'Frontrunning' coins

Dahlonega

Used to be in the old days a group would get together hype a series/grade...buying before the coins went up selling before they went down...the collectors and underinformed would be left with the high priced coins
I suspect this still occurs but I don't know...if so, it would seem to be bad for beginning and intermediate collectors and unethical at best. Any thoughts of what may currently be 'in play'?

MrEureka

it would seem to be bad for beginning and intermediate collectors and unethical at best

I understand the first part. Yes, it's bad for the "end users" paying the big prices. But please help me understand why it's unethical.

MrEureka

One more thing. What you have described is not "front running".

jbsteven

BUY TONED COINS!


is it working?

FC57Coins

JBS:

In a way that's a good example. With all the hype that you see about toned coins, many marginal and substandard toned coins are getting hyped to newer collectors as monsters and they're getting very high prices. I wonder what the market will do when people realize that in fact these coins that are being hyped are pretty much common coins with a little bit of oxydation on them. I'm not talking about the monster gems here. I'm talking about the stuff that knowledgeable toned coin people will toss aside like pocket change.

Dahlonega

True not exactly front running in the stock market sense but, I didn't have a better word for it. What is the proper term? The scheme seems unethical to me because it requires collusion and preys on the underinformed and/or on the neophyte/intermediate collector. I have no qualms for any loss to investors in the coin market but, it bothers me that true collectors may bear the brunt of the loss and forgo the hobby. Again just my opinion and I value yours.

mercurynut

I will stick to my blast white coins and let all the Monster Tone collectors pay way too much.

Nic

How about 2 1/2 Indians, especially the 11-d ? K

MrEureka

True not exactly front running in the stock market sense but, I didn't have a better word for it. What is the proper term?

"Pump and dump"

eagle7

If you fail to exercise due diligence, whether it is from not looking at all the toned coins in a given venue for sale, or a little bit of snobbery which causes you to buy from only one seller because "they are the best" you will spend a lot more money than someone who works hard and looks everywhere. Toned coins are used in this example but it will apply to any area of the coin market. Reading and the school of hard knocks are also very good teachers. If you do your proper homework, you will be shielded from most problems in this area. I dont think frontrunning as such exists in the coin market, but elitism and snobbery and laziness and people willing to exploit these traits exist in record numbers in today's coin market. It does not matter how wealthy you are, you can still pay too much for something. Beware and do your homework.

khayse

front running

Sounds close to what you are describing. Instead of stealing from your company, you're stealing from your customers.
Instead of the almost guaranteed score you would get by buying or selling right before your company does, you have
an increased likelihood of a score based on whether your customer believes your advice.

>But please help me understand why it's unethical.
Oh, boy. It unethical because you're getting a bunch of people together to all tell the same lie to customers so
that the customers will be more willing to believe it so that you can achieve greater profit.

Anytime you not only lie but get other people to tell the same lie you need to double check what you're doing.

-KHayse

MrEureka

Anytime you not only lie but get other people to tell the same lie you need to double check what you're doing.

Agreed. But is it a lie to tout a coin that you REALLY BELIEVE is undervalued? Of course not. If you and your buddies happen to own some of those very coins, does that change anything? I don't think so. Unless you're lying, which you're not.

RYK

Andy beat me to it:

PUMP AND DUMP

(Very common practice in the 1999-early 2000 stock market involving tech stocks)

I have no idea what series or type of coin is presently involved. It seems like the coins that I collect are genuinely scarce and in demand. You cannot seem to locate them at any price.

stman

<< <i>I wonder what the market will do when people realize that in fact these coins that are being hyped are pretty much common coins with a little bit of oxydation on them. I'm not talking about the monster gems here. I'm talking about the stuff that knowledgeable toned coin people will toss aside like pocket change. >>



A little bit of oxidation? Pocket change? Hello earth to Frank. BTW, I already got rid of mine.

291fifth

I heard a rumor about a year ago that an attempt would be made to promote very high grade Shield and Liberty nickels. I don't know if it ever happened..or will happen.

DaveG

I don't know the coin market either, but as a collector I would be concerned about any area of collecting that's receiving a lot of attention in the market place, such as Registry sets, toned coins, etc.)

On the other hand, I thought collecting Morgan dollars by VAM variety was strange when I first heard of it, and now it seems to be a well established pursuit.

I guess that in general, I would be wary of any series that showed continuous price increases in the Grey Sheet or Trends. For example, if prices for Saints had been stable for the past year or so, and suddenly, they started increasing in price month after month (with no increase in the price of gold), I would be concerned that they were being manipulated.

By the way, how's the market for C- and D-mint gold? I understand that that market can be very variable over a year or two time period. Is that a market that is susceptable to manipulation?

roadrunner

Pump or dump....or front running....I'd call it unethical. The entire business world operates on that standard today. If you can get away with it....it's just business. It's not unethical until the NY State Attorney General says it is. Once you get caught, then it is deemed
unethical.

Part of the hype today is to come out with a book, stir the pot a bit, and them dump. There have been a number of gold books written in the past few years, and in many cases each one helped to ignite a series or fan the flames.

Do your own research and studies, even consult the often-bashed POP reports (at your own peril of course) to help make decisions on what's reality and what is hype. The answer is not always clear.

roadrunner

Bear

If you purchase quality truly scarce coins in clean, pleasing condition for what every grade

you prefer to collect, then you should be OK thru the ups and downs. Nice looking coins are getting very

hard to find with the increasing collector base. Its mighty hard to run Seated Liberty, Barber and Bust material

if you cant assemble large quantities of them. As for Moderns, there are a number of truly scarce dates and

denominations, but you have to be able to seperate those from the artificially scarce high pop tarts.

