Is it possible to corner a market; then sell and come out ahead??

Ed62 · May 23, 2016 7:19AM

That is, to buy up all, or nearly all, of the supply of a commodity or collectible as prices rise from outside demand, then unload ahead of the price decline, and come out ahead.

Jay Gould tried it with gold, the Hunt brothers tried it with silver, and a rich Chicago collector (whose name slips my mind) tried it with 1856 FE cents (he had over 700 as the story goes). The force of the USG broke the corner for the first two, and I don't know how the third came out in the end.

But is it even theoretically possible to get out from under the selling stampede once the price collapse begins??

Is there a different answer for a market with forward contracts??

Danye West · May 23, 2016 7:31AM

Someone ATS mentioned a guy holding 10 or so 1796 dimes. I suppose if you bought up all the examples offered over a few decades, potentially, you could corner the market.

Wabbit2313 · May 23, 2016 7:35AM

I knew a guy a few years back buying any and all AU53-AU58 1884-S morgans. I am talking everyone that would come across eBay and any he could find anywhere else. I sold my AU-55's to him for $700-$800, maybe 5 of them if memory serves.

a few years later I see them selling for $400-$500 all day long on eBay. So much for that try!

TwoSides2aCoin · May 23, 2016 7:44AM

Cornering is what specialists do. Not that anyone owns the market.

WaterSport · May 23, 2016 7:47AM

I see that wheat cent hoarding has kept prices steady and 2-3 cents each these days....Sooner or later they are going to have to sell.

WS

amwldcoin · May 23, 2016 7:58AM

We all know about Little Orphan Annie!

joebb21 · May 23, 2016 7:59AM

Yes- very successfully.

The key is that nobody knows what you are doing and when

MrEureka · May 23, 2016 9:26AM

It probably only works if you get lucky/smart on your timing, if you can do something to increase demand for the coin, or if you team up with a retailer/promoter who can help you liquidate the coins to unsuspecting marks.

First, an example of getting lucky/smart. A dealer convinced a couple of big investors to hoard proof type coins in a very big way in 1977-79. Prices rose significantly as they built their position, but didn't go completely wild until the super bull market of late 1979 and early 1980. They sold out near the top and made a fortune, but they couldn't really attribute their profits to "cornering the market". They just bought and sold the right coins at the right times.

Second, an example of doing something to increase demand for a coin. Buy up the supply of an obscure rarity, make it famous by publishing an article or book, or by getting it listed in the major catalogs, or by convincing a TPG to recognize it, and then slowly sell the coins into the market.

Third, an example of working with a retailer/promoter. Quietly buy up a large quantity of a relatively common coin or series of coins. Then buy more, with increasing visibility and at increasingly higher prices. Then, have the retailer/promoter tout the series to his customers - typically, investors - and liquidate your position at the new higher prices. If all goes well, you'll be out of coins before anyone even realizes you've stopped buying.

RichieURich · May 23, 2016 9:32AM

I know a person who owned ten (that's right, ten!) 1804 dimes. He called them "my 1804 dollar".

I don't think he was trying to corner the market, I think he just liked 1804 dimes a lot.

BryceM · May 23, 2016 10:37AM

Sure, but I only see it happening in a coin with relatively low pops with a concerted buying effort over many decades. Trying to do it in something as popular and widespread as Morgans isn't going to work. The later examples to be acquired will likely become quite expensive as you're essentially competing with yourself (previous strong bids). When it's time to sell, you'll do well with the first few, but it's hard to set new price records unless it's been quite a while since one sold openly. After selling a few, demand will soften (probably) and the last ones to be liquidated won't bring in as much as the first ones. Selling them all at once won't work either, as it's pretty easy to follow what is being offered.

TopographicOceans · May 23, 2016 10:49AM

Ask the Hunt brothers

2manycoins2fewfunds · May 23, 2016 10:54AM

It is possible but requires special circumstances, deep pockets and a tolerance for risk.

