Heritage auction realized prices: retail or wholesale (deconstructing price guides)

RYK · June 16, 2005 12:17AM

I often wonder how price guides (Coin Values, Greysheet, Numismedia, etc.) compile and analyze the data that goes into the published prices in the various price guides. I personally think that there is a lot of guesswork and perhaps some degree of shenanigans involved. When one asks how a price guide obtains data for its guide, you get an answer like dealers reported wholesale and retail prices and auction prices. For the sake of argument, let us assume that Heritage is the largest and most important auction venue. Are the prices realized in Heritage auctions considered wholesale, retail, or neither?

jcping · June 16, 2005 12:30AM

To me, common coins auction prices are toward wholesale and rare coins auction prices are toward retail.
But, in this up market, who knows

coinguy1 · June 16, 2005 12:32AM

Good post, Robert. Welcome back, too : )

<< Are the prices realized in Heritage auctions considered wholesale, retail, or neither? >>

In all seriousness, it depends upon who the winning bidder is. And, since most of us don't usually know that, we can't know if the price realized represents "wholesale" or 'retail". Accordingly, consulting prices realized in order to make such a determination is often highly misleading, not to mention fruitless.

coppercoins · June 16, 2005 12:38AM

I have actually had a hand in formulating a price guide. All of wht you mentioned is included as is the consumer price index and the values of various metals. Additionally, the stock market plays a small role, as does auction prices realized and previous months' price guides.

mrdq · June 16, 2005 12:40AM

misleading and fruitless might be harse.

It's quite possible to be off by a factor of 10 or even 100 on many many coins without doing any research. If the prices realized are either wholesale OR retail it HAS to be close doesn't it? Everyone here claims there's very little profit in coins so you must be within 10-15% of a retail price. I'd rather be within 15% than off by a factor of 10 or 20 or more.

I think realized prices is pretty darn valuable to the common man and possible any dealer looking to see a range of prices based on some sort of reality rather than a website sheet or a book printed last year.

RYK · June 16, 2005 12:56AM

There are three possible ways for me to buy auction coins:

1. I buy the coin from a dealer who bought the coin from the auction and typically pay a 10-15% premium over the realized price.
2. I buy the coin directly from the auction and pay the realized price.
3. I buy the coin from the dealer who represented me in a no-risk (for the dealer) transaction and typically pay 5% over the realized price.

How can the nameless, faceless price guide analyst determine which scenario has taken place and how to assign the data point for that transaction?

What if the dealer bought the coin at auction, carried the coin in inventory for 3 months without selling, and then sold it for a loss to a) another dealer; or b) to a retail customer?

It gets very muddled, and I have not yet thrown in the time factor and n factor, which I will do next.

geb209 · June 16, 2005 1:11AM

Why would the prices realized be anything other than retail? I always thought wholesale was the price paid between dealers behind closed doors. Heritage sales are open to everyone and just because a dealer may have purchased the coin doesn't transform the transaction into a wholesale transaction. Definitely retail.

mirabela · June 16, 2005 1:48AM

<< Why would the prices realized be anything other than retail? I always thought wholesale was the price paid between dealers behind closed doors. Heritage sales are open to everyone and just because a dealer may have purchased the coin doesn't transform the transaction into a wholesale transaction. Definitely retail. >>

I don't have all the answers to the original question, but I can't agree with this. Take an ordinary MS62 gold somethingorother in a Bullet sale -- I think it is fair to say that much of the time, NONE of the bidders are making an attempt to be the collector/long-time end user of this coin. The whole pool of bidders is comprised of people attempting to buy for resale. The closing price in such a case is close to wholesale. Maybe it goes to the dealer who works for the tightest margin, or to the guy who thinks he can crank the highest retail sale out of it, but either way it is a price that leaves room for further markup. Interestingly, the little bit of price watching I've done suggests that a higher percentage of this sort of stuff on Teletrade gets bought by retailish customers without room, or much room anyway, for markup.

MrEureka · June 16, 2005 2:00AM

Retail guides can only raise their prices based on auction results. They cannot lower prices based on auction results because they don't know if all retail buyers were represented in the auction room. Conversely, wholesale guides can only lower prices based on auction results. They can assume that there were dealers in the room ready to bid every coin up to wholesale levels, so if a coin sold below the old "bid", the new "bid" will need to be lower. On the other hand, some coins will sell above wholesale levels to retail buyers, crackout artists, etc, so a high price realized should not affect reported wholesale bid levels.

coinguy1 · June 16, 2005 2:08AM

<< I think realized prices is pretty darn valuable to the common man and possible any dealer looking to see a range of prices based on some sort of reality rather than a website sheet or a book printed last year >>

Mr. DQ, I agree with you and often consult prices realized myself.

