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I thought this was a great explanation of priceguides and how to use them!

amwldcoinamwldcoin Posts: 11,269 ✭✭✭✭✭

Price Guides?

Let me start off by saying thanks to everyone who came and visited and purchased from us at the Buena Park Show this past weekend. We appreciate the business and welcome you to our educational series newsletters.

. . . .

So....there you are, staring at a coin in either a dealer’s case or online, when you decide THAT is the coin for you. It may be toned, it may be mottled, it may be high for the grade, it may be a lot of things. But for some reason, you like it, and you want to own it.

In this example let’s say it is an 1881-S MS65+ Morgan Silver Dollar the Dealer has marked for $220 (See photos below for reference)

So now the acquisition process begins...

Almost inevitably the next thing we do is understand what a coin LIKE that sells for. How do we get that understanding? Most of us turn to the price guides. Each of the major grading houses maintains one, there are "sheet" services, and books that “tell us” what a given coin is expected to sell for. We then decide if we are going to accept the seller's price, or try and negotiate.

In this example one online price guide says the coin is worth about $185. Being the diligent collector, you go to yet another sheet and find that they have ignored “+” grades (even though they have been around for years) and so does not have pricing for this coin. So you look at the price in MS65 ($120) and then look at the price in MS66 ($250) and come to the conclusion that the dealer's asking price of $220 is more than you SHOULD pay, so you walk away from the coin. You may be disappointed that you let a nice coin get away from you, but at least you did not wind up paying too much.

BIG MISTAKE.

Price guides, by definition are an AVERAGE price, not the highest price you should pay. The people who put out these sheets out are grinding a lot of data to come up with an average value. Other than NGCs admiral attempt at " * " designations, there is NO CONSIDERATION IN ANY PRICE GUIDE ON EYE APPEAL. It is just not possible, so what we wind up with is an average price for an average coin.

So, somehow we make some logical leap that the dealer’s coin is priced too high even though it is a stellar example of what WE were looking for.

According to the online price guide BOTH of the coins below are worth $185. Which would you rather own for $185? Are these coins really worth the same amount?

No way!

Remember, Price Guides are exactly that; "Guides." They are the result of some bell-shaped mathematical curve that has very little to do with the actual coin YOU are looking at. If you think about it, for that guide to come up with a $185, they had to average together a bunch of numbers. Some of those numbers HAD to be higher and some HAD to be lower to get to the $185. If you spend your days trying to stay in the $185 or less range you will find it very hard to find coins that are above average. Not to say it cannot happen, but safe to say you are going to miss-out on a lot of nice coins.

If you bought the coin on the left for $220, did you pay too much for the coin? What if in 5 years when you take that coin out and look at it, you see again exactly what attracted you to the coin in the first place? You will also more than likely have forgotten that you paid $35 more than the price guide said it is worth. But, if you do not buy the coin, or worse buy the coin on the right, you will inevitably wind up thinking about how you let the one on the left get away because some price guide said it was too much. To add insult to injury, you may have passed up the coin on the left, because some price guide used the sales price of the coin on the right to determine the average price of both these coins! Ouch!

You have fallen into a statistical trap.

By definition a “guide” price is an average price. If you are buying average coins you are all set. But if you are looking for nice coins, more times than not relying too closely on a price guides will keep you away from higher quality coins and will ultimately destine the quality of your collection to be a whole bunch of average.

When you look at a price guide price, you are, by definition, looking at an average bell-shaped curve price for an average coin. Value Collectors are buying to the left of that bell and Astute collectors are buying to the right of it. If you aim for the middle, that’s where you will end up.

Nice coins do not sell for sheet prices, and sheet prices are not for nice coins.

Thanks for reading,

Armen and Heather Moloian

Comments

  • BillJonesBillJones Posts: 33,471 ✭✭✭✭✭

    A monster toned 1881-S dollar is what you are looking for, not what I am looking for, I can walk away from such coins very easily because they don't fit what I want in my collection. Furthermore, since I don't travel in the toned dollar circles, I have no idea to whom I would sell such such a coin at a huge premium when the time comes.

