Massive Turnover of Collections
tradedollarnut
Posts: 20,604 ✭✭✭✭✭
In one of my series alone, the Seated Dollars, in the past few years there have been 7 complete [or almost complete] collections sold. Sterling, Share, Rudolf, JFS, Magdic, Sweet consigned to B&M ANA and the set consigned by a doctor to Heritage ANA . This must comprise at least half of the sets currently being built, a rather large percentage.
This certainly seems to be a lot in historical terms - is it the same for other series? What is driving this amazing turnover? Health issues? Rising prices? Are collections becoming too valuable for their current owners to keep together long term?
This certainly seems to be a lot in historical terms - is it the same for other series? What is driving this amazing turnover? Health issues? Rising prices? Are collections becoming too valuable for their current owners to keep together long term?
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Comments
<< <i>Are collections becoming too valuable for their current owners to keep together long term? >>
I don't understand the logic of this statement. How would a collection increasing in value "force" an owner to sell???
My opinion is that it is an age thing. Older collectors liquidating in their golden years...Mike
42/92
It may just be a demographic sort of change. For many collectors there has always
been more pleasure in the pursuit than the ownership. Perhaps more collectors now
are just interested in moving on to new challenges.
On the local level in this area in recent months, thier has been an increase in collections coming up for sale. Several of these were long termers who have held them for at least 10 yrs or better. I dont know the story behind them all, but several have mentioned that they wanted to take advantage of the higher pricesand ue the funds for other ventures.
Jim d
He started worrying because of security issues? Why did he worry about their high value?
This effect is magnified by the high level of competition between auctioneers, which has brought commissions down to the level at which the cost of selling can be almost ignored. (By comparison, consider some European markets where bull markets don't bring out as much supply. That's because auctioneers get in the way by grabbing 20-40% of the gross proceeds!)
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i><< Are collections becoming too valuable for their current owners to keep together long term? >>
I don't understand the logic of this statement. How would a collection increasing in value "force" an owner to sell??? >>
The concern would be that the values are approaching the bubble point and might not be sustained for much longer.
Russ, NCNE
<< <i>is it the same for other series? What is driving this amazing turnover? Health issues? Rising prices? Are collections becoming too valuable for their current owners to keep together long term? >>
>>>
The most important answer is that as prices rise, true collectors who attempt to maintain their collections begin to fear that their collection has become an investment as opposed to a collection of coins. Of course, no collector buys coins to purposely lose money in them but they also get some satisfaction that others appreciate his collection evidenced by being willing to pay more than what he paid for the same coins.
It is also a sense of validation.
I remember Logan telling me once this exact thought process even though he was a true collector, researcher and writer.
Once the coins become so expensive to upgrade the collector (even if a wealthy person) begins to revaluate whether his collection is a collection or has become increasingly an investment. Many collectors are in "denial" that their collections are outperforming even some of their real investments and it terrifies them that that their love for their collection and hobby is being "attacked" in that their collection is increasingly the tail that wags the dog.
Even collectors who do well in these financial terms now are forced to think in terms of dollars and cents and that slowly corrodes their original enjoyment of their collections and hobby.
Sure health and financial issues come into play, but an increasingly new factor BOREDOM has come to the forefront in that we are seeing more and more registry set burnout. Collections have become too easy to locate and complete and can be done at the mere click of a button. Once the set is complete and now the major upgrades are needed to be #1/2/3/4/5 or to stay #1/2/3/4/5 that now becomes an intolerable choice.
I think that drove the change in the virtual demographics by making us 'expire' all at the same time.
Link to 1950 - 1964 Proof Registry Set
1938 - 1964 Proof Jeffersons w/ Varieties
I don't understand the logic of this statement. How would a collection increasing in value "force" an owner to sell??? >>
Regardless of appreciation, there's also the issue of the sets being so valuable, period. You might build a million dollar collection of Indian cents because you really want to do it. Then, when you're finished, you come to your senses, realize that you have too much of your net worth tied up in a collection of pennies, and sell it just because it's the prudent thing to do. That didn't happen as often when the coins were worth far less.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I would have to check my theroy out with guys like Conder who have been around a lot longer and know a lot more, but that is my gut feeling.
Tbig
If less time and energy is invested in a collection, the collector will be less attached to the collection.
I find the symetry interesting and a little scary. At the rate things are changing, I wonder, if the day comes when all coins are always available, will anyone bother to collect them?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I'd guess that the percentage of consignments at auction that come from the collectors themselves, rather than their heirs, is greater now than it was 20 years ago. Perhaps with rare coin collections becoming more valuable, more would rather do it in their lifetime than see the kids fight about it from the great beyond.
I agree that the average lifespan of a collection is shorter now, not because most collectors sell after a shorter period of time, but because a small percentage of collectors are assembling high end collections and almost immediately selling them. In 1914, R.W. McLachlan called these collectors "comets" because they shine brightly for a short time, get everyone's attention, and then disappear without a trace.
