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Is there more price support at the very high, ultra grades, than there is at the more common, regula
Longacre
Posts: 16,717 ✭✭✭
I was reading another thread, and a very prominent member of these boards made the following comment, in response to the current gloom and doom, and the modern coin market:
“One thing that has been overlooked by all the prognostications
of doom for the high grade moderns is that they can't possibly
dip below the lower grades. Some might see this as weak sup-
port but I believe it would prove very strong support. If the 66
drops down to even begin to approach the price of the 65 most
collectors would simply stretch and but [sic] the higher grade. There
is real value in moderns and collectors are fully aware of it.”
I thought this was a rather interesting comment, and have the following questions:
(1) What prevents an ultra high grade coin (such as an MS66), from falling in tandem in price with all of its lower grade counterparts? In other words, if the value of an MS66 starts to fall, does that necessarily mean that the value of the MS65 will not fall in somewhat equal proportion in value?
(2) If the price differential between MS66 moderns and MS65 moderns starts to get smaller (with no overall reductions in prices at other grades), is that just a phenomenon that occurs with ultra high grade moderns, or does it also hold true for classic coins?
“One thing that has been overlooked by all the prognostications
of doom for the high grade moderns is that they can't possibly
dip below the lower grades. Some might see this as weak sup-
port but I believe it would prove very strong support. If the 66
drops down to even begin to approach the price of the 65 most
collectors would simply stretch and but [sic] the higher grade. There
is real value in moderns and collectors are fully aware of it.”
I thought this was a rather interesting comment, and have the following questions:
(1) What prevents an ultra high grade coin (such as an MS66), from falling in tandem in price with all of its lower grade counterparts? In other words, if the value of an MS66 starts to fall, does that necessarily mean that the value of the MS65 will not fall in somewhat equal proportion in value?
(2) If the price differential between MS66 moderns and MS65 moderns starts to get smaller (with no overall reductions in prices at other grades), is that just a phenomenon that occurs with ultra high grade moderns, or does it also hold true for classic coins?
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)
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Comments
What was the question again?
Ray
<< <i>I was reading another thread, and a very prominent member of these boards made the following comment, in response to the current gloom and doom, and the modern coin market:
“One thing that has been overlooked by all the prognostications
of doom for the high grade moderns is that they can't possibly
dip below the lower grades. Some might see this as weak sup-
port but I believe it would prove very strong support. If the 66
drops down to even begin to approach the price of the 65 most
collectors would simply stretch and but [sic] the higher grade. There
is real value in moderns and collectors are fully aware of it.”
I thought this was a rather interesting comment, and have the following questions:
(1) What prevents an ultra high grade coin (such as an MS66), from falling in tandem in price with all of its lower grade counterparts? In other words, if the value of an MS66 starts to fall, does that necessarily mean that the value of the MS65 will not fall in somewhat equal proportion in value?
(2) If the price differential between MS66 moderns and MS65 moderns starts to get smaller (with no overall reductions in prices at other grades), is that just a phenomenon that occurs with ultra high grade moderns, or does it also hold true for classic coins? >>
As to #1, I would think that a decline in value of the top pop coin would cause a ripple effect and those graded below it would fall in value proportionally . I do not understand the logic put forth in the quoted post.
As to #2, the only way I see the price differential decreasing between say a 66 and a 65 is if the population of the 66 experiences a marked increase. Supply-side economics. Of course if this were the case, there should be less demand for the 65 and the value of that grade should decline as well. I think that this would likely hold true for both moderns and classics.
In summary, I do not agree with the quoted statement.
Blue book finished and submitted. How'd I do?
Collector of Early 20th Century U.S. Coinage.
ANA Member R-3147111
then the grade right below. thus more room to fall percentage
wise then the grade below.
The 65 might actually get more support as it is seen as a good buy
value wise until the 66 approaches a sane level comparable to it.
As in less then double the price. After that takes place the damage
was already done percentage wise.
