Is the market the only real indicator of value?
MrEureka
Posts: 24,258 ✭✭✭✭✭
I see some coins as ridiculously overpriced at current levels. Others as unbelievable bargains. But obviously the market disagrees. Am I just plain wrong?
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
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depends on how small/big of a time frame you are analyzing.
No.
It depends on time frame.
If you need to sell (or) buy today, you get or pay whatever the market is that day.
If you are in no hurry, sellers, may what for a buyer to meet their price. Buyers can wait until they find the price they are willing to pay for a certain item.
A non-necessary item is worth exactly what a willing buyer, under no compulsion to buy, will pay a willing seller, under no compulsion to sell.
When talking about expensive, scarce coins, they are not fungible (even within a set grade from a particular TPG). So it's only possible to judge the market broadly, and not with respect to a specific example. I think that this is especially true when valuing non-perfect coins; two XF45/CAC Walking Liberty half dollars can have radically different eye appeal. And some people value "toning" highly, while others don't even like "toning."
Each of us had to decide what a coin is worth to him/her, independent of what the market says (e.g., I'm not about to buy a 1916 MS64 FH Standing Liberty quarter, because it's not worth to me what the market values it at. But it will go at something like that very high price it's advertised at, because someone with that much money to spend on it will want it.
The OP seems to be asking the question from the standpoint of the price versus a coin's collectible attributes. It's still subjective, but by this standard, a lot of coins are overpriced to most collectors because they aren't the buyer and won't pay the necessary price to buy it.
Longer term, I expect most of the most overpriced coins to lose noticeable value, some relatively and others absolutely.
The market is always right and the only true indicator of value. If a coin sells at auction for $500 and you don't think it is worth more than $200, you are obviously "wrong". It would be sheer arrogance to think that you know more than the collective market.
I don't think it does. The market is not a predictor of future value. The market is not a historical record. The market is a reflection of the current value. There is no "time frame".
Are you currently selling the overpriced ones and buying the bargains?
Examples would help in substantiating your opinion and for me to opine.
"Got a flaming heart, can't get my fill"
If I believe the market is overpriced and a coin I want I don’t buy at the current price. I have time, so I wait. I also willing to negotiate especially if an item has been for sale for a while. Sometimes I get the coin at a price I feel is fair other times I pass. The market is what it is.
You have other options like going to coin shows or local shops. Most times I get a better price at those.
My current registry sets:
20th Century Type Set
Virtual DANSCO 7070
Slabbed IHC set - Missing the Anacs Slabbed coins
The market is just that and what price something is being bought and sold at. The price one thing is listed at and then sold at are two different things. Anyone can price/list as high as they want. Some can be ridiculous, some can be dead on, and some may leave a little bit of meat on the bone or offer at a bargain price. While I reference several guides I also research the sold prices on the auction sites
Pocket Change Inspector
True, but this is really only true in the very narrowest sense. The market is not "perfect" at any given point in time, especially at auction. If someone isn't paying attention or misses a particular auction, people can and do buy things and immediately flip them for 10%+ more. Strictly speaking, the hammer price is the "market" at the time, but it isn't really accurate if a profit can be made immediately thereafter.
The same can be said for two people getting into a bidding war, with the winner ultimately paying far more than the consensus of value, and then find no takers at anywhere near the hammer price soon thereafter.
That said, your definition is spot on, but the same can be said for the S&P 500. It moves up and down by 100 points a day with no new information, but changed sentiment. That's what makes markets!
People can arrogantly believe they know more than the collective market and actually be correct about that. Certainly anyone who sold stocks at the close last Thursday couldn't be blamed for feeling that way when the market opened Friday morning.
to keep it simple (yes, the below is simple compared to what it could/show be to give an honest accounting of the op inquiry and one that has been asked many times on this forum, to some LIVELY discussions lol), i am thinking in terms of the world not collapsing or WWIII etc.
the current market really only dictates what the current value is and until something sells, technically it is theoritcal and i've had/have stuff based on current levels that is not selling, even a bit under what other examples are selling for, so to some extent, even current market is not truely 100% across the board an accurate snapshot of values of collectables of any type. now there are of course some reliabilities as we go on as if the world isn't ending today/tomorrow so i know i can some items at X and figure i can take them to certain sources and get around X. i've also had that NOT be true sometimes.
