Another look at "freshness" and market timing.
roadrunner
Posts: 28,303 ✭✭✭✭✭
To make real money in rare coins, you need to be a LONG TERM buyer....A great example of how short term does not work: the Late Gene Gardner. He bought fabulous coins. he had a good advisor. But in sales like Newman where we made him pay $188,000.00 for the 1861 25C proof in 2013, we were able to by it at his sale in 2015 for $129,250.00. Now, our customer plans to hold that coin for at least a decade or more. While being “golds gift” to all No Motto Pr 25C in the end, the coin was not fresh. And in the 2 years since he bought it, the other buyers found other places to spend their money.
I read that and really couldn't believe I was reading it. You mean it's OK to pay 32% over market to get something fresh, that if you're forced to sell in a shorter time period, will accept that 32% loss? In this case it applies to both the winning bidder and the under-bidder as each was willing to pay close to $188K. Either could have taken that loss. And no one can guarantee higher prices 10 yrs down the road...especially for a type coin seated quarter that sold for approx 50X what a regular PF65 would fetch. You can buy some pretty killer no motto PF67/68 seated quarters in the $8K to $30K range. Sort of like having a million dollar home in a neighborhood of $150K homes.
To make real money in rare coins you probably needed to take part in any of the 1972-1980, 1982-1990, 1996-2008 rare coin markets from early on to the peak. No one knows when the next cycle will occur or even if there will even be another such cycle. A lot of the 45-60 year coin market boom was predicated on the economic policies to cater to baby boomer parents and then the boomers themselves. The rare coin market boom was somewhat linked with the stock and real estate market booms. What happens if 1955-2007 doesn't repeat similarly again? It's unlikely it will. 8 to 9 years into it and one could say we've had a longer rare coin market lull than 1990-1996, which was the previous longest one. Recall that the Pittman and Eliasberg sales lit off the last strong rare coin market advance. We just had Newman, Gardner, and Pogue. No real lift-off has followed. In fact, a lot of the Newman coins have recycled back into the markets for losses up to 40%. Yeah, I know....the "freshness" thing.
Comments
RR:
In that quote is the comment "we made him [Gardner] pay $188,000.00 ... in 2013" and "we were able to buy it at his sale in 2015 for $129,500.00" And then the conclusion that "you need to be a LONG TERM buyer." Am I correct that this dealer was the underbidder in 2013? If that is the case, presumably they thought they could sell the coin for more than their underbid in 2013, which would suggest to me that their buyer in 2013 would currently be buried in the coin. Is this analysis correct?
Oh, and I definitely agree with your conclusion that no one knows when or if the next price-peak will occur.
Mark, that was my take on it. They claimed to be the under-bidder, on behalf of one of their clients. Gene could have dropped out one bid earlier and dumped it on the dealer "running it up." Now their interpretation of that scenario would probably be that it was a long term purchase and in 10 years would be worth a lot more than the $176K-$180K or so they would have paid. While that all could be the case....it's just as true that if forced to liquidate in only 2 years, they'd have gotten even less money than Gene did (ie 2 key market players gone). In other words, it's ok to take an initial 32% loss for the long term "anticipated" gain in a great coin. And to that I'd say it "depends"....and is highly dependent on where in the coin cycle you bought it and where in the current or next cycle you plan to sell it. There have been some very short and "hot" coin spurts where you got huge returns in only a few years (1975-1980 up to 16X, 1986-1989 up to 5X to 10X, 2002-2008 up to 3X to 5X ).
Just like in 1980, 1990, and 2008 where all time high prices for many coins were left behind for good....I think some of the 2013 Newman prices will prove to be all time highs for some coins. Where you buy in the cycle could be a lot more important than what you buy. Any decent quality rare coin bought in 1996-2002 did pretty darn good by 2008. You didn't have to be a genius to figure out which coins were worthy and which ones weren't. And the irony of it is that simple common date MS63/64 slabbed $20 Saints and Libs were some of the very best performers in the rare coin market from 2000-2011 (they probably out-performed 95-99% of the rare coin market). We won't even discuss ASE's or 90% "junk" silver coinage. And the risk when buying them in 2000-2004 was minimal. It might be a long time before that kind of opportunity ever exists again, if ever....especially with the proliferation of slabbed gold since 2006.