I'd content that there are more richly monied comets now than ever before. The average person who consigns six-figure coins to auction has been collecting for under a decade -- a stark contrast from the era of the Norwebs, Pittmans, Oechsners, etc.
There is no question that the age factor is involved as well. I seem to remember the late Buddy Ebsen saying that the reason he sold his collection was to raise money for travel. This was clearly a redefinition of what he saw as important as he aged.
Completeness, itself, also tends to kill interest. With many collectors it is the hunt that is important. When the hunt is over they want to move on to something new.
<He started worrying because of security issues? Why did he worry about their high value?>
Andy L. answered it perfectly:
<Regardless of appreciation, there's also the issue of the sets being so valuable, period. You might build a million dollar collection of Indian cents because you really want to do it. Then, when you're finished, you come to your senses, realize that you have too much of your net worth tied up in a collection of pennies, and sell it just because it's the prudent thing to do.>
This was the first major set my buddy put together. He did it fairly quickly. He had about a quarter million bucks into it. After upgading a few coins it was clear that there is a spread between the bid and the ask
Tyler
Back in 1970, when I was 17 years old, very few coin dealers had toll free telephone numbers (I do not recall if toll free numbers even were used by them in 1970!!!). Here was what I had to do to buy one single coin for my uncirculated 1909-1958 lincoln cent set:
I wrote to the dealer in letter #1 inquiring about a 1927 uncirculated red cent. He stated that he had five of them in stock. "Please quote me your price for your best one and is it red and without any carbon specks?"
Three weeks later, I received dealer letter #1 in which he stated the coin was $3.50 including postage. "The coin is indeed all red, almost brassy in color."
A few days letter, I wrote letter #2 in which I stated "Thank you for the information but is the coin free of any carbon specks?" If so, please put the coin aside for me and I will send you a check.
Two weeks later, I received letter #2 from the dealer stating "Yes, the coin is perfect and has no carbon flecks. Please send $3.50 and I will send the check as soon as the check clears."
One week later, I sent a postal money order.
Two weeks later I received the 1927 cent which was a beauty.
It took nearly 9 weeks to get an inexpensive gem BU red 1927 cent.
The point of all this was it was too danged expensive to make a long distance phone call on such a coin. From experience, it took at least 10 minutes to complete a phone call about specific coins.
Letter writing was still done back in 1970. Going to monthly shows and club meetings and visiting coin dealers on a Saturday along with mail order bidding and attending auctions was how it was done along with auctions. It took a lot longer to complete collections in 1970 and earlier than it does today. Longer completion times meant the "process of completing the set" was more important than the completion of the set itself.
<< <i>Prices rising probably have much to do with the sale of such collections. It is human to feel the urge to book a profit and rising prices tend to bring such coins out. Also, paying off debt or offsetting losses in other ventures often give rise to sales. Or, possibly savvy numismatists want to pull money from an overheated series and put that money to potent use in an underrated (undervalued) series. The reasons for selling are probably as varied as the coins being sold.
<< <i>Oreville: what is this thing you call letter writing. I am not familiar with this term.
It's soooooo 19th century. Sounds like what Bear would do.
Rainbow Stars
Use the extra cash to upgrade
As the discrepancy of income accelerates, societies generally finalize themselves in a glow of self congratulatory excess.
After all, they CAN eat cake.
You ain't seen NUTTIN yet. We will YEARN for the "depression." Hard to keep coins in a house of cards.
When I was in this hobby 15 years ago, you kept your coins in a album. You got to handle them, look at them, place them in their spots in the album, and over time see the set completed. You got to view your entire collection and most of the time you kept them at home for easy access.
I feel the TPG's and their slabs greatly add to the turnover of collections. In any large number at all they are difficult to manage.
I suspect that now most of the fun is the chase. When the checklist is complete, off they go.
I personally am thinking of breaking all mine out of their slabs and placing them in albums to enjoy and keep.
AlaBill also makes an interesting point. Slabbing of coins might serve to increase coin turnover for two additional reasons:
1. The coins, being in slabs, might distance the collector from his/her coins.
2. Most slabbed coins are quite liquid with readily available buy/sell prices. It makes selling much easier than before.
Now its just a race for ego.
Exactly.
Jack
<< <i>I don't understand the logic of this statement. How would a collection increasing in value "force" an owner to sell??? >>
Opportunity cost. Say you are a person with a relatively modest income living in Louisiana where the cost of living is relatively low. You make $30k a year, which is a pretty decent salary here. Five years ago you took $10,000 and bought quality coins. Today that $10,000 may well have ballooned to $50k+, and that's more money than you want to have tied up in one asset--remember, (all? or most at least) investment advisors stress diversification. Perhaps it's time to put some of that $40,000 profit into a (really big!) down payment on a house, or put it back into stocks/bonds, or to use it as leverage to start up your own business, etc. Most people get quite nervous when they see a meteoric rise in the value of something they own--because the price could fall just as quick as it rose (just as Russ said). After all, if your coin collection comprised 20% of your assets back then, and now suddenly your collection represents half your total wealth, it may be time to think about knocking your collection back to the 20% point.