    Every collector has their ideas of what is worth a premium. Usually when you make such choices you have some some idea of the dealers who make the market. That in the end that is the deciding factor. it has nothing to do with playing the market for "monster toning" when you don't have a firm idea about what you are doing.

    Retired dealer and avid collector of U.S. type coins, 19th century presidential campaign medalets and selected medals. In recent years I have been working on a set of British coins - at least one coin from each king or queen who issued pieces that are collectible. I am also collecting at least one coin for each Roman emperor from Julius Caesar to ... ?
  • amwldcoinamwldcoin Posts: 11,269 ✭✭✭✭✭

    I posted this because it really relates to Barber coinage and other series I'm sure!. Lately there is so much more crap being graded that would have been rejected as cleaned before that it is making people think they should be able to buy a nice original coin at the same prices the crap sells for. You know and I know this is true across the board!

    @BillJones said:
    A monster toned 1881-S dollar is what you are looking for, not what I am looking for, I can walk away from such coins very easily because they don't fit what I want in my collection. Furthermore, since I don't travel in the toned dollar circles, I have no idea to whom I would sell such such a coin at a huge premium when the time comes.

    Every collector has their ideas of what is worth a premium. Usually when you make such choices you have some some idea of the dealers who make the market. That in the end that is the deciding factor. it has nothing to do with playing the market for "monster toning" when you don't have a firm idea about what you are doing.

  • amwldcoinamwldcoin Posts: 11,269 ✭✭✭✭✭

    Wish the pictures had copied from the email!

    @tradedollarnut said:
    _So you look at the price in MS65 ($120) and then look at the price in MS66 ($250) and come to the conclusion that the dealer's asking price of $220 is more than you SHOULD pay, so you walk away from the coin. You may be disappointed that you let a nice coin get away from you, but at least you did not wind up paying too much.

    BIG MISTAKE._

    I am a fan of paying up for quality but in this instance it’s hardly a big mistake. Spend another $30 and buy as nice of an average MS66 as you can find - which will invariably be nicer than the MS65+. If this dealer is urging you to pay an 80+% premium over price guide for the plus, why not pay an additional 25% premium over price guide for a coin that actually is the next grade up? Seems like a bargain.

    (This assumes the respective coins are accurately graded and the 65+ isn’t a 66 in the wrong holder. )

  • tradedollarnuttradedollarnut Posts: 20,146 ✭✭✭✭✭

    If there’s toning premium involved then throw price guides out the window

  • TommyTypeTommyType Posts: 4,586 ✭✭✭✭✭

    I agree with the theory: Nicer coins sell for more money, and price guides SHOULD be an average price of average coins.

    But there are two places where the theory can be sidetracked*.

    *At least at the "low to mid grade" level. I will admit that at the high end, there are a whole lot of smart and motivated people on both the buying and selling end of the transaction, working with coins that may NOT have comparable quality coins within easy reach, and my comments below are probably weeded out at the wholesale level.

    1) Not all dealers operate by using "High end / Low end" pricing. Most coins (at the lower grades) are easily obtained, and are often sold at a set markup percentage. Many dealers will be happy to sell as long as they get their profit, and the "high end", "average", and "low end" calculation isn't done....or is only loosely considered.
    As a result, it IS quite possible to find a NICER coin at a LOWER price a couple of tables away.
    (One could say the dealers are undercutting each other...but it's purely unintentional, I'm sure).
    This is why I often walk the entire bourse before deciding what I want to look at, and have priced for me. (Just a personal quirk, maybe).

    2) Some price guides seem to me to be "optimistic" guides. And everyone seems to understand that. I have paid over PCGS guide...but MUCH more often, prices are set from the beginning below that, and are negotiable even lower. Most often, they are probably the average quality coins, that in theory, should be selling AT the price guide values. (Will agree that monster toned coins are a significant exception, but like Mr. Jones above, I choose not to play in that realm).
    I think all one needs to do is look at auction results compared to price guides. In many cases, it doesn't take too much analysis to show that the guides are just too high.

