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Today's Coin Market -- My Personal Investment Perspective
Stuart
Posts: 9,761 ✭✭✭✭✭
The following is an expression of my own opinion, and is intended to stimulate some honest, healthy and forthright discussion. It is not intended to be incendiary or to poke criticality at anyone or any collecting specialty group... Let's see if we can get a constructive and non-defensive discussion started...
I personally think that investing in the new 21st Century Coin market will share some aspects that have evolved during recent years in the stock market, with rotating hot & cold market sectors.
I think that today's oversold market sectors include coins that are being heavily marketed by some of the the grading services (i.e. Registry Sets) to encourage people to become overly condition census conscious -- with the effect of influencing them to pay phenomenal and (to some) unjustified markups on condition rarities of common coins.
I feel that as a result people are overly focusing on condition rarities of otherwise very common coins, rather than date, type or series rarities. The key here is that the grading services are the ones who make the rules because they determine and assign the grades to the coins (like MS68/69 or PF-68/69).
I applaud the grading services' very successful marketing approach which promotes and appeals to our very competitive nature in an environment that thrives in America today, in gambling & competitive sports, etc. They are turning passive collectors into active competitors, and are helping to keep score of the "winners" through registry sets. To use a chess analogy, that's OK as long as the pawns and knights understand the role that they are playing, enjoy fighting the battle, and know who the King, Queen, Bishops & Rooks are...
I consider myself more of a "classic collector" who enjoys the hobby, and will continue to collect scarce types of coins in pleasing collector grades that are affordable to them (VF-XF Draped Bust, AU-55+ Capped Bust, and AU-55 to 58 Seated Liberty, MS-63 & 64 PL Morgans, etc.
I welcome others' comments and opinions on this. Please remember that I do not intend for this to be critical, although I know that it will be controversial and hope to stimulate some useful discussion.
Thanks in advance for your consideration and your feedback!
Please don't shoot the messenger.. But if you decide to, please shoot high and aim low, to only wound and not kill me!
I personally think that investing in the new 21st Century Coin market will share some aspects that have evolved during recent years in the stock market, with rotating hot & cold market sectors.
I think that today's oversold market sectors include coins that are being heavily marketed by some of the the grading services (i.e. Registry Sets) to encourage people to become overly condition census conscious -- with the effect of influencing them to pay phenomenal and (to some) unjustified markups on condition rarities of common coins.
I feel that as a result people are overly focusing on condition rarities of otherwise very common coins, rather than date, type or series rarities. The key here is that the grading services are the ones who make the rules because they determine and assign the grades to the coins (like MS68/69 or PF-68/69).
I applaud the grading services' very successful marketing approach which promotes and appeals to our very competitive nature in an environment that thrives in America today, in gambling & competitive sports, etc. They are turning passive collectors into active competitors, and are helping to keep score of the "winners" through registry sets. To use a chess analogy, that's OK as long as the pawns and knights understand the role that they are playing, enjoy fighting the battle, and know who the King, Queen, Bishops & Rooks are...
I consider myself more of a "classic collector" who enjoys the hobby, and will continue to collect scarce types of coins in pleasing collector grades that are affordable to them (VF-XF Draped Bust, AU-55+ Capped Bust, and AU-55 to 58 Seated Liberty, MS-63 & 64 PL Morgans, etc.
I welcome others' comments and opinions on this. Please remember that I do not intend for this to be critical, although I know that it will be controversial and hope to stimulate some useful discussion.
Thanks in advance for your consideration and your feedback!
Please don't shoot the messenger.. But if you decide to, please shoot high and aim low, to only wound and not kill me!
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
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Comments
I don't know about your chess play, but, to me those kinghts are equally important to the bishops AND the pawns are probably THE most important pieces on the board of any chess game. Every one of them has the ability to become a queen at the end of the day
Wondercoin
The hobby has enough room for all types of collectors. It is a great hobby and past time. I have a few registry sets, and I'm in for the fun. My Mercury dime set is made of mostly lower grade unc in the tough stuff, higher grade in the common, and for the keys and and overdates, they are circulated. I will never make it to the top of that list, and I simply don't care. I am more than happy with my set. I will make some improvements and upgrades as time goes on.
Tony
President, Racine Numismatic Society 2013-2014; Variety Resource Dimes; See 6/8/12 CDN for my article on Winged Liberty Dimes; Ebay
I have the # 1 late date Walker set registered with PCGS.... But I have a couple of coins in the set that it wouldn't be hard for me to replace in a higher grade if I wanted to, because they are not that expensive compared to some of the other coins in the set. But since I only collect originally toned coins in this series, I wouldn't part with a lower graded coin just to have that "POP" # 1 condition rarity assigned to the coin that I have in my set just to say I have the "highest graded" coin of that date. Although it might be desirable as long as the coin had more "eye" appeal, than the coin I presently have.
