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Serious Attempt at Registry Discussion Regarding Leased Coins
TomB
Posts: 20,733 ✭✭✭✭✭
This is an earnest attempt at a serious discussion about the idea of leasing coins for a Registry Set (RS). Let me preface this by saying that I do not own an RS neither do I intend to have or build one. I also do not typically sell coins that end up in an RS. Therefore, my mind set about coins may not be the same as that of someone whom aggressively builds, trades or sells an RS. However, I am a serious numismatist and there are certain points that I am not clear about. Also, I have been trying to find the answers to my questions but the discussion is so fragmented at this point, it is in probably six to eight threads dealing with every aspect of what happened yesterday, that I cannot get coherent opinions from it. Therefore, I will ask these questions and hope that the major players in the RS field (wondercoin, HD, RegistryCoin, etc…) and the myriad of well-informed collectors and observers will come forward and help me and others understand the issues.
1-How could PCGS control the admission of an RS containing leased coins or coins whose certification numbers have been taken without permission from web based auctions? In the latter case, if the coin is at some later time put into an RS by the rightful owner PCGS will spot the problem and correct it, this won’t happen often, though. In other words, how do you close the “loophole” that has been mentioned so many times in the last day?
2-How likely is it that a person or people will make a concerted effort to dominate the RS matrix with coins obtained via a lease? Let’s assume a top-notch type set costs about one million dollars and the ability to lease it costs $10,000 a year (about one-percent). How many sets could possibly be put together and leased in that manner? Once the highest graded set or two in each section is put together wouldn’t the leasing terms become more favorable for the lessee and not the lessor? So, who would pay a one-percent fee for the fourth or fifth best set in a field? I think this would put a cap on the number of potential sets that could be leased.
3-From whom are these sets going to be leased? Dealers are not really an option here as a dealer must turn over inventory and a lease on an RS is dead inventory. That leaves collectors with deep pockets as the source of material for a lease.
4-If a lease were to happen who would assume the highest rankings in the matrix of the RS field? It seems that the highest rankings would go to those with the most money as a lease does not leave you with any inventory or capital after the lease expires. So, you are renting the coins and expect nothing in return when the lease period ends. The only people who could afford to do this are those with a tremendous amount of money, coincidentally, the only collectors that can afford to dominate the RS matrix at the present time are those with a tremendous amount of money.
5-If the integrity of the PCGS RS is really in jeopardy by the idea of leasing coins who will be affected most? It seems to me that the vast majority of collectors do not engage in the PCGS RS and even for those that do only a precious few have any realistic chance whatsoever of obtaining a highly ranked RS. So, is the potential affected population only a few collectors? In reality, it seems as though the affected population would be a few collectors and those dealers that supply them. Even if the PCGS RS would cease to exist you could still collect every coin the same way. That is, the RS does not need to exist for you to be able to collect.
6-I notice that PCGS has added the following to their rules:
In order to list your set as current, you must own the coins you are listing or be an agent with permission to represent a collection.
The boldface type is used by PCGS, not me. So, is an agent a person who represents the coin? Is that the same as a lessor in a lease agreement?
So, from what I can figure out this is actually a very small issue. This thread is not meant to be a slam at all at anyone or anything, it is an honest list of questions. I have to be missing something here, please help.
1-How could PCGS control the admission of an RS containing leased coins or coins whose certification numbers have been taken without permission from web based auctions? In the latter case, if the coin is at some later time put into an RS by the rightful owner PCGS will spot the problem and correct it, this won’t happen often, though. In other words, how do you close the “loophole” that has been mentioned so many times in the last day?
2-How likely is it that a person or people will make a concerted effort to dominate the RS matrix with coins obtained via a lease? Let’s assume a top-notch type set costs about one million dollars and the ability to lease it costs $10,000 a year (about one-percent). How many sets could possibly be put together and leased in that manner? Once the highest graded set or two in each section is put together wouldn’t the leasing terms become more favorable for the lessee and not the lessor? So, who would pay a one-percent fee for the fourth or fifth best set in a field? I think this would put a cap on the number of potential sets that could be leased.
3-From whom are these sets going to be leased? Dealers are not really an option here as a dealer must turn over inventory and a lease on an RS is dead inventory. That leaves collectors with deep pockets as the source of material for a lease.
4-If a lease were to happen who would assume the highest rankings in the matrix of the RS field? It seems that the highest rankings would go to those with the most money as a lease does not leave you with any inventory or capital after the lease expires. So, you are renting the coins and expect nothing in return when the lease period ends. The only people who could afford to do this are those with a tremendous amount of money, coincidentally, the only collectors that can afford to dominate the RS matrix at the present time are those with a tremendous amount of money.
