Price guides and market value

[jwither 11]

On the NGC Message Boards, someone recently asked a question about the accuracy of NGC Price Guide which I believe is taken from the Krause manuals. Both on this forum and NGC's, there have been questions and comments about how much coins are listed for in some source and questions asked about its accuracy. Even here, I have seen a few posts from those who I would expect would know better quoting some price as if this actually reflected what the coin being discussed was actually worth. What follows is my opinion of price guides generally as well as how their usage might have changed over time.

 

First, everyone should know that something is only worth what someone is willing to pay for it, nothing more and nothing less. So yes, even though I have made numerous comments about how overpriced or exorbitantly overpriced I believe some South African coins to be, they were "worth" that price at the time the last sale occurred. (What these coins may sell for LATER is course, another matter entirely.)

 

Second, I do not know how any price guide is actually compiled or what kind editing occurs (if any) before it is released. For example, in the response I provided to the NGC post, I used the Union 1925 florin as an example since I just bought one.The VF price I paid is about the same as Krause but much less than my 2008 copy of the Hern Guide. For "UNC", Krause states $2200 while the actual value of the two listed in the combined census is likely from seven to 20 times this amount. The 2008 Hern edition lists R50,000 which is closer but still grossly wrong as of that date.

 

As I was writing this post, I found a paper I previously downloaded from the internet titled, Trends in South African Coin Prices and the Role Of Catalogues which was presented at the August 2008 meeting of the National Numismatic Society of South Africa. There is a lot of information in this document which I cannot address in detail in one post. If anyone wants to bring up some topic in it, I can try to answer or maybe someone else can do so. The reason I bring it up now is that it purports to list the approach which is (or was) used to compile South African price catalogues generically (now Hern but previously others). However, given what I describe in this post and prior comments here from myself and others, I do not agree that this has resulted in any real accuracy in recent years. Maybe it did in the past (which I will explain why shortly) but definitely not now.

 

For Union, almost none of the Krause prices have changed between my 2009 and 1998 copies, With Hern, as inaccurate as I believe it to be for any scarcer or more expensive Union or ZAR coin, I will give it some credit for at least bothering to reflect a token effort at accuracy by changing the prices between editions.

 

What I just described, I would apply to every other standard price guide with the annual versions being the least accurate. This would include to some extent even weekly sources in the US such as the "Greysheet" and Bluesheet" which purport to reflect "wholesale" and "retail" dealer buy/sell prices for some but I believe not all coins.

 

Third, below I list some of the limitations which exist that make it virtually impossible for any price guide to be accurate to any useful degree.

 

-The frequency of sales which is often for some and seldom and hardly ever for others. I have used the example of the 1931 florin several times before. The 2008 Hern edition lists the value in "UNC" at R12,000 while Krause (2009) lists it at $1200. To my knowledge, this coin never sold in this grade (and hardly at all in any grade) either in 2008, 2009 or for that matter, since 1998. So where exactly did these prices come from and why is this coin which is obviously scarcer listed for a lower price than not only the 1925, but many others (in Hern)?

 

-Many of these sources do not incorporate the Sheldon scale which is how coins are actually valued in both the United States and South Africa today and in the recent past. US sources are much better but still incomplete in some instances.

 

-The lack of comparability between coins, even in the same grades. In South Africa, everything I read here indicates that practically everyone thinks of two coins in the same grade as being equal. For any scarce and/or desirable coin, they are not and never were. Because this is widely believed to be true in SA now, it either is or might be a self-fulfilling prophecy to some extent. In the United Sates, coins in the same grade can and do sell for large price variances because no really scarce or desirable coin is a "widget" to be bought and sold like a share of stock or a commodity.

 

In closing, I will now discuss how the use of catalogues might have changed over time. Prior to the widespread use of the internet and TPG, coins were both much cheaper and much more difficult to both find and sell. This is much more true of South Africa than the US.

 

I never bought from SA dealers in the pre-internet age and only have a few times at all. But I do know that even though I only started collecting both Union and ZAR in 1998, that SA coins were much harder to find until about 2002 or thereabouts (for ZAR) and 2006 (for Union). The reason is because the prices were so low. In looking at public auction archives (such as Heritage but also others), I saw very few prior to these dates.

 

I presume that what this meant in the past is that most SA collectors (there were few "investors") had to go through a dealer to buy most of their coins. Maybe those of you in SA were also able to buy, sell and trade with other collectors but someone like Jerry Remick, who I believe did not live In SA, would not have had that as an option. I assume this because I know one of the dealers who sold him some of his coins.

 

This is what also existed for the most part in the US, though most coins are easier to find. So dealers used their own grading standards and could (more or less) "enforce" the market value defined by the catalogue through their buy/sell prices through their effective oligopoly. The low prices which existed for most SA coins prior to about 2002 also likely had an impact because any change would have been low in absolute terms.

Edited December 22, 2012 by jwither

[Pierre_Henri 29]

On the NGC Message Boards, someone recently asked a question about the accuracy of NGC Price Guide which I believe is taken from the Krause manuals. Both on this forum and NGC's, there have been questions and comments about how much coins are listed for in some source and questions asked about its accuracy. Even here, I have seen a few posts from those who I would expect would know better quoting some price as if this actually reflected what the coin being discussed was actually worth. What follows is my opinion of price guides generally as well as how their usage might have changed over time.

