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jwither

A comparison of the market characteristics between the United States and South Africa

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jwither

In prior posts, I have described what I believe to be the characteristics in the pricing of US and South African coins with an occasional reference to other markets. In this multi-part narrative, I will attempt to identify and describe the attributes that I believe best explain why coins are priced as they are in the United States and then provide an opinion of whether and to what extent they apply in South Africa. Where applicable, I will also provide my opinion for other markets to support the points I am trying to make. From what I can see, the US has a unique combination of characteristics that make existing prices possible. Most of these characteristics either do not exist at all elsewhere or to a much lesser degree. These include:

 

1. A large population with above average income and net worth;

2 A long term numismatic tradition;

3. A vast variety of options in terms of denomination and design;

4. A demonstrated cultural tendency to actually pay prices which are much higher than elsewhere, even when considering the same level of scarcity and numismatic appeal;

5. An established numismatic infrastructure; and

6. Specialization practices such as "conditional rarity" collecting die varieties, "monster" toning, special designation strikes and errors.

 

Here is the first one and I will add the others periodically.

 

Under the topic “Defining Affordability”, I provided some recent data on wealth distribution statistics for the United States and my “guestimate” for South Africa. Whatever the numbers, neither precludes the outcome of higher or much higher coin prices because the “market capitalization” in both is trivial versus other asset classes. In the US, the size of the collector base makes more of a difference because the coins are more common and there is more to collect. So this combination increases the odds that one of the affluent will both be a collector and spend more money. However, this cannot be the deciding factor or even a primary one since other countries such as the UK, Germany and Japan have large numbers of wealthy individuals yet coin prices are so much lower.

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Pierre_Henri
In the US, the size of the collector base makes more of a difference because the coins are more common and there is more to collect. So this combination increases the odds that one of the affluent will both be a collector and spend more money. However, this cannot be the deciding factor or even a primary one since other countries such as the UK, Germany and Japan have large numbers of wealthy individuals yet coin prices are so much lower.

Yes, that is true but I could never understand it. While I was reading your post, my eye caught a Coin News Magazine lying next to me. It is Britains biggest-selling coin magazine and an old issue of November 2006. The front page shouts "RECORDS CONTINUE TO TUMBLE" and then

"£1/4 million paid for triple Unite" which was some kind of record. Interestingly enough, in the same issue there is the following mentioned " ...Billed as the finest known ZAR Proof Set of 1892 at the DNW British and World Coins sale, the set of nine coins sold marginally above estimate to a dealer in Johannesburg at £74 750.00 ...".

The reason I am mentioning this is that those two lots are about the best the UK and RSA can offer on any auction and if one compare those prices (yes it was a few years ago) to USA prices realized in the same period for rarities, then there is actually no comparison.

 

But the reason for this (why USA coin rarities does so very well) is still not clear to me. Take a country like Germany as an example and compare it with your 6 characteristics : -

1. A large population with above average income and net worth (The Germans are there!)

2 A long term numismatic tradition (Much longer than the USA probably)

3. A vast variety of options in terms of denomination and design (Much larger than the USA probably)

4. A demonstrated cultural tendency to actually pay prices which are much higher than elsewhere, even when considering the same level of scarcity and numismatic appeal; (I have no idea)

5. An established numismatic infrastructure; (The Germans certainly got that) and

6. Specialization practices such as "conditional rarity" collecting die varieties, "monster" toning, special designation strikes and errors.(Not sure?)

Then why? - maybe the simple reason could be that Americans have been lulled over many years into thinking that "everything is and will always be OK with us" and whatever they pay for a coin will eventually turn into a profit whilst Europeans have seen terrible wars, damn and damnation and "knows better" than them Yanks.

 

South Africans (affluent collectors) are also apprehensive about their future and what it holds for them - no laissez faire attitudes around as far as I can see.

 

But it seems like Uncle Sam has no stopping him - the recent financial glitch was just a temporary hiccup and everything will be fine boys - so fork up another million for that 1806 Flowing Hair beauty that will double your money in a year or two.

 

Come to think of it, maybe the US dealers just know to do their thing compared to the UK and Europe lot that are still so caught up in their terrible numismatic marketing habits that it sometime feels that one is reading a Victorian ad for whatever?

 

Regards

 

Pierre

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jwither

This is a complicated subject and as you will see, I have a lot more to say about it. What I included in the last post was my introduction and my comments on the item #1.

 

For item #1, I agree with you which is why I said this factor alone does not explain the pricing difference.

 

For item #2, yes, there are some (presumably only or mostly) European countries which have a longer tradition, but I do not see any evidence that there is a direct correlation between the length of the numismatic tradition and absolute prices. Only that the numismatic tradition is a necessary requirement for higher prices but it is not sufficient in and of itself.

 

For #3, I would also agree that interpreted literally, that (once again) European countries have more variety than the US, but this "variety" is actually not as varied. It's basically what you see I will state about SA with ZAR and Union later. With both, there are eight to 11 denominations but all of them have either the Kruger, KGV, KGVI or QE portrait. The same applies to the UK and disproportionately everywhere else where the same portrait is on all the denominations. They are not nearly as different as many of the US designs and this is the reason why I believe there is no "type" collecting outside the US. There is not much point to it. "Type" collecting is a big reason why some (not all) US coins cost as much as they do.

 

For #5, I'm not aware that Gernany has as much as the US or even Britain, but to the extent that they do, I do not see that it exists to where it has as much of an impact on prices.

 

For #6, I'm pretty confident about that outside of die variety collecting, but I can answer it in more detail later.

 

On your comments about the triple unite and ZAR proof set, yes I agree that the difference between these coins which are the "best" in those markets and what are in many instances "run of the mill" US coins is absurd. I mean, what is so great about a US 1920-S $10 gold Indian that it should be worth $1.75 million except that it is in an NGC MS-67 holder? The answer is. nothing really. It is a scarce coin (not rare except "grade" rare) and a "key" date, but the latter is irrelevant because almost no one collects this series by date. It is exorbitantly expensive to do so. It is the combination of its "conditional rarity" and "key" date status combined with the fact that there are thousands of US buyers who have plenty of money to spend on coins that make it possible. I believe the two examples you used, they have the opportunity to become worth somewhat more or a lot more, but this does not extend to most other coins, no matter how scarce or rare. The reason is that these are candidates for "celebrity" status which can only apply to a relative few.