It will be interesting to see some of the other comments made to this thread!
Ed
dragon
at the end of the day?
Camelot
At present I don't do the registry thing because I don't have any set either completed or slabbed to any significant extent. If that happens maybe I will register my sets. I don't think that modern condition rarities are a good buy for the long run, but whatever turns your crank is OK by me.
at the end of the day?"
Bear, as my may know, occasionally, the pawn turns into a knight, bishop or rook at the end of the game. Perhaps these are the "male" pawns you refer to
Wondercoin
Expensive coins are too expensive and cheap silver & gold coins are too cheap.
In other words, rare coin prices have been advancing faster than bullion, but now I think we will see bullion catching up with rare coin prices.
Imagine if you took all of the coins you own out of their holders (slabs, 2x2s, albums, everything) and put them into a cloth bag, and put your hand in the bag, and ran your fingers through the coins for about 5 minutes, mixing them well.
Then submitted all the coins for grading. I imagine you or I would not lose very much money, because most of the coins we collect would still be in the same grade. Oh, sure, the proofs would be hurting, but they're still mostly pre-1964 proofs and many are pre-1900, so they're still desireable coins, not like a post-1965 proof coin, which if it has a nick, hairlining, or any wear it's worth a couple times face, maybe.
People who collect modern Registry Rarities would be devistated by jingling their coins. In such cases, the plastic around the coin is worth a large percentage of the "value", if for nothing else but protecting the coin. Doesn't mean there is not market and event risk to both of the two collectors' holdings, just that the different kinds of coins have different kinds of risks.
There are indeed parallels to the stock market, and I consider the "top-pop" market similar to the speculation bubbles that occurred in markets for biotechnology and internet stocks a few years ago, it became so profitable to open a new one and get money thrown at you that too many companies went public, people lost interest in long development timelines, and the markets crashed.
Meanwhile, the stock values of old tried and true companies were brought down too in the ensuing bear market, but have weathered the storm and are coming back strong, because they had inherent value that was not a function of "popularity"
Liberty: Parent of Science & Industry
If a registry person buys a coin for a million bucks thats worth 99 % less without the grade on the plastic, thats o.k. with me as long as he loved the coin and not just the number on the slab.
Les
What you say may be true in some sets, but in most registry sets there are significant weight differences and one high grade common date coin simply doesn't impact the set rating very much at all. For example:
Legend MS Trade $ Set
Note that the only upgrade possible is the 1878-S from MS67 to MS68 and the fact that this $75,000 upgrade would add exactly 0.01 to the set rating. And that's for only an 18 coin set - imagine on a long set like the Lincoln Cent how small a contribution a coin going from MS67 to MS68 would impart. The idea that someone is paying $20k to receive a 0.001 jump in the registry is just a bit ludicrous.
I submit that [in most cases] the large prices paid for grade differentials is simply a matter of quality conscious collectors really wanting a certain coin because of the quality of the coin. Of course, there are always the exceptions, such as the infamous 1963 PF70DCAM cent. In some cases, lunacy knows no bounds!
If a registry person buys a coin for a million bucks thats worth 99 % less without the grade on the plastic, thats o.k. with me as long as he loved the coin and not just the number on the slab.
Les >>
Great point!
<< <i>In high level chess, pawns are very, very rarely promoted. >>
Yes, and only because one player forfeits if he makes the mistake of allowing his
opponent to get within five moves of a promotion. Ultimately this will be the deciding
factor in most games.
I've beaten three different masters in chess because of an unusual strategy. In fact,
only two have beaten me. One used a pawn attack the likes of which still makes my
head spin. There was no way to attack any of his pawns without suffering an unaccept-
able trade and they just kept coming!!! ...and with all those other pieces right behind
them. This is in essence the weakness of the powerfull pieces like the queen. Sure it's
equivalent to nine pawns but her huge strenght makes it vulnerable to every piece on
the board. While it can move at will its huge value makes it meaningless against a pawn.
It is also grossly outnumbered.
Just like in real life the king can often be the game and the queen has the real power. And
getting a move ahead will win the game in the end.
<< <i>I think that today's oversold market sectors include coins that are being heavily marketed by some of the the grading services (i.e. Registry Sets) to encourage people to become overly condition census conscious -- with the effect of influencing them to pay phenomenal and (to some) unjustified markups on condition rarities of common coins.