 

First, everyone should know that something is only worth what someone is willing to pay for it, nothing more and nothing less. So yes, even though I have made numerous comments about how overpriced or exorbitantly overpriced I believe some South African coins to be, they were "worth" that price at the time the last sale occurred. (What these coins may sell for LATER is course, another matter entirely.)

 

Second, I do not know how any price guide is actually compiled or what kind editing occurs (if any) before it is released. For example, in the response I provided to the NGC post, I used the Union 1925 florin as an example since I just bought one.The VF price I paid is about the same as Krause but much less than my 2008 copy of the Hern Guide. For "UNC", Krause states $2200 while the actual value of the two listed in the combined census is likely from seven to 20 times this amount. The 2008 Hern edition lists R50,000 which is closer but still grossly wrong as of that date.

 

As I was writing this post, I found a paper I previously downloaded from the internet titled, Trends in South African Coin Prices and the Role Of Catalogues which was presented at the August 2008 meeting of the National Numismatic Society of South Africa. There is a lot of information in this document which I cannot address in detail in one post. If anyone wants to bring up some topic in it, I can try to answer or maybe someone else can do so. The reason I bring it up now is that it purports to list the approach which is (or was) used to compile South African price catalogues generically (now Hern but previously others). However, given what I describe in this post and prior comments here from myself and others, I do not agree that this has resulted in any real accuracy in recent years. Maybe it did in the past (which I will explain why shortly) but definitely not now.

 

For Union, almost none of the Krause prices have changed between my 2009 and 1998 copies, With Hern, as inaccurate as I believe it to be for any scarcer or more expensive Union or ZAR coin, I will give it some credit for at least bothering to reflect a token effort at accuracy by changing the prices between editions.

 

What I just described, I would apply to every other standard price guide with the annual versions being the least accurate. This would include to some extent even weekly sources in the US such as the "Greysheet" and Bluesheet" which purport to reflect "wholesale" and "retail" dealer buy/sell prices for some but I believe not all coins.

 

Third, below I list some of the limitations which exist that make it virtually impossible for any price guide to be accurate to any useful degree.

 

-The frequency of sales which is often for some and seldom and hardly ever for others. I have used the example of the 1931 florin several times before. The 2008 Hern edition lists the value in "UNC" at R12,000 while Krause (2009) lists it at $1200. To my knowledge, this coin never sold in this grade (and hardly at all in any grade) either in 2008, 2009 or for that matter, since 1998. So where exactly did these prices come from and why is this coin which is obviously scarcer listed for a lower price than not only the 1925, but many others (in Hern)?

 

-Many of these sources do not incorporate the Sheldon scale which is how coins are actually valued in both the United States and South Africa today and in the recent past. US sources are much better but still incomplete in some instances.

 

-The lack of comparability between coins, even in the same grades. In South Africa, everything I read here indicates that practically everyone thinks of two coins in the same grade as being equal. For any scarce and/or desirable coin, they are not and never were. Because this is widely believed to be true in SA now, it either is or might be a self-fulfilling prophecy to some extent. In the United Sates, coins in the same grade can and do sell for large price variances because no really scarce or desirable coin is a "widget" to be bought and sold like a share of stock or a commodity.

 

In closing, I will now discuss how the use of catalogues might have changed over time. Prior to the widespread use of the internet and TPG, coins were both much cheaper and much more difficult to both find and sell. This is much more true of South Africa than the US.

 

I never bought from SA dealers in the pre-internet age and only have a few times at all. But I do know that even though I only started collecting both Union and ZAR in 1998, that SA coins were much harder to find until about 2002 or thereabouts (for ZAR) and 2006 (for Union). The reason is because the prices were so low. In looking at public auction archives (such as Heritage but also others), I saw very few prior to these dates.

 

I presume that what this meant in the past is that most SA collectors (there were few "investors") had to go through a dealer to buy most of their coins. Maybe those of you in SA were also able to buy, sell and trade with other collectors but someone like Jerry Remick, who I believe did not live In SA, would not have had that as an option. I assume this because I know one of the dealers who sold him some of his coins.

 

This is what also existed for the most part in the US, though most coins are easier to find. So dealers used their own grading standards and could (more or less) "enforce" the market value defined by the catalogue through their buy/sell prices through their effective oligopoly. The low prices which existed for most SA coins prior to about 2002 also likely had an impact because any change would have been low in absolute terms.

 

A wonderful post but as I am on holiday - summer time down south now - and only have limited internet access without my indespensable spell checker on my laptop, I would rather wait for the new year to leave a message to avoid my is's, are's and whatevers to get crossed and leave a red-faced me without a suntan that is.

 

Thank you for all your wonderful "bydraes" during 2012. I salute you.

 

Pierre

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[Cold Sea 3]

I must agree with Pierre in appreciating all the interesting and informative posts by not only jwither, but others as well.

Edited December 24, 2012 by Cold Sea