new legend report and meaning of "very rare"
Gazes
Posts: 2,315 ✭✭✭✭✭
I read the new Legend Report this morning and there is much interesting information in it. One sentence (actually two) caught my eye and is the question for this thread. She says "In terms of paying more, if you have a very rare coin and there is a 25% premium, pay it! Your (sic) NOT burying yourself."
My question is specific and my guess is people have a difference in opinion--what does she mean by a "very rare coin"? Does this mean only the coins that bring 6 figures or more or could it be a $3000 coin? Does it mean only top pops or could it be an incredibly original coin that is lower on the census? Does it mean a relatively common gold coin that is in uncommon condition? Is there a way to differentiate "very rare" from rare in her definition so one knows when to pay that premium or not?
I think this important since I generally agree that paying a premium for a very rare coin will pay off but I could also see someone buy a coin that they believe is very rare and others disagreeing and then not getting their money back.
Comments
As usual, it's best not to analyze exactly what Laura says, but what she means. In this case, her point is that if you're a long term buyer, it's better to overpay for the best and rarest than to get a "deal" on a second rate coin, because the best coins tend to appreciate at a much faster rate. She is correct.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Don't overpay for anything be it coins or anything else. Sales hype should always be dismissed as what it is; an attempt to transfer the money in your wallet to the salesperson's wallet.
All serious buyers I know are extremely disciplined, they don't want to fall in love with a numismatic item and overpay, there are usually better opportunities down the road. "Very rare"; condition census, top half dozen or so with a particular issue. Meaningless with common coins, or grade rarities that can be readily found at somewhat lower grades.
You can overpay for even the best coins, especially incredibly rare and irreplaceable ones as well. Gene Gardner paid up big to get the unique Newman 1840-0 ND MS67 quarter at $329,000 against those that ran him up. Same for the Newman 1861 PF68 quarter at $188K. When his collection was sold he netted $199K/60% and $129K/69%. Not exactly winners. You can pay too much. I think it was Legend in one of their reports where they stated they helped to run up Gene on that 1861 and were very happy when they got ended up with it for $129K. At the upper echelons how can you be sure you aren't the runner but the runnee? If Gene had been able to hold those 2 coins for another 8-10 yrs I'm not sure he'd have broken even yet.
Another of Gene's key coins was his 1867-s MS67 quarter purchased for $74.4K in 2004. It only fetched $88K in 2015....a pretty poor return considering how many top notch coins doubled up from 2004. I understand the need to own the best. It can be costly though, even when paying 25% premiums. Timing in coins is everything as that 1867-s went from $9.6K in 1986 to $74.4K in 2004, a 7.7X increase. Or better yet, $1800 to $30,000 from 1975 to 1980. I would consider all 3 coins discussed above very rare.
Gene knew his days were numbered before the Newman Sale. A hedge-fund manager who sold his first very high quality collection in 1965 because "my wife didn't want to live in an apartment any more", Based on his day job, he knew ROI. This lifetime hobby was one of the greatest joys of his life. Eliasberg was his role model on completeness. To have the opportunities for finest-knowns was a perhaps unknowable thrill. ROI?
None of which obviates the overall validity of @roadrunner 's premise.
Good points Colonel. Eliasberg, Pogue, Gardner, Pittman, Norweb and others stand in rare air. Very few of our discussions pertain to any of them....yet would certainly apply to 95-99% of rare coin dealer customers.
This is a self-serving statement on her part. Sure, she’s okay with customers overpaying. So are some other dealers on the national circuit. Some of them sell burials in coins that are improperly graded (C- to B- coins). Others sell burials in coins that are close (C+ or B coins) that are massively over priced. And some sell Premium Quality (B+ or A- coins) coins at prices that are well beyond where they should be. I could name the names, but I don’t want to get sued.
You can overpay for anything, no matter how good it is. You should also be paying prices based on the CURRENT MARKET, not on what you think it’s going to be ten years from now. Any prices based upon the future are speculation.