I feel that as a result people are overly focuing on condition rarities of otherwise very common coins, rather than date, type or series rarities. The key here is that the grading services are the ones who make the rules because they determine and assign the grades to the coins (like MS68/69 or PF-68/69). >>
I also mostly disagree with your quote.
Note that I use the term MOSTLY.
Why?
Let's look at the history of this condition census rarity conciousness:
Firstly; it was the coin collecting public that started the craze towards condition rarities in coins, not the grading services. It started long before the grading services got ahold of this as a marketing concept e.g. the registry set concept. Now, why has the coin collecting public gone this way? Simply because date and mm collecting of complete sets (a la Eliasberg) has become too expensive for most collectors to pursue. Type collecting as a result has been reborn but instead of collecting just nice type coins the coins being collected now have to be the finest or near the finest available!!
Secondly; the movement towards condition rarity collecting mirrors a worldwide obsession for the best and the finest of whatever is being collected. Antique cars, postage stamps, artwork, furniture, homes that real people live in, movie cells, you name it. Lets face it fellow collectors, we are only following the rest of the world!! The grading services are in fact, LATE TO THE PARTY!!!
Thirdly; The movement towards condition rarity collecting is currently collecting based on quality. Quality is king/queen and quantity is booooring! In the 1960's and 1970's, quantity was king and quality was booooring!!! Things do go in cycles!!!!
Fourthly; Long before grading services were born, I remember competing against the best of the condition census collectors in lincoln cents in the late 1960's and early 1970's. A small but powerful enough group of cent collectors wanted the best of the best in lincoln cents back then!!! True, it was a small but dedicated collectors of condition rarity coins that went against the convention of quantity is more and quality was only for those who could not afford quality!!!!! What simply happened since then was that lincoln cent condition rarity condtion collecting went into relative hibernation until three years ago.
Fifthly; In the mid 1990's, I shadowed Knoxville as much as I could afford, and went for as many of the condition rarities I could get my hands on. I simply wanted the best. At that time, the ruile of thumb was not to pay more than 3x the next lower grade, a little less than 3x for moving up to a minor grade e.g. MS62, MS64 and MS66. The grading services did not have any registry set marketing and was still more focused on the mass grading of generic graded coins as that was still the bread and butter of the grading service fees. In those days, the collecting public was not yet fully focused on condition rarities but we could see that the day was coming when condition rarity collecting would become mainstream.
Now, condition rarity collecting is mainstream and is only going to get stronger. But I still try to follow the old adage of 3x the lower grade maximum.
When will we reach the top? When guys like wondercoin and tradedollarnut throws in the towel and ceases buying at the inflated levels or more obviously, sells out!
I say we are still 2-3 years away from that point.
I really appreciate the quality of your toned collector "culls" -- especially those dingy brown & blue pastel toned coins with concentric toning....
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
Actually, I'm tired of predicting when the high grade modern craze is gonna blow up. It may happen, it may not. There have been a lot of collecting fads ever since US coin collecting started gathering steam in the 1860s. If there is ONE long term trend, I would say it is that absolute rarity never goes out of style, and I am not talking about condition rarities here.
For what it's worth, the comic book market over the last few years has also seen an explosion in prices of condition rarities as well. I don't know squat about sports cards but it wouldn't surprise me if the same thing is going on there too.
So, this may be a permanent thing or not, but like Stuart, I will continue chasing eye appealing 19th century coinage in AU/MS.
just have me slabbed. Use the money saved, to buy a coin in my memory.
Camelot
<< <i>for the record I want to be KING at the end of the day!
One way or another we're all waiting for that.
Either that or we can find real power as a pawn.
I think that today's oversold market sectors include coins that are being heavily marketed by some of the the grading services (i.e. Registry Sets) to encourage people to become overly condition census conscious
i think you may be putting the cart before the horse by thinking that a grading service such as PCGS creates markets. i tend to believe that they respond to a need in the market place. it seems clear that the majority of MS68/69 or PF-68/69 graded coins are modern coins. those are simply collected in high grades. the same with bullion coins and modern commems. as someone else pointed out, it isn't unique to this hobby to seek the best, that's universal.
al h.
collecting quality coins that, hopefully will appreciate over time.
I imagine there will always be someone looking for better coins so if the time should
come that Social Security and my 401 won't cover expenses in my old age, I'll have
something of value I can sell to pay my nurse.
In the meantime, I'll have something beautiful assembled I can fondle.