 

On your comment regarding the security of buyers, yep that is part of it as you will see in my later comments.

 

On your comments on dealer business practices, that is actually (indirectly) part of what I describe as the numismatic infrastructure.

Edited by jwither

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jwither

Here are my comments for item #2, a long-term numismatic tradition

 

This factor is important from two perspectives. First, a history of collecting generally results in a proportionately higher percentage of the population who is or will become collectors. Combine that with attribute number one that results in a large or relatively large collector population who has “big money” and this creates the potential for higher prices and definitely a more stable market given the price level.

 

Secondly, a history of collecting has a direct impact on scarcity. As I pointed out once before, the primary reason why South African coins are relatively scarce is because your country does not have much of a numismatic tradition relative to others such as the US or the UK. So while the coins are usually scarcer or much scarcer, there are also far fewer people (even proportionately) who actually want them and the likelihood is much lower that this will change.

 

Aside from the US and UK, the other countries that I would categorize as having a longer or at least more established tradition of collecting include most of Western Europe (if not all of it) and British Commonwealth countries such as Canada and Australia.Within these countries, some apparently have much more of a tradition than others. I say apparently because scarcity appears to differ dramatically between them. For example, British coins seem to be much more common than comparable period Spanish. Coins from Japan post 1870 and China early 20th century appear to have reasonable availability but I do not know if it is because the coins were preserved by locals or expats. I do not collect them but I suspect that many Soviet Russia, Communist East Bloc and PRC Chinese coins are also somewhat scarce. Even within Latin America, late 19th century to date Mexican coins and those from a country such as Chile seem to be a lot more common than those from Argentina.

Edited by jwither

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Pierre_Henri
Aside from the US and UK, the other countries that I would categorize as having a longer or at least more established tradition of collecting include most of Western Europe (if not all of it) and British Commonwealth countries such as Canada and Australia.Within these countries, some apparently have much more of a tradition than others. I say apparently because scarcity appears to differ dramatically between them. For example, British coins seem to be much more common than comparable period Spanish. Coins from Japan post 1870 and China early 20th century appear to have reasonable availability but I do not know if it is because the coins were preserved by locals or expats. I do not collect them but I suspect that many Soviet Russia, Communist East Bloc and PRC Chinese coins are also somewhat scarce. Even within Latin America, late 19th century to date Mexican coins and those from a country such as Chile seem to be a lot more common than those from Argentina.

 

This is a subject that is very difficult to reply to as I (and I would think many of my countrymen) have not much knowledge of - I am talking about the collecting habits of foreign (to us) collectors.

 

More interesting to us would be, for example, the profile of collectors that would still be collecting a country like Rhodesia and former Southern Rhodesia / Rhodesia / Nyasaland. The poor Zimbabwe have run dry in all aspects and the few coin collectors left must be 99.99% expats living mostly in SA and the UK.

 

I think some SA collectors have something in the back of their mind when they see (saw?) what happened to our northern neighbor when it comes to collecting with an apprehensive slant looking at the caricatureian black pot with the natives dancing around it.

Not the easiest of times but diehard-collectors always pull the hobby through don’t they?

Pierre

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jwither

My knowledge of the collecting practices outside of the US and SA is also very limited since I do not know any collectors in other countries and did not live in them as a collector.

 

However, though such knowledge is helpful, I do not believe it is necessary. I believe the conclusion that I write can be inferred and drawn from other available data - for the most part.

 

The fact that coins are more available in some countries and not in others is the most obvious indication. I mean, if South Africa had a widespread culture of collecting during the Union period, how is it that the coins are as scarce as they are? The answer is that there wasn't one (which we know) and to think otherwise contradicts common sense.

 

Even within South Africa, I see a distinct difference between the attitudes toward ZAR and Union. I believe I have seen comments to this effect but the plain reason to me is that Afrikaners (especially) identify with these coins as a link to the prior ZAR state. The cultural attitude I see toward Union is one primarily of blase indifference. If this is correct as i believe it undeniably is, then no amount of difference in the scarcity between the two series is going be enough to overcome the existing price gap. Not unless sentiments change substantially toward Union because foreigners (like myself) are never going to "pay up" simply because they are scarce or rare. As you will see in my later comments, if this were supposedly enough of a reason, there are plenty of countries whose coinage is just as scarce if not scarcer.

 

Now whether more of one is being created now and over the last 10 to 15 years since I started collecting SA coins, those on this board can tell me. I do not see it at least from the posting comments on this site because a lopsided focus on the "investment" potential hardly constitutes a real interest in collecting. And yes, a real interest in collecting is necessary to limit the supply and maintain demand as prices increase.

 

A second is the extent of numismatic research. The fields with the most research (to my knowledge) are the US, the UK and ancient Greece and Rome. Even for coins from elsewhere, US or British numismatists seem to disproportionately provide the research which exists. For example, US dealer Mike Dunnigan is the author of "Resplendores" covering Mexican Cap & Ray 8R and I am not aware of any Mexican (or Spanish) author who has ever written on the subject. The now defunct Mexican coin site "Mexican Coin Magic" was also hosted by Americans and either all or most of the articles were written by "Yanks". To my knowledge, Brits have disproportionately written about coinage of the British Commonwealth and many other coins unrelated to Britain at all. While German and Spanish authors have written about their coins, to my knowledge, it is much much less. An Englishman (Frank Gilboy) wrote the authoritative source on the Spanish colonial pillar coinage I collect. it is vastly better than the Spanish books preceding it which cover the "pillar dollar" and do not even include the minors. So why is it that local authors could not produce this body of research? The numismatic culture or lack of it is the most logical answer.

 

Rhodesia has been discussed here several times previously. I agree that the coins are scarce (through probably less than some who have posted here), but I do not have any high regard for the financial potential of these coins. I expect them to under perform (and probably badly) other coins that are actually legitimate coins for "investment". A hundred years from now (or even much less) after we are all gone, I expect them to be mostly or entirely forgotten. Lost to the dustbin of numismatic history like so many others that neither i nor anyone else on this board can remember right now. The obvious reason for this is that most coins without a country are not collected.

