Lessons from: Collectors Rule!
RYK
Posts: 35,800 ✭✭✭✭✭
The original post referenced (and linked) to another website topic.
In particular it stated that gradeflation and TPG grading was the cause of an 80cc dollar puchased in MS66 back in 1993 as being worth less today. While that is part of the reason, maybe a tiny part, it's not the whole story. Hence my additions to that. When I checked back on this tonight I was surprised to see my reply first.
Thought I was seeing things. Looks to be a targeted strike on the first post only ..... sort of like a "smart" bomb. RYK was the orig poster, not me. It also came to the conclusion that "collector's rule."
_____________________________________________________
Sure collectors do rule, but it's the TPG's and dealers who make the Lion's share of the money off the market. Being a ruler is highly overrated.
While I agree with her basic premise that gradeflation has contributed to keeping the value of that 80cc MS66 dollar in check,
I don't think it's the primary one. There are other forces at work.
While plastic plays a role, it still tends to be true that the value of the actual coin in the plastic (and not the plastic) is what tends to drive its value. Put a great coin in low end plastic and it will fetch the next grade. Put a piece of schlock in plastic and it well often fetch 80-90% of that grade, and possibly as low as the next grade down.
Other factors:
1. Many more 80cc's have hit the market. The line for what is
rare keeps on moving because of more coins hitting the market.
We saw this effect in 1990-1996 and it will continue. It was
great when there were say only 200 MS65 WM seated quarters
graded. Today that number might be around 1000. Well there
aren't 5X as many buyers (or dollars) to pick up the extra qty.
2. Prices in 1988-90 went so high that is has taken 10-20 years
to recover. In some cases the price of some coins haven't yet
recovered even assuming they went up one point. MS65 Barber
quarters were selling for $3500 in 1989. Even if graded MS66
today that's only $1600-$2200. They may not fully recover in
this current cycle. There are just too many of them for the
current demand.
3. Registry fever and modern mania has shifted demand away from
classics. Carson City dollars have done very well in spite of this.
But even the 80cc is too common in MS66 for the set demand.
And collectors who want an MS66 type will get a more common
84cc. The big Morgan collectors are after one of the MS67 80cc.
There are not that many collectors who are assemblying an MS66
set of CC Morgans. Those set collectors are more interested in
GSA's or a decent 63-65 specimen. What was popular in 1993
may not be so hot today. Bottom line though, if that 80cc buyer
was fussy in 1993, he'd have an upgrade coin today. If he bought
product in 1993, he probably still has a MS66. Again, the fussy
and seasoned collector/investor/dealer has the upper hand. The
TPG standards in the early 1990's were not perfect. Most of what I
saw in holders I passed on. If you were selective then, your coins
would upgrade today. This is just as true today.
Example: I purchased a wonderful album toned NGC MS67 1839
half dime off Teletrade in 1993 for $9500. The coin was selling
for $20,000+ in 1990. I thought it had fallen enough and jumped
in since coin market down cycles "only last 3 years" (true for the
past). That coin fell to under $5000 by 1996!! Even today it's
probably worth only $7500-$8500 in the old holder. I'm still
underwater after 14 years, just like the 80cc guy! But the coin
is also monstrous and could upgrade to MS68...or at least a 67*.
That would get me above water. Maybe being fussy on that one
will bail me out. But gradeflation was not the primary cause of
this.....the other factors listed here certainly are.
4. Stock, bond, real estate markets. These have taken a lot of
money from coins. Home prices fell from 1990 to 1996, and so
did coins for that matter. Why invest in coins during the stock
mania of the 90's, followed by the housing mania? Stocks and
bonds never performed like this in the 1970's or 1980's. And
no wonder! From 1982 to 2007 the money stock has increased
13X. That's rocket fuel for stocks....coins took second fiddle.
5. Price of gold kept in check from 1990-2002. There is still lots
to be made up. The effect had to spill over into coins as well.
Gold moves have often propelled the coin market since 1971.
There were no significant central bank gold sales in the pre-1990
era. There were also no significant derivatives, forward selling,
leasing, Yen carry trade, etc. All the rules were changed.
