The CAC Myth?
Desert Moon
Posts: 5,910 ✭✭✭✭✭
Out in the numismatic world there is this perception sometimes that CAC is a major market maker. I love coins with CAC beans on them (>80% of my collection) bc on average it means they are a great coin. But. Each week like many of us, I receive a highlights of the upcoming GC auction tomorrow. There are are incredible coins that are being highlighted and I am sure that Ian is putting up the creme de la creme of the listings. This week, there were 224 CAC eligible coins shown in the highlight email. Out of those, I counted 41 CAC, or 18%. That is even higher than on ebay. For example, on ebay for barber quarter listings for MS and PF in grades down to 40, there are 389 coins listed, 37 that are CAC (9.5%). In early halves there are 98 CAC (<6%) out of more than 1700 eligible from G6 up. For early halves with prices from $750-1500 there are 298 listings of CAC eligible and only 11 are CAC (3.7%) - >$1500 there are 613 CAC eligible listed and 69 of those CAC (11%) . I think both GC and ebay provide a key view of what the real market is out there.
So what I see here is that even within the area CAC considers, only a small fraction of the market is CAC approved coins. If I were a dealer, I think I would want to deal in more than CAC coins to make a living. All of these coins find a home and move through the market so it seems one is leaving a whole bunch of the market out if one only sells CAC. Now HST, there are dealers who have a heavy emphasis on CAC and are very successful at it, but I am thinking there is only room for a few of them.....
Conclusion, CAC as a market maker is mostly a myth - only a very small part of the market - maybe more influential on 4 figure coins on up (although ebay listings of early halves don't support this), but in terms of numbers and possibly total value of the numismatic market, no.
Thoughts?
Best, SH
Comments
The term "market maker" describes a person or enterprise that stands ready to buy and sell a given commodity or security. In the case of CAC, it doesn't mean that the enterprise's endorsement (i.e., the bean) strengthens or creates a market outside of itself (though it doubtless does). The term doesn't describe CAC's effect on the wider market, it describes CAC's ability and willingness to be a buyer and seller of the coins it beans.
Coinlearner, Ahrensdad, Nolawyer, RG, coinlieutenant, Yorkshireman, lordmarcovan, Soldi, masscrew, JimTyler, Relaxn, jclovescoins
Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't no optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
The blandest and therefore most agreeable thing I can say about CAC is that they seem successful in providing a service. If it isn't "market making," it's something that they're doing and they're doing it well. Could I hear more on what it really means to make a market?
CAC the sticker is different than CAC the exchange.
You are correct for CAC the sticker as a percent of the coin volume. But "market maker" doesn't usually refer to the stickering but the buying and selling. CAC the company buys and sells a LOT of coins in a year.
You could, however, say the same about PCGS. What percent of coin sales (volume) are raw?
I would also suggest that you don't need to be 51% of sales to be a "market maker".
@ms71 it appears our posts are out of order.
Thank you!
I believe your assumption is flawed when looking at CAC coins as a percentage of total listings. One could easily argue that those that have coins with beans are less likely to sell them since those coins are supposed to be the cream in a particular grade/coin. Since there is no way to know how many given coins/grades have beans then the presumption that you can draw any inference is flawed. Just my 2 cents…..
It is also worth considering that since CAC stickers half the coins or more, if you are seeing less than half of GC or eBay coins being CAC, this might PROVE CAC is a market maker because those coins get bought and sold without going to auction.
I have a dealer friend who does $millions in sales annually on the national circuit, and I bet you could count the number of CAC coins he’s handled on one hand.
The important comments of others in this thread aside, the coins that are currently on the market probably aren't an accurate cross-section of coins that exist.
All that might prove is that he doesn't want to pay the CAC premium.
There’s not? What about the CAC Pop report? Perhaps I misunderstood what you are saying.
Nothing is as expensive as free money.
And that he apparently doesn’t need to…..
Go to a local Sunday bourse and see how many CAC coins you see. Not many. In fact, you will usually see a lot of raw coins as well. The lower end of the market really does not seem to care and that is not a bad thing.
No one NEEDS to. Most of my business is raw. You don't even NEED to slab.
The interesting thing would be to look at the Dealer to Dealer sales pre-show and see that most of the trading involves the CAC coins. I read blogs from dealers that admit they currently only buy CAC coins.
Successful BST with drddm, BustDMs, Pnies20, lkeigwin, pursuitofliberty, Bullsitter, felinfoel, SPalladino
$5 Type Set https://www.pcgs.com/setregistry/u-s-coins/type-sets/half-eagle-type-set-circulation-strikes-1795-1929/album/344192
CBH Set https://www.pcgs.com/setregistry/everyman-collections/everyman-half-dollars/everyman-capped-bust-half-dollars-1807-1839/album/345572
So, you're pro-CAC? I never would have guessed!
jk
There are some dealers (and collectors on this forum) who buy only CAC coins. Dealers who buy only CAC coins are decidedly a small minority, however. Not even JA buys only CAC coins.