Edited by jwither

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jicol
The cultural attitude I see toward Union is one primarily of blase indifference. If this is correct as i believe it undeniably is, then no amount of difference in the scarcity between the two series is going be enough to overcome the existing price gap.

 

Even for coins from elsewhere, US or British numismatists seem to disproportionately provide the research which exists.

 

I have recent experience which seems to confitrm two of the points raised.Looks like the cultural difference is not only blase to Union coins but also to earlier Colonial coins.I recently sold 7 Great Britian Crowns that were in circulation in South Africa and spans 125 years of our Numismatic History.Some of the coins were in very good condition and the lot sold for not much above their silver value and went to an overseas buyer,so very little local interest to keep the coins in South Africa.

 

I now have on auction two earlier Great Britian crowns which have a very rich Numismatic history associated with them but once again the most interest seems to be from overseas buyers.

 

On the second point the one lot includes one of the most informative books I have seen on Crowns of the Bristish Empire,and it is written by Richard J Trowbridge....a "Yank".See Europe & Great Britain - Historic Significant Old Silver Item 2 of 2.King WilliamIII Silver Crown 1696 Octavo++Bonus Book for sale in Cape Town (ID:95252421)

 

Jimmie

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jwither

Jimmie,

 

I'm not surprised with your experience in selling those coins. At the same time though, I would not expect collectors in SA to have any preference for British coins. The coins in your example are more recent and because of this my example is probably somewhat different, but US collectors do not have any attachment that i can see to coins that circulated in the US colonial period (about 1600 to 1776) either unless they are included in a catalogue such as the "Red Book". Within this reference, there is a definite preference for the coinage with a British (as opposed to French) connection, but not otherwise. There are some such as the Spanish colonial pillar dollar which actually circulated a lot more widely than local coinage that are popular, but only or mostly because of the design.

 

The distinction to me in your example is that the British crowns are at least very popular in Britain among coin collectors. Given how common most 19th century and later British crowns actually are, I think the prices are reasonably strong, especially for a non-US coin.

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jwither

Here are my opening comments for item #3, A vast variety of options in terms of denomination and design. Since this write-up is very long, I will post in multuple segments. And in this instance, starting with the conclusion. I will "backfill" the supporting detail after providing opportunity for any comments.

 

To conclude this topic, here is the bottom line. In the US, there is both a lot of money in the field and a lot to buy with this money. So prices of many coins are high. In many countries such as in Europe, there is a lot to potentially buy but the level of “investment” is relatively low and these countries currently lack the culture which drives substantially higher prices. In other countries such as Latin America, the level of investment and the level of supply are both low. In South Africa, the potential level of "investment" is theoretically high, but there is no practical outlet for these potential funds and the same applies to Latin America if the level of “investment” substantially increases.

 

Except selectively, there is neither any merit nor any example from prior experience which supports the idea that collectors will ever support a price structure which prices most of them out of most of the coins they actually want to buy. They are not going to disproportionately buy the “leftovers” simply because there is nothing else available or that they can afford to buy while a few “deep pocket” collectors and “investors” pay “moon money” for the best coins everyone actually wants. The overwhelming evidence better supports that the marginal buyer who is theoretically in a position to pay more and increase prices (substantially) will either buy something else or not collect at all, resulting in the paradox of (substantially) lower prices for coins that are scarcer or much scarcer versus coins from a country like the US.

Edited by jwither

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jwither

Here is the next part for item #3,

 

I see this factor as significant in two aspects which contribute to either higher or lower prices, depending upon the market’s other characteristics.First, let’s look at the collecting options in the United States and South Africa and then let me tie it back to my prior comments on this board. Then I will use other countries as examples.

 

In the US, taking into account circulation strikes and proofs, patterns, colonials, territorial gold, commemoratives and modern bullion issues, I estimate that there are in the vicinity of 7500 possible coins to collect, and this with a variety in denomination and design which is greater than any other country for the comparable time period, by far. Of this number, maybe 1% of US Mint circulation issues are actually rare as a generic coin and maybe as many as 5% for all others. Expanding this to include die varieties and other specialization might double or triple this number to the vicinity of 15,000 or 20,000.

 

(In other countries, there are or may be more options than in the US, but the older a coin is, generally the less likely it is to be collected. Additionally as I pointed out in my pror reply, these “differences” are really not that different. Taking coins issued prior to the early 19th century, US coins are more widely collected than most or even all from elsewhere. Most of the time, there is no comparison in the relative demand.)

 

For ZAR and Union combined, there are in the vicinity of 700 or maybe 800. I believe slightly over 100 circulation issues and closer to 200 with “patterns” for ZAR while for Union there are about 600. (There are also several hundred Union patterns but all are rare and almost none are available. Most of the ZAR patterns are not either but at least they are primarily available to be sold.) Add in RSA and maybe there are as many as 1500. Since there is no specialized collecting (such as die varieties) in SA except by TPG grade, it is not relevant.

 

In the US, the coins that the lopsided majority of collectors prefer are termed “classics”. In South Africa, from the standpoint of how collectors perceive your coins, ZAR and Union are the equivalent of “classics” and RSA equivalent to “moderns”. The primary difference between the two countries is that the proportion is much more equal in SA (about 50%) while in the US it is about 10% to 15% “moderns” and 85% to 90% “classics”.

 

Now, when you combine the number of options for the US collector along with the generally far higher availability of most individual coins, you can see how the potential impact of a substantial price increase in the US differs dramatically from South Africa. If prices increase in the scarcest and highest end US coins as they have recently, there is plenty left for most collectors to buy. The same applies if prices increase substantially in one US series. The US collector can just go buy another one. Especially when considering the higher income and wealth levels versus most other countries, the likelihood that a disproportionate number of US collectors are ever going to be priced out of (most) everything that they would be willing to buy is very low.