6. Failure to pick the right coins. If you had an eye for quality and
rarity in the 1990's you have done well to date. 1880cc in MS66
a rarity? No. Popular? Yes. Investment potential? Mixed.
If you bought the status quo your returns are mixed. The game
changes. This has certainly hurt classic coin collectors the most
with the exception of those into early bust, key 19th cent. dates,
finest knowns, major rarities, REG sets like RED Indian cents, etc.
7. Step pricing of coins based on "fixed" grades. The mentality
that all coins in that grade are worth about the same. The
minority of the hobby works on a grading continuum, the majority
believe in step pricing. Reality is that no two coins are of the same
quality, but try and get others to believe that.
There are no doubt more but enough for one day. Other reasons?
roadrunner
In particular it stated that gradeflation and TPG grading was the cause of an 80cc dollar puchased in MS66 back in 1993 as being worth less today. While that is part of the reason, maybe a tiny part, it's not the whole story. Hence my additions to that. When I checked back on this tonight I was surprised to see my reply first.
Thought I was seeing things. Looks to be a targeted strike on the first post only ..... sort of like a "smart" bomb. RYK was the orig poster, not me. It also came to the conclusion that "collector's rule."
_____________________________________________________
Sure collectors do rule, but it's the TPG's and dealers who make the Lion's share of the money off the market. Being a ruler is highly overrated.
While I agree with her basic premise that gradeflation has contributed to keeping the value of that 80cc MS66 dollar in check,
I don't think it's the primary one. There are other forces at work.
While plastic plays a role, it still tends to be true that the value of the actual coin in the plastic (and not the plastic) is what tends to drive its value. Put a great coin in low end plastic and it will fetch the next grade. Put a piece of schlock in plastic and it well often fetch 80-90% of that grade, and possibly as low as the next grade down.
Other factors:
1. Many more 80cc's have hit the market. The line for what is
rare keeps on moving because of more coins hitting the market.
We saw this effect in 1990-1996 and it will continue. It was
great when there were say only 200 MS65 WM seated quarters
graded. Today that number might be around 1000. Well there
aren't 5X as many buyers (or dollars) to pick up the extra qty.
2. Prices in 1988-90 went so high that is has taken 10-20 years
to recover. In some cases the price of some coins haven't yet
recovered even assuming they went up one point. MS65 Barber
quarters were selling for $3500 in 1989. Even if graded MS66
today that's only $1600-$2200. They may not fully recover in
this current cycle. There are just too many of them for the
current demand.
3. Registry fever and modern mania has shifted demand away from
classics. Carson City dollars have done very well in spite of this.
But even the 80cc is too common in MS66 for the set demand.
And collectors who want an MS66 type will get a more common
84cc. The big Morgan collectors are after one of the MS67 80cc.
There are not that many collectors who are assemblying an MS66
set of CC Morgans. Those set collectors are more interested in
GSA's or a decent 63-65 specimen. What was popular in 1993
may not be so hot today. Bottom line though, if that 80cc buyer
was fussy in 1993, he'd have an upgrade coin today. If he bought
product in 1993, he probably still has a MS66. Again, the fussy
and seasoned collector/investor/dealer has the upper hand. The
TPG standards in the early 1990's were not perfect. Most of what I
saw in holders I passed on. If you were selective then, your coins
would upgrade today. This is just as true today.
Example: I purchased a wonderful album toned NGC MS67 1839
half dime off Teletrade in 1993 for $9500. The coin was selling
for $20,000+ in 1990. I thought it had fallen enough and jumped
in since coin market down cycles "only last 3 years" (true for the
past). That coin fell to under $5000 by 1996!! Even today it's
probably worth only $7500-$8500 in the old holder. I'm still
underwater after 14 years, just like the 80cc guy! But the coin
is also monstrous and could upgrade to MS68...or at least a 67*.
That would get me above water. Maybe being fussy on that one
will bail me out. But gradeflation was not the primary cause of
this.....the other factors listed here certainly are.
4. Stock, bond, real estate markets. These have taken a lot of
money from coins. Home prices fell from 1990 to 1996, and so
did coins for that matter. Why invest in coins during the stock
mania of the 90's, followed by the housing mania? Stocks and
bonds never performed like this in the 1970's or 1980's. And
no wonder! From 1982 to 2007 the money stock has increased
13X. That's rocket fuel for stocks....coins took second fiddle.
