocable bidder presumably won but not necessarily with the irrevocable bid. The fee paid would have been paid for the irrevocable bid, which could have been less than the hammer. In other words, the advance bidder was getting that fee whether they won the lot or not, for guaranteeing a reserve.
At least that’s my understanding. And I’m sure it’s incomplete.
the advance bidder was getting that fee whether they won the lot or not
Correct. That’s why I think it misleading to reduce the sales price. But MrEureka has a valid point as well. I’ll just sum it up with stating that I don’t like the concept at all. Period.
@airplanenut said:
Can someone explain what exactly an irrevocable bid is? I know what the word irrevocable means, but I can't figure out what it means in the broader auction context. After some googling, I'm just as confused as when I started.
Imagine you're an auction firm looking to get a consignment. The consignor has some leverage and asks you to guaranty a sale at some minimum price. If you agree to that, you have some serious risk, and you might even end up owning the item yourself. Faced with that situation, one option is to pay a fee to a third party to get his irrevocable bid in advance of the auction, with the understanding that in no case will he be allowed to purchase the item for any less. In other words, the third party is guarantying a sale at the effective reserve, and you, the auction company, are kicking back some part of your commission to that third party for that guaranty. A win-win-win arrangement for all involved, although it does tilt the playing field in favor of the guarantor, in the sense that his net cost for purchasing the item could end up being less than any other bidder would have to pay. I'd say that's fair enough because the guaranty is provided at a real cost to the guarantor. First, because the market could drop between the time of the agreement and the time of the auction. And second, because the guarantor forgoes any opportunity to buy the item for less than the agreed upon price, should no other bidders present themselves to drive bidding to that level.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
@airplanenut said:
Can someone explain what exactly an irrevocable bid is? I know what the word irrevocable means, but I can't figure out what it means in the broader auction context. After some googling, I'm just as confused as when I started.
Imagine you're an auction firm looking to get a consignment. The consignor has some leverage and asks you to guaranty a sale at some minimum price. If you agree to that, you have some serious risk, and you might even end up owning the item yourself. Faced with that situation, one option is to pay a fee to a third party to get his irrevocable bid in advance of the auction, with the understanding that in no case will he be allowed to purchase the item for any less. In other words, the third party is guarantying a sale at the effective reserve, and you, the auction company, are kicking back some part of your commission to that third party for that guaranty. A win-win-win arrangement for all involved, although it does tilt the playing field in favor of the guarantor, in the sense that his net cost for purchasing the item could end up being less than any other bidder would have to pay. I'd say that's fair enough because the guaranty is provided at a real cost to the guarantor. First, because the market could drop between the time of the agreement and the time of the auction. And second, because the guarantor forgoes any opportunity to buy the item for less than the agreed upon price, should no other bidders present themselves to drive bidding to that level.
Well that very complicatedly makes sense--thanks!
I think I'll be sticking with 99 cents and no reserve on eBay
@airplanenut said:
Can someone explain what exactly an irrevocable bid is? I know what the word irrevocable means, but I can't figure out what it means in the broader auction context. After some googling, I'm just as confused as when I started.
I read their Conditions of Business and I'm not sure. Seems like it's simply a bid placed before the lot goes live that the bidder is contractually bound to honor if successful. Perhaps when there are that many zeros involved, the occasional advance bidder may become illiquid before the sale and be granted the opportunity to quietly revoke their bid and avoid unnecessary embarrassment. I searched for "revoke" and the only mention was in the context of Sotheby's reserving the right to revoke a bid placed online.
@airplanenut said:
Can someone explain what exactly an irrevocable bid is? I know what the word irrevocable means, but I can't figure out what it means in the broader auction context. After some googling, I'm just as confused as when I started.