 

The same applies to any European country except that the point is “moot” because there is no foreseeable or feasible possibility that it could ever happen. Compared to the US and even South Africa, the percentage of coins with “high” prices is very low. In the US, given that the PCGS “million dollar club” listed 91 unique coins by my last count, there are easily at least 1000 different coins that sell for at least $10,000 in the highest actual or potential TPG grade and in many instances even lower grades. In Europe, I estimate less than 1%, regardless of the quality, with the UK having a higher number or proportion than any other except maybe for Russia.

 

Now let me compare Australia to the UK. I believe (but cannot prove) that the numismatic culture is more or less similar. Under the assumption it is, I partly attribute the higher prices in Australia to fewer choices versus the UK. In other words, there are more collectors in the UK who spend more in total than Australia, but the money allocated to any one coin is less because there are so many more to collect. However, in Australia even though the coins are expensive compared to other markets, either a disproportionate number of them are affordable to most collectors even in better grades or collectors are willing to pay relatively strong prices for quality but somewhat lower grade coins. I believe it is some of both but in any event, the likelihood that the typical Australian collector is going to be priced out of most better coins also appears to be lower or much lower than in SA.

Edited by jwither

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Pierre_Henri

Let's get back to Numismatics ....

 

Here is the next part for item #3,

 

I see this factor as significant in two aspects which contribute to either higher or lower prices, depending upon the market’s other characteristics.First, let’s look at the collecting options in the United States and South Africa and then let me tie it back to my prior comments on this board. Then I will use other countries as examples.

 

In the US, taking into account circulation strikes and proofs, patterns, colonials, territorial gold, commemoratives and modern bullion issues, I estimate that there are in the vicinity of 7500 possible coins to collect, and this with a variety in denomination and design which is greater than any other country for the comparable time period, by far. Of this number, maybe 1% of US Mint circulation issues are actually rare as a generic coin and maybe as many as 5% for all others. Expanding this to include die varieties and other specialization might double or triple this number to the vicinity of 15,000 or 20,000.

 

(In other countries, there are or may be more options than in the US, but the older a coin is, generally the less likely it is to be collected. Additionally as I pointed out in my pror reply, these “differences” are really not that different. Taking coins issued prior to the early 19th century, US coins are more widely collected than most or even all from elsewhere. Most of the time, there is no comparison in the relative demand.)

 

For ZAR and Union combined, there are in the vicinity of 700 or maybe 800. I believe slightly over 100 circulation issues and closer to 200 with “patterns” for ZAR while for Union there are about 600. (There are also several hundred Union patterns but all are rare and almost none are available. Most of the ZAR patterns are not either but at least they are primarily available to be sold.) Add in RSA and maybe there are as many as 1500. Since there is no specialized collecting (such as die varieties) in SA except by TPG grade, it is not relevant.

 

In the US, the coins that the lopsided majority of collectors prefer are termed “classics”. In South Africa, from the standpoint of how collectors perceive your coins, ZAR and Union are the equivalent of “classics” and RSA equivalent to “moderns”. The primary difference between the two countries is that the proportion is much more equal in SA (about 50%) while in the US it is about 10% to 15% “moderns” and 85% to 90% “classics”.

 

Now, when you combine the number of options for the US collector along with the generally far higher availability of most individual coins, you can see how the potential impact of a substantial price increase in the US differs dramatically from South Africa. If prices increase in the scarcest and highest end US coins as they have recently, there is plenty left for most collectors to buy. The same applies if prices increase substantially in one US series. The US collector can just go buy another one. Especially when considering the higher income and wealth levels versus most other countries, the likelihood that a disproportionate number of US collectors are ever going to be priced out of (most) everything that they would be willing to buy is very low.

 

The same applies to any European country except that the point is “moot” because there is no foreseeable or feasible possibility that it could ever happen. Compared to the US and even South Africa, the percentage of coins with “high” prices is very low. In the US, given that the PCGS “million dollar club” listed 91 unique coins by my last count, there are easily at least 1000 different coins that sell for at least $10,000 in the highest actual or potential TPG grade and in many instances even lower grades. In Europe, I estimate less than 1%, regardless of the quality, with the UK having a higher number or proportion than any other except maybe for Russia.

 

Now let me compare Australia to the UK. I believe (but cannot prove) that the numismatic culture is more or less similar. Under the assumption it is, I partly attribute the higher prices in Australia to fewer choices versus the UK. In other words, there are more collectors in the UK who spend more in total than Australia, but the money allocated to any one coin is less because there are so many more to collect. However, in Australia even though the coins are expensive compared to other markets, either a disproportionate number of them are affordable to most collectors even in better grades or collectors are willing to pay relatively strong prices for quality but somewhat lower grade coins. I believe it is some of both but in any event, the likelihood that the typical Australian collector is going to be priced out of most better coins also appears to be lower or much lower than in SA.

 

I just want to intervene to get real numismatic issues on track again – the previous line of thought(s) was a bit off-track to put it mildly...

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jwither

Since I have no idea what you are talking about, I will take it that you do not understand what I wrote. Or maybe because i have to split it up into multiple parts, it is harder to follow. Yes, i am primarily talking theory about how coins are priced, but this is directly related to the ability of collectors to actually buy the coins they want to own. What I am describing are real world limitations that actually exist.

 

If this is not related to numismatics, then I have no idea what is.

 

What I am describing here is not unique to the comments I have seen on this forum. I also saw the same thing recently on that link I included to the NGC Message Boards.

 

The primary reason I am bothering to even write this is to explain in detail why the wishes of the majority who want higher "moon money" prices for South African coins are pure fantasy. No one is ever going to admit it even though I know practically everyone wants it, but then nobody has provided any pausible theory on how it is going to happen. What I describe is not absolute but it is far more logical than what everyone or most everyone else here seems to believe.

 

For anyone who is an "investor", then whether I am exactly correct or not, you better consider what i am describing. If you are a collector and ever want to complete your colelction, you need to consider it also.

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Cold Sea

Hi jwither,

 

Your take on market values and rational numismatic investing are always interesting. Though not a pure numismatic subject, I agree it has relevance. As mentioned by Pierre before, investment decisions do not always make sense, thus the odd broker literally flying out the window when they get it wrong and hero portfolio managers when they get it right.