5. Price of gold kept in check from 1990-2002. There is still lots
to be made up. The effect had to spill over into coins as well.
Gold moves have often propelled the coin market since 1971.
There were no significant central bank gold sales in the pre-1990
era. There were also no significant derivatives, forward selling,
leasing, Yen carry trade, etc. All the rules were changed.
6. Failure to pick the right coins. If you had an eye for quality and
rarity in the 1990's you have done well to date. 1880cc in MS66
a rarity? No. Popular? Yes. Investment potential? Mixed.
If you bought the status quo your returns are mixed. The game
changes. This has certainly hurt classic coin collectors the most
with the exception of those into early bust, key 19th cent. dates,
finest knowns, major rarities, REG sets like RED Indian cents, etc.
7. Step pricing of coins based on "fixed" grades. The mentality
that all coins in that grade are worth about the same. The
minority of the hobby works on a grading continuum, the majority
believe in step pricing. Reality is that no two coins are of the same
quality, but try and get others to believe that.
There are no doubt more but enough for one day. Other reasons?
roadrunner
0
Comments
No matter how you slice it, the shepard still makes all the money.
and it sets us apart from practitioners and consultants. Gregor
<< <i>True. But if most of the rulers have no backbone and cave in to the silly and damaging whims of some of its "subjects," it won't be a very effective rule. >>
Very well said!
Just like inflation has robbed the general public blind since 1913
(dollar eroded 95%), gradeflation has done the exact same thing to the coin public over the past 20 years. The system benefits those in the know and with grading/pricing/negotiating skills. The average public though has lost hundreds of millions or billions of dollars not being able to navigate the grading system and really determine what their coins are worth.
roadrunner
I haven't come across a thread on the new "prices realized" feature that's linked on PCGS' home page, so I wanted to comment here that it might prove to be a great tool. I've printed out the results for the later date Walkers I own in top-pop grades, and I'm planning to search each auction houses' archives to find the photos.
Will I find dreck among the auctions that realized steadily dwindling prices, and stellar examples to explain the outlying high prices? I sure hope so.
Because I have no doubt that we "rulers" can learn to find the best coin for the tag, in part by putting pressure on internet dealers to properly image and describe their coins.
As an aside, my confidence in collectors is challenged a bit by this good faith in "old holders." New collectors, like myself, learn about the good old days and think there's great opportunities in these scratched-up slabs, but obviously these rattlers and green tags have been picked over long before I got here. If it's in an old holder, it's for a good reason (unless it just came to market from an old collection).
I don't exect to see new hoards of MS67 seated halves hitting the market at any time in the future. The increase of MS67 pops here is almost solely due to resubmits and gradeflation.
Just like with M3, the govt has to increase money stocks to keep the inflation game going. To stop the inflating means an end to the game. It's a direct correlation to the gradeflation problem.
roadrunner
Is this slabbable?
.............
Seriously though, I think the topic is worth discussing and tossing all the blame at gradeflation or inconsistent grading is only partly the issue. Personally, I think inconsistency is worse than gradeflation.
Like Elvis, maybe LS has become a bigger celeb or folk hero of sorts here following her bamming.
roadrunner
Here, I'll ttt the message for you guys.
and it sets us apart from practitioners and consultants. Gregor
<< <i>TDN, I recently opened an OBW roll of walkers and one of the coins had toning on it that formed a visual image of LS in the field! >>
Put it on eBay. It'll probably bring even more than the toast with The Virgin Mary.
Russ, NCNE
<< <i>I would add Auction Companies to the "Lion Share" list.... >>
Re: Auction Companies
An apropos quote from the movie, Trading Places............
We have other clients who are speculating that the price of gold is going to fall.
They've placed their orders with us and we buy or sell their gold for them.
Tell him the good part.
The good part is that no matter whether our clients make money, or lose money, Duke & Duke get the commissions.
Well, what do you think, Valentine?
Sounds to me like you guys are a couple of BOOKIES.
