My theory

HansMoleman

I am trying to get a better understanding on why grade has become so important in justifying high prices paid for common coins.

Is it possible there is so much intense competition for ultra grades of common coins because there are so many collectors creating the same sets from a limited amount of designs? If more collectors decided to collect less popular coins such as three cent pieces, prices for current coin designs would fall to reasonable levels. However, because so many people jump on the band wagon to collect Memorial Cents, Jefferson Nickels, Roosevelt Dimes, Washington Quarters, and Kennedy Half Dollars, prices for these coins remains high despite their high mintages. The only way to distinguish ones own set from those of his many competitors is to collect minor varieties and grade rarities. This applies to Morgan Dollars also. The future may hold a kind of VAM for other popular series also.

This idea is probably not original and may be written here from time to time. I apologize if it is often repeated here.

Conder101

Most collectors collect the more modern coins that they are familiar with from everyday use. Since these coins are very common such a set would be too easily assembled in circulated grade so most series are collected in Unc. In typical Unc condition though this is still very easy and there are a lot of such sets out there. How do you make your collection stand out among the crowd? You go up in condition and strive for better than the typical Unc coins, Now our circulation coins today are pieces of mass produced junk that are not exactly handled with kid gloves by the mint equipment so I will admit that in the top one or two points of Mint State these coins are rare. So now suply and demand takes over. You now have this hoard of people who want something to give their common coins bragging rights chasing the few cream of the crop coins. Naturally the prices shoot up because the market will support it. That is why grade has become so important on moderns. Will it hold in importance? I don't know but I suspect that if we ever do get design changes, after about 20 years or so the premiums will drop considerably. So will point out that their are significant premium jumps for top grade coins on the earlier series too but there would be a difference. After one of the modern series gets its design changed and enough time passes that it is no longer current in circulation interest in collecting it will drop some because people will be chasing the new modern series. But there will still be thousands of Mint State collections of that series out there. And as interest drops in the series there should be fewer people chasing those top pieces plus a glut of coins one grade down going begging. You don't have that in the older series now. The closest is the Franklin halves but I think as the current modern series eventually be come obsolete you will have quantities of Mint State coins available that make the number of Mint State Franklins look small, but with a similar collector base. Basicly the current Modern market but remove say 8 out of every 10 modern collectors from the competition. Can the prices still be supported?

MacCoin

Conder very well put. I do think people are getting tried of the crazy modern fab and you will see the buffs, mercs, SLQs, and Franks make the same high grade prices as the moderns are now.

crito

Can the prices still be supported?

I don't think modern collectors paying $8.50 for registry quality top pop PCGS MS67 Sacs are too worried.
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or the ones buying PCGS MS68 Roosevelt dimes for less than $20
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But if you paid 10X red book for a monster toned common date Morgan, be worried, VERY worried

Trime

HansMoleman,
I collect 19th century silver and nickel coins. Other people collect what they collect. You are giving advice based on your sense of value and concern for risk of putting money into coins that are highly priced for their established or potential population. You are concerned that they will be financially hurt by the process and encouraging them to think through their interests and select other series of coins which you believe should be interesting to them and have a better return on eventual sale. All this seems to be a logical train of thought but...this coin collecting thing-None of it really makes much sense to the real world.
I collect what interests me. It turns out that my interests are based on the type of reasoning you described in your post but my wife thinks I am crazy. Why in God's name should I be spending all of our money to purchase pieces of metal and send them to a company to wrap them in plastic and place them in a bank vault. I fantasize that I will some day bequeath a fantastic and valuable collection to an appreciative family but I know in reality that there are more rewarding places to invest money and that they will never have the interest that I doin my hobby. So, in truth I do it because I like it.
Maybe , we should give advise when asked: " What is the best series to collect for the best return on my investment? " "Will conditional rarities of high mintage coins retain value after everyone searched for them and the market turns to other interests?" ; " Why do you collect the coins you do?" or " Am I making a mistake and risking my childrens education by buying the coins I do?" ; " Can I make money buying modern coins, selecting the best specimens , send them in for grading and sell them to others to allow them to move a step up in a list of registered sets?" or more technical questions about rarity, varieties, grading, history, etc. I am used to giving advice and have a hard time resisting providing input to people who (I think) may not know what risks they are taking. Never the less, we are talking about a semi-rational pursuit which is supported by others with similar delusions. Maybe we should let others find their own joys. It is my belief that peoples interests in hobbies evolves with time- either they lose interest and their $ or they become more focused and sophisticated. In truth my most exciting days as a collector was when I was a boy sifting through rolls of circulated coins. I was a real collector with no risk but lots of fun!
Thanks for trying to help your fellow collectors but don't expect that your insights will be appreciated by all.
Happy Thanksgiving!

paigowjohnny

I wonder who paid to have those Sacs slabbed....somebody lost some dough along the way...

braddick

No- the original submitter, if he sold right away, probably did ok. It's the guy holding them next in line that lost out.