Imagine you're an auction firm looking to get a consignment. The consignor has some leverage and asks you to guaranty a sale at some minimum price. If you agree to that, you have some serious risk, and you might even end up owning the item yourself. Faced with that situation, one option is to pay a fee to a third party to get his irrevocable bid in advance of the auction, with the understanding that in no case will he be allowed to purchase the item for any less. In other words, the third party is guarantying a sale at the effective reserve, and you, the auction company, are kicking back some part of your commission to that third party for that guaranty. A win-win-win arrangement for all involved, although it does tilt the playing field in favor of the guarantor, in the sense that his net cost for purchasing the item could end up being less than any other bidder would have to pay. I'd say that's fair enough because the guaranty is provided at a real cost to the guarantor. First, because the market could drop between the time of the agreement and the time of the auction. And second, because the guarantor forgoes any opportunity to buy the item for less than the agreed upon price, should no other bidders present themselves to drive bidding to that level.
@MsMorrisine said:
CNBC just did a bit on the auction
I’m not sure what’s what, but they said “both lots were won by —- of the Carlyle Group”
Sotheby's said the stamp block was bought by David Rubenstein, a co-founder of private equity company The Carlyle Group.
Correct the buyer of the 33 Saint didnt want to be identified .
FYI Stuart Weitzman did not attend the sale. If I would have been selling these 3 items I would have had a bull horn, wore a rally cap and spiked the punch
m
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
@Currin said:
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
A stamp dealer who was a previous owner of the plate block thought that it went for less than he expected. The 1 penny magenta went for more than he expected - he thought the estimate of $10 - 15 million was too much to begin with.
@Currin said:
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
I've always felt there is too much comparison between the coin and stamp markets. They are much different. One could argue stamps have more in common with sports cards (they are both paper). Generally, when I see a post using a stamp comparison the poster is almost always gloom and doom about coins and uses the stamp market to make a belt and suspenders argument.
Bottom line is this coin did terrific and the stamps didnt. More proof the two markets are not connected.
@Currin said:
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
It seems more likely that it speaks to the economic health of some very wealthy individuals.
@Currin said:
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
No.
It's a single iconic coin. It would have set records in a crap coin market. That coin isn't even part of the coin market.
Stamps are dead and they just sold one for $8 million. What does that tell you about the stamp market?
@Currin said:
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
I've always felt there is too much comparison between the coin and stamp markets. They are much different. One could argue stamps have more in common with sports cards (they are both paper). Generally, when I see a post using a stamp comparison the poster is almost always gloom and doom about coins and uses the stamp market to make a belt and suspenders argument.
Bottom line is this coin did terrific and the stamps didnt. More proof the two markets are not connected.
We just sold a stamp for $8 million and a plate block for $5 million.
But all 3 results say nothing about the underlying markets. The items are so iconic they are all just trophies which is why the shoe baron owned all 3. All 3 items are unique.
@Nap said:
There is probably a tax reason why the fee was taken out of the BP. Sort of like when you trade in a car.
That makes sense. The guarantor wouldn't want to pay income tax on his fee if he actually purchased the lot. (Not sure what the IRS would say.) But still, the larger issue is probably that these deals could be used to fraudulently inflate auction records, for the purpose of "setting up" the next buyer. Of course, the game doesn't work unless the consignor and the buyer are working in concert. Not a common situation, but it wouldn't be unprecedented.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The only way I could accept the guarantor reduction of the buyer's fee is if the guarantor agreed to pay his guaranteed price regardless of what the final hammer is. Ex. the guarantee was $15 million and it hammered for 5 million. The guarantor would still pay the 15 million.
@Nap said:
There is probably a tax reason why the fee was taken out of the BP. Sort of like when you trade in a car.
That makes sense. The guarantor wouldn't want to pay income tax on his fee if he actually purchased the lot. (Not sure what the IRS would say.) But still, the larger issue is probably that these deals could be used to fraudulently inflate auction records, for the purpose of "setting up" the next buyer. Of course, the game doesn't work unless the consignor and the buyer are working in concert. Not a common situation, but it wouldn't be unprecedented.
I don't think you can offset the basis of the asset that way. Then again, I'm not an accountant.