    As a result, I would not suggest that your average collector be content to pay "price guide" for average coins. My experience says they would probably be over paying more often than not.

    (I do think it's in their best interest to look at a lot of coins, and get a feel for what "average" means, though! Only then can you start to determine when you should pay over guide. No offense, but you can't let the seller decide that for you!)

    Easily distracted Type Collector
  • divecchiadivecchia Posts: 6,527 ✭✭✭✭✭

    I agree with your general premise, but beauty is in the eye of the beholder. I will pay up well over book if in my eyes, I love the look of the coin. Most coins with toning or coins that lack luster I won't even look at, never mind pay a premium for it.

    Donato

    Hobbyist & Collector (not an investor).
    Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set

    Successful transactions: Shrub68 (Jim), MWallace (Mike)
  • mannie graymannie gray Posts: 7,259 ✭✭✭✭✭

    @stman said:
    I get it and I certainly have stepped up for nice coins. Unfortunately turnabout doesn't seem to be fair play. Hmmm, where have I heard that heh. Anyway go sell those pq coins and many,/most dealers only want to pay what the barkers have sold for by the so called guides.

    And look at us low life collectors like we are the ones that are nuts. So, I walk and don't want to hear the stories. But that might just be me. :)

    I agree.....give me a number and if I like it I buy it...I don't care what a price guide says.

  • BillDugan1959BillDugan1959 Posts: 3,821 ✭✭✭✭✭

    The original commentary is okay, but the idea that coin price guides "grind a lot of data" may be true, or may not be true.

  • ChrisH821ChrisH821 Posts: 6,317 ✭✭✭✭✭

    @amwldcoin said:
    Wish the pictures had copied from the email!

    If all else fails you can use windows snipping tool to copy and paste them in. :)

    Collector, occasional seller

  • amwldcoinamwldcoin Posts: 11,269 ✭✭✭✭✭
    edited October 10, 2017 4:58PM

    I do play in a different pool than you do! I'm a F-AU kindda guy! I can tell you with out a doubt the difference in pricing between the crap and a nice original coin is crap is worth a buck and nice is worth 2 bucks! Last year I had a customer email me about an XF another dealer had forsale for almost 1/2 what I was asking for my coin. I had seen the coin and wrote him back my opinion of the coin(shouldn't have been straight graded). It just so happened I had just bought one in auction that also shouldn't have been straight graded and offered it to him at a lesser price than the other dealers. He bought it,and was happy,... evidently he was only concerned with the number on the plastic!

    @tradedollarnut said:
    _So you look at the price in MS65 ($120) and then look at the price in MS66 ($250) and come to the conclusion that the dealer's asking price of $220 is more than you SHOULD pay, so you walk away from the coin. You may be disappointed that you let a nice coin get away from you, but at least you did not wind up paying too much.

    BIG MISTAKE._

    I am a fan of paying up for quality but in this instance it’s hardly a big mistake. Spend another $30 and buy as nice of an average MS66 as you can find - which will invariably be nicer than the MS65+. If this dealer is urging you to pay an 80+% premium over price guide for the plus, why not pay an additional 25% premium over price guide for a coin that actually is the next grade up? Seems like a bargain.

    (This assumes the respective coins are accurately graded and the 65+ isn’t a 66 in the wrong holder. )

  • BuffaloIronTailBuffaloIronTail Posts: 7,405 ✭✭✭✭✭

    Thanks for the write up. No one who plans to buy any coin should pay moon money for it. A little planning and research ahead of time works for me.

    There are also personal variables here. Some coins will just "fit" well in a collection. I also consider that before I purchase.

    If you research a little bit, you should never walk away feeling guilty about what you purchased.

    Pete

    "I tell them there's no problems.....only solutions" - John Lennon
  • Coin FinderCoin Finder Posts: 6,953 ✭✭✭✭✭

    TPG services and price guides exist becasue someone somewhere got screwed over on a coin; perhaps many people over the years before these things existed. Still with all these services someone somewhere is getting screwed over and paying to much..I like the guides as a starting point. The thing is, if I really have to own a coin I see.... I mean really want it... I don't look at one price guide I buy the damn thing!!