<< <i>Often the uber condition rarities have such a high price differential
then the grade right below. thus more room to fall percentage
wise then the grade below.
The 65 might actually get more support as it is seen as a good buy
value wise until the 66 approaches a sane level comparable to it.
As in less then double the price. After that takes place the damage
was already done percentage wise. >>
That's what I always thought. People for years have said that you should buy at the grade just before the big price jump. So if a coin is worth $60 in 64, $100 in 65, and $1000 in 66 you should go for the 65.
That would also imply that the "safety" of the next lower grade's price point is not much of a safety at all. It's not particularly comforting to know your 66 will never be worth less than a 65 when the 65 is worth 1/10 the price.
<< <i>I was reading another thread, and a very prominent member of these boards made the following comment, in response to the current gloom and doom, and the modern coin market:
“One thing that has been overlooked by all the prognostications
of doom for the high grade moderns is that they can't possibly
dip below the lower grades. Some might see this as weak sup-
port but I believe it would prove very strong support. If the 66
drops down to even begin to approach the price of the 65 most
collectors would simply stretch and buy the higher grade. There
is real value in moderns and collectors are fully aware of it.”
I thought this was a rather interesting comment, and have the following questions:
(1) What prevents an ultra high grade coin (such as an MS66), from falling in tandem in price with all of its lower grade counterparts? In other words, if the value of an MS66 starts to fall, does that necessarily mean that the value of the MS65 will not fall in somewhat equal proportion in value?
(2) If the price differential between MS66 moderns and MS65 moderns starts to get smaller (with no overall reductions in prices at other grades), is that just a phenomenon that occurs with ultra high grade moderns, or does it also hold true for classic coins? >>
They let anyone say anything here.
I'm certain what was meant is that most of the undergrades are
very secure in price. What many old time collectors don't understand
about moderns is that they are collected primarily in uncircyulated or
proof condition and generally in the highest grade affordable.
Coins with a shot at pop tops have been submitted and misses form
the bulk of the next highest grade though, of course, in some cases
the three highest grades are worth the cost of submission. This im-
plies that the populations in these grades are unlikely to grow at any
higher rate than the pop tops unless these markets expand. There
should continue to be sufficient demand to absorb the coins on the
market at least to the same degree that the market will continue to
absorb any other collectible coin.
There isn't the depth to these markets that there is to something like
indian cents or buffalo nickels. This is why coins with populations of
only a couple hundred sell for such low prices. There are huge num-
bers of Morgan dollars graded in relation to Ikes because they are far
more numerous in high grade and because they are far more widely
collected. Morgans in various grades would be far more likely to move
up and down in tandem with changes in macroeconomic conditions and
Ikes are far more likely to be very stable in the "off grades" simply be-
cause they are far less available.
Of course this all presupposes that demand for moderns continues to
grow and just as you can't eat gold or GM stock you can't eat sandwich
coins either.
There is a worldwide phenomenon which is causing the prices for
moderns to explode upward. All over the world people simply quit
setting aside new coin when silver and gold were removed from the
coinage.
There is renewed interest in collecting in many of the emerging econ-
omies as well as many of the old established economies as well. Col-
lectors are seeking coins made since their countries quit using precious
metals and often can't find them. Despite huge mintages and much less
demand than for the old coins these moderns are simply exploding be-
cause of this lack of supply.
While many believe modern markets are dependent on registry sets and
the like the facts say that there's far more to the high prices for high grade
US coins. There's more support for the lower priced moderns than most
people suspect. This won't extend to every "mistake" in a slab but it cer-
tainly applies to coins that are hard to find raw.
<< <i>Beautiful fall weather here in Western Michigan.
What was the question again?
Ray >>
It's pretty nice here in Illinois too. All the fall colors remind me of beautifully toned, 19th century American coinage.
I give away money. I collect money.
I don’t love money . I do love the Lord God.