WHY ARE THE PROOF SETS VANISHING?

dixfer

Forgive me if this article has already been posted. LINK

I’ve been very sick with the coin buying fever and my 12 step program required that I stay away from the coin forum/coin hobby for a bit. I stayed ‘clean’ for about 24 hours (not in a row) since 1972.

This article is a bit old but the more I read it, the more is seems like it was written yesterday. It may tie in with some of the posts regarding “Smart money leaving [entering the market]”.

I really don’t have a point to make here, just thought I would share this, then ask….
Why are the Proof Set boxes and COA’s vanishing? Why are more people looking for proof set boxes & COA’s than proof sets? Why is an empty 2001-S Proof set box worth more than a 'full' 1971-S Proof set. I have a good idea, so I am working on a post text to the article.

Email me with questions/answers if you like.

Best Regards,
John
Altgeld Rarities
563-264-0959
agr@machlink.com
ANA Life Member LM5502

DeepCoin

I believe the reason that COAs and boxes have value is that some people are recreating proof sets after cherrypicking coins for submission to the grading services and backfilling sets with the leftovers. Just a guess.

BillJones

Down here in the Tampa area where the Hauser firm, which is quoted in the linked articel, does business, there is one dealer who buys every modern Proof set he can puchase for 10 to 30 percent in back of bid. He breaks up every one of them and sells them in roll form.

Intact Proof sets are becoming an endangered species. The problem is that there is very little demand for them as evidenced by the very low bids that appear on the Gray Sheet. For examples sets from the mid-1980s have bids as low as $2.50 to $3.50.

For some reason some collectors are willing to pay more for some run-of-the-mill Proof coins, like the half dollars, than the bid prices for the entire set. As a young numismatist I found myself falling into this stupid trap when I was trying to maintain my Kennedy Half Dollar collection. I "reformed" myself, but many collectors don't seem to have the capacity to do that.

When collectors ask me about Proof singles, I tell them to buy whole sets. If they have ANY use for the rest of coins in the set, they will money ahead in the short and long run. Proof singes are among the worst buys in any coin market.

kieferscoins

Peple are cracking them like crazy. Wait five years and they will be even harder to find in original boxes and holders.

Cameron Kiefer

cladking

Most collectors don't want to bust up their own proof sets but want the coins
for their collections. Many feel it is destructive to dismantle a set or they may
believe it's difficult but they wind up buying the singles which makes them bet-
ter sellers than the sets. This has been going on for many years and is probably
starting to bump up against supply constraints on some issues. While all the proof
sets were made in huge quantities, a few decades of destruction will cause some
to look less common. The 40% half proofs have been moving and there's no pro-
motion going on so this looks like a supply problem. Many of these coins have
been placed in to circulation over the years.

The mint sets were made in significantly lower quantities and the attrition has been
much higher.

ttown

That's why I'd put back gold, siver, and modern proof/mint sets with correct paper work and boxes. While collectors like to know the're buying an MS/PR 69 in reality most of the modern stuff is high grade. I've seen packaging go for more than the item it contained in other hobbies. A watch box for an common Hamilton 992b is selling for over $200 while the watch sells for $300. If you get paper work and matching SN you've got a watch worth at least a grand in good condition, in mint the sky the limit. Toys are the same way.

I'd like to say thanks to those in the hobby that are in it for a quick profit and to the short sighted collectors breaking these sets up for grading.

JrGMan2004

<< <i>WHY ARE THE PROOF SETS VANISHING? >>

A Simple One Word Answer To This Question: Marty...

JadeRareCoin

A Simple One Word Answer To This Question: Marty...

Yousri

<< <i>A Simple One Word Answer To This Question: Marty...

>>



And Russ.

Coinhusker1

<< <i>I believe the reason that COAs and boxes have value is that some people are recreating proof sets after cherrypicking coins for submission to the grading services and backfilling sets with the leftovers. Just a guess. >>



Is it that easy to open and re-assemble proof sets from the newest packaging (1999 and later)? I've never tried it, but I thought once you cracked these things, the plastic cases are ruined.

ttown

I think they are doing it more with the modern gold and silver Comm sets. I've been buying the 4 and 6 piece wood boxes and putting in my UNC/PF sets together. There are many 82-88 gold coins out there that don't have anything but the plastic capsule from the mint. You can buy that and find a box and the silver/half dollars and reassemble it but It's usually cost more IMO.

MadMarty

<< <i><< WHY ARE THE PROOF SETS VANISHING? >>

A Simple One Word Answer To This Question: Marty, Russ, Don, Ken, Frank, George and half the users of this forum!... >>

Russ

Yep, it's Marty's fault.