Newman 1861 PF68 CAC quarter. I don't think I ever looked at this one closely. The obverse is incredible from the photo though it's impossible to see any hairlines from that view. On the reverse, I was surprised to find an obvious planchet defect under the eagle's left lower wing, some dark alloy streaking across the eagle, a couple dark alloy spots on the eagle's neck, and a field scratch or deep lint mark just above the eagle's right wing tip. If those items were on the obverse, I don't think it would have graded higher than 67. The coin has yet to be crossed which would be a concern to those building only PCGS sets. I recall having an NGC PF65 1862/1863 quarter with a similar planchet defect in the upper left reverse field. It kept the coin from going PF66 and was a considerable distraction.
https://coins.ha.com/itm/seated-quarters/quarters-and-twenty-cents/1861-25c-pr68-cameo-ngc-cac-briggs-7-e/a/1228-98381.s?ic4=GalleryView-Thumbnail-071515
https://coins.ha.com/itm/seated-quarters/quarters-and-twenty-cents/1861-25c-pr68-cameo-ngc-cac/a/1190-33376.s?ic4=GalleryView-Thumbnail-071515
The finest known 1850 Proof 67/68 seated quarter brought a huge $460K back in 2008. And it has brought less every time out since. Latest was $169K or 37% of the former higher. Timing is almost everything. It's likely that the 2008 price will be its all time high for a long time to come. Only 4 proofs reported known....vs. the hundreds of 1861 proofs. This one is not a type coin.
https://coins.ha.com/c/search-results.zx?N=790+231+3183+365+573+83+84&Nf=US%20Coin%20Year|BTWN+1850+1850&limitTo=all
There are several things going on in this scenario:
I can sort of agree with those 2 points. But in this situation, you don't run up someone and "hope" they don't just drop it right back in your lap because they know what you're doing. In this case, Gene's advisor was one of the best set of grading eyes ever and had nearly incomparable seated coin market knowledge. I've butted heads with WN at auction since the mid-1980's and he knows his stuff. No way he would let Gene get run up on a coin that was bringing a 4X to 8X toning premium. What I can agree with is that 2 bulls might have been knocking heads and neither really wanted to give in on the 1861 PF68. I can't address that as I've never been one. The next highest priced 1861 PF ever sold at Heritage fetched $14,950....a long ways from $129K or $188K.
Fwiw, I had the opportunity to run up this same dealer a number of times over the years but didn't do so. At Vermeulle 2002 they were going after the same high quality seated proofs that I was after. Once they bought the 1869 half dime and dime, I knew they were going for the whole year set. I was very tempted to run them up on the quarter, half, and dollar. They got the entire 5 piece 1869 proof seated set...and I loved the half and silver dollars. I didn't even bid on the half dollar which they got on the cheap imo at well under my anticipated bid. What was the point? I was probably never going to get it. And just what IF they dumped it on me at 2X market value? Then what?
I've always agreed that freshness is overrated....almost stupid as the coin itself is unchanged. Yes, TIMING is the key. Another way to look at the 10 year freshness "rule," is that your dealer may not want to see (you) with those coins again for at least 10 yrs. Bring them back at 5 yrs and you might get a lower offer than you deserve or complete indifference. Ironically, the highest auction price for a US coin was made by a coin that had only been off the market for 32 months....the 1794 $ SP66. So much for freshness.
Fun Game but it can bite you in the back side.
Hoard the keys.
I can almost guess who made that statement. As for the future? Don't see any up trends here.
Agreed.
I'm betting there'll be good buying opportunities in 2017 -- especially the 2nd half of the year, when I expect an overdue economic downturn.
Successful BST transactions with forum members thebigeng, SPalladino, Zoidmeister, coin22lover, coinsarefun, jwitten, CommemKing.
I've been collecting rare coins for 40 years now, but did most of my quality buying 1996-2006, especially in 1999-2002, when I was new to ebay and you could still both find good values, and sell nice coins for good prices by running auctions with good pictures. Had the time of my numismatic life. These days, I just sit tight as the hobby evolves, paying zero dollars for opinions about the quality of my coins in the meantime. Someday, maybe even someday soon, I'll empty the SDBs, send it all in for holders and stickers, and send the "fresh" coins to auction. After that, I'll probably say goodbye to this hobby forever.
I'm really not crazy about the direction it is headed.
Liberty: Parent of Science & Industry
Agree with Bailey with the direction of the hobby.
Have been thinning my collection down to the bare bones.