 

Your attempt to rationalise the different numismatic markets is, to me, and whether I agree with you or not, a welcome addition, but that is only me.

 

Derick

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jwither

Thanks Derick.

 

Let me put it in more practical terms and then I will add my final comments on this topic a little later.

 

You are Legend Numismatics and Bruce Moreland (aka, TDN on the NGC Message Boards and PCGS Coin Forum). You just paid $10 million USD for the US 1794 PCGS SP-66 flowing hair silver dollar. Now imagine that instead of buying this coin you decide to buy multiple coins from South Africa or for that matter, Mexico. It could be any number of countries and it could be 10 or even 100 prospective buyers who want to spend the same amount of money. For the purposes of this example, it does not matter. (To be clear, this is additional demand to that which already exists.)

 

Ok, so what are going to buy with $10MM? Seriously, what is actually available to be bought without the entirely self-defeating result that your purchases do not substantially drive up the price of the coins you are trying to buy as everyone else "front-runs" the "trade" before you make it? in the South African numismatic community, how long would it take before most everyone found out that there is a "whale" buyer out there? My answer is, not very long and as soon as this became public knowledge, everyone would raise their ask prices and probably substantially.

 

The fact of the matter is that with SA (since this is a SA forum), there isn't actually enough to buy unless the purchases are spread over a long period of time. My estimate is years and not months to prudently make your purchases. I'm not aware that anyone has ever considered this real world limitation. Not here and in the posts I linked to the NGC Message Boards, not the one contributor who bothered to reply. I have never seen anyone consider it. This collector is also very knowledgeable but apparently, he could not see how this limitation exists and that coins can only sell for "moon money" in isolation if too much money is chasing too few coins.

 

For ZAR, maybe someone could spend as much $1MM over a six month period or more likely, a year or even two. But if you extend this example to more than a few buyers who each want to spend around this amount, I do not see it. For Union, I believe someone would be hard pressed to spend even $100,000 without driving up the prices of many or most of the "best" coins higher or substantially higher. That is, IF this was attempted in any short period of time. If I wanted to do so, I could try to buy $100,000 myself so it is not like soemone has to be "rich" to attempt it either..

 

The only alternative to this real world limitation is for what I would describe as the completely nonsensical price forecasts I have heard (some second hand) to be fulfilled. To give you one example, supposedly one such forecast was for the 1949 2/6 in MS to sell for R300,000 or about $40,000 USD at the then FX rate. Of course, no grade was specified or date provided. But regardless, for any kind of "real money" to be spent especially on Union this is actually not that far from the prices which would be required. This is aside from the fact that:

 

First, this coin and most other in Union or ZAR are not remotely desirable enough to justify this type of price in anything close to current purchasing power.

 

Two, since this coin is not going to "the moon" by itself, the implied pricing structure for both this coin in lower grades and others in comporable grades is one which would price out 99% of all existing collectors.

 

Someone can argue that this a "tongue in cheek" example and maybe it is, but even removing one zero from the equation, there is still no reason whatsoever to expect it to happen unless the coin in question is a "conditional rarity". Aside from what I describe here, the reasons for it are exactly those covered in my most recent analysis.

 

Per my prior comments, the reason it is so different for the US is because if you take a series like the 1813-1834 "Capped Head" half eagle ($5 gold denomination) or even early large cents, the fact that a disproportionate number are "key" dates or even "celebrity" coins does not impact most collectors. For the gold coin, few buy it except as a "type" coin which is why a date such as the 1813 which is actually common compared to many SA Union coins can still sell for around $10,000 even in the lowest MS grade. It has hundreds in MS though there are likely MANY duplicates. Practically every other date sells for more than $100,000.

 

The same applies to a series such as the Lincoln Cent even though it is far more common generically. The most expensive coins in this series are the 1943 and 1944 off-metal strikes, die varieties such as the 1969 S/S and higher grades for selective dates in MS RD. All of these coins sell for over $100,000 and up to $1MM+. But most of the coins are vastly cheaper even though many are still absurdly expensive by my standards. A US collector could easily spend $1MM (or even much more) just on the Lincoln cent without distorting the prices of most (much less all) coins in this series. The apparent difference in collectibility and pricing impact between these US series and SA Union and ZAR generically should be obvious.

 

When it comes to this subject, there are coins - whether from South Africa or elsewhere - that can sell for more or substantially more than they do today or compared to US coins. I have never argued against that position.

 

In South Africa, coins like the 1898 "Single 9" pond and many of the other ZAR "patterns". Maybe even most of the 1892 proof denominations and the Veld pond could even though I do not think they should. In Union, the 1923 and 1924 Sovereign (because they are also collected as part of a Sovereign set by non-SA collectors) and the 1931 silver for sure. Maybe some other circulation strikes selectively such as the 1925 florin and even most of the KGV proofs though I consider them far less prominent. Coins that are or become "celebrities" are candidates for this outcome but this can only apply to a relative few, no matter how scarce or rare a coin may be. All, most or even a disproportionate percentage of an entire series cannot be classified as "celebrities" if it prices out most collectors and leaves them with little or even nothing that they still want to buy. That is a recipe for "widget" trading and not real collecting.

 

To take another country, in Mexico, these coins are candidates for "celebrity" status: Carlos & Joanna 8R (the first new world crown sized coin), any "royal", the 1732 pillars (all five denominations), the 1772 pillar 8R and the patterns included in the Millenia Collection. But most of the other coins of which many are as scarce if not scarcer than those in SA, no.

 

I use these coins from Mexico as examples to show that though I almost always make these "negative" comments about Union or ZAR, the same logic and theory applies to others. I just usually do not spell it out because no one else here usually has an interest in coins from elsewhere,

Edited by jwither

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Pierre_Henri

You totaly misunderstood me - I was refering to another thread on this coin forum (Bucks -'n -Gems) where a buyer and seller had a disagreement but all is now sorted out and everyone happy.

 

It had nothing to do with your post regarding A comparison of the market characteristics between the United States and South Africa

 

I am a bit behind on the reading but should comment soon on your wonderful posts.

 

Pierre

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jwither

Here are the last of my prepared comments for item #3.

