Market Psychology Question

CAlcazar

This is fairly long so consider this a warning.

I was wondering about this the other day. Now to explain some background I am a novice coin collector. By this I mean essentially that I collect a little at a time, trying to stay mostly with graded coins because I don’t yet have the experience necessary to make many grading judgments myself. So I am fairly new to this collecting fraternity.

Now, by contrast I am a pretty experienced sports card collector, meaning that I already have the ins and outs of that collecting business fairly within my grasp.

So with this background I was thinking about the striking differences in the two markets. In the Sportscard world similar to the numismatic one we have our own set of trends prices which are used both by collectors and dealers in much the same manner as many of you are familiar with. However where the two differ is in how these guides are used which brings me to what I was wondering about.

I have been scanning ebay for coins of interest, mostly Canadian cents and Franklin Halves. For the Franklins I use the little Price Guide on the PCGS site as a reference point. Now I know this is simply a guide but what I noticed is that it is not unusual for the prices to be pretty close to right on or below what the real ebay prices were finishing.

For example I purchased a 1957 PCGS MS64 Franklin for $13.50. Now the PCGS guide has that one at $16 in MS64 condition. I basically wanted an example so I could see an example of a Mint State Franklin so I was willing to pay a little more than maybe what’s the real value.

But what caught my attention is that when I collect my hockey cards the guide is usually nowhere close in the Sportscard market. Now since I have been collecting for almost 14 years I already know that this is because the guide in the Sportscard business is simply a vehicle to provide some standard starting point allowing for the dealer to mark down the price from the full guide giving the customer the illusion they are getting a great deal, when in reality they are likely paying what the real market will bear.

With this market it is not unusual for me to purchase a card valued at $200 for less than $40-50 with absolutely no defects or questions, however if a coin valued at $200 was suddenly selling for $40 an experienced collector would have serious doubt as to why this was taking place. Perhaps there is a defect not being mentioned, maybe the coin is overgraded, fake, altered, or one of many other possibilities.

So why the big difference? Are coin collectors just wealthier and more willing to shell out nearly full guide for the coins they desire? Or are they overpaying? I look forward to reading your thoughts.

cladking

It's probably mostly tradition. It may also be related to the fact
that coins have experienced no large price drops recently so the
guides tend to be more up to date. There are those who would
argue that the coin guides are not accurate.

TomB

In addition to what cladking has already mentioned it may have to do with competition. That is, there are several web sites that are devoted to the prices of coins and there are also several in print sources for coin prices. Therefore, you can always check other sources for prices and might be able to tell fairly quickly if a source was completely out of touch with reality. Also, there are many auction houses that have web sites and some of these sites list auction sale prices. Again, this is a reality check for certain coins. In a way, I think there is just more transparency in the coin market.

jeffnpcb

It is a roller coaster ride for seeing retail value and selling value. If you take a MS-64 Morgan that has a retail value of $50.00, but sells for $2800 because it is highly toned, it throws off the curve. The PCGS price guide is not reflective of the market. It is high for regular grades and does not represent the broad spectrum of prices. If your into Franklins,the FBL designation is the way to go,regardless of grading companies, yet the San Fransisco mint is the tough one in the early '50s. Regardless of the price guides, go with the coins you like, but don't get caught in a bidding war. There is another one out there to take the place of the one you lost.
Find a good dealer and see if you can get some insight on the grey sheet prices of the coins you are interested in, follow auctions often to catch a market trend, sit back and enjoy the ride!

CAlcazar

Cladking and TomB: I understand that no guide can ever be fully accurate but where my questioning comes from is why the coin industry (collectors and dealers) itself tends to pay closer to the trends value than in other collectibles. If the $200 hockey card in my example can be aquired for $40 reasonably then it would "seem" that the guide is overstating the value. However in sportscards this is not the case as it might be in coins. If the guide price was ever adjusted to $40 to reflect the prices being paid when the item is $200 then the actual prices attained on ebay and other places would likely fall into $8-10 range. The psychology of the sportcard collectors is to take the "guide" value and deduct a large chunk of it to arrive at the actual market price.

However it seems that this is a different story for coins were examples of many coins can yield numbers much closer to the trends price for the grade if nothing is out of the ordinary.