Just keeping my choice Early Type Pieces to scratch the itch when the urge arises.
I agree it's hard to see an uptrend but often times that's the case. For perspective ~47 years worth of data makes the last 10 years look relatively flat.
Yep, I've been strongly considering selling most everything and coming back in 20-30 years.
It's difficult to engage in conversation which makes me look even dumber than I already think I am for being in "the trade"
I do not care what someone thinks a coin will be worth in 10 years when we spend MY money. I am more concerned with the value 24 hours later. If it will only bring 65 cents on the dollar someone else will own it. I hAve always had an issue with dealers buying at the same auction as everyone on the net and jacking the price 24 hours later.
NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"
By some standards, to make a coin "worthy" in today's market is a relatively small group of coins.
Anything bought since November 7th 2006....isn't yet "worthy." And people wonder why the market has been in a funk since the fall of 2008?
Interesting chart(s). What does the PCGS 3000 track or what is it comprised of? I tried to do some googling, but didn't find info on what it specifically tracks.
You can find the PCGS 3000 on the PCGS website. Not too hard to find. Though I never find it on the first few tries. Go to "price guide." The link is on the left side of the page. For the most part, the value comes from a fairly advanced group of coins.
pcgs.com/prices/PCGS3000.aspx
The overall market is down, and an aggressive buyer has died. I don't think there is a deeper lesson to be learned.
Gene only affected the higher end, finest known seated coin market...and little to do with type coins prices, gold, commems, silver dollars, etc. Let's say he affected 1% of the coin market. His influence on most other collectors here was negligible. He wasn't the only one to leave though. Many big guns started leaving in 2006 as their REG sets were auctioned. That continued for years. Joe Thomas left in 2009. Pogue is now gone. I'd bet for every new 6-7 figure gun entering since 2008, that 2 have left. This has nothing to do with Gene Gardner. And besides Gene other seated guns have gone away since 2008. Didn't Simpson recently unload their seated half dime set? And that must have been a drop in the bucket (1-3%) in what he's invested in the coin market
The important thing is "why" the market is down. There are many reasons from the exiting buyers, TPG policies, CAC, auction house policies, auction houses combining and/or shutting down, B&M shops shuttering, PM market generally in the tank since Sept 2011....to only name a few reasons. The original point of this thread was "freshness." You can toss that into one of the reasons the market is down. Too many won't even touch an "unfresh" 4 or 5 figure coin (esp sans sticker) or any coin in an NGC holder for that matter. Even if CAC has purchased $275 MILL of their own coins, that's a dribble to the entire rare coin numismatic market (non bullion and non-junk) which must be worth $5B-$10BILL. A huge part of the market is not yet on the approved list. We can only blame ourselves in the end.
The market is down because the supply of coins is increasing dramatically, while the demand for coins is increasing more slowly.
Liberty: Parent of Science & Industry
The days of making money in coins are probably over. The market is fully mature. The same thing can be said for many/most other collectibles as well. Margins are too high for profits to be a realistic outcome.
You know the old saying "To make a small fortune in coins, start with a large fortune"
Jim
A couple of points.
First I found that the prices in the Newman auctions were very strong. I tried to bid a few times and got blown out of the water. I was successful on some "dark side" purchases, but even then I had to pay strong money.
Second, all of the Newman coins were originally graded by NGC, and some of those grades were shall we say "optimistic."I remember one gold dollar pattern that was struck on a perforated planchet. The coin was graded PR-66, but it had an obvious mark on the obverse that was inconsistent with that grade. I don't remember the exact numbers, but it was something like this. The previous highest public auction price for this piece had been $6,000. That coin appeared to be a better example. This piece, which was over graded in my opinion, brought over $9,000.
When you go and have these coins crossed to PCGS, usually at a lower grade, you well on your way to losing money. "Freshness" really has nothing to do with it. It's a combination of exuberant bidding in a name sale combined with some optimistic grading.
I ended up with a couple ex Newman coins in PCGS holders. In one case I paid less than the Newman hammer price, and in the other I paid more. Both were strong prices, but the coins were "colonial" (actually Articles of Confederation) pieces, and they were in outstanding states of preservation for their types. Some of the Newman coins that brought strong money did not fall into that category. They were more run of mill or ordinary. Once those pieces left the Newman venue, reality set in.
Here you go. It's a long list of course. PCGS 3000 linked