 

Comparing South Africa to the US, first few coins were struck prior to 1892 which is why I estimated 1500 versus 7500 available coins to collect. Second, the actual variety even from 1892 forward is much less because all ZAR and Union denominations have the same obverse design. This is important because it apparently influences how coins are collected in your country which is a major factor in pricing. To give the most obvious example, I have never heard of a SA collector who primarily buys only KGV pennies while thousands of US collectors prioritize the Lincoln cent over others. For the SA collector, this “collection” would be pointless since it only includes 14 coins. Third, SA coins are also either typically scarcer or much scarcer. Lastly, then there is the fact that a disproportionate percentage of SA collectors only want the ‘best” coins and will not even consider lower grade specimens that collectors in other countries normally buy. When these four factors are combined, it should be obvious that if prices explode like most on this board apparently want and believe should happen, the traditional collector is not going to have anything worth buying (by your local standards) from either Union or ZAR.

 

In the US, a large number of series consist of mostly common dates and a few “key” dates. But in most instances and especially with the most widely collected, these “key” dates are not scarce, only expensive. In South Africa and many other countries, a disproportionate percentage or even the majoriy of dates in a series meet the definition of “key” by US standards, except that the coins are actually scarce and sometimes almost impossible to find, at least in the grades that most actually want (hint: think MS). Take a look at Union 1/, 2/ and 2/6 and you will see what I mean. Or with the Mexican (or any) pillar 4R, ALL dates are “key” because NONE of them are common and especially in any decent grade. These comments are simply another way of restating the limited supply which exists for many collectors of non-US coins..

 

For much higher prices to be even logically possible in South Africa, the only realistic options would be for South African collectors to 1) adopt US specialization in large numbers, 2) prefer RSA coins far more than they do today so that they would pay a lot more (even if only proportionately) for a (much) larger number of them, 3) start paying more or a lot more for “lower” grade (especially up to AU-58) coins, or 4) adopt “type” collecting. These practices are necessary because it would enable a much larger number of potential buyers to still acquire coins they actually want if the best Union and ZAR increase in price substantially. Today, compared to other countries such as the US, there is little to buy that most SA collectors both want and can afford to buy even at current prices. With these additional options, then from this expanded pool of buyers, some small percentage would be much more likely to pay the (much) higher prices which everyone on this board seems to desire. One or more of these may eventually become widespread, but unlikely anytime in the near future to alter what I am describing here and which is reflected in pricing today.

 

Based upon how coins are collected today in South Africa, the price explosion desired by the lopsided majority on this board contradicts common sense. And since it does, absent a big change in collecting practices as just described, this is why I do not believe that prices of South African coins are going to increase (and stay there) as most on this board think should happen. It contradicts common sense because it would leave most of the better coins in the hands of “investors” who I believe are disproportionately not real collectors at all and therefore, they will dump them as soon as the coins become too expensive to achieve their ROI objectives. I believe that this is a big part of the explanation for the current price weakness today versus late 2011.

 

In South Africa, the price spreads between “conditional rarities” and those in slightly lower MS grades are already absurd and so are many of the spreads between low grade MS and higher grade AU. While some expansion of price spreads can happen from today’s levels even as nonsensical as they are now, I see no reason to believe that they are going to increase by a factor of 5, 10 or even more (as in my prior theoretical example of the 1949 2/6 in MS) which is exactly what would be required for the most ridiculous price forecasts I have seen. And yes, these are the multiple expansions that will be necessary for the implied forecasts to be fulfilled because it should be obvious that most real collectors cannot or will not pay substantially more for the more common Union and ZAR in MS or for most AU and lower grade scarcer ones. Probably, it is both.

 

In many other countries with limited numismatic traditions, the dynamics are similar. In my recent NGC posts, I used the example of Mexican coins since I am somewhat familiar with them. Given US demographics, there are likely to be a lot more US collectors of Mexican descent who will want the “best” Mexican coins. This will be both a larger potential buyer pool than for Union or ZAR and one which is more likely to have the ability and willingness to pay (much) higher prices. Problem is, the supply is restricted just like it is in South Africa except that in one respect, it is even worse. The more recent (post 1870) coins are more available than many Union or ZAR, but not the earlier ones (dating back to the 1530’s) which are those most collectors want the most. In my opinion, these are even less available. So what exactly are these potential collectors going to buy either?

 

What I just described, it is equally true for the other Spanish colonial coinage I collect and also many Latin American countries. In my opinion, this lack of supply is going to be an impediment to price appreciation just as I believe it will be in SA because most collectors are not in the habit of pursuing coins that are disproportionately difficult or impossible to acquire, even if many more collectors want and can in theory afford them at current prices than own them today. I believe some of these coins can still appreciate a lot from current levels (hint: such as the "celebrity" coins in my post) as they can in SA, but only in isolation or in low proportion. It will not be to the point where most will remotely replicate US pricing (even at much lower levels), even considering that they are disproportionately much scarcer.

 

Finally, taking a (defunct) country like Southern Rhodesia which has been discussed here several times, there isn’t much to collect period, whether the coins are expensive or not. With maybe 100 coins to complete the entire series and the prospect of a disappearing collector base, I see limited prospects for these coins and any others like them. Longer term, I expect the relative prices of these coins to be lower or much lower versus others such as South Africa except in isolation.

Edited by jwither

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jwither

Here are my comments for item #4, A demonstrated cultural tendency to actually pay prices which are much higher than elsewhere, even when considering the same level of scarcity and numismatic appeal. Basically the same sentiments Pierre shared in one of his prior posts here but I will elaborate if necessary.

 

The only thing that needs to be said here is that it is obvious that US collectors have a habit of paying more. I cannot say why except that the US has an extended tradition of above average financial risk taking (and recklessness) compared to other countries which have traditionally been more financially conservative. Prioritizing the financial over the collectible aspects is a manifestation of this behavior. In copying US practice, SA is following the same path.