depending on how you define value. will this stuff realistically lose all value or go to 1000x. probably neither averaged out over hundreds of different coin issues/dates.
i recall pre-pandemic, say a year or so that it sure looked like to me silver dollars were kinda on a collapse and i remember thinking WOW, someone should buy these up en-masse. then late spring/early summer 2020, into the pandemic, silver is at around $8 an oz. WOW. then a little time passes and prices start SHARPLY increasing and keep increasing and are still holding fairly well, WAY above pre-pandemic for a couple of years or more, on average.
they will be slowly coming back down again because this pace is never sustainable, in anything. the harder and longer it goes, the harder it will pop.
so my time comment was kinda based on historical patterns of cycles that i've now seen a few times having started to collect some grey hairs. ooof
To me, the value of collecting is to have fun. A bit of education, a chance to interact with people, and a chance to practice some photography comes along with it.
I was seriously considering working on a type set of early US gold a few years back, but the movement of the market made that niche seem a little too hot for my taste. So.... instead I decided to work on a set of my favorite commems. The barriers to entry weren't as steep and it has been plenty of fun. Sadly, it's possible the better "investment" might have been to go with the gold..... or that market could correct downward. You never know. As long as it's fun, I still do it. Loosing a ton of money.... well, to be honest, that takes some of the fun out of it.
A single auction result is not “the market”. It is a single data point within the market. Just because one idiot over bids does not mean that all coins comparable to the one at auction are now worth $500 and not $200.
Latin American Collection
If you were to make this statement in a bear coin market (think 2015ish), I’d say you’re probably going to become incredibly wealthy in the coming few years by picking those coins.
Making this statement right now in a strong bull coin market, I’d say you’re gonna lose money in the coming few years.
Just because one idiot over bids does not mean that all coins comparable to the one at auction are now worth $500 and not $200.
Thank you for not mentioning me by name
Charles III Album
Charles III Portrait Set
Charles IV Album
Charles IV Portrait Set
Spanish Colonial Pillar Set
Same can be said if an ugly coin sells for $200 and then others think a high end coin should sell for the same $200. Every coin is unique. A price paid is for a particular coin and often people overlook that.
Successful BST with BustDMs , Pnies20, lkeigwin, pursuitofliberty, Bullsitter, felinfoel, SPalladino (CBH's - 37 Die Marriage's)
$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
Guilty as charged!
And I mean it. "The market" includes a lot of players who have no clue what they're doing, and their money moves prices just as much as mine. (And to go OT for a moment - ignore if you like - that's why I don't buy the efficient market hypothesis, and why the smartest stock investors make the most money.)
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
.> @jmlanzaf said:
All investments are priced, to at least some extent, on the expected future value. Granted, some of us are pure collectors who truly don't care what their coins will be worth in the future, but most of us do. That doesn't mean we're always trying to maximize our ROI on every purchase and sale, but we generally prefer profits to losses. Especially on coins that cost a meaningful amount of money, however each of us would define that.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
It all depends on who is in the market , for what.... and when. A sleuth will find a bargain more often than not, especially in the current market. He doesn't have to wait for the auction or auctioneer to make a market.
Yes.
But the question becomes whether or not the current market determines value. Therein lies why I said yes. The market will always determine value when it comes time to sell IMO, but the value can change with time.
Coin Photographer.
This is both true and false. You really can't determine "the market" from a single sale of a single coin.
I agree. I didn't mean to imply that a single data point created that $500 price.
Yes and no. There are all kinds of sentiments that influence price. However that is still a reflection of CURRENT value not future value. If I buy a stock at a premium to current earnings. It is based on a market expectation of growth. But that is still the current value not the future value.
For coins, the sentiments include things like perceived future value for somevas well as perceived rarity, nostalgia, etc. It is worth considering whether the Matthey weakness from 2000 until 2015 or so wasn't about the internet removing a prior illusion of scarcity for widgets. But, sentiment included, that is still current value not future or past.
So if a counterfeit 1893-S dollar in a counterfeit PCGS or NGC holder sells for $10,000 on eBay, it’s “value” is $10,000? Or what if a seller of a genuine uncirculated1893-S dollar, thinking it’s a copy, sells it for $50 to a buyer who knows it’s genuine? Is the “value” of that coin $50?