What chess masters have you played and beaten, were they USCF rated masters? Your chess vocabulary doesn't sound like you're a serious player.
dragon
Competition and diversity are good things. I can understand the surge in chase for high grade moderns.
As a new collector without a background in the classics, I can purchase a classic morgan take it home a show it off and not get a real response. On the other hand, I can bring home a high grade modern and get oohs and ahhs.
Cladking: I didn't make this statement early in the thread by accident. An accomplished Chess player knows the pawns ARE the most important piece on the Chess board. Nearly nothing is more fun than developing iron-clad pawn position in a chess game and using it to slowly break your opponent down
By the way, ANYONE just PM me if you ever desire to play a game of chess during a coin show - I'll make time!!
Wondercoin
Interesting. Tell us, dizzlecc, how knowledgeable about coins are these family members that ooh and ahh over your high grade moderns?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
befor the chess game began.
Camelot
dragon
>>
You're way out of my league. I never played at much better than A rated and NEVER actually
got rated. Had an extremely aggressive game that shocked better players and had the oppor-
tunity to play four different masters. I beat two in my first game with them the third required
a few dozen attempts to beat and he turned down ALL future requests to play me. The fourth
annihilated me as would be expected by all of them.
I'm rustier but if we get a chance...
Dragon: I've never played a grandmaster.
...and I never beat anyone that I underrated.
Dragon: Anytime
Wondercoin
Camelot
<< <i>Dragon: Anytime >>
Wondercoin: You can challenge him all you want but you'd better not make any bets. You have been warned...
<< <i>I didn't make this statement early in the thread by accident. An accomplished Chess player knows the pawns ARE the most important piece on the Chess board >>
Yep, that was first quoted by Philador about 300 years ago....
jom
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
If Dragon is a Grandmaster, I'll lose the honorable way
Wondercoin
<< <i>Boy, am I ever sorry that I used the chess analogy in my post to try and make a point...
OK. But it seems to me that I just castled and put you in check.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
Instead of complaining, why not simply respond in kind to our posts instead of ignoring tradedollarnut, keets, myself, etc. who have tried to keep this thread on track whether we agree with you or not.
Are the grading services and registry set competitions responsible for the huge premiums paid for the pop 1 coins? Granted there has always been a desire to own the best but the idea that someone would pay 20x ~ 100x for a 1 point difference in grade is as far as I know a relative new thing in numismatics.
Is the demand for these coins and the premiums paid driven by a desire to own the very best? Yes, but when what separates the best from the second best or the third best is a few miniscule marks paying a 20x ~ 100x premium causes me to question the sense of value the would justify those prices.
To repeat the broken record question...should 99% of a coins value be tied to a couple of miniscule marks? For some the answer is yes and as long as they're spending their own money, understand the why/how they have arrived at their value assessment AND the risk involved (possibly 99% of the coins value) when placing that much emphasis on very minute and subjective judged differences more power to them.
Now who goes first, black or red
<< <i>
Are the grading services and registry set competitions responsible for the huge premiums paid for the pop 1 coins? Granted there has always been a desire to own the best but the idea that someone would pay 20x ~ 100x for a 1 point difference in grade is as far as I know a relative new thing in numismatics. >>
Also new to numismatics is the internet. It's 2003 and time don't fly it bounds and leaps.
<< <i>
Is the demand for these coins and the premiums paid driven by a desire to own the very best? Yes, but when what separates the best from the second best or the third best is a few miniscule marks paying a 20x ~ 100x premium causes me to question the sense of value the would justify those prices. >>
You may be making a mountain out of a molehill with semantics. Whatever you call these
differences, a layman can spot them with a few minutes of instruction. If you don't believe
it, try it. They may pick the wrong coin a little more often when they are close, but they can
quickly see the differences and I've tried this several times. Don't use proofs.
<< <i>
To repeat the broken record question...should 99% of a coins value be tied to a couple of miniscule marks? For some the answer is yes and as long as they're spending their own money, understand the why/how they have arrived at their value assessment AND the risk involved (possibly 99% of the coins value) when placing that much emphasis on very minute and subjective judged differences more power to them.
>>
...and the broken record answer is always that the undergrades are dramatically underpriced
due to a unnaturally low demand. ...which is in the process of exploding upward.
I play a fair to middling game of checkers. It's very much like counting moves in the end game
of chess so it's not my favorite, but I do play.
Oreville, Tradedollar & Keets: Oreville thanks for your post. I did not know that you were expecting a response from me, but now that you've asked I'll prepare one for later today -- when I get a chance to revisit the message forum.