DaveG

On the other hand, if you're a coin dealer, you do need inventory to sell.

Here's a scenario - you get interested in a coin series, decide to write a book about it, and, because you know that once the book is published customers will come to you to buy these coins, you go out and accumulate some inventory. However, because the series you wrote about isn't Morgans or Saints, your very act of accumulating inventory pushes prices up and creates "buzz" in the dealer community, so other dealers buy some of these coins. Then, when your book comes out, collectors buy the coins and push prices up higher still.

Then, a year or so later, your book is no longer new, the new collectors attracted to the series have most of the coins they want, so purchases of these coins fall, other dealers no longer want to hold inventories of these coins, so they drop their buy prices and prices for the series start to fall.

Is that "pump and dump" or hyping a series? I guess that it is.

On the other hand, if your book adds to the knowledge base of the collector community, I'd say it's a good thing. After all, I'd guess that few people collected Morgans by die variety before the VAM book came out and now, I understand that some of those varieties command high prices. Would you call that hyping a series?

Edited to add: By the way, I'd say that the dealer who decides to write the book about the coin series could be said to be engaging in "pump and dump", while the dealers who decide to add to their inventory of these coins because of the "buzz" created by the forthcoming book can be said to engaging in "front running", because they are buying in advance of their customers.

Dahlonega

'Pump and dump' even sounds obscene...Scoundrel's are a blight on a wonderful hobby.

MrEureka

Its mighty hard to run Seated Liberty, Barber and Bust material

Think back to 88-89. The promotion of that material was every bit as aggressive and successful as anything done with more common coins in the past few years.

Bear

Andy, I was refering to 2003 not 1987. But if we were to somehow return to those days or yore,

you would be quite correct.

MrEureka

Andy, I was refering to 2003 not 1987.

It would be even easier to run those coins today than it was in 88-89. The pops are way higher now. Makes it easier to quietly build a big position.

kamehameha00

<< <i>I will stick to my blast white coins and let all the Monster Tone collectors pay way too much. >>




Ditto,I like toned coins,but sometines they go for ALOT more than what most people would pay for.

Dahlonega

Dave G. I'll try to answer some of your questions. Many books from large cents to Dahlonega gold have been published over the past 30 years probably benefiting the author to some degree but, if it's because he or she stimulated our interest and increased our enjoyment with historical info, factual analysis, etc. I think that's the legitimate way to increase the base of collectors for that series. To me that's not pump and dump. Unfortunately in Dahlonega gold a lot of the coins were 'processed' to achieve a better grade and therefor a higher price than I think they deserve. So I think the coin doctors, grading services and buyers are all partly responsible for the price increase. But, original coins can still be found for relatively modest premiums in circulated grades and this may offer opportunity for the savvy collector of this series.
But, I'm especially wary when a series is suddenly promoted that has significant product available...to the extreme I note the telemarketers on tv/cable that are touting common product at uncommon prices. Tough to explain to a young or new numismatist they've been had but, hey it's a great and enjoyable hobby.
Re: C and D mint recent manipulation I do not recommend either as an investment. At times they can be very illiquid. But add a few pieces to your collection annually over a ten to twenty year span building a collection which should have significant residual value and provide you years of pleasure and enjoyment.

RYK

Many books from large cents to Dahlonega gold have been published over the past 30 years probably benefiting the author to some degree but, if it's because he or she stimulated our interest and increased our enjoyment with historical info, factual analysis, etc. I think that's the legitimate way to increase the base of collectors for that series.

Re: rare date gold books by Doug Winter, I am surprised by how little he appears to benefit from these publications. I do not see what happens at the wholesale level, but I follow closely his retail offerings on his website. One would think that having released a book on Type I Liberty $20's and Dahlonega gold coins this year, his inventory would be packed with such material. It is not. I suspect that these publications have benefited the collector more than the author.


Re: C and D mint recent manipulation I do not recommend either as an investment. At times they can be very illiquid. But add a few pieces to your collection annually over a ten to twenty year span building a collection which should have significant residual value and provide you years of pleasure and enjoyment.

Dahlonega, as you know, this is one of my major collecting pursuits. Thanks for your help

Bear

Andy, when are you going to unload that vast hoard of Gem Barbers, Bust and Lib Seated Coinage you have

been assembling since 1798?

MrEureka

Andy, when are you going to unload that vast hoard of Gem Barbers, Bust and Lib Seated Coinage

Long gone. I collect Franklin Mint now.

seanq

While I don't doubt that it has happened, I like to think that most folks who write specialty books aren't in it for short-term market-making purposes. I would completely expect someone who writes a book on, say, Dahlonega gold to possess a large number of Dahlonega gold coins. I'm working (I should say "working", as not much research has been done) on a book concept for clipped Lincoln Cents, based in large part on my own (significant) holdings.

Publication of a book could be the end product of a collection, at which point it's perfectly reasonable for the author to move onto another area of interest. What may look like an author capitalizing on the book could be simply a natural progression to a new challenge.

... or I could just be an optimist, as opposed to a capitalist.


Sean Reynolds

MrEureka

There's nothing wrong with writing a well researched and honest book to promote your inventory. The perfect example is David Akers' book on US Gold Patterns. The book was written to promote Paramount's sale of the Wilkison collection, the best collection of gold patterns ever assembled. The book is a classic and I'm still using it close to 30 years later.