@tradedollarnut said:
Bottom line is the underbidder was willing to pay $19.2M for the coin. So representing it as sold at $18.9M is just as misleading as sold at $19.5M
@Nap said:
There is probably a tax reason why the fee was taken out of the BP. Sort of like when you trade in a car.
That makes sense. The guarantor wouldn't want to pay income tax on his fee if he actually purchased the lot. (Not sure what the IRS would say.) But still, the larger issue is probably that these deals could be used to fraudulently inflate auction records, for the purpose of "setting up" the next buyer. Of course, the game doesn't work unless the consignor and the buyer are working in concert. Not a common situation, but it wouldn't be unprecedented.
I don't think you can offset the basis of the asset that way. Then again, I'm not an accountant.
Oh, I'm sure you can offset it. I just don't know if the IRS would agree.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I see this as a significant milestone as it is the first time a U.S. coin has truly broken the $10 million mark without tricks and gimmicks to inflate the price. I think the value of 1804 Class I dollars, 1913 Liberty Head nickels, and the like just went up.
@amwldcoin said:
The only way I could accept the guarantor reduction of the buyer's fee is if the guarantor agreed to pay his guaranteed price regardless of what the final hammer is. Ex. the guarantee was $15 million and it hammered for 5 million. The guarantor would still pay the 15 million.
Isn't that what happened? That is the only description of an 'irrevocable bid' that makes any sense to me. Otherwise I thought that all of my bids were irrevocable.
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
There is also the chance that there may not have been an underbidder. The one bid may have been it. Since it was a guaranteed bid, the auctioneer bid it up to give the facade of action.
But I think that's unlikely. Why make a guaranteed bid above the estimate when you can always bid again later?
The coin opened at $7M and moved very quickly to $12M. I wonder if that was the highest irrevocable bid. A few reasonably quick bids to $14M then it was a long slog back and forth between a phone bidder and a floor bidder. It sold to the phone bidder, on a cut bid I believe. Either the whole event was just a stage show, or the phone bidder paid significantly more than his irrevocable bid. But by placing an irrevocable bid in advance he saved some green. Smart.
The underbidder may have placed an irrevocable bid too, and would have benefited in the same way. Certainly had the opportunity to. I wouldn’t feel too bad for him.
@amwldcoin said:
The only way I could accept the guarantor reduction of the buyer's fee is if the guarantor agreed to pay his guaranteed price regardless of what the final hammer is. Ex. the guarantee was $15 million and it hammered for 5 million. The guarantor would still pay the 15 million.
Isn't that what happened? That is the only description of an 'irrevocable bid' that makes any sense to me. Otherwise I thought that all of my bids were irrevocable.
That is what happens. If the guarantor guaranteed $15 million, he pays $15 million even if no one bids past $1. That's what it means to be the guarantor.
@MsMorrisine said:
What does one do with multiple irrevocable bids?
You don't need multiples. One serves as the reserve, essentially. If you had multiples, you are just giving money away to people. Once I paid one person to bid $15 million GUARANTEED, why would I pay anyone else to bid? The only reason to do it is if a second person comes along who bids $18 million GUARANTEED and then I've wasted money by giving it to the first person who is no longer guaranteeing anything.
Sounds a bit like gambling. If you place an irrevocable bid and someone outbids you, you get to walk away with some free cash. If no one comes close to your irrevocable bid, then you’re stuck “overpaying”.
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
Comments
Just when you thought auctions couldn't get any more confusing.....in any case, the PR is a good thing for the overall coin market.
The irrevocable bidder presumably won but not necessarily with the irrevocable bid. The fee paid would have been paid for the irrevocable bid, which could have been less than the hammer. In other words, the advance bidder was getting that fee whether they won the lot or not, for guaranteeing a reserve.
At least that’s my understanding. And I’m sure it’s incomplete.
the advance bidder was getting that fee whether they won the lot or not
Correct. That’s why I think it misleading to reduce the sales price. But MrEureka has a valid point as well. I’ll just sum it up with stating that I don’t like the concept at all. Period.
