Has the Internet made coin collecting less risky? If so, are higher prices justified?

dan1ecu

Hi, Everybody -

Buying coins is less risky now than it was before the Internet in the sense that one can very quickly and easily sell coins via Internet auctions. Would you agree?

If the hobby is less risky, wouldn't that warrant higher prices (i.e., less of a risk premium)? I'd certainly feel more comfortable paying a large sum of money for a coin knowing that Heritage will gladly accept it on consignment should I ever need/choose to sell. I'd feel confident that the coin would sell for a reasonable price, too.

Do you see this as a major factor in the current market? Do you see prices rising for a period of time before plateauing at a higher level that will become the new Internet age norm?

Dan

islemangu

Yes, you seem right. So putting supply and demand aside even though still a factor...just the liquidity and lower engaged risk warrants a higher price and value than pre-internet periods...like the late 1980ss

291fifth

It is always going to be supply and demand that dictates prices.

Baley

Less risky in the sense that coins are a lot more liquid they they used to be, yes.

A wider audience and narrower spreads between buy and sell prices improves efficiency of the market.

The internet has made it a lot easier to be a collector, because collectors are mailing stuff instead of driving all over town or to a different town to buy "sight-seen", you can see pics on the web, so you don't have to schlep to shops and shows to see lots of coins, and you can sell coins you no longer want for more than store dealers pay, and in addition to the hobby, education about coins, such as this site, make the learning curve faster, so newer collectors feel more comfortable spending more money because the coins are percieved as more liquid as in easily exchangeable for cash, then yes prices should continue to go up.

joeyuk

Wouldn't the opposite have a good argument as well? A seller has to compete with many more sources of coins. Also the dealer knows he has a larger audience with the internet so if the coin is more liquid for him he should be able to pay less /charge less to make his percentage.

cladking

There should be some benefit to prices caused by the ability of buyers to get more
coins for their money and for the coins they sell if nothing else. It would seem that
this benefit would be limited to not much more than the difference between typical
dealer mark-up and normal consignment fees.

There may also be some benefit from decreased risk associated with slabbing. This
benefit, if it exists, could be much more substantial since it can affect the structural
elements of the market including aggregate demand.

Bikingnut

I don't beleive it's made it less risky. It has made coins more available to me, easier to get, and provided greater choices. I think there is a lot more risk involved due to the fact that you don't know what you're getting until it arrives at your door.

Baley

I think there is a lot more risk involved due to the fact that you don't know what you're getting until it arrives at your door.

More risk, as far as the quality of the coin, than buying in a shop, yes.

But I think there is a lot LESS quality risk buying off an internet picture and description than there used to be when i bought from a print description and/or dot-photo from a printed advertisement in a coin periodical.

paigowjohnny

Maybe I missed the boat a little...but in many regards I think it has become more risky, particularly for newer collectors/novices. Just look at all the grossly AT crap being sold in some ebay auctions by some notorious sellers...those buyers, who may not have bought that stuff otherwise if it wasn't a mouse click away, are gonna be in for a rude awakening.