The sheep analogy is a good one. There are few independent thinking collectors, in the large herd of sheep. Some of the sheep are old and wise, but still have to migrate when the flock moves. Some are new borns are easy prey. There are wolves (scammers), that prey on the weak. There are herders (reputable dealers and top grading services) that tend the sheep and try to keep the sheep happy, in return the herders get the wool every now and again (fees and profits). Sometimes a cattle car full of new well-heeled easily led sheep come into the market. When that happens they are often led where ever the herders or wolves want them to go. The wolves will take their portion and the herders take their percentage out of them.
I do think grade inflation is real. However, it is unrealistic to expect 100% consistency over 14 years. What does can any realistic person expect from the grading services, when a significant portion of their revenue is from resubmits? If they held the line so hard that no coin ever upgrades, revenues get hit, and dealers complain about the lack of so called new material (fresh upgrades).
I do think the article is a useful warning to would-be coin investors. A nice collector coin has the same value as it did 14 years ago, or 0% return for the time period. Zero. Even if it crept up a grade, the return with the grade bump is somewhere between 1% to 3% per annum, at retail prices on both ends. Buying at retail, selling at wholesale, as many do, and the collector's return is less, and this is if he/she was able to get the coin upgraded. Sure some coins have done better, however, some coins have also done worse. This is during a good coin market, with a relatively good economy.
/edit typos
<< <i>Now, I definitely think that Laura is on the right path. However, why won't she, or any other dealer for that matter, name these people who are screwing with the coins and, in turn, collectors???
TELLING US THAT COINS ARE GETTING DOCTORED DOES US ABSOLUTELY NO GOOD UNLESS YOU TELL US WHO IS DOING IT so that we know who to steer clear of!!!!
Are there no leaders left in numismatics??? Will no one stand up for the collector and say "Dealers X, Y, and Z are selling scrubbed and retoned crap ... BEWARE!"??? It is easy to cry "Doctor" and "Gradeflation" ... but it will take a real industry leader to step up to the plate and out specific individuals to actually make a change. LAURA ... ARE YOU THAT LEADER??? I hope so ... >>
Absolutely. It's almost as if coin doctors are the Mafia or something, where people are afraid to identify them and "testify" against them for fear of being "rubbed out."
Why is it a long time poster can place a link to a bammed members site where there is a story that pounds PCGS to pieces ??
If a newbie did the same thing they would get booted in a heartbeat . Whats going on here ?
<< <i>Knowing who is doing the doctoring may not do a collector any good as I would think that most of the doctored coins go through a wholesale process, or at the least change hands a time or two before they become available at the retail level. >>
<< <i>so this thread evolves into doctored coins .........
Why is it a long time poster can place a link to a bammed members site where there is a story that pounds PCGS to pieces ??
If a newbie did the same thing they would get booted in a heartbeat . Whats going on here ? >>
First and foremost, it's not about doctors , it's about Rosa Parks
``https://ebay.us/m/KxolR5
<< <i>
<< <i>Knowing who is doing the doctoring may not do a collector any good as I would think that most of the doctored coins go through a wholesale process, or at the least change hands a time or two before they become available at the retail level. >>
<< <i>Why is it a long time poster can place a link to a bammed members site where there is a story that pounds PCGS to pieces ?? >>
For the same reason that former members who have been banned multiple times get away with coming back as an alt for a while.
Russ, NCNE
Cuz anyone who has been here for awhile already knows it anyway.
<< <i>
<< <i>Why is it a long time poster can place a link to a bammed members site where there is a story that pounds PCGS to pieces ?? >>
For the same reason that former members who have been banned multiple times get away with coming back as an alt for a while.
Russ, NCNE >>
"for a while" being the key to this series.
``https://ebay.us/m/KxolR5
<< <i>Knowing who is doing the doctoring may not do a collector any good as I would think that most of the doctored coins go through a wholesale process, or at the least change hands a time or two before they become available at the retail level. >>
I would agree that I don't think it's (mostly) the retail dealers doing it.
But there's a chance that if we know of some "coin doctoring" shop feeding the retailers, at least SOME action can be taken.
I'll use the recent scare over tainted pet food as an example. We KNOW it wasn't the retailer who tainted the food. It likely wasn't even the manufacturer of the end product. But in some place in the business cycle, something bad was going on to ultimately sell to an unknowing public. Yes, consumers don't buy directly from these suppliers of tainted wheat gluten. But we can put pressure on those who get their supply from these shady places -- IF we know who the seller of bad grain is, and if we know which manufacturers are using them. As a result, many manufacturers are more carefully looking into their suppliers.