In Legend's case, most of the coins they offer are not rare in the absolute sense. They sell high grade PCGS - CAC approved coins at strong prices. Yes, almost all what they offer is beautiful for the grade, but it seldom fits what I want because I'm happy with attractive, properly graded coins in the higher end of the "collector grades" (e.g. Choice AU to lower Mint State) Legend is in the "investment grade" business, they have little interest truly rare coins that are not in the top of the grade pool.
The only coin I have purchased from Legend was an 1854-D Three Dollar Gold Piece in PCGS AU-55, CAC. Legend only had this coin for sale because they had accepted it on consignment from a client, "who was headed in a different direction." They said that in their copy when they advertised the piece for sale. Under normal circumstances, Legend would never have had this coin in stock.
I bought the coin and paid a strong price, probably too much, but I've enjoyed owning it. That's what being a collector is supposed to be about.
Legend and I are like oil and water. They have different tastes and different goals than I do. If I were to buy from them exclusively, I would have far fewer coins, but more in higher grades. I would also have far fewer rare coins, like a 1854-D gold dollar or an 1838-C $5 gold or a 1796 half dollar in Fine-15. I could not have bought any of those coins from Legend unless they bought them especially for my want list.
Legend serves a segment of the market, and they serve it well. What really bugs me about Legend is that they feel to need to attack those who don't agree with their philosophy. Sure, maybe they have found the formula for making money in coins. I'm more interested in having fun with coins and making money from conventional investments.
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I see it more as 'keeping the flock in line'. Those attempting to follow the Legend model, which is a very specialized one, appear to need or benefit from periodic reminders from Laura to stay the path. She is like a numismatic border collie.
As usual, Bill hits the nail on the head.
Of course it's better not to "overpay" if a comparable piece can be had at a more reasonable price. But if a comparable piece is unlikely to come to market, what should you do? Stretch, of course.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Nothing wrong with overpaying, but you can sometimes bury yourself. It seems a better message may be to say it's okay to bury yourself on a rare coin if you enjoy it than you are not burying yourself.
If it is a "very rare coin," then wouldn't the price already reflect that rareness? Are you paying 25% on top of the price the experts list for it, or 25% more than a common year version of the coin? For example, if an 1876 Indian cent in high grade lists for $400, are they saying I should offer 25% more than that, or $500, for the very rare 1877 version of that cent in the same condition? Maybe they are saying that if the price guides and dealer think the 1877 cent in high grade is worth $4,000, that I should be willing to go as high as $5,000 to buy it?
Indian Head $10 Gold Date Set Album
Some coins of quality are so rare that they don't often come on the market. When they do, opportunity is often more important than price. I've followed that philosophy and have built great sets that I truly enjoy.
In old gold...I consider a date to be "rare" with less than 100 surviving...with maybe one auction appearance per year...
For some items I collect, rare can mean once in a decade or a generation (or two). In many of those cases, I don't worry about being buried, just whether it's in my budget.
If a satisfactory coin comes up once a year, you might as well wait for a decent deal. But if you want one of the best few of the 100 known, it might be more like once in a decade opportunity, so you may need to stretch.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Overpay ..... we need to define what's overpay on very rare coins before we can speak the same language.
To me, very rare coins has to be at least R7, aka less than 9 known to exist. There aren't too many "very" rare coins in the market to buy/sell.
In terms of overpay, do you think winning in any auction is overpay because no one is willing to outbid you at the moment? Of course not. Pogue 1804 dollar is a good example that many are willing to pay more after auction. How about, if you buy a coin and you cannot flip it tomorrow to get your money back, did you overpay?
Overpay on very rare coin is another story. Usually, very rare coins do not have a well defined value. It is very hard for me to know whether I overpaid very rare coins until the coins be auctioned next time.
Should we overpay not-very-rare-coins? If you can flip it tomorrow and make money, why not
Unique or rarely traded coins are a market in themselves. Last two bidders determine value.