There were a couple of possibilities in late 2008 with platinum coins.

In late Nov. of 2008 you could have purchased 50% or more of several platinum SP and proof issues when they were re-introduced in Nov. after having been off market since July.

Had you then quietly accumulated all available coins til say Jan. 2009 you would likely have had 60%+ of several denominations.

Destroy or deface 1/2 of your hoard and you would have been left with some real key coins with surviving mintages a deep 30% or more below any other year. Publicly announce the destruction and stand back.

Yes you would have enriched many others but at that time the spot value of Platinum mint issues was very close to the mint selling price so your loss on destroyed coins would have been small. (Actually platinum rose from a low of $800 in Now to over $1,000 by 2009 so no actual loss)

Today same thing might possibly be done in a few spouse issues however since 2008 mint has significantly increased premium over spot so loss on destroyed coins would be much larger...........

In addition we now have weekly mintage updates and risk of mint striking more coins meaning action would have to happen late in Dec.

Lastly there is some real question of how low a mintage for spouse coins would it take to juice the market.

Kinda like how much voltage to bring Frankenstein back to life.

BAJJERFAN · May 23, 2016 11:30AM

If you had 10 of a really scarce coin, you could put a post on the BST and hope you get 10 or more different PM sent.

ranshdow · May 23, 2016 11:54AM

Isn't someone trying this currently with the 1909 VDB matte proof cents? How is that working out?

jwitten · May 23, 2016 12:22PM

I probably have 70-100 of a certain date of $2 1/2 Indians. Not really corning a market, as there are plenty of them around, but it would flood ebay if I sold them all at once, lol.

oih82w8 · May 23, 2016 12:28PM

I have two of the three PCGS attributed 1872-S H10C MM Below MPD FS-302, seems that nobody wants (or knows about) the Top Pop (MS-63) for a reasonable price.

mustangmanbob · May 23, 2016 12:34PM

I was probably easier before ebay and the internet, so the pattern would not show up, and you could create localized shortages.

Nowadays, if it is rare enough, the Chinese will just pump out a couple thousand and THEY make the money, selling them to the 3rd tier direct to personal sale.

Then the word gets out that there are fakes, and the market tanks.

I see this occasionally in the Classic car market market. Some model becomes the IT car (Shelby, Dodge Hemi, Yenko Camaro, Ford GT40, Dodge Daytona. )

Either the supply of new money goes away, or more of them come out of the woodwork, or collectors finally realize the car they paid $9,000 for 20 years ago is selling for $200,000, or the collectors WIFE finds out.

rhedden · May 23, 2016 1:10PM

Cornering a market would make the most sense for a coin that "flies under the radar" and has less than 50 known. If one goes around buying 1884-S dollars in AU, he's going to get found out sooner or later, as there are just too many of them out there. As soon as dealers realize what he's doing, they're going to raise prices, and the only person who's going to pay too much for the coins is the hoarder himself. If one tries to corner the market on a well-known rarity like a 1901-s quarter, everyone out there who deals in U.S. coins is going to figure it out sooner or later. The coin is simply too popular and well-known. Popularity also translates to "very expensive," which makes it a bad item to buy up. 1901-s quarters are not exactly sleeper-rarities.

Another problem is the availability of lower grade coins. If there are no 1884-S dollars available in AU for five years, a lot of people are going to to be happy with an XF45 instead of paying too much for an AU55. That's why the coin has to have small population in all grades, right down to FR-02.

Finally, there is the massive problem of "buying them all" when there are 500 or 1000 examples of a coin available. It's much easier to quickly buy up something with less than 50 known in all grades than it is to hunt down 700 examples of the 1856 Flying Eagle cent. One might not be able to pry every last one of the 50 the coins out of the strong hands of specialist collectors, but if he buys even 10 of them, he might be able to put a hurting on the market availability for 10 years. Prices could conceivable rise.