So to some degree, if we knew the doctors and which dealers they "feed," pressure on the dealers could have at least some impact on their relationship with the coin doctors. Now I know this isn't perfect; many people who would intend to "boycott" such dealers would likely "make an exception" when the "perfect" coin (for them) hit their inventory or their auction schedule. But it's *something*. We're at least one degree closer to getting to the bottom of it. Besides, from the collector's standpoint, what would it hurt?
I suspect the truth is that the dealers who claim to know who the "doctors" are but refuse to "out" them are doing so because they don't want these doctors to stop supplying them with material at wholesale to resell to us at a profit.
Ziggy, truer words have never been spoken.
I knew it would happen.
<< <i>I suspect the truth is that the dealers who claim to know who the "doctors" are but refuse to "out" them are doing so because they don't want these doctors to stop supplying them with material at wholesale to resell to us at a profit. >>
I'm sure that's the case with some dealers. But, I'm also sure that is not the case with Laura. She simply does not want to spend the next five years dealing with lawsuits - and you can bet your ass that some of these slimeballs would sue at the drop of a hat.
Russ, NCNE
<< <i>I'm sure that's the case with some dealers. But, I'm also sure that is not the case with Laura. She simply does not want to spend the next five years dealing with lawsuits - and you can bet your ass that some of these slimeballs would sue at the drop of a hat. >>
Maybe. But if she *knows* they are doing this (presumably, if you KNOW it then you have proof), the truth is an absolute defense against libel. At least that's what I've always been taught.
I don't know the woman, but I am sure you're right, Russ. I find this all very intriguing, and this is a major reason I deal mostly with the slimeball Mint. The industry simply cannot and will not police itself - make no mistake.
I knew it would happen.
<< <i><< I'm sure that's the case with some dealers. But, I'm also sure that is not the case with Laura. She simply does not want to spend the next five years dealing with lawsuits - and you can bet your ass that some of these slimeballs would sue at the drop of a hat. >>
Maybe. But if she *knows* they are doing this (presumably, if you KNOW it then you have proof), the truth is an absolute defense against libel. At least that's what I've always been taught. >>
The "truth", and four dollars will get you coffee at Starbucks. It won't pay your legal bills.
Russ, NCNE
<< <i>I don't know the woman, but I am sure you're right, Russ. I find this all very intriguing, and this is a major reason I deal mostly with the slimeball Mint. The industry simply cannot and will not police itself - make no mistake. >>
Say what you will about Laura, but I think she is what she is because she doesn't BS with what she thinks people wants to hear and she calls 'em as she sees 'em. That can lead to some pretty serious personality clashes, but I will certainly give the woman serious points for her candor. Now if only someone would out those doctors...
<< <i>The "truth", and four dollars will get you coffee at Starbucks. It won't pay your legal bills. >>
Maybe. But I for one would throw $100 into the legal defense (if they are sued) of the first prominent dealer who has the courage to out these suckers and provide a reasonable amount of evidence for their position.
<< <i><< The "truth", and four dollars will get you coffee at Starbucks. It won't pay your legal bills. >>
Maybe. But I for one would throw $100 into the legal defense (if they are sued) of the first prominent dealer who has the courage to out these suckers and provide a reasonable amount of evidence for their position. >>
That's a nice gesture. I'll match it. Then they'd have enough for a 30 minute phone consultation.
Russ, NCNE
Since when it is illegal to doctor coins? Especially if they get slabbed following the work?
roadrunner
I knew it would happen.
<< <i>The "truth", and four dollars will get you coffee at Starbucks. It won't pay your legal bills. >>
Or maybe your medical bills if they decide to send one of their goons to remind you why you shudda kept your mouth shut.
