Options
Does anyone use the concept of "Net Liquidation Value" in purchasing or selling coins?
Longacre
Posts: 16,717 ✭✭✭
I was reading one of those numismatic investment newsletters, passed on to me by the gentlemen and learned gold enthusists, RYK and DaveG. In one of the newletters, there was a description of "net liquidation value". The concept is that you want to pay as close to what a coin can properly be sold for in the wholesale market, and you want to receive very close to that value when you sell your coins. If I understand it correctly, suppose a coin has a wholesale bid price of $1500, and your dealer actually paid on the "ask" side of the wholesale market (say, $1600-$1800). Now you are asked to pay $2225 for the coin. That price is 48% above the NLV of $1500. Once you buy it, you could take an immediate 33% loss (ie, $725 divided by $2225). In dollar terms, you are paying $1 for .67 worth of investment. The newsletter goes on to say that you should strive for paying in the range of 20% above "NLV bid".
This concept seems interesting, especially for me because I like to be able to do things with formulas and understand the numbers better. Does anyone use this system? Also, in today's market and high prices, do you think this system is even useful?
This concept seems interesting, especially for me because I like to be able to do things with formulas and understand the numbers better. Does anyone use this system? Also, in today's market and high prices, do you think this system is even useful?
Always took candy from strangers
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
0
Comments
Total Copper Nutcase - African, British Ships, Channel Islands!!!
'Do not meddle in the affairs of dragons, for you are crunchy and taste good with ketchup'
If I did, if I were able to buy any coins at all, they would be low-end for the grade.
This market is highly driven by eye appeal which is a completely subjective measurement. Buy what looks nice to YOU, and don't be afraid to pay above-guide for it.