The Dynamics Behind Coin Pricing
TigersFan2
Posts: 1,442 ✭✭
So I'm thinking why the difference? PCGS Price Guide represents dealer ask prices while Ebay is prices for selling coins now. Patience seems to be an important factor here. The PCGS Price Guide represents a dealer willing to have patience in selling a coin.
I've noticed that the prices for coins at coin shows are also much higher than what they sell for on Ebay. I have no concept of what percentage of coins at the coin shows actually sell, but I expect it's very small. Again, the dealer at the coin show generally has more patience than those selling on Ebay. Also, the dealer at the coin show can probably ask a higher price because prospective sellers can actually view the coin rather than trust a photograph on Ebay.
But I wonder also whether there's a big "coin bubble" that keeps prices artificially high due to coin dealers having a tremendous amount of patience. It seems that most dealers are willing to sit on a huge amount of inventory and wait for their prices to come. I think a lot of supply is therefore withheld from the market which holds prices high in general. Would this "coin bubble" be burst with significantly falling prices if more dealers became motivated to sell their inventories rather than wait for their prices?
Then I think also that the coin market often uses a cost-plus pricing rather than market pricing. A dealer buys a coin at $X so he prices it as $X+Y. So when silver prices were significantly higher 5-6 years ago, a lot of patient dealers bought product that is above current market prices and they're inclined to be patient until they can sell at their cost plus profit.
Just thinking out loud here...
Comments
I don't think its really a market driven guide. It seems to me to be more of a "worst case", (or "best case", if you are the seller), type of guide.
For me, I very rarely end up paying full PCGS prices, even for coins I think are quite nice for the grade. And I don't buy on eBay, so it's not a matter of eBay not being a high price venue.
(Caveats: I don't buy extremely rare, or extremely high grade, or extremely high priced coins, where the guide might be more applicable?)
I think you are probably better off with the CDN, or other more fluid source of coin values.
You may still get the same answer, but probably to a lesser degree?
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When I first started buying PCGS coins in August 2014 after the previous 40 years owning only raw coins, I took the PCGS Price Guide as the true value of coins. When I look at my spreadsheet of the first several PCGS coins I purchased, I significantly overpaid although a the time I thought I was getting a good deal in buying for 5% below the price guide. But even with time and learning what various coins are selling for and believing I'm being smarter and making better buying decisions, I bet if I did try to liquidate my collection, I'd probably learn the coins are actually worth a little less than I currently believe.
I try to justify my collecting because of the underlying value of what I've purchased, but the market is very loose and non-specific. In the end, purchasing coins for a collection should be for the fun of collecting and not trying to beat the market.
I believe in coins, there's a significant difference in the bid and ask prices.
1) you are looking at sold items on eBay. If all transactions have cleared, the price is necessarily lower than one in which they have not. If you look at ask prices on eBay they will be higher, obviously.
2) PCGS and NGC price guides are high retail and do not reflect the market for most coins. CDN is a much better guide, although there are exceptions (especially for nicer material).
3) the trust factor and ability to examine the coin in hand keep in-person transactions higher than eBay.
Quality is not the same just because the number on the holder says so. Obviously paying more doesn't guarantee a better coin, but in person one can tell the difference. On eBay, you kind of have to assume the worst.
There are at least 3 factors that keep eBay prices lower than typical dealer ask prices.
1) you are looking at sold items on eBay. If all transactions have cleared, the price is necessarily lower than one in which they have not. If you look at ask prices on eBay they will be higher, obviously.
2) PCGS and NGC price guides are high retail and do not reflect the market for most coins. CDN is a much better guide, although there are exceptions (especially for nicer material).
3) the trust factor and ability to examine the coin in hand keep in-person transactions higher than eBay.
Quality is not the same just because the number on the holder says so. Obviously paying more doesn't guarantee a better coin, but in person one can tell the difference. On eBay, you kind of have to assume the worst.
Concerning your #1... Shouldn't the market price include ONLY sold items? A dealer asking a price shouldn't set the market price as it's possible that no buyer will be found at that price. I think that's the fallacy with the PCGS Price Guide because a dealer can ask the moon and it gets factored into the price guide.
Coins are no different.
Price guides are just that - guides.