Shouldn’t the definition of “value” include the stipulation that both the buyer (market) and seller have some reasonable minimal amount of knowledge?
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
If I had to guess, I think Mr eureka is broadly saying that your money goes way further in foreign coins, that the foreign parallel to us rarities that cost millions are obtainable to low budget collectors. Just a guess.
The short answer is no. There are markets within markets and some markets are more developed and mature than others. If we are looking solely at a specific example such as the US Govt sale of CC Morgans, my answer would be different. That market is developed and mature. I don't even want to go down the path of knowledge/ignorance as that will just open up a hornet's nest.
Experience the World through Numismatics...it's more than you can imagine.
Value can be difficult to measure.
The marketplace can be subject to price dislocations. Example the recent stock market bubble due to reddit meme stock retail purchasing. Buying of certain companies based on no fundamentals. Now plummeting back to earth.
In coins, there has been dislocation due to the pandemic and there are bubbly segments. I have some notion of where that is but I will not speculate here. Anyway its perceived value, so many will not agree.
The marketplace for coins is thinly traded. That exacerbates dislocation and will get worse if the demand subsides.
So yes, the market price is the determination of value, but it is fluid.
As I said in a follow-up, I don't mean to imply that "the market" is dictated by a single result. The $500 coin I'm referring to is a G/VG SVDB cent (type not single coin), based on all of the auction results for that coin in that grade. You might think that they are too common for that price. You might think they are too legendary to not sell for more. You're wrong. The market has determined the value and that current value is what it is. Of course any single result might be anomalous. That's why the market is really only efficient at pricing widgets.
The 'market' is affected by many things - supply, demand, politics, pandemics, trends etc. As a seller, these must always be considered. As a buyer, diligent research and patience will usually be advantageous. Have fun, it is a hobby. Cheers, RickO
People make this argument all the time, but it ignores demand. It doesn't matter if a US coin with 10,000 known sells for 5x more than a Colombian coin with 10,000 known. That is not "value" in Colombian coins. The price is higher because of higher demand.
Now, 50 years from now only Merlin knows which one will appreciate more. But that is not :"Market value" which is a current indicate of price not a prediction of future price.
I guess my fuzzy idea is that it feels like the trend is that the world is opening up. It would be almost unthinkable for a US citizen or European to move to Colombia 100 or even 20 years ago, but now it's relatively easy, and those people will collect Colombian coins. Or people will admire them more as the coins are better understood.
It could happen. People, including myself, felt that China coins were a value but 25 years ago. We were right because as China's economy exploded so did the price of its coins and stamps. However, to my mind that is different than saying that the market value was too low 25 years ago. The market value at the time included collectors as well as speculators and the price was correct at the time. And the new price is correct at the current time.
If I were buying for "investment", I would avoid 95% of the US market. But that is really speculation on future trends not a reflection of current ones. Mid grade SVDB cents have been a horrible investment over the last 20 years... but they've always been correctly priced for the market. And Colombian coins might seem like a bargain, but that doesn't mean they will outperform the broad US market moving forward.
I occasionally tell this story, I'll repeat it here. About 5 years ago I bought a rare Irish coin, an overdate with only 5 known. Mine was the second highest grade known. I paid $169, all in, in a Stack's auction. If that were a Bust Half variety, it was probably 6 figures. If it were a Morgan $, maybe 7. I sold it a year later for $240. There just way more collectors of US overdatesc than Irish overdates. The market isn't wrong about the coin. It just is what it is.
Actual selling prices are the only thing that matter. Increasingly, asking prices seem to be a part of the hunt for the greater fool. This seems to be the case throughout the field of collecting hobbies, not just coins.
The greater fools that buy these overpriced coins have more money than sense.
In the case of perceived bargains it just means there is little interest in collecting them at the moment. A good promotion by the "right" people can change that.
Reading threads like this just remind me how I’m glad to be a collector and don’t look at what I can sell a coin for before I buy it. For me it’s about finding the best looking coin that I can and that will cost more then dreck.
Successful BST with BustDMs , Pnies20, lkeigwin, pursuitofliberty, Bullsitter, felinfoel, SPalladino (CBH's - 37 Die Marriage's)
$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