I said $8.1M in a previous post. Indeed, close to $8.1M for the stamp. Can't something be done to brighten it up?
Great spirits have always encountered violent opposition from mediocre minds.-Albert Einstein
Figures.
Imagine you're an auction firm looking to get a consignment. The consignor has some leverage and asks you to guaranty a sale at some minimum price. If you agree to that, you have some serious risk, and you might even end up owning the item yourself. Faced with that situation, one option is to pay a fee to a third party to get his irrevocable bid in advance of the auction, with the understanding that in no case will he be allowed to purchase the item for any less. In other words, the third party is guarantying a sale at the effective reserve, and you, the auction company, are kicking back some part of your commission to that third party for that guaranty. A win-win-win arrangement for all involved, although it does tilt the playing field in favor of the guarantor, in the sense that his net cost for purchasing the item could end up being less than any other bidder would have to pay. I'd say that's fair enough because the guaranty is provided at a real cost to the guarantor. First, because the market could drop between the time of the agreement and the time of the auction. And second, because the guarantor forgoes any opportunity to buy the item for less than the agreed upon price, should no other bidders present themselves to drive bidding to that level.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Well that very complicatedly makes sense--thanks!
I think I'll be sticking with 99 cents and no reserve on eBay
Your point is well taken. The only way I can think of that it helps is that probably just the publicity about this sale helps the hobby.
CNBC just did a bit on the auction
I’m not sure what’s what, but they said “both lots were won by —- of the Carlyle Group”
I read their Conditions of Business and I'm not sure. Seems like it's simply a bid placed before the lot goes live that the bidder is contractually bound to honor if successful. Perhaps when there are that many zeros involved, the occasional advance bidder may become illiquid before the sale and be granted the opportunity to quietly revoke their bid and avoid unnecessary embarrassment. I searched for "revoke" and the only mention was in the context of Sotheby's reserving the right to revoke a bid placed online.
Keeper of the VAM Catalog • Professional Coin Imaging • Prime Number Set • World Coins in Early America • British Trade Dollars • Variety Attribution
Excellent articulation
Latin American Collection
Sotheby's said the stamp block was bought by David Rubenstein, a co-founder of private equity company The Carlyle Group.
Latin American Collection
Correct the buyer of the 33 Saint didnt want to be identified .
FYI Stuart Weitzman did not attend the sale. If I would have been selling these 3 items I would have had a bull horn, wore a rally cap and spiked the punch
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
If I read the results correctly, the coin over performed and the both stamps underperformed. I am reading that correctly? If so, does it speaks to the health of the coin market?
My 20th Century Gold Major Design Type Set ---started : 11/17/1997 ---- completed : 1/21/2004
Congratulations to the consignor!
A stamp dealer who was a previous owner of the plate block thought that it went for less than he expected. The 1 penny magenta went for more than he expected - he thought the estimate of $10 - 15 million was too much to begin with.
Wonder if we will find out in 10 years that the British Royal Family bought the magenta
Latin American Collection
https://www.1c-magenta.com
There is probably a tax reason why the fee was taken out of the BP. Sort of like when you trade in a car.
I've always felt there is too much comparison between the coin and stamp markets. They are much different. One could argue stamps have more in common with sports cards (they are both paper). Generally, when I see a post using a stamp comparison the poster is almost always gloom and doom about coins and uses the stamp market to make a belt and suspenders argument.
Bottom line is this coin did terrific and the stamps didnt. More proof the two markets are not connected.
It seems more likely that it speaks to the economic health of some very wealthy individuals.
No.
It's a single iconic coin. It would have set records in a crap coin market. That coin isn't even part of the coin market.
Stamps are dead and they just sold one for $8 million. What does that tell you about the stamp market?
I guess we don't have to worry about it becoming its new owners pocket piece.
Pete
We just sold a stamp for $8 million and a plate block for $5 million.
But all 3 results say nothing about the underlying markets. The items are so iconic they are all just trophies which is why the shoe baron owned all 3. All 3 items are unique.
That makes sense. The guarantor wouldn't want to pay income tax on his fee if he actually purchased the lot. (Not sure what the IRS would say.) But still, the larger issue is probably that these deals could be used to fraudulently inflate auction records, for the purpose of "setting up" the next buyer. Of course, the game doesn't work unless the consignor and the buyer are working in concert. Not a common situation, but it wouldn't be unprecedented.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The only way I could accept the guarantor reduction of the buyer's fee is if the guarantor agreed to pay his guaranteed price regardless of what the final hammer is. Ex. the guarantee was $15 million and it hammered for 5 million. The guarantor would still pay the 15 million.
I don't think you can offset the basis of the asset that way. Then again, I'm not an accountant.
Bottom line is the underbidder was willing to pay $19.2M for the coin. So representing it as sold at $18.9M is just as misleading as sold at $19.5M
Now my head does hurt.
Oh, I'm sure you can offset it. I just don't know if the IRS would agree.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I wonder if this sale will have any effect on some of the other great numismatic rarities.
I see this as a significant milestone as it is the first time a U.S. coin has truly broken the $10 million mark without tricks and gimmicks to inflate the price. I think the value of 1804 Class I dollars, 1913 Liberty Head nickels, and the like just went up.
That’s a safe bet, even if we never find out.
Isn't that what happened? That is the only description of an 'irrevocable bid' that makes any sense to me. Otherwise I thought that all of my bids were irrevocable.
I’ll post a picture when I get it.
Who's on First?
Rubenstein is great as an interviewer on his series on Bloomberg. Wish he had purchased the Double Eagle.
I do wonder how many bidders were above $10M That might be an even more telling number than the final price.
"Look up, old boy, and see what you get." -William Bonney.
https://www.1c-magenta.com
@MsMorrisine showed us who purchased the stamp
There is also the chance that there may not have been an underbidder. The one bid may have been it. Since it was a guaranteed bid, the auctioneer bid it up to give the facade of action.
But I think that's unlikely. Why make a guaranteed bid above the estimate when you can always bid again later?
The coin opened at $7M and moved very quickly to $12M. I wonder if that was the highest irrevocable bid. A few reasonably quick bids to $14M then it was a long slog back and forth between a phone bidder and a floor bidder. It sold to the phone bidder, on a cut bid I believe. Either the whole event was just a stage show, or the phone bidder paid significantly more than his irrevocable bid. But by placing an irrevocable bid in advance he saved some green. Smart.
The underbidder may have placed an irrevocable bid too, and would have benefited in the same way. Certainly had the opportunity to. I wouldn’t feel too bad for him.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
Hard to say up to $12M as it went so fast. Definitely looked like two from $14M up.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
What does one do with multiple irrevocable bids?
Maybe you’re right, and they only allow one irrevocable bid.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
That’s an open question.
That is what happens. If the guarantor guaranteed $15 million, he pays $15 million even if no one bids past $1. That's what it means to be the guarantor.
You don't need multiples. One serves as the reserve, essentially. If you had multiples, you are just giving money away to people. Once I paid one person to bid $15 million GUARANTEED, why would I pay anyone else to bid? The only reason to do it is if a second person comes along who bids $18 million GUARANTEED and then I've wasted money by giving it to the first person who is no longer guaranteeing anything.
Sounds a bit like gambling. If you place an irrevocable bid and someone outbids you, you get to walk away with some free cash. If no one comes close to your irrevocable bid, then you’re stuck “overpaying”.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
I did it. I accidentally bid my phone number.
The magenta was sold for 9.4 million in 2014
Successful BST with ad4400, Kccoin, lablover, pointfivezero, koynekwest, jwitten, coin22lover, HalfDimeDude, erwindoc, jyzskowsi, COINS MAKE CENTS, AlanSki, BryceM