OMG.
Great transactions with oih82w8, JasonGaming, Moose1913.
Well, it has been a while since we had an overt CAC bashing thread. Lately, they've mostly been in stealth bashing mode.
Yup, pro-CAC and pro-PCGS.
We can revisit this thread in 5-10 years and see if CAC flopped or has stood the test of time. I have a feeling more dealers will gravitate towards CAC coins in their inventory. If you go back 15-20 years it was hard to find graded coins at shows.
Successful BST with drddm, BustDMs, Pnies20, lkeigwin, pursuitofliberty, Bullsitter, felinfoel, SPalladino
$5 Type Set https://www.pcgs.com/setregistry/u-s-coins/type-sets/half-eagle-type-set-circulation-strikes-1795-1929/album/344192
CBH Set https://www.pcgs.com/setregistry/everyman-collections/everyman-half-dollars/everyman-capped-bust-half-dollars-1807-1839/album/345572
Right on!
And I thank you for supporting my point….
Everyone has their own niche. If you want CAC then buy CAC. If you want slabs then buy slabs. If you don't want to buy coins don't buy coins. Everyone is able to find the niche they are comfortable with. There are no mandates.
As for me, I only buy slabbed coins. I am relatively dependent on one consultant (PCGS/NGC). I do get a second opinion (CAC) after the purchase has been made. I then ask my wife who looks at me and often says, "Can u still return it?". I need that reassurance? That's why she's the third consultant.
Informal poll:
I have a $50 widget in a collectible mid-grade. Should I:
A. Spend $40 to get it in PCGS plastic?
B. Spend $60 to get it in PCGS plastic and have a CAC attached?
C. Enjoy it as it is?
The vast majority of coins have never been to a TPGS. It isn't always worth the cost.
The vast majority of slabbed coins have never been to CAC. They are either ineligible (moderns) or in a price tier that makes it unnecessary or cost prohibitive.
I absolutely do!
I just don't support the OP's point.
CAC is a % of the total market. A shop or internet seller usually deals in the total market even if you don't see them retailing non CAC coins.
It’s a myth that CAC as a market maker is mostly a myth.😉
I believe that CAC buys and sells millions of dollars of CAC coins per month and that it works on a very tight/narrow buy/sell spread. That’s a market maker.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I am a slab collector.
The majority are PCGS.
I own only 1 or 2 CAC slabbed coins.
I did not buy the bean sticker but the coin(s) that it was on.
I buy the grade only.
Wayne
Kennedys are my quest...
I’m a small dealer and try to only buy PCGS coins with CAC stickers. I might pay more for the coin but it sells faster and often for more money.
CAC is absolutely a market maker in rare coins.
They have and will influence pricing on high quality coins. You would need to look at how CAC prices have adjusted pricing for the high quality merch. Not just the total numbers of coins bought or sold.
If anyone ever did a cost/profit analysis on coin purchases/sales of same grade/type coins without CAC and with CAC, then that would be interesting to compare. In any true enterprise, profit is the driving factor. Finding whether more net profit could be made via CAC graded coins would be a must to know if in that sales venue. In other words, do you make more profit on a CAC purchased coin when you sell it by a cost/sales ratio than a like graded coin non CAC? Has anyone done this type cost/sales analysis to determine(as far as a profit margin analysis) if it is truly worth tying up larger funds for CAC and is this really a larger profit maker. No doubt that a CAC vs nonCAC sells for more money, but if you have to buy the CAC coin do you really make that much more profit to warrant the expense. I'm not considering sending coins to CAC and reaping the benefit, but of buying CAC coins on the open market and reselling them, which is obviously happening. Just curious and I hope PCGS does not take this as an attack on their grading as I am not even considering whether to use CAC or not, but whether to buy then sell CAC. I have sold several CAC coins that I purchased and did not make the profit vs cost that I felt should have occurred to warrant the additional cost. Just curious.
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
Patriotism is supporting your country all the time, and your government when it deserves it.....Mark Twain
Lots of local coin show collectors still don't know about CAC. Lots of low-end dealers make sure to not tell all of those collectors about CAC. Some of the examples in the OP prove the point that there's lots of questionable slabbed coins in some series and it doesn't surprise me that they don't sticker, and many dealers wouldn't send them if they didn't think they would. I still buy raw, but I really check it carefully, slabbed I still check carefully, CAC maybe a little less. In the current market I would think long and hard before I bought an unstickered coin over $5k.