5-If the integrity of the PCGS RS is really in jeopardy by the idea of leasing coins who will be affected most? It seems to me that the vast majority of collectors do not engage in the PCGS RS and even for those that do only a precious few have any realistic chance whatsoever of obtaining a highly ranked RS. So, is the potential affected population only a few collectors? In reality, it seems as though the affected population would be a few collectors and those dealers that supply them. Even if the PCGS RS would cease to exist you could still collect every coin the same way. That is, the RS does not need to exist for you to be able to collect.
6-I notice that PCGS has added the following to their rules:
In order to list your set as current, you must own the coins you are listing or be an agent with permission to represent a collection.
The boldface type is used by PCGS, not me. So, is an agent a person who represents the coin? Is that the same as a lessor in a lease agreement?
So, from what I can figure out this is actually a very small issue. This thread is not meant to be a slam at all at anyone or anything, it is an honest list of questions. I have to be missing something here, please help.
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Comments
I'm not sure how "leasing" could be successful, or swiping certificate numbers seen on E-Bay, and still have a competitive set. As a CPA, I don't see leasing as a viable option, as leasing is generally expensive for the value you get out of it in most lines of sales.
I can see a scenario where a conglomerate of people get together and build a group set. We discussed this a long time ago that a group of us should get together and "donate" a certificate number out of our private collections to build a "super-set" that might be able to compete against greater sets. What would be wrong with a coin club pooling funds and registering a group set like that?
The real issues I see are someone using a certificate number that is not theirs. Say you own a #1 Registry Set and sell 95% of the coins, but keep a few keys for your private collection. You give 100% of the certificate numbers to the buyer though for their use in registering their new set. I think that scenario might actually be happening out there more than we would think.
Keith
That post was way over the top and too difficult for us unedujumakted folks in here. Can't you make up a nice pretty story, or maybe use the 3 bears or Jack and Jill in it so we can understand it? Or, I know Christmans just ended, but maybe you can say SANTY CLAUSE is leasing coins! I'm sure we could understand it then.
I'm still confused, nobody wants to answere my questions and I know they aren't that hard. Maybe I'll get better luck here since this is the discussion thread rather than the flame or humor thread.
Have you dealers priced coins out of range of the normal collectors and are turning to rental/lease property to make up revenue?
Have the buyers of these high priced former pop 1 & 2 coins realized they have made a mistake spending thousands for a coin they can only sell for hundreds now and need to get cash back, thus renting/leasing?
Has the Registry craze peaked and the only coins being sold are the $100-$200 coins for the Modern Type?
Are collectors finding it's not as hard as they have been led to believe to make high grade coins and they are making their own now? (lots of new 68s & 69 now and the quality supposedly went downhill with the State 25¢ rush on)
Why is RegistryCoin asking about combining sets? Are you dealers trying to cook up some new money making scheme?
Instead of buying a $40,000 set a collector can pay you guys who will combine your or your customer's (is there a difference?) sets and rent him a spot in the top 5?
I do not ask this to be inflamatory but I do see that the Top 3-5 spots are locked in for most catagories with coins that were grossly overpaid for when they were low pop coins which now regulary sell on eBay and Teletrade for lots less, the same big name guys have the same coins in most of the sets and the regular collectors are using lower grade coins to complete their sets, which they are making themselves or buying off eBay for less than the cost of slabbing.
It would be hard to prove renting/leasing in the first place and the ethics are unknown since this is new ground. It's also a new and ingenious way to squeeze more $$ from a thin market. It's a brilliant idea, I wish I had thought of it. I don't have to worry bout jail and the big money guys don't care as long as they get their precious coin # to enter on the website. However a word of warning: If the normal Joe Smoe Collector doesn't stand a chance to compete in the Registry because he can never move up or afford to since the same dealers keep their guys at the top as long as the money flows people will lose interest in the Registry and you will have killed the goose that laid the golden egg.
Maybe this is what the big boys want, they can afford to lose their money when the market crashes and then they will be all alone at the top in their exclusive little club. Us little guys have caused the nice coins to be searched out and located and who buys them for next to nothing when we quit?
I am still confused by these recent threads and have some more questions:
#1 Is this lease/rent deal really a problem?
Throughout numismatic history the true great rarities were in strong hands which manipulated the market after aquiring the coins under questionable circumstances.
#2 If so, then how big of a problem is it?
Is it limited to the 2 or 3 top State Quarters sets offering to rent their coins to the 3rd set which is mostly ms67 with a few ms68 sprinkled in?
#3 How does it affect my collection?
My collection is still my coins, am I jealous or envious because I can't/won't pay absurd amounts of $$ to actually own these Top Set coins? After all I can't/won't pay ½ million dollars for a Jack Lee DMPL but I have enjoyed Morgans for over 30 years.
#4 How does it affect HD, RC & WC?
I'm still trying to figure out Wondercoin's Henny Pennyish thread that the sky is falling and Registrycoins repeated comments as to this being a "loophole."
If this "loophole" and the way it hurts the dealers, collectors and the hobby in general could be explained to me maybe the rest of the members and myself could work toward solving this problem if it indeed even exists.