I do think they are often misleading, however. Perhaps a given coin was PQ and brought double what a typical example would bring. Conversely, the coin might have been a dog and (pun intended) fetched only 60% of what a nice one would realize. Maybe a certain coin was esoteric and the price could not easily be put into proper perspective, etc.

Many coins will show very large price disparities in their prices realized. Unless we know who bought them and why (and we usually don't), the prices don't necessarily provide us with the type of information we often want/need.

<< Why would the prices realized be anything other than retail? I always thought wholesale was the price paid between dealers behind closed doors. >>

Geb209, I think that is a very good point/argument. I do at least wonder, however - if a dealer buys a coin out of an auction for his own account with the intent to re-sell it, might one fairly argue that he bought it at "wholesale"?

I realize that many, if not most will disagree with that line of thinking. But, (I believe) that very topic/question is part of what RYK brought up in his post - for a number of reasons, some of the results and information contained in auction prices realized are ambiguous, at best.

geb209 · June 16, 2005 2:14AM

<< 

<< Why would the prices realized be anything other than retail? I always thought wholesale was the price paid between dealers behind closed doors. Heritage sales are open to everyone and just because a dealer may have purchased the coin doesn't transform the transaction into a wholesale transaction. Definitely retail. >>

I don't have all the answers to the original question, but I can't agree with this. Take an ordinary MS62 gold somethingorother in a Bullet sale -- I think it is fair to say that much of the time, NONE of the bidders are making an attempt to be the collector/long-time end user of this coin. The whole pool of bidders is comprised of people attempting to buy for resale. The closing price in such a case is close to wholesale. Maybe it goes to the dealer who works for the tightest margin, or to the guy who thinks he can crank the highest retail sale out of it, but either way it is a price that leaves room for further markup. Interestingly, the little bit of price watching I've done suggests that a higher percentage of this sort of stuff on Teletrade gets bought by retailish customers without room, or much room anyway, for markup. >>

Interesting example that I'm certain occurs all the time. But I still don't think that it would be a wholesale transaction. The example suggests that the potential end-buyer of the marked up coin is uninformed. The opportunity was there for the potential end-buyer to purchase the coin at a much cheaper price. The fact that s/he is ignorant of the opportunity and paid too much for the coin doesn't make it wholesale. It's like buying a new car -- some people get taken to the bank while others don't. It's all retail.

Good question though and I can see both sides of the coin, so to speak.

RYK · June 16, 2005 2:30AM

Is it enough for one auction event to raise prices? I am not talking about 1924 MS-63 Saints. How many 1861-D $5 AU-50 transactions does it take to move the price? If I submit the bill of sale of my 1861-D $5 to Mark Ferguson, does the price I paid automatically become the new Coin Values retail price?

mirabela · June 16, 2005 2:39AM

<< Interesting example that I'm certain occurs all the time. But I still don't think that it would be a wholesale transaction. The example suggests that the potential end-buyer of the marked up coin is uninformed. The opportunity was there for the potential end-buyer to purchase the coin at a much cheaper price. The fact that s/he is ignorant of the opportunity and paid too much for the coin doesn't make it wholesale. It's like buying a new car -- some people get taken to the bank while others don't. It's all retail. Interesting example that I'm certain occurs all the time. But I still don't think that it would be a wholesale transaction. The example suggests that the potential end-buyer of the marked up coin is uninformed. The opportunity was there for the potential end-buyer to purchase the coin at a much cheaper price. The fact that s/he is ignorant of the opportunity and paid too much for the coin doesn't make it wholesale. It's like buying a new car -- some people get taken to the bank while others don't. It's all retail. >>

Not necessarily uninformed. Maybe the buyer lives far from major shows & auctions, but doesn't like to buy sight unseen. In this case, the dealer local to this buyer travels & buys, then sells for purchase +15% to buyers like this. Many other scenarios that don't involve the end user losing his shirt, just paying a bit more than he could have had the coin for in other venues. I'll say this, though -- the egalitarian access to auctions & such that the web provides certainly blurs the distinction between wholesale and retail, and brings those two marks -- whatever they are -- somewhat closer together.

RYK · June 16, 2005 2:46AM

Are coins that I buy necessarily retail sales? What if I buy a coin with the intent of immediately selling it? Do ebay sales count toward price guides?

neocirrhitus · June 16, 2005 2:54AM

I don't really think your intent to sell it right away makes any difference. To me, the difference between retail and wholesale is how the coin is sold, if it is put up for sale in a store or auction, where everyone has the opportunity to buy/bid on it, it is retail. If it is a private transaction between parties where people are excluded from the chance to buy, since they are not dealers or whatever, it's wholesale.