The best research approach is to search completed auctions on HA, SB and eBay.
If you really want to shake your confidence in the PCGS price guide, go look at modern Roosevelt PR70's and compare that to what they sell for on eBay. You can become a price guide millionaire overnight just by scooping those up.
When I compare the PCGS Price Guide with what coins sell for on Ebay, I can see that the coins on Ebay "generally" sell for lower than the PCGS Price Guide and sometimes at a significant discount.
PCGS price is optimistic. US Coin in decline, invest in digital money transfer tech. Sign of the times.
Then again, arty art supporters think that is the way to go, I think a beating is forthcoming.
MHO.
Ebay Auctions represent a liquidation and consequently I consider these wholesale transactions, not something a retail customer should expect to buy at. CDN Bid is also a wholesale price. If buyers expect to buy at wholesale I would advise them to open up a coin shop.
During the month I update my Sales and Purchase Journals with the relative market retail and wholesale especially in gauging purchases, retail sales, and any ebay liquidations (wholesale).
Price guides are merely a guideline and that is at the point in time of when they were published. In many instances cost + or CDN Bid + may trump some price guide price. My goal is to retail my inventory with positive P&L. If a buyer does not like the price of a coin offered perhaps they should shop around or lay the money on the table and make a counter offer.
I consider the PCGS price guide very informative and accurate in gauging market value of a coin.
This is why I'm asking these questions to understand the dynamics behind the pricing at different levels. I've been occasionally been buying bargain coins on Ebay at the low end of the Ebay price range with the hope of building up enough of an inventory to get a table at a local coin show later this year or early next year. I know retail prices are higher than Ebay prices, but selling at retail prices aren't as liquid as selling at wholesale prices. To buy wholesale on Ebay and sell retail at local coin shows, I need to understand that my inventory will be sold slowly.
Every time I set up at a show, I try to figure what I can do to increase sales. I generally try to price my items near or below current trends and assume that with the good prices, I should sell out my inventory every show. But if the buyers for your particular item don't show up, doesn't matter if they are priced at CDN, PCGS, Ebay or at melt. The coins may just sit there. Actually, at this last long beach show I sold more coins than I ever have. I put price stickers on my coins and tried to price below trends. 95% of my sales were to other dealers.
IMO PCGS guide is just another guide when it comes to pricing coins, and I have seen it both on the high and low side of coins.
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Leo
The more qualities observed in a coin, the more desirable that coin becomes!
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I realize you were probably making the correct apples-to-apples comparison using PCGS coins for both examples, but that blatantly obvious point had to be made.
Even if you're talking about already certified PCGS coins, you need to factor a little in for slab costs. I'm not sure PCGS is actually doing this in the price guide (maybe not), but that could be part of the reason prices for some very low value coins and generic moderns start in the $10-15 range when a raw example could be worth less than a dollar. (I realize that can't account for most of the price spread discrepancy, though, and probably only affects the really low end slabbed stuff.)
Some dealers use eBay as a place to dispose of the coins they could not sell at the shows. Some of these pieces are "C" or "B-" coins, and you should bear that in mind when you look at eBay results.
Probably true for some dealers. But I also think there are many dealers who use Ebay because they can't afford to sit on a coin for many months or many years while they wait to receive a retail price. Ebay offers quick sales and fast cash. Some dealers probably prefer small margins with quick sales than larger margins while holding a lot of inventory. Plus, waiting can be risky if the market drops.
There's a lot of PCGS A coins on Ebay in additoin to the B and C coins. I've bought some nice toned Morgans along with some bright white Morgans. Digital photography has progressed where most auctions have very good photographs to minimize thinking a PCGS A coin is being sold and receiving a C coin. Beats 15 years ago when most coin auctions didn't even have photographs and you were judging purchased based on the auction description.
One obvious point is also that PCGS price guide is for PCGS-graded coins, whereas eBay listed coins are just as likely to be raw or in another service's holder.
I realize you were probably making the correct apples-to-apples comparison using PCGS coins for both examples, but that blatantly obvious point had to be made.