<< <i>Or maybe your medical bills if they decide to send one of their goons to remind you why you shudda kept your mouth shut. >>
And hence we're back to my Mafia comparison. I didn't know Tony Soprano was in the coin business.
and it sets us apart from practitioners and consultants. Gregor
... PLEASE
More truth comes out in these threads than any other day of the week
My advice to all of those offering $100 to the Laura defense fund should consider becoming members of the "consortium" and send their donation there. I dont know how to link to the "consortium" page but I am sure someone will do it soon enough. (It guarantees that this thread goes *ooF)
Collectors rule only if we have a voice in our hobby, this forum is not our voice, the ANA is not our voice, the dealers are too chicken to be our voice.
We are being wagged by our tails and because we are all victims of OCD we will continue to be wagged forever
<< <i>We are being wagged by our tails and because we are all victims of OCD we will continue to be wagged forever >>
Coin collectors? OCD??
Then what?
what would you do?
Run in circles and scream and shout?
EDITED TO ADD: The people on this forum can't even agree as to what is and isn't doctoring.
<< <i>Ok, so you know who all the coin doctors and artists are.
Then what?
what would you do?
Run in circles and scream and shout?
EDITED TO ADD: The people on this forum can't even agree as to what is and isn't doctoring. >>
I am not smart enough to recognize a doctored coin so I rely on the TPGs to weed them out.....shows you how smart I am LOL
<< <i>You know that I have always been a big fan of Laura's, and a client, so my statement was not obviously intended to bash her. Laura has stated that she wants to be a true leader in the industry and affect change that will serve to protect the individual collector and the behemoth dealer alike. All that I am saying is "great" ... then be a leader and out the scumbags that are ruining the party. She has identified an issue that seriously needs to be addressed ... now finish the job and provide a remedy. And, until the "consortium" does whatever it is going to do, help us defend ourselves against the scumbags by identifying who the culprits are ...
... PLEASE
Perhaps you should get with Laura and look over the evidence she may have and see if there's enough dirt there to build a case against those scumbags before expecting her to start spouting off the mouth with names. Timing is very important and if not done right, may cause those doctors to go into deeper hiding.
What she is saying is, that she may know or has a very good idea where this stuff is coming from. Bottom line, be careful what you buy and get another opinion on those colorful coins before getting stuck with them.
Leo
The more qualities observed in a coin, the more desirable that coin becomes!
My Jefferson Nickel Collection
<< <i>What a fun thread. You call yourself a collector but you don't know enough about coins to grade them. So you rely on the tpgs and then feel cheated that your coins are lower grade than the coins you see on the bourse floor. Folks if the coin is pq then its pq. Stop your worry. Seems people here are missing the point that this is supposed to be a enjoyable hobby to collect not to worry that the 8k coin you just bought is now a month later worth 7700. Old time collectors studied the coins and spent years with the sets they built. Today a person walks into a show with a big wallet and expects to buy the #1 set. in a day. >>
I agree with this 100% in principle.
The problem is that even if we stray from the "herd" in terms of becoming educated, relying on our own opinions, learning how to evaluate coins and all that, the fact remains that the herd mentality still has a HUGE impact on how the rest of us are able to collect. So even if we buy the coin and not the holder, and even if we buy the book before the coin, even if we do all our due diligence, the market dynamics are thrown way out of whack by those who don't. So I still think those who aren't *directly* affected by the status quo still have a vested interest in stopping the train before it continues to roll out of control in its current course.
Huh? Market dynamics don't keep a nice coin from being a nice coin, nor do they keep a crappy coin from being crappy. I don't get what you mean.
I knew it would happen.
<< <i>Huh? Market dynamics don't keep a nice coin from being a nice coin, nor do they keep a crappy coin from being crappy. I don't get what you mean. >>
No, but as much as we say to buy the holder and not the coin, the bottom line is that a lot of people chase numbers on the slab.
This affects what we pay for coins (a clearly 64 coin in a 65 holder will probably get closer to 65 money because someone will bid up to that). Gradeflation results in another market distortion. Crackouts and resubmissions that reward coin doctoring cause more and more original coins to disappear...making us pay more for the ones that remain. Crackouts also result in too many overgraded coins that people won't often sell for what they SHOULD be worth without the plastic.
The bottom line is that much of what goes on in today's market results in making us pay a heck of a lot more for coins. Good for dealers, good for coin doctors, good for crackout artists and perhaps good for investors/speculators...but bad for collectors who simply want to accumulate nice coins at less than absurd prices.