 

Here are my comments for item #5, An established numismatic infrastructure

 

By numismatic infrastructure, I am primarily referring to the extent to which numismatics is a business versus a hobby. Examples of this characteristic include: TPG, non-traditional sellers of coins as “investments” such as brokers, number of dealers relative to the population, number of auction firms, number and specialization of collector clubs and the practices of the national mint. The US has all of these and to a much greater extent than anywhere else.

 

Even in countries that should theoretically be able to economically support all of these practices, most do not exist or are not a significant factor economically. Those that resemble the US the most in my opinion are the UK, Canada and Australia though the individual attributes vary. South Africa apparently is attempting to copy the US, but I am dubious that the size of the collector base and more importantly, real interest in collecting will achieve the same or a similar result. My opinion is no.

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jwither

Here are my comments for item #6, Specialization practices such as "conditional rarity" collecting die varieties, "monster" toning, special designation strikes and errors. This closes out my prepared write-up for this topic.

 

The US is the only country that exhibits all of these practices but even though I list five, except for die varieties, the grade still accounts for a disproportionate percentage of the premium with the other three.

 

Canada and South Africa are the only other two countries to my knowledge where TPG is widespread or preferred. But for Canada unlike South Africa, I suspect that a disproportionate percentage of TPG demand for Canadian coins comes from US residents, particularly those who live near the border. In the past, it has not been uncommon for coins from both countries to circulate in the other and older US collectors probably like them at least partly for this reason.

 

I suspect (but cannot prove) that the incremental demand by Americans for Canadian coinage results in a somewhat higher (and noticeable) price level than would otherwise exist. I suspect it because the price structure of higher grade Canadian coins seems to reflect it and the logical reason is that since Canadian coins are so much cheaper than their US counterparts, it’s easy enough for Americans to afford the more expensive Canadian coins. The same is also logically true for US demand with any other non-US coins, but its just that the US demand is or is likely insignificant for most of them.

 

For example, I believe that many of the better TPG coins from the UK are also disproportionately owned by Americans, but the census counts are so much lower than for Canada that it impacts the pricing structure much less. At this time, it’s my opinion that foreign demand is somewhat of a factor (but less than with Canada) for scarcer better TPG grade ZAR but do not believe it is a factor for Union of any consequence. Furthermore, I do not believe it will be going forward either.

 

Die variety collecting is also prevalent or at least practiced in many countries, but I am not aware that it is as widespread or that the pricing varies anywhere nearly as much as the US. The same applies to error collecting except that even in the US, the prices for errors are usually much lower than for die varieties or even generically for the better and scarcer non-error coins. I covered the prospects for error collecting in South Africa in a prior post and as I stated there, financially I believe it is going nowhere.

 

I have never heard of special designation strike collecting or an outsized emphasis on toning anywhere outside the US. An example of a special designation strike is a “full head’ on the 1916-1930 Standing Liberty Quarter. I consider this emphasis numismatically trivial and in many instances the price premiums absurd because the coins with this designation do not look that much better than those without it. In theory, many other series in and out of the US could also use this practice. For example, the two globes on the pillar coinage I collect are typically weakly struck. A “full globes” designation would make far more sense than with any US series using this practice today because the difference is very noticeable.

 

Another US practice is type set collecting which actually is the opposite of specialization but probably has a bigger price impact on more US coins than the others. This is especially true for any series with a short life and maybe somewhat so for “key” dates in those I have termed “perennial collector favorites”. I am not aware of this practice elsewhere either and actually, adoption of this practice in SA would make the price hopes of you locals far more realistic. If ever adopted widely, it would change the opinions I have expressed on this board substantially.

 

Aside from type collecting, the primary reason I believe these practices have been adopted in the US is because most US coins are so common that they are necessary to create an artificial challenge. The primary reason I do not believe any of them will ever go anywhere worth mentioning in your country (except maybe for type collecting) is because South African coins are generically so much scarcer. It is only with RSA that I see any viability. After all as I explained before, what point is there to collect the Nomisma die varieties and especially in high grade when most collectors cannot even complete the series by date? Add in the fact that the difference in appearance between “regular” coins and most of these is trivial and my prediction is that these practices are going absolutely nowhere in either Union or ZAR.

Edited by jwither

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jwither

The link below is to a related topic on the PCGS Coin Forum. As anyone reading my prior comments can see, what I described above is consistent with the way many and probably most US collectors at the least think. For most (which applies more to those in the US), the price is the primary obstacle. For others (which will mostly apply to those outside the US), the lack of availability will be the obstacle.

 

Collectors Universe Forums - At what level of rarity does set-builder interest drop?

 

As you can read in these posts, when a collector is a real one as opposed to primarily or exclusively just an "investor", the inability to complete the chosen series will more often than not result in the decision not to pursue it at all. And as you can see in the examples provided, this will be true even if only a few coins cannot be acquired which is the situation with the more common and available US series.

 

In the United States, the combination of price and availability is the reason why a series such as the 1813-1834 "Capped Head" half eagle ($5 gold) is pursued by a very small number of collectors. Most cannot possibly afford it but even if more could, many dates such as the 1822, 1815 and 1829 are not available in any grade anyway.

 

With another set like the Barber half dollar (1892-1915) which I profiled once before under another topic, many can in theory pursue it because no coin is "rare" (except maybe as a die variety) but the number of coins (about 70 for all date and mint mark combinations) makes it impractical or a poor choice compared to the alternatives. From the financial side, even in a grade like VF, the set will cost $25,000 or near it and maybe a lot more if the coins are "original". (That is, they look as if they have not been cleaned, dipped or conserved.) Combine the cost with the existing disproportionate collector tendency to prefer better grade (especially high grade or "conditional rarity" coins) and the result is that the number of collectors who pursue this series is not very large. Likely it is a few hundred which is nominal given the size of the US collector base.

 

The above two examples provide the most logical explanation why a disproportionate number of US collectors pursue the "perenial collector favorties" such as the Morgan dollar, Lincoln Cent or Mercury dime. These series have "key" dates but none of them are actually scarce though some are relatively expensive such as the 1893-S Morgan, 1909-S VBD cent and 1916-D dime. Most US collectors will also adjust their collecting goal to fit their budget by reducing the minimum grade, especially for "key" dates. Those who do not choose a series such as these will buy others such as the Barber half by type which is where most of the demand for these coins originates.