Even if you're talking about already certified PCGS coins, you need to factor a little in for slab costs. I'm not sure PCGS is actually doing this in the price guide (maybe not), but that could be part of the reason prices for some very low value coins and generic moderns start in the $10-15 range when a raw example could be worth less than a dollar. (I realize that can't account for most of the price spread discrepancy, though, and probably only affects the really low end slabbed stuff.)
The intent of this thread was assumed pricing of PCGS coins, via Price Guide, Ebay, whatever.
As a coin dealer who has sold multiple thousands of coins I can tell you that I referenced the pcgs price guide on less than .01%
And I can tell you that I have never used ebay prices realized as a factor in my pricing.
I have always used coinfacts (NOW FREE) and sometimes coinplex/cce (dealer networking).
As a coin dealer who has sold multiple thousands of coins I can tell you that I referenced the pcgs price guide on less than .01%
And I can tell you that I have never used ebay prices realized as a factor in my pricing.
I have always used coinfacts (NOW FREE) and sometimes coinplex/cce (dealer networking).
And I expect you use your own experience of what's selling, at what price and how much you want to sell a particular coin.
PCGS, NGC, greysheet, redbook and all other price guides are just guides. learning how to read all the information as well as having a handle on market value of the items you are looking to sell are the key ingredients.
I remember a classic line I heard years ago when a collector quoted to a dealer on a seemingly low offer "But the pcgs price guide says X" to which the dealer replied go sell the coin to pcgs.
PCGS, NGC, greysheet, redbook and all other price guides are just guides. learning how to read all the information as well as having a handle on market value of the items you are looking to sell are the key ingredients.
At a coin show a few weeks ago, A dealer had several display cases of PCGS and NGC coins. No prices marked. I was interested in one (which I bought) so I asked him the price. He gets out his magazine of published prices to look up what to sell it to me. This struck me as strange. As a dealer, he should know his coins, the market for his coins and what he's willing to sell them for. To just look up a price in a magazine seemed way too trusting of someone else's opinion. In this situation, he'll more likely sell the coins where the publication under-states the market price and be stuck with the coins where the publication over-states the market price.
Some dealers use eBay as a place to dispose of the coins they could not sell at the shows. Some of these pieces are "C" or "B-" coins, and you should bear that in mind when you look at eBay results.
I remember a classic line I heard years ago when a collector quoted to a dealer on a seemingly low offer "But the pcgs price guide says X" to which the dealer replied go sell the coin to pcgs.
PCGS, NGC, greysheet, redbook and all other price guides are just guides. learning how to read all the information as well as having a handle on market value of the items you are looking to sell are the key ingredients.
At a coin show a few weeks ago, A dealer had several display cases of PCGS and NGC coins. No prices marked. I was interested in one (which I bought) so I asked him the price. He gets out his magazine of published prices to look up what to sell it to me. This struck me as strange. As a dealer, he should know his coins, the market for his coins and what he's willing to sell them for. To just look up a price in a magazine seemed way too trusting of someone else's opinion. In this situation, he'll more likely sell the coins where the publication under-states the market price and be stuck with the coins where the publication over-states the market price.
At this last Long Beach I had a dealer with a copy of the PCGS price guide printed out in his hand ask to see a coin I had for sale. He wanted to buy my FS nickel and was quoting PCGS guide as $300. (Non FS Guide) I told him the price he was looking at was for a no FS coin, and that recent auction results for my coin were much higher than my listed price.(info I got from coinfacts). He then went into a rant about how auction prices had nothing to do with coin prices.(im not making this up) and that you cant use auction prices for buying or selling because yada yada. So I told him fine, I would sell him my coin for PCGS Guide which is actually $750 more than my price on the sticker if he would prefer. He seemed a bit flustered and then went on to bash my coin....David Hall would fire the grader who gave that coin this grade...blah blah blah...but still wanted to buy it.
Nearly took every bit of willpower I had to not tell him to shove his papers up his..... but the look on his face when I told him the new price was worth it.
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I would think that most dealers know where they have into their coins and what it's worth even if there are no markings on the holder to guide them. They might have that information in a spread sheet that you don't even see as they seemingly only look at a price guide. Could be that they buy their stuff cheap enough, that the sell price from a guide is always good enough. If a coin is special enough that the price guide is out to lunch, I'd say 95% or more of dealers are quite aware of that fact.