Some need it, some don’t. If it’s on the holder good if it’s not that’s fine. I can see! if I see a nice coin and it doesn’t have the bean I’ll buy it still. It’s not needed for me I’m not going to pass on it because it’s not there. How many people need to look at it to say yup that’s a coin. Spend your money how you want but I don’t let a bean stop me or help me make a decision. Done or we will be here all day. 😉
Hoard the keys.
Soooo, I was under the assumption that not every coin will CAC. Thus I would also assume a low percentage of the total number of coins will have a sticker and therefore those percentages of CAC coins along with raw, coins in other holders, etc., will remain relatively small. I would not call CAC a market maker except maybe on the high-end market.
WS
The real profit these days may actually be in raw coins. They can be bought and sold in an all-too-common manner of the pre-slab era - Buy at one grade and sell at the next higher grade. This is possible because so many collectors do not know how to grade conservatively or spot surface alterations such as cleaning.
Here's a great senario. You have 10 coins of the same date and grade. 1 is superior to the other 9. That 1 is the only 1 that the Coin God will approve. I for 1 think the beenie weenie would make little difference in the higher price realized if the 10 coins were auctioned together in the same venue....bean or no bean! A bean has never ever influenced the price I am willing to pay for a coin.
That is not what the marketplace says.......for the millionth time.
If they ever reopened membership, many new coins would probably be evaluated and as a consequence the market would have more CAC product.
There is no way to quantify this! The grading services have created a bifurcated market due to inconsistencies in grading....ie manly lately letting problems slide by they wouldn't a few years ago. To amplify that I have seen beaned coins I think slid by that I don't think should have received a straight grade.
Even today after 35 years of our hosts grading coins there are many out there that assume a coin has a problem if it hasn't been certified. Now multiply that factor by the young age of CAC vrs. the TPG's.
At the FUN show I was trying to buy a Barber coin from a known retail dealer. I was willing to pay full retail or even then some for my collection. He quoted me a price and it was over 3 times PCGS price guide and 4 grade levels above! I asked him why he was asking so much and told him what price guide was. He said I must have made a mistake. Then he gets at it with his computer. Wow he says, I must have made a mistake, I paid a lot for that coin. Then a few minutes later he says ah hah! Now I know why, CAC has only stickered 3 in that grade. That is 20% of the POP for a coin series that people are just starting covet the bean for. I said that is a high POP for that kindda premium. Then he made a comment along the lines of why don't more of them have a CAC sticker. I told him to come over to my table and I can show him somewhere in the neighborhood of 1000 PCGS graded Barber coins that have not been to CAC and will not be as long as I own them. I also have close to that many in my personal collection.
Now the kicker! I know he has had the coin available for more than a year. On top of that it was a coin that wasn't all that and I would be looking to replace it at some point! To be honest I was surprised it had a bean!
LOL! You completely missed my point.
I see on the PCGS website that for $435/month (minimum three months) one can belong to the Certified Coin Exchange (CCE) which includes the following services - CCE Quick Price*, CCE bid/ask updating, CCE trade execution, FACTS trading messages, ability to list your inventory on Collectors Corner and more.
Are you saying JA conducts much of CAC's buying and selling on CCE and from the activity you are seeing, CAC has become a market maker?
This thread is well on its way to becoming the all too familiar street fight.
Coinlearner, Ahrensdad, Nolawyer, RG, coinlieutenant, Yorkshireman, lordmarcovan, Soldi, masscrew, JimTyler, Relaxn, jclovescoins
Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't no optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
@jesbbroken said:
** I have sold several CAC coins that I purchased and did not make the profit vs cost that I felt should have occurred to warrant the additional cost.**
I think the greater profits come to those dealers who spot nice coins, buy them at a reasonable price, then send them to CAC themselves....and have the customer base in place that wants and pays a premium for coins with the sticker. Like @amwldcoin 's example, if a dealer pays a big premium upfront, he may be holding the coin a long time, while waiting for the "greater fool" to come along and pay even more.
But these are just my thoughts. A dealer acquaintance at FUN had a nice 38D walker in PC63 CAC - he was over 65 retail money on it. Maybe the market is that strong? I don't know, he does this for a living - I just know that I personally wouldn't pay even the next grade up money for coins that have bigger spreads like that, let along two grades up.
Yes. In certain coin types, especially dollars
It is a mixed situation. Auction companies routinely pass consignments through CAC to potentially increase bids. Who can blame them? The greysheet values CAC enhancements, even before plus grades. But the general market still has no attendant expectation that every coin offered for sale was sent in for sticker consideration. If CAC were trying to drive their car on that road, they would have scaled up operations and offered on-site services at all of the major shows. Perhaps they should. I am sure it would be exceedingly popular.