 

For the non-US collector whether from South Africa or elsewhere, I'm not sure what their definition of "completion" is used. I have asked this question before here and nobody answers. To some extent, it may or does matter less because the coins are generally scarcer or much scarcer and it is the only option if collecting is going to happen at all. It is an individual preference. However, "some" difference does not mean that most collectors (once again real ones) are going to pursue their collecting with a complete indifference to accomplishing their goal (whatever it may be) and instead pursue coins as they would any number of "widgets". There is no basis to hold that position or believe in that outcome at all.

Edited by jwither

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Cold Sea

Hi jwither,

 

The old saying or advice that, when you start out as a collector, you should concentrate on items and series' that can be completed relatively easily, seems to fit in here. Some that start out with high hopes and low budgets soon lose interest and disappear, others adjust their sights and collections.

 

The speculator/investor has little interest in completing a series unless the financial rewards make sense to him.

 

This brings me to my point again about the difference in value between the high end coins, conditional or not, and the second, third best etc. The collector, who is looking to add to his type collection, comes into play with these, and brings with him or her a more conservative and sensible budget. Coinoisseur commented in another post that some unc's seem to be becoming more scarce. Maybe this is because of collectors holding back, or maybe there are more collectors, but most of these will still be within the reach of ordinary collectors.

 

As to when is a set complete? Never for a collector, because the investor got the best bits!

Edited by Cold Sea

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jwither

I agree with you generically which is one of the reasons why I do not believe that collecting is that popular in your country or that this will change much going forward.

 

In the United States, there are many different sets and variations of sets to pursue. Hundreds depending upon the definition used and these can accomodate a wide range of financial budgets because most of the coins are both common and cheap. Yes, a large number are not either but the proportion of these is low or relatively low. Including specialization practices of die varieties, special designation strikes, toned coins and errors also creates the (artificial) challenge of pursuing "rare" but still mostly affordable coins.

 

In South Africa, I still do not know how most buyers define "completion". By my definition, there are six primary series in Union (KGV, KGVI and QE II for business strikes and proofs) and a similar number for RSA prior to 1994. After 1994, I have lost track because I do not pay any attention to these coins. For ZAR, I think of it as two, patterns and all others.

 

In ZAR, I have always presumed that any collector who has actually planned their acquisitions collects the circulation strikes up to the 5/ if they cannot afford the gold and 1892 proof set. If they can can afford both, they probably also buy some or many of the "pattern" bronze 1D and 2D. Almost no one even bothers with the other "patterns" but they are both rare and desirable enough to still command really strong prices..

 

For Union, I really have no clue. When I started in 1998, I set a cut-off of $500 per the Krause manual and just tried to buy all I could find in the best quality I could find. I presume that most locals exclude most of the KGV proof sets and the scarcer KGVI (like the 1939) but other than that, I do not know.

 

Aside from the cultural aspects which apparently make ZAR much more popular than Union in your country, the other difference is that many collectors can buy all of the 1D through 5/ if they will compromise on the grade which is exactly what appears to happen just as it does in the United States. With Union, the problem is that first, fewer will accept lower grades (as evidenced by the prices) but even where they might, many of the coins are not (apparently) available in any quantity anyway.

 

If the issuance of SA coins resembled the US, Union collectors could narrow their focus down to one or maybe more denominations. Maybe that happens to some extent (per posts here), but I doubt it is that common of a practice. Collecting only by portrait reduces the cost if KGV is excluded, but many KGVI are also "key" dates. All or at least most of the QEII are more available, but because of the poor strike, not in a quality which most (including myself) are going to like. Limiting a collection to farthings or crowns might be feasible, but that is about it. I do not see anyone specializing in a single denomination within KGV, KGVI or QEII because there isn't enough to collect. And with most of the denominations, there are still a disproportinate number of key dates that make completion even in this limited sense unachieveable for many or even most collectors. This is why I believe that "type" collecting is a logical alternative to current practice in SA but I have never read even one comment here which indicates that this happens at all, much less that it is widespread.

 

Reading the historical post content on this site and in private communications, one of my interpretations is that a disproportionate number of SA collectors and especially "investors" have completely misinterpreted what the scarcity or apparent scarcity of Union coinage means from the standpoint of future pricing. The consensus thinking is that because many of these coins are really scarce, that the prices should be much higher. Well, given how low prices were when I started in 1998, that was true but not so much anymore for the reasons I have provided.

 

The other thing I have noticed is that, because of the lopsided preference for only higher prices, there is and has been a bias to believe that most Union coins are scarcer than they almost certainly actually are. As I have said before, for those who wish for higher prices, it would be better if the coins are somewhat more available anyway because to most actual and prospective collectors, it is pointless to even start when you know in advance that completion of your goal is not going to happen. I have circumvented this psychological obstacle by choosing to collect a number of series from many countries but the lopsided majority are not going to do that.

 

The posts I have included under this topic spell out exactly why this is likely true. It is only for "investors" who treat their purchases as "widget" buying that they likely did not both consider this obvious reality and did not care.

Edited by jwither

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jwither

More wishful thinking

 

Below is another link to the PCGS Coin Forum. This link contains posts similar to the one on the NGC Message Boards I provided before. The difference between these two and the comments I posted above is that in this instance, there are those who are under the illusion that the coin market as a whole is going to be so compelling to non-collectors that it is going to resemble the art market and that prices (especially for US coins) will sell for "moon money". Unfortunately, the link to the Legend Numismatics article which started the whole conversation is no longer available, but the second link below from Coin Week is apparently a summary. In any event, this is pure wishful thinking. There is no reason to believe that outcome whatsoever.

 

The comments that I consider insightful are those by "Coinarefun", "Realone", "Secondrepublic" (especially), "Roadrunner" (especially) and Andy Lustig (a dealer). These comments describe the differences between coins and the collectible fields with the most money, including the lack of market depth. They also distinguish between the non-financial characteristics that are probably equally (If not more) important and which make these other fields more appealing and compelling to those with the most money.

 

Of note on the other side is a comment by contributor "Sanction II" who apparently has the same type of opinion that I have seen expