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Comparing Financial Performance of Ultra Rarities, Rarities (incl. Key Dates) and the rest.
Zoins
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Interesting comparison of ultra rarities, rarities and the rest (aka PCGS 3000).
PCGS Ultra Rarities Index
- Ref: https://www.pcgs.com/ezine/imagesforweb/UltraRaritiesBrochure.pdf
- Discussion: https://forums.collectors.com/discussion/1062966/a-neat-brochure-from-pcgs#latest
PCGS Key Dates & Rarities Index
PCGS 3000
- Ref: https://www.pcgs.com/prices/coin-index/pcgs3000
- Discussion: https://forums.collectors.com/discussion/977235/other-than-the-stock-market-crash-what-led-to-the-spike-and-nose-dive-in-coin-prices-in-1989
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Mix of logarithmic stock graphs compared to linear price scales present distorted information.
Does the above match people's experiences when collecting:
The scales on all the charts are linear.
Are you saying the stock graphs were logarithmic an improperly transcribed?
Yes. Look at a linear stock graph of the S&P 500 over the same time period.
edit - wikipedia comparison of the S&P logarithmic to linear https://en.wikipedia.org/wiki/S&P_500
The OP article graph indicates that coin rarities price increases from 1970 far exceed S&P returns. That is not the case.
I've always thought the 3000 index was really of limited value. Coins are not stocks. Measuring with an index just isnt a good fit.
Why isn't it a good fit?
What about Price Guides?
It seems that if a Price Guide is a good fit, something like the 3000 index would be worth while as well.
A couple of reasons
1) the share of coke you buy and the share of coke that warren buffet buys is the same. The pcgs ms 65 quarter eagle indian I buy and the quarter eagle indian ms 65 that JA buys---probably arent the same and his is probably worth more. So treating coins like an index is difficult.
2) I'm not sure a large index of a basket of coins is the best way to "invest" in coins. I think I would prefer hand selecting coins that were pq or undergraded and that were truely rare. Most money mgrs dont beat the s and p 500---most shrewd collectors and dealers do beat the pcgs 3000.
Coins are just a different animal and I think an index isnt a good fit. I do think an index of ultra rarities probably makes more sense because since they are ultra rare it takes away some of my concerns. That being said---Im not a fan of indexes for coins regardless
This may have already happened as it's getting more similar with CAC. JA indicated that it's gotten very expensive for him to buy PQ coins since he's identified so many of them with a CAC sticker now.
The PCGS 3000 seems to be at a relatively break-even level. Before Covid, it seemed like many collectors were doing worse than break-even due to buyer premiums. Also, many in less popular series needed Hansen to come along.
To me, if Price Guides and estimated prices in auctions make sense, indexes make sense. They go to gether.
Hopefully PCGS will fix this in the guide.
Here's the Wikipedia chart.
The Wikipedia example I gave is not the best representative, as it goes only to 2016. The S&P is now at 4458, more than double from start of 2016.
My goal with this thread isn't to compare with stocks as I don't think that many people use coins as investments, but unfortunately it has dominated the discussion.
From the charts, for investment returns on coins, it seems ultra rarities are the way to go, and not with rarities, key dates or the rest of the PCGS 3000. Thoughts?
It’s a highly complex issue with many variables
Unless your able buy / sell coins flip on reg basis successful biz model make positive P&L tough make money RCI. As far as the ultra rarities that’s an arena for the billionaires. See last paragraph below. Graphs are graphs. They do not show the future. Nobody knows the future. People who are collectors with zero experience on the bourse or running a numismatic business really aren’t qualified to analyze this issue IMO. I find many of them like deer in the headlights lacking even basic knowledge in accounting and basic cost analysis. Then in here it at times reminds me of children argueing “my red car is better than your green truck” lol. Everybody knows most collectors lose money over the long term.
Coins do not pay dividends nor something replace equity investment. The wealthy (who can afford ultra rarities) may buy coins if interested like say a yacht. My understanding only a very small percentage of them like coins. Equity investment based on basis of businesses make money. Coins a risky investment - they can go bad in the holder due to exposure with atmosphere, the existing grading / TPG structure, market demand could be defunct or something entirely different in the future. At some point US RCI could simply be a segment merged into a worldwide global numismatic structure. Us Classic Coins not the only numismatic area / others are Paper Money, Mods, and World.
If billionaire even with what I know I would select an agent (commissioned) at a well known firm like Heritage represent me for buying. I would want initially work on $2.50 Indian Set (best slabbed grades could find) plus some slab boxes of slabbed Double Eagles (perhaps in tandem with the set) especially some CC. Of course everything wb subject to my sight seen approval. I am sure many wb stickered but would consult w him on that, go with his recommendation.
I'll leave the billionaires to worry about ultra-rarity prices.
How much is a BU 50-D nickel worth?
The ultra-rarities behave as their own little segment of the market. How billionaires spend their money is a science unto itself. There's a huge difference between that market and even 5-figure coins.
I agree with the limitations of the index already stated. Stocks are perfectly fungible. Coins are not.
Also, stocks aren't affected by "gradeflation" over time, as coins CLEARLY are. I started collecting about 10 years ago and worked on a high-grade peace dollar set. At the the time, there were precisely two coins graded MS68 and not a single 67+. I even started a thread on it. Now there's 24 of them. There's at least one and often several 67+ coins in every big auction. Many of my old friends are now in holders half a grade to a grade higher. Pretty sure the coins didn't improve since I owned them.
not everybody has the money to buy rarities, but everybody can buy stocks.
The only way to do this is to look at a large number of specific coins. Rarities tend to have long pedigrees, and historic prices are well known.
Sooooo…maybe ultra rarities should be stocks.
Have you thought about collateralizing your coins?
If you mean securitizing, Ohhhhhh yessssss.
Instead of stock certificates, you could have stock tokens! You could have Dan @dcarr scan your coins, say the obverse. The reverse could say this token represents ownership of x shares in the real coin!