ANACONDA

Dude: to winnow out 99% of the readers in this forum, keep posting long threads like that.

Coin people are like bird dogs running over here, over there, go, go, go.......find a good deal, gotta find a rip, get there before someone
else, go, go, go, go! Someone may buy a stunner behind their back while they're into the second minute of your thread! GO! GO! GO!

I happen to like guys like you with a brain, a good question and who can type 70 wmp. You're a thinker, i can tell.

All right, on to your question.

In the coin world, retail and wholesale overlap more than in most other areas. There really isn't wholesale and retail.

Everyone thinks they can and should buy like a dealer. 90% of the guys who walk onto a show room floor have a post office box, a business card and a tax number. Coins don't go bad, so we're all dealers. (Insert winkie here.)

The key to getting good deals is how much do you spend on coins, how much do you spend trying to buy them and do people think you're a bone-head?

Setting that aside, essentially, here's how it breaks out in my bone head (this is the less than three minute over view):

Ugly and generic coins are generally worth around Bluesheet or CCE (trading network for coins, sight seen and unseen)

Average coins are generally worth greysheet.

Really nice coins are worth Numismedia and PCGS prices and

truly spectacular pieces are worth many multiples of any sheet you care to use.

I recently sold a coin for about 100 times Greysheet bid. I paid 83 times greysheet bid for the coin.

(Cards are not like coins. There are no spectacularly toned baseball cards so cards are more like paper money.)

There ya' go!

adrian

CAlcazar

Thanks for the info Anaconda,

That's more along the lines what I was looking for, a pretty clear explanation.

So basically I can conclude that the price philosophies differ because coin guys are crazy and have a little too much expendible income.

On the other hand maybe long-time card guys like myself are just used to being cheap and treating the guides as a good laugh before paying the real price.

Maybe that explains why there is only one million dollar baseball card while a few coins have already topped this mark.

You're definately right about there being no toning in cards. I don't think it would have the same appeal to the collectors as usually sportcard "toning" involves a further reduction in the price we pay, not the other way around.

I knew you hard-core coin guys had it screwed up all along.

Thanks for the help.

sinin1

If you have just started collecting and buying on eBay then be warned!!!!



Not all MS 64 Franklins are alike!! A MS64 Franklin in a PCGS slab maybe a MS65 or MS66 or MS67 in some other companies slabs. On the otherhand an ACG or NTC MS 64 maybe a MS61 or MS62 PCGS !! Big differences when looking at price guides.

Strickness in grading ?? some may disagree ??

PCGS => NGC => ANACS => ICG >> SEGS >> PCI >> NTC>>ACG

also these are opinions of graders and a 64 graded today could come back different numbers from the same service on different days. Coins are cutthroat.

ANACONDA

"I knew you hard-core coin guys had it screwed up all along."

We have way, way more than just "it" screwed up.

Hang out in here a while and you'll know what i mean.

CAlcazar

Thanks for the warning sinin1,

This has proven to be sound advice, as I have stated I am cheap so I basically researched everything before I spent a dime on anything. The only Franklins I have are PCGS graded copies or raw copies that I liked and didn't exactly break the bank on.

You last statement also seems to hold some water, about as cuttroat as any hobby I've seen.

anoldgoat

I'm glad someone asked that question.

My $2 worth, calculated per word, not worth.

I came over from sports cards also (mb, not collecting). I collect baseball traded sets and Grant Hill.
Set prices on Ebay vs "book" has a faily small spreed as opposed to singles which could have 90% spreed, depending on popularity.
Iv'e always thought this had something to do with younger collectors being a little impatient to sell a card (younger collectors are not that into collecting sets (especially unopened)). Whereas coin collectors tend to be older.

sinin7 - Are you a programmer? If so add spell checker to this site.

CAlcazar

anoldgoat,

I think you may have something there with the age thing. I think also that in all seriousness disposible income also plays a role. While coins are not completely limited to younger people (I'm 19 myself) the prices of some of some coins do limit them to those who are successful in business, are independently wealthy or simply budget carefully (more my category). Although not always these characteristics seems to come up more frequently with adults rather than young children or teenagers.