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'Creating' value at auction
tradedollarnut
Posts: 20,197 ✭✭✭✭✭
Say you have a coin that's worth $30,000 and there's a coin of the same date but lesser grade coming up at auction. Wouldn't it be smart to be an aggressive bidder on that coin in order to make your own coin be worth more? For instance, suppose every one figures that coin at $10,000 but you bid it up to $20,000 - now your coin can reasonably be figured at $50,000. You might lose a few thousand when you eventually dump out of the auction coin, but you 'created' $20,000 in value for your coin!
I've seen people protect their coin at auction - creating value seems to be the next step.
I've seen people protect their coin at auction - creating value seems to be the next step.
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Back in 1988 or so, I had a very active dealer explain to me that if he owned a coin for which he paid $1000, and that was "bid" at $1000, he would raise the bid (on ANE or CCE at the time) to $1200. If nobody hit his bid, he was up $200 on the one coins. If somebody hit his bid, he now had two coins "worth" $2400 total at a cost of $2200, so he was still up $200. He would then raise bid to $1400 at which point he figured he was up $600. It was a no risk proposition. He described it all as "simple third grade math". Somehow, he managed to lose a lot of money in the next few years. Gee, I wonder why?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>every one figures that coin at $10,000 but you bid it up to $20,000 - now your coin can reasonably be figured at $50,000 >>
If every one figured that coin is worth $10k who were you bidding against to get it up to $20k?
You would need that guy, along with another believer, to get your coin up to $50k.
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since 8/1/6
Scenario I: Competing coin (Coin A) sells for $1000 and your coin (Coin
Scenario II: Coin A sells for $2000 (you buy it) and Coin B sells for $5000, as in your proposed scenario. You dump Coin A for $1000 (what it should have sold for. Net gain: $1000.
Scenario III: Coin A sells for $2000 (you buy it) and Coin B sells for $3500, a little more than you would have guessed, but not enough. You dump coin A and lose $500.
Scenario IV: Coin A sells for $2000 (you buy it) and Coin B sells for $3000 (you (or the market) misjudged the quality difference). You have trouble getting what you think is fair for Coin A and hold it. Now, you are in the hole $1000 and own the inferior coin.
Your workout assumes that market is efficient for the auction, all of the bidders are acting as you would, all of the bidders are paying attention to what happens on one lot before bidding on the next, other bidders do not see your running up the price on Coin A as an aberrancy, etc. Seems to be that there are just as many ways for you to lose, as win.
Roulette. He would wait until it had hit either black or red three times in a row, then
lay down $20 on the opposite color (obviously thinking it was due). If he lost, he
doubled his bet and stuck with his color (since it was overdue now). Bottom line
is he would eventually win $20 once his color hit.
What he didn't take into consideration is that the wheel has no memory, there are
betting limits in place, and the house had way more money than he did, especially
after a day or two of doing this.
Ken
<< <i>Somehow, he managed to lose a lot of money in the next few years. Gee, I wonder why? >>
That's like the old stock market joke.
A broker calls his client and tells him about stock ABC is at $10 and the client says "Buy 10,000 shares".
The next day it goes up to $20 and the client says "Buy 50,000 shares".
The next day it's at $50 and the client calls the broker and says "Sell! Sell!! Sell it all!" and the broker replies "To whom?"
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since 8/1/6
At the 50K level, there aren't a lot of players. Everyone pretty much knows everyone else. So, I'm not sure this would work. If a collector buys coin X and then buys another a couple grades lower, it's gonna arouse suspicion.
Certainly you can use an agent, but the other thing is that valuation of coins at this level is really murky. If we are talking about coins with really low pops, valuation has a lot more to do with who needs what rather than what a lower grade coin might have recently sold for.
It would have been easier for me to sell too had it jumped 15% when I owned it. The reverse situation happened with this same dealer sold me a low pop type coin in MS67. As soon as the sale was complete the blue sheet dropped $2000 on this coin. I guess you could say they were propping the bid up here until they sold the coin and the odds of another MS67 being made were very slim. I also knew that they had "made" the coin from an old PCGS MS66 holder into an NGC67. Didn't matter to me as I agreed with the new grade. Such is the coin game.
roadrunner