By the way, I noticed that you felt that I was "complaining". That's not the case. I was speaking my mind and asking for others' opinions. I try to write these posts as objectively as I can, but there are alot of very defensive people out there who take the approach of ready, fire, aim and are very quick to attack others' opinions.
I'll get back to the thread later today and will respond to your posts. Thanks for taking the time to reply.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
differences, a layman can spot them with a few minutes of instruction. If you don't believe
it, try it. They may pick the wrong coin a little more often when they are close, but they can
quickly see the differences and I've tried this several times. Don't use proofs."
Hold up....in one thread we're told how difficult it is to spot these differences and that only an astute collector can differentiate between these coins but now it only takes a few minutes of instruction.
"...and the broken record answer is always that the undergrades are dramatically underpriced
due to a unnaturally low demand. ...which is in the process of exploding upward."
Undergrade or overgrade misses the point. The differences are minute and the huge premiums paid base 99% of the coin's value on those miniscule, minute differences. But even if you double or triple the undergrade price you're still dealing with 30x ~ 50x one point premiums when you're starting with a 100x premium. And how far down the line do you push that concept.
I'm from the school of thought in which the value of a coin is made up of a number of major components. Historical significance, absolute rarity and preservation. Preservation, especially differences in preservation that are reflected in one point differences in grade, are never going to account for anywhere near 99% of a coins value in my formula for accessing value.
to be large. Obviously two coins can by chance be close, but typically there
is a wide spread in quality.
I really like the proofs and the differences can be learned to be seen and ap-
preciated, however there is a narrow range in quality for these. With some
dates like the '84-S quarter it takes a little practice to tell a coin in the 5%ile
from the 95%ile.
<< <i>I personally think that investing in the new 21st Century Coin market will share some aspects that have evolved during recent years in the stock market, with rotating hot & cold market sectors. >>
for me, "invest" & "coins" are mutually exclusive. i do not buy coins w/ any concept or the slightest concern for financial profit whatsoever. in fact, i buy coins full expecting to lose value, because for me, the trade-off of owning something which i truly love & can enjoy for years, no price-tag can be placed on that.
what i'm saying is that if the only way you can measure your success as a collector is in dollars in cents, you are a failure as a collector.
i have coins that i paid 10x mkt-value, & will never recoup my financial investment, but i don't care. otoh, i have lucked out & sold coins for multiples of mkt-value, not because i intended to, but because that's just how it worked out.
<< <i>I think that today's oversold market sectors include coins that are being heavily marketed by some of the the grading services (i.e. Registry Sets) ... I feel that as a result people are overly focusing on condition rarities of otherwise very common coins, rather than date, type or series rarities. >>
the problem w/ your premise is that people are not focusing on condition rarities, but rather "plastic rarities". pop-top jibber-jabber that i see in c-w, etc, just does not reflect reality, when in fact, nobody, BUT NOBODY, not even the plastic co's themselves can differentiate ms-68 & ms-69 w/ even remotely reasonable consistency. the grade as it pertains to coins is meaningless in situations, because it actually pertains to "population control".
<< <i>I applaud the grading services' very successful marketing approach which promotes and appeals to our very competitive nature >>
if the playing field were level, i would too. but for the reasons i just mentioned, it is not. 3d party grading is supposed to be unbiased grading, but how can it be unbiased when the graders realize they must control the population of pop-top coins in order to maintain a premium for pop-top coins? therefore, it is not possible for 3-p-g of pop-tops to be unbiased. this is my biggest complaint re: the registry crap that goes on. 3-P-G IS NOT UNBIASED where it pertains to pop-top.
<< <i>They are turning passive collectors into active competitors, and are helping to keep score of the "winners" through registry sets. >>
but as i've said though, the "coin-collecting" aspect of the competition is negligible. it is a competition that involves LUCK, not SKILL. ie. if you are the lucky sucker that the plastic co. decides to throw the bone to today, you win ..... at least until the next bone is tossed out.
the difference that winning at chess depends primarily on skill, winning at the registry set game depends primarily on luck.
there is another anology i would like to mention, but i know it would get me banned, so that's where i'll leave it.
K S
Just as grading at some level is discreet so too is the ability to play chess.
A C-rated player will Always beat a beginner, a B-rated player will ALWAYS beat
a C-rated player, An A-rated player will Always beat a B-rated player, an expert
will always beat an A-rated player, a master will always beat an expert, and a
grandmaster will always beat a master.
They rarely even play out of their class because neither the winner nor the loser
will learn anything from the dramatic win. Such is chess; very much like grading.
Except there can be NO luck in chess and each player is entirely in control of his
own destiny.