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭

    PCGS price guide is generally full retail on 90% of the US coin market. For those in high demand and tougher to find coins (like Bill Jones' coins) this doesn't apply. Very few except the truly uninitiated newbies pay full retail. It's 50% over wholesale as a rule. That's why the offers you will get on a common $100 Morgan will have a $150 price guide value. Not all coins work on +50%. But typically, most of them will fall into the +25% to +65% over wholesale range. For 90% of easily available coins, paying price guide is the last thing you should want to do. And these days, even gem proof 19th/early 20th century type is generally easily available.

    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • cameonut2011cameonut2011 Posts: 10,061 ✭✭✭✭✭
    edited October 10, 2017 10:00PM

    @tradedollarnut said:
    _So you look at the price in MS65 ($120) and then look at the price in MS66 ($250) and come to the conclusion that the dealer's asking price of $220 is more than you SHOULD pay, so you walk away from the coin. You may be disappointed that you let a nice coin get away from you, but at least you did not wind up paying too much.

    BIG MISTAKE._

    I am a fan of paying up for quality but in this instance it’s hardly a big mistake. Spend another $30 and buy as nice of an average MS66 as you can find - which will invariably be nicer than the MS65+. If this dealer is urging you to pay an 80+% premium over price guide for the plus, why not pay an additional 25% premium over price guide for a coin that actually is the next grade up? Seems like a bargain.

    (This assumes the respective coins are accurately graded and the 65+ isn’t a 66 in the wrong holder. )

    I agree TDN, which is why I don't understand the CAC only mentality of many here. I would take a wholesome MS66 "C" coin over a MS65 "B" or a MS65+ "A" coin with a sticker for the same price (e.g. Saint double eagles) assuming problem free and sufficient eye appeal.

  • amwldcoinamwldcoin Posts: 11,269 ✭✭✭✭✭
    edited October 11, 2017 4:44AM

    Actually I should have posted the 2 coins used as an example were the same grade. One was a luster bomb blast white 1881-S NGC 65+ Morgan Dollar and the other was a bland looking toned 1881-S PCGS 65+ Morgan Dollar.

    @tradedollarnut said:
    _So you look at the price in MS65 ($120) and then look at the price in MS66 ($250) and come to the conclusion that the dealer's asking price of $220 is more than you SHOULD pay, so you walk away from the coin. You may be disappointed that you let a nice coin get away from you, but at least you did not wind up paying too much.

    BIG MISTAKE._

    I am a fan of paying up for quality but in this instance it’s hardly a big mistake. Spend another $30 and buy as nice of an average MS66 as you can find - which will invariably be nicer than the MS65+. If this dealer is urging you to pay an 80+% premium over price guide for the plus, why not pay an additional 25% premium over price guide for a coin that actually is the next grade up? Seems like a bargain.

    (This assumes the respective coins are accurately graded and the 65+ isn’t a 66 in the wrong holder. )

  • BIGAL2749BIGAL2749 Posts: 742 ✭✭✭✭
    edited October 11, 2017 5:52AM

    I think all of the statements made so far are on the money for generic coins but it's a different game on the truly rare and early (18th cent.) coins. An 1881-S dollar is a very generic coin thru 66.
    Also a rapidly rising market can bail you out on a coin that you paid too much.

  • tradedollarnuttradedollarnut Posts: 20,146 ✭✭✭✭✭

    assuming problem free and sufficient eye appeal.

    Well, that’s the rub - isn’t it? Most collectors do not have the skills to detect what can be done to coins these days

  • rickoricko Posts: 98,724 ✭✭✭✭✭

    Price guides are a crutch for inexperienced buyers and, because they vary widely, are also used - in some cases - by dealers to support their price. One must educate oneself through many sources, and then - and this is critical - be able to appraise the coin you are considering. Technical quality - in all respects - and, of course, eye appeal. If these attributes coincide with the price, buy. If not, negotiate or walk. Cheers, RickO

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