So I guess the right approach for the prospective market cornering, anti-trust genius is to find something obscure that has less than 50 known, buy them up quietly, and then wait long enough for a new generation of collectors to discover on their own that they are seemingly "never available." Once the coin gets talked up on the bourse and the internet forums, a la the 1824/2 and 1909-o quarters, there could be a market bubble. Ten coins can be sold off in a hurry without collapsing the market.

So what coins actually meet these criteria? Next to nothing in mainstream US numismatics qualifies. You've got to look to the obscure series to find an appropriate target. Personally, I'd rather just complete a collection of coins with great eye appeal and let the market do its thing.

Lakesammman · May 23, 2016 1:18PM

Seems like Charles Anderson did a good job - bought up a ton of patterns, promoted them through Whitman publishing with the Judd book updates, then sold them for $30 mil to Simpson.

He clearly didn't "corner" the market, but did have a good chunk of it.

EagleEye · May 23, 2016 1:26PM

The John Beck hoard of 1856 Flying Eagles cents was not so much a speculation to make money than it was a compulsion to own them all. He hoarded $50 slugs as well. He had a standing offer to buy all 1856's offered ($10) at the time. He got much of the lower grade pieces that way. He died and the estate was sold many years later. The knowledge of the hoard might have kept prices down in the early 1970's. The coins were wholesaled out to dealers at a fixed price. Everyone made money on the disposition of the coins. The prices rose dramatically afterward.

I am giving a talk on the Jay Gould / Jim Fisk gold corner of 1869 tomorrow at my local coin club. I'll post the video.

Zoins · May 23, 2016 1:41PM

If someone cornered the market for a coin, could the make a rarity like the 1822 half eagle?

There's some theory that most of the 1822 half eagle mintage was melted.

Overdate · May 23, 2016 5:51PM

Sure you can corner the market and make a profit.

Purchase a coin with a population of 1.

Sell it a few years or decades later for a higher price.

Mission accomplished!

2manycoins2fewfunds · May 24, 2016 5:23AM

The problem is not just the acquiring without driving price up but perhaps more importantly disposing without driving price down.

I do believe at present the spouse gold would be best bet.

Low mintages with tight spread between 5-10 coins for low mintage king..

Mint production is now limited to runs of around 2500 coins +/- 500 for each issue in PR/MS

Buyers are now used to issues being available for months on end.

Take last issue of year............the closer to new year it comes out the better.

Wait til last few days of Dec. and buy all remaining inventory from mint.
That solves problem of acquiring without driving price up.

Too late for mint to strike more.

Going dark will start frenzy.

Wait a few months and post a youtube video of you using a hammer to insert them into albums.
(Even better use a hammer with a specific punch mark.......in time the counter struck coins might have value beyond bullion.)

This defacement is key.........destruction/defacement to reduce population must be real.

Rest is market driven.

Need will be to remove 30-50% of mintage leaving a new deep, deep key and a lot of frenzy, message board chatter and free numismatic press.

Could be done with less than 1 million investment with difference between bullion value and mint cost absolute max. loss.

I'm kinda surprised someone hasn't done it yet.

or have they........................

PonyExpress8 · May 24, 2016 6:44AM

I am aware of a handful of relatively scarce dates where this was attempted with mixed results. The difficult part is the sale of said accumulation. Most folks that attempt to corner or at a minimum have a strong influence and control the price on a date, have a poor to non-existent exit strategy.

The accumulation part isn't that difficult if the date is scarce and reasonably known to be so. This would be over a good long period of time, paying attention and being in the market regularly, yet under the radar.

But you need to sell in a similar manner, where nearly all corner attempts, would wind up dumping the coins all at once. You can still be profitable in the endeavor if you have been involved in the long haul in acquiring them and work with a dealer that has the knowledge to disburse the coins over a few months period. If anyone is interested in a couple of specific stories PM me.

mustangmanbob · May 24, 2016 8:18AM

In the late 1970's, I was attending college just north of New York City. I got into buying and selling on the stock market. They had just deregulated brokerage prices, and discount brokerages sprung up.