So what is an agent???<<<an agent with permission to represent a collection>>> I take it that means you can rent/lease but no stealing slab # from eBay auctions?
Does this include being one of the few Modern dealers (agents) holding the highest graded coins for your customers who have not listed their Top Sets and be using them to get the pedigree so you can get more $$ at selling time?
sheesh, I remember when coin collecting was simple!
In God We Trust.... all others pay in Gold and Silver!
Well said.
In God We Trust.... all others pay in Gold and Silver!
Does it matter if that one time entry is by the coin's owner or someone else?
Hey! You hear about the PCGS Club? Crowd's friendly, good music, price is right, fun to go to. The word spreads, things liven up.
Cripes. Here comes the downtown crowd. They adopt the place. The club is really "in" now. Lines form out front. Who do you know? Who did you see? Can't find any place to park your car. New dress codes. Just mainstream music. Uh, oh. Underaged kids and uncool people got in last night. Better tighten up, screen people more closely.
Rules. Status. Bickering. Cops.
Who needs this?
Heard the NGC-a-Go-Go's fun. Y'all wanna meet me there--for awhile?
Here's a warning parable for coin collectors...
My point is that the more hide-bound and concerned about rules the Registry Set business gets, the more contentious, expensive and less enjoyable the participation is going to be. People may flee for the moment to NGC, but the same thing will eventually happen there.
All along, people have pointed out that Registry people have let slabs of certain shapes become too important. My response has been that the Registry Sets only added a new dimension: these were special coins that the generally trustworthy people at PCGS agreed were special, and annoited them as such. It's sort of pedigree collecting. (Who among the curmugeons would have sneered about somebody putting together a Bass or Eliasberg type set?). And for a collector, as long as the enterprise is enjoyable, all is well.
I've said elsewhere that if somebody is rediculous enough to rent or contrive a coin for their Registry set, then that's pathetic. But otherwise, so what?
My point is that when the PCGS Registry sets get to the point of such seriousness that people can credibly answer that "so what?", then it's time to move on to some other venue.
For the moment, that may be NGC. After that, who knows?
Here's a warning parable for coin collectors...
Scott M
Everything is linear if plotted log-log with a fat magic marker
1. People register their coins to say theirs is the best one in a group. It's the competition thats raising the price of slabs. If nobody cared about being first them the price of coins would reflect there true value.
2. Leasing a coin is lame. What excitement is it to have a collector friend or group over and show them a contract that you are leasing the Pop 1 coin and that makes your set #1. Who are you impressing except yourself!
3.If you collect a top set you should have all the coins under your ownership.
4. Registry sets are a great gimmick that PCGS started. It allowed all us poor people to get our name in "lights". and start slabbing coins like mad.
5. Great colllectors don't need registry sets to have great coins appreciated. I worked for the late Harry Basss Jr and I can be sure that he didn't need to register his coins to be well known. People in collecting know who has great sets or coins they don't need a electronic registration forum to tell them whos the best.
Maybe I would feel differently if I had the #1 set and was edged out by someone that didn't own the coins they listed, but right now I get my satisfaction from sharing knowledge and debates with the other board members here. I don't even mind the occasional, backfiring joke.
It's a fun place to be, and it's nice to be able to share a special purchase with all of you, since you don't get that glazed look in your eyes like my (truly wonderful in every other way) wife does when I show her a new coin!
Ken
I'm sure someone can refine this more
My Merc Dimes
Exactly! Once again this is something in the coin market that is blown way out of proportion. If you want to put together a set and have PCGS register it...great! It is this competition thing and all the "overhead" that it is creating that is getting out of hand (pricing, rules of RS etc). If people cared little if someone has a "higher graded" set (even that is questionable....a "grade" is NOT the whole story of a coin) we wouldn't have this trouble. I mean...really...is it that important...who cares?!
These days it seems all collectors care about is GRADE GRADE GRADE. Nothing else matters. What happened to history, art etc? I dunno...I guess I just don't get it.
jom
I don't think that all collectors fall under this description. When you have a coin that was minted last week, and has mintages in the hundreds of millions, all there is is GRADE, GRADE, GRADE. There is no history etc. to be appreciative of. This forum has many collectors of these coins, which gives the impression that ALL collectors fall in this category. This group, while dominant here, are a very, very small portion of the true collecting public. I still feel that the vast majority of people collect for the same reasons as they always have for as long as it has been a hobby.
jom
PCGS does make it to major coin shows all over the US. I dont think anyone trying to make the top set would mind waiting till they came to the local show. Of course now days everyone has the patience of a 2 year old, so I could be wrong.
My Merc Dimes
Think about it. If I bought or slabbed a Pop. 1/0 coin, the registry no. is all I need. I can then crack it out -- keep the registry no. -- and resubmit it. If it upgrades, wonderful!! I can play the game again. If not, I can sell the "new" (i.e., re-slabbed) coin and use the funds to buy another "best of the best".
Come on over ... to The Dark Side!