I love working in a segment of the industry that does not need nor want an approval service
I use a CAC in my government computer every day. I earn my living with CAC...
USAF (Ret) 1974 - 1994 - The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries. Remembering RickO, a brother in arms.
Why do I get the feeling that this would quickly descend into a marathon of angry appeals and arguments with JA?
Nothing is as expensive as free money.
Yet all of your inventory is slabbed...
Data is what data is, no one has so far discounted the data I present. One said it was a biased snapshot, no, two major numismatic selling sites showing the limit on CAC coins offered, not biased. I love CAC coins and mostly buy them bc they are great, but they seem to be a small part of the total market (and we are not even talking tokens, world, modern, etc, etc,). Again, Ian puts out the best coins in his email each week, everyone amazing and only 18% are CAC amongst the elite coins out of his total auction each week. That convinces me that CAC is not as important to the total numismatic market even though I love having beaned coins myself. I am a scientist and trying to analyze this without bias (notice I love CAC). I certainly would not place these kinds of limits on my product to sell (CAC only) if I were trying to make a living unless I was able to make a niche market from CAC only and be successful at it (I noted a few can, most can't)............ Thaz the whole point of my post above. So no, they a really are not a Market Maker, except within a very small niche market (for high quality coins for the grade for some US coins only) that is just one small fraction of the total numismatic market. I find that interesting and data don't lie.........
Imagine if someone like GC only auctioned off CAC coins, would they be the great success they are in the market? Well no. And GC is clearly a market maker because of their diversity in product.
Again, I love CAC coins and mostly buy and own them, I am just evaluating what I see and what it means.
Best, SH
Fair enough, so I fixed it for ya .....
I love working in a segment of the industry that does not need nor want a Double approval service
Still my question to you buyer and seller's of CAC coins. Is the net profit ratio high enough to warrant the higher investment in CAC inventory over nonCAC inventory of the same grade? Now, if your experience is that CAC stickered coins sell twice as fast as non stickered coins then perhaps a point or two of cost/proftit is not as important. Again, not for sellers who send in slabbed coins to CAC, only CAC purchased coins.
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
Patriotism is supporting your country all the time, and your government when it deserves it.....Mark Twain
They’re a market maker in many CAC coins. Market makers in stocks aren’t market makers in all or even most companies - that doesn’t disqualify them from being market makers.
spacehayduke Said:
Data is what data is, no one has so far discounted the data I present. One said it was a biased snapshot, no, two major numismatic selling sites showing the limit on CAC coins offered, not biased. I love CAC coins and mostly buy them bc they are great, but they seem to be a small part of the total market (and we are not even talking tokens, world, modern, etc, etc,). Again, Ian puts out the best coins in his email each week, everyone amazing and only 18% are CAC amongst the elite coins out of his total auction each week. That convinces me that CAC is not as important to the total numismatic market even though I love having beaned coins myself. I am a scientist and trying to analyze this without bias (notice I love CAC). I certainly would not place these kinds of limits on my product to sell (CAC only) if I were trying to make a living unless I was able to make a niche market from CAC only and be successful at it (I noted a few can, most can't)............ Thaz the whole point of my post above. So no, they a really are not a Market Maker, except within a very small niche market (for high quality coins for the grade for some US coins only) that is just one small fraction of the total numismatic market. I find that interesting and data don't lie.........
Imagine if someone like GC only auctioned off CAC coins, would they be the great success they are in the market? Well no. And GC is clearly a market maker because of their diversity in product.
Again, I love CAC coins and mostly buy and own them, I am just evaluating what I see and what it means.
Best, SH
Yes, in terms of numbers, CAC coins are a very small part of the market. That has nothing to do with whether CAC is a “market maker”, however.
And GC is clearly not a “market maker”, just by auctioning “diversity of product”. They aren’t making markets in the coins they’re auctioning. You seem to be confusing buying/selling or auctioning large varieties/quantities of coins with “market making”. They’re not the same thing, as “market makers” offer a buy/sell, two way street.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
There is a constant churn of coins through dealer to dealer transactions that are not public. I think eBay and GC (to a lesser extent) are poor metrics to use. The fees are so high that in many cases, it is easy enough and you net more by selling to another collector or dealer private for CDN/CAC bid amounts so naturally a large number will never appear at auction. I understand this may not seem true to you, but it is because what you collect. I admit that CAC is not the strongest bidder for early federal coinage, coins with amazing toning, etc., etc., but for generic type post Civil War, the bids are usually pretty competitive or at least they were I was active. At this point, I've pretty much limited my exposure to this hobby and retain more or less a box of 20 of irreplaceable pieces (to me).