Elcontador · June 16, 2005 3:01AM

The more a particular coin is sold in a specific grade and holder and you can review it in the Heritage archives, I think you will be more informed re its pricing.

When I was looking for a type Shield Nickel in MS 66, I saw a number of nice for the grade examples selling at around a $1,250 hammer early last year. One sold for a lot more, and it was clearly a much nicer looking coin; someone thought it had a shot at an upgrade. In conjunction with the Heritage archives, I went on line to some well known dealer's websites to see the pricing on said coin. Based on this, I was able to form an opinion on where Heritage was re pricing an 1882 or 1883 Shield Nickel in PC and NGC MS 66.

The caveat is that as I was not sight-seeing the coins, there may have been hairlines or scratches on the coins that did not image well. Therefore, I only use the Heritage data as a general guide. Before actually bidding for one of these coins, I checked my 'sources' for more info.

Practically speaking, I think a knowledgeable dealer whom you trust is a more value resource than a price guide. Also, if you are dealing with a genuinely scarce coin, IMO price guides are useless.

Nysoto · June 16, 2005 3:04AM

The prices are neither wholesale or retail, they are what they are - auction prices realized, and can vary greatly for reasons previously stated. Many can be found on dealers websites at 20%+. The prices realized are critical to analyze if you bid in auctions.

One interesting data point available on some mail bid auctions is the high bid. At the last Sheridan Downey mail bid a 1795 R.6 half dollar hammered at $3581, but the high bid was $8500. The Heritage prices realized give you the prices paid - not the price the winning bidder was willing to pay, which could be considerably higher on certain coins.

morgannut2 · June 16, 2005 4:39AM

When offering a number of problem-free Morgans over the years to dealers, I have been amazed that there is almost always a cash offer of exactly what my bid was at auction. Of course this isn't wholesale, it's sight-seen from a non-dealer to dealer. But still, it suggests that wholesale price of problem free commons is around hammer or Heritage bid.

rays · June 16, 2005 4:51AM

All you have to do is look at all the lots in just *one* box of coins in a Heritage Sig sale and your question will be answered. There is a wide range of coins for each date/grade/variety and each has it's own value.

One small example from the most recent auction I participated in:

Kingswood Eureka Sale June 9, 2005. There were 4 1917 Type 1 SLQ, all MS65FH.

Lot 116 very nice, PCGS MS65FH Sold for $1093
Lot 117 OK, soft lustre PCGS MS65FH Sold for $1093
Lot 118 PQ, booming lustre PCGSMS65FH Sold for $1265
Lot 119 dull, unattractive (IMO) NGC MS65FH DID NOT SELL

lloydmincy · June 16, 2005 6:46AM

I agree with Nysoto. And for sure, NO prices realized should ever be considered wholesale - you or I or any collector/dealer could have purchased it. Some coins, with the same grade with the same TPG, could have better eye appeal, strike, color, etc, and sell for much different prices, thus making a price guide based on auction prices realized for retail or wholesale inconclusive.

rhedden · June 16, 2005 7:03AM

Based on the fact that I can buy nice type coins in PCGS holders from certain dealers and at shows at a reasonable price, while similar coins bring higher prices in Heritage auctions, I don't see how you can consider the auctions anything but "Retail". Unless you are talking about the most generic coins, e.g. 1881-S dollars in MS-64, most PCGS coins sell for 20-50% above CDNL Bid in a Heritage auction. Some with monster eye appeal go much higher, as we all know. You often have no shot at winning a coin (just an accurately graded one, not high-end) unless you are willing to go well beyond Bid. Yes, it is a free market, but the nicer coins are usually won by someone who is "stretching" to get the coin, and probably outbidding 5 other people who were also "stretching."

To me, "wholesale" implies that you can turn around and flip it for a profit, even a slight one, whereas you will usually be hard pressed to get your money out of most anything won in a Heritage auction.

You can't really say that coins in an auction are an accurate reflection of market prices. Correct me if I am wrong, but aren't dealers and consignors allowed to bid on their own material?

swhuck · June 17, 2005 5:37AM

<<Correct me if I am wrong, but aren't dealers and consignors allowed to bid on their own material? >>

I can't speak for other auction companies, but Heritage does not permit consignors to place bids on their own material over the Internet. We have no choice but to allow them to do so if they are on an auction floor, but we strongly discourage the practice and charge both buyer's and seller's fees in such an event. If a consignor has a price below which he is not willing to part with the coin, he must place a reserve.

Heritage auction realized prices: retail or wholesale (deconstructing price guides)

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