On the other hand, if you are a college student like myself, and perhaps you had spent several thousand on good, solid coins in 1998 (I wish I had!). Now you have a car with 140,000 miles on it, tuition payments due every four-five months, food cost, gas cost, insurance, etc. It may be a good time to sell and put the money in the bank so that when your car finally dies, you'll have the money for a new one...or when you graduate, you'll have the money for grad school, etc.
I've done it myself, and plan to continue doing it every few years. A collector of modest means can enjoy pursuing a set, piece by piece, enjoy the thrill of the hunt and a few years ownership, and "cash out" into a much higher dollar trophy piece, one that would normally take years of patient saving (and no buying
Ego selling.
Better sell before the music stops and you dont get the last chair.
Then explain to me why all these collections coming to auction, are going to higher and higher closed prices!! Maybe SOMEONE is positioning to be the next Eliasberg, Norweb, etc, and we just don't know it yet. I HOPE it is mainly new collectors, that are holding for the long haul.
Hitting close to home forum members here - Laura/Bruce/Legend have some amazing rarities between them. How long are THEY going to hold on to them??? I don't care WHEN Bruce sells his 1870-s MS Dollar. It WILL sell for more than he paid.
I can't wait for Judd 1776 to show up. WANNABE Queen will be first in line, with 1913 Nickels and 1885 Trade Dollars as gifts...
So I think it's two kinds of ego-- 1) a change through the Internet from having something you thought was special but with the Registry's you now realize isn't; and, 2) finishing up a set and moving on to something else, ego satisfied VIA the Internet Auction House and PCGS/NGC Registry listing online.
Why is it all happening at once? Prices have risen to the point retail price buried collectors can finally make a good profit, and easy access to auctions instead of the years ago when some dealers always tried to rip a collector (without Internet-based pricing knowledge)
It doesn't force an owner to sell but a collection, while it may increase in value, does not produce income. Anyone who has millions tied up in a collection has to think about how much money it could generate if it were sold and the money put into something that would produce a stream of income.
As coins become more valuable, fewer people put together the expensive sets and the expensive sets get converted into cash, some of which probably gets put back into the coin market.
Don't forget the wife factor. The more money you have tied up in a collection, the more likely it is your wife isn't going to like it. For those of you whose wives love your coins and your expensive collections, some not so lucky men would like to bless your armpits with the fleas of a thousand camels.
Women's shoes are very available and women still collect them. Same goes for many other things. If you study collecting from a psychological perspective, it's the ownership and the bragging rights of ownership (part of which is the successful hunt, I'll grant you) that cause many people to collect things. Those things will not change with availability. Modern are available and people still collect them.
P.S. I bought my first coin from you. Do you know which one?
<< <i>What is driving this amazing turnover? >>
-death
-philanthropy
-market timing
-opportunity
-ego
-distress
-financial
-loss of interest
-satisfaction
-profit
-priority
-retirement
How many of these collections of which TDN speaks have been assembled in two or three years?
Probably a substantial number of them. I sincerely do not believe that you can assemble an expensive, attractive set of 19th Century type coins in two to three years, unless you give a knowledgeable dealer a blank check and say "have at it."
To have a high end registry set, you need to have expensive plastic. Expensive coins do not necessarily equate to attractive coins, as anyone who has seen a number of high grade Trade and Seated $s will attest. Anyone with deep pockets can buy expensive coins. However, knowledgeable people with money, time and patience (not necessarily in that order) can buy attractive, expensive coins. There is a big difference.
Personally, I get more satisfaction (and save $) spending time looking for coins and buying when I finally find one that looks and is priced right for the grade, rather than saying "hey dealer X, here's a blank check, get me the nicest Barber Half you can find at the upcoming (fill in the blank) auction." I'd think the latter kind of indivdual can assemble a nice registry set rather quickly, but treat it as more of "something to do," rather than collect coins.
Again, there's a big difference.
"Seu cabra da peste,
"Sou Mangueira......."
<< <i>"
Don't forget the wife factor. The more money you have tied up in a collection, the more likely it is your wife isn't going to like it. For those of you whose wives love your coins and your expensive collections, some not so lucky men would like to bless your armpits with the fleas of a thousand camels. >>
My wife has no idea what my coins are worth and I want to keep it that way.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
There is no premium for a collection that "look right " together, it's all in the numbers on the plastic. Take a registry set from nothing to #1 and then you're out, sell it, creating much turnover in coins.
<< <i>I agree. The second part is why I sour a bit on the Registry concept. Unless your a top player, you don't feel special. >>
Disagree. You have to put the thing in perspective based on your means and what you feel you can spend on your pursuit of the Almighty Registry goal. I already know that unless I am smiled on by the Lotto Gods or have a long lost rich relative that I have no chance at number 1 or anything close and I'm comfortable with that. Considering where I thought I might be when I got back into the hobby 6 or 7 years ago now I aint done so bad.