I figured to make it work, I would need to buy lots of a stock, low commission, and then I could sell on a modest uptick. If I was 2,000 shares or more, I could make money, albeit small, on a quarter point move.

That limited me to low dollar stocks, and I was only working the NYSE. To maintain a listing, the stock had to be more than $5 a share, but there were lots of distressed stocks less.

I had a notebook, graph paper, and got a copy of the NY times delivered each morning, and I charted and looked for patterns.

One stock ranged from 1 5/8's to 2 1/2. It had no revenue except for a lease payment on land. It had been a mining operation and shut down, and leased the land to a ski resort. There was no reason for the stock to modulate, but it did, and so I bought at 1 3/4's and sold at 2 1/4, and never held it for more than 2 weeks. On rare occasions, it sold in a day, so I never "paid" for it (5 days to fund a purchase), so the payment was just deducted from the sale.

Anyway, I got a call one day, there were some people to see me. 3 Gentlemen from the Securities and Exchange Commission investigating the sales of this stock. Short version, I was the largest buyer and seller of the stock, and I was not on anyone's radar anywhere, and inquiring minds wanted to know who I was and if there was price "irregularities"

I showed them my notebook, with the ruler and pencil. I showed how I was tracking the stocks, and what triggered my buy and sell, and the rates from the brokerage I was using. Apparently I was so small, on stocks that were thinly trades, before the giant algorithms kicked in, etc. that I was truly "cornering" that market on that one stock.

They were genuinely interested that some kid was doing this, congratulated me on my "niche", closed out the report, and went on their way.

So I guess, at least with this stock, and less than $10,000 in working capital, you can "corner" a market and make money it.

roadrunner · May 24, 2016 8:44AM

I contemplated buying every decent unc 1867-s quarter that hit the block once I got the finest known in 1986. It would have been easy. The next 3 best pieces popped up at Norweb, Eliasberg, etc. The prices were well under what that date should have been bringing. It would have been a wonderful investment with gains of 5X to 10X over the following 15-20 years, with almost no downside. Once I let another collector have the Norweb MS63 in 1988 at 30% LESS than I would have paid for it, the idea of hoarding them all lost a little luster. Then it was another 10 years before the next one showed up. Even if I had ended up with 4-6 pieces, it wouldn't have affected the market any as no one else would have had one.

I started doing the same thing with the 1858-0 quarter in 1983-1988 when I owned the finest known and 2 other 62/63 coins. Would not have been hard to buy all the others up as they showed up. These dates are not nearly under the radar like they were in the 1980's and 1990's. You also need a 10-25 year time frame to get this done.

PQueue · May 24, 2016 10:00AM

Ask the individual who bought all those "rare" 09 VDB matte proofs.

roadrunner · May 24, 2016 10:57AM

Originally posted by: PQueue

Ask the individual who bought all those "rare" 09 VDB matte proofs.

That's the problem....they weren't rare enough. You have to generally pick something where there might only be a small number of specimens available that routinely fly under the radar in a less popular series. The person that assembled a hoard of 600+ 1844 dimes because they had a neat name (Orphan Annie) and a low mintage, would have been much better served assembling 600 specimens of the top 50 or so underpriced seated coins....beginning with the 1874-cc dime. They could have done that over a 20-30 year period and formed a whopper hoard of the most desirable coins....maybe 3-10 specimens per date. They picked the wrong coin, for all the wrong reasons.

Now if the 1909-vdb person only hoarded the top 4-12 specimens. That would have been a little smarter.

mrcommem · May 24, 2016 2:56PM

I could see this happening with a coin with a low population that is already popular such as a 54-D three, or a 55-D dollar. You would have to have deep pockets and time enough to buy up enough coins to create a demand. It would take too many coins, maybe 10 to 12 to cause a problem in those that would want one of the above mentioned coins.

Is it possible to corner a market; then sell and come out ahead??

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