Russ, NCNE

Sandhawk

Russ

cladking

Original packaging only has value when the value of set is greater than the value of the
coins in the set. Since this premium is negative for most modern mint and proof sets, they
get dismantled to capture the difference. They also get destroyed to assemble date sets
and they are lost to fires and floods. Opening them to retrieve high grade coins is really
a very recent phenomenon and has affected a very small percentage of the total mintage
of sets. Not only are these high grade coins quite scarce in the sets but most of these sets
had already been destroyed.

Sets have also been destroyed for storage considerations. You can't fit very many proof
sets in a safety deposit box or small safe. If you desire the set because it contains one or
two nice gems then you can just store the one or two coins and get rid of the rest of the
bulk.

When the premium for intact sets turns negative then they are destroyed in huge numbers.
Dealers won't ship off a lot of sets when they'll make more money by busting them up. This
may not be a large factor at the corner coin shop but it is when a dealer has hundreds or thou-
sands of a single date.

Those sets that do have large premiums are rarely dismantled so there is no supply of pack-
aging. There will be some of the coins for the sets available and apparently some people
have these coins and are seeking the boxes to capture this premium. This will allow collectors
who want to display the coin in a different way to sell the packaging and not have to lose the
premium. I've seen repackaged SMS's that were much better than original SMS's. Apparently
the owner had saved choice coins for years and then the heirs bought the packaging to get the
premium on the sets. In this case though they may have been better advised to send the coins
in for grading.

The quality of the coins in the sets are very hit and miss. There are some coins in these sets
which may never appear as superb gems.

dixfer

I love all the responses. I'm sure there is some validity to all these observations. I would like to respond to >

I believe the reason that COAs and boxes have value is that some people are recreating proof sets after cherry picking coins for submission to the grading services and backfilling sets with the leftovers.

While that would be a great assumption, it would require filling in the holes later with the same proof coins (even if they are lower grades). Cherry picking modern proof sets for one possible high grade coin to replace at a later date with a lesser grade coin only to re-sell at wholesale would entail days of labor by a senior grading expert and much planning by people with deep pockets and 'crystal ball agenda's'.

Take this for an example. I am joe inventory purchaser for coin telemarketing companies in 45 countries....the year is 2001. I buy 200,000 2001-S proof sets. I spend $8,000 in labor pre-screening them for high grade 2001-S Sac's. I find 40 dozen PCGS PR70 candidates so I carefully open only those sets that give birth to the golden eggs. I spend $5600 sending the golden eggs to a crossed eyed 20+ year old ‘coin expert’ to slab them, complete with bar codes, maybe a hint of bad breath and/or latent thumbprints.

Then I get back 477 PR69 DCAM's and maybe 3 PR70 DCAM's. I sell the 3 PR70 DCAM's for $1,300 ea. Then I break out all the body bagged (PR69 DCAM's) and spend $2,200 in labor putting them back in their original US Mint proof set holders to sell them at market bid.

Not a chance. Here is what I believe is happening. This coin hobby/business can easily be manipulated with little capital (20-50 Mill). Not the whole market, but certain segments. $20-50 Mill is chump change in comparison to one small NASDAQ trade. The coin business is one rare $60 - $110 Billion/yr market that has never been regulated by the Federal Government (nor can be). Imagine if every coin, bank note, or postage stamp in every collection were returned (called) to banks tomorrow. Gasp. Imagine if your bank charged you tax when you buy a $10 roll of Iowa state quarters. Imagine if you had to file a Schedule D form after selling that roll on Ebay for $16.00.

Not a chance. The coin market has become a legitimate investment vehicle for many shrewd and savvy investors with deep pockets. They do not need to collect coins or even see them. They make their money the same way a frozen orange juice concentrate trader does in the futures trading pit. They make a market overnight by shuffling buy/sell orders. They don't care if they are buying or selling. The coin market has never met market makers until recently. (A 1.5% interest rate will do that to floating currency).

Ask all the people who paid $6500 for PA or NJ State Quarter mint bags if they met the people who created that price (market makers). Sadly, the U.S. Mint has been an active participant while observing the trend. They mass produce coins that aren’t ordered by the Federal Reserve. (2001-2005 Sacs, 2001-2005 Kennedy Halves). They become the only outlet for them at 1.5 time face value releasing them in small quantities in relationship to total production. Wait till the Mint starts shipping 2001- 2005 Sac’s and Kennedy’s to Central America or worse yet, to your local bank. It would not look good for all the people buying BU Sac rolls at $40 - $90.