Pump and dump schemes in the coin business?

dan1ecu

Hi, Everybody -

I was wondering if pump and dump techniques are used in the coin business like they are in the stock market. Does anyone have examples of cases where someone purposely talked up the price of something, only to unload what they had before the prices collapsed?

Who do you think would be capable of such market manipulation, and has it been made illegal to participate in it?

Dan

nwcs

I think most dealer hype falls into that category.

kranky

I think there is pump-and-dump. This can be done with items available in quantity (Unc Saints, classic commems, etc.), and the nature of how the coin market works actually lends itself to pump-and-dump being successful.

Let's say classic commems are languishing. Some market makers start quietly building a stockpile, and dealers are happy to part with them since they haven't been moving. Over time, the oversupply starts to dry up. Now the market makers can begin raising their bids for the coins, as they won't have to worry about tons of stuff rolling in. Bids go up, the Greysheet and the CCE reflect the higher bids. People start talking about them and realize there aren't a whole lot of them laying around for sale. The market makers, sitting on a big pile of them, start selling them off to the dealers and customers who now want them, and they are making a nice profit. They can even raise their bids higher, to keep the buzz going. They eventually sell off their stockpile while the bids are up, and once they have gotten out, they can drop their bids.

MrEureka

This can be done with items available in quantity

But it's even easier with low pop coins. That's probably why CCE won't even let dealers bid on ultra-low-pop coins. On the other hand, Eureka doesn't prevent bidding, but that's more of a philosophical stance than a failure to recognize that dealers will be dealers.