Random musing about rarity, scarcity, value, demand and supply. Plus a specific example to ponder.

SanctionII

Rare, scare, valuable, supply and demand. All terms which are slippery and hard to get a firm grasp on.

I invite your comments on these topics and before you reply consider:

1. The 1939D Jefferson nickel and the 1950 Proof Jefferson Nickel. The 39D has a mintage of just over 3,500,000 and is valued at $125.00 in MS 65 in the 10-2006 edition of "Coins" magazine. The 1950 Proof has a mintage of slightly over 50,000 and is valued at $70.00 in Proof 65. Obviously the 1950 Proof has a higher survivial rate since these coins were not intended for circulation. I will estimate a 90% survival rate, thus about 45,000 examples exist. The 39D is a circulating issue. The survivablilty rate is thus much, much less than the proof 50. I will estimate a 2% survivability rate for AU-MS examples of this coin (this may be a high estimate, but work with me). That would leave about 70,000 AU-MS coins. With these estimates, why the $55.00 difference in reported retail value? Jeffersons are widely collected coins both proof and circulation strikes. Does the difference in value stem from any realistic, verifiable phenomena (i.e. documented proof that more Jefferson collectors seek/demand AU-MS circulation strikes of the 39D than they seek/demand the proof 1950). Or is the price differential something that arises from nothing that can be determined and recognized (smoke and mirrors, or simply the publishers of the price guides pulling prices out of the air).

I am sure that other examples exist similar to the one discussed above, including examples where one circulation strike coin (i.e. a Lincoln cent) is compared with another circulation strike coin of the same series, mintage and survivability rate, but of a different date and/or mint mark.

Your thoughts and comments please. Thanks in advance. SanctionII.

MikeInFL

Said simply, demand. More people collect business strikes than proofs...Mike

Gemineye

While this theory holds true in "older" issue coins where the circulated (business) issues commands a premium at a high grade what of the modern issues.Aren't the same dies used to mint the Satin Finish coins first then the business strikes.......

cladking

I would guess that half of the '50 proof nickels are gone or in a highly degraded condition. Most are
for all intents and purposes no longer in existence. They have been destroyed in fires or have been
buried in the ground so long that they are unrecognizable.

I would also guess that a lot more than 2% of the '39-D's were saved as uncs back in 1939. More
than half of these are gone as well.

There are several ways to get a feel for demand but one is to compare one date with another. We
know that there are some one and a half million '50-D nickels in unc and another quarter million in
circ or damaged condition. This should give an estimate of the number of '39-D's. There's also anec-
dotal evidence to get a feel for demand. Have you ever seen an album which had a slot for a '50 PR?

If you look at the used folders in the coin shops you'll see that the '39-D and '50-D tended to be the
last slots full. (the holes for these two dates are often pristine). You'll also see that almost all of the
folders and albums end at 1961 or 1964. When you see these sets the '50-D is unc and the '39-D is
usually F/ VF.

For coin prices to increase the demand has to be specific. For instance no amount of type collecting
is ever likely to increase the prices of eagle reverse clad quarters because if the price of one increases
then the demand will shift to another date. But such demand can be specific as it applies to the '76
coin. One either has to have the Philly or the Denver unless a proof will fit the collection. By the same
token if a collector doesn't have to have an unc '39-D then he'll buy the F and save a lot of money ov-
er the unc. With the '50-D there aren't many circs so collectors end up with the unc and there's little
savings in buying a circ. Most people don't collect the earlier proofs since they aren't sufficiently dis-
tinct from the uncs. A '50-P unc and proof look quite similar so the demand for the proof suffers.

There is a complicated interplay between supply and demand. Generally where the price doesn't look
right to you then you're misestimating the supply or the demand but it does seem that sometimes it's
the price out of whack. If and when it's the price it's usually caused by either the thinness of the mar-
ket or mechanisms that you haven't considered. Such as just today Coin World announced dramatic
price increases in the Jeffersons. The price didn't really suddenly increase a few fold, it's just a change
in the way values are reported to reflect the real world. These prices had been set under the old sys-
tem which entailed 5c first class postage and dollar fifty lunches. This worked well because there was
little interest or trade in these anyway. But things habve changed and real world prices and coin values
are higher so these were changed. The catalogers don't really have any control at all over price but if
the prices are not reflective of reality it can distort just who are the buyers and sellers and suppress a
market whether the prices are too low or too high.

ABC123

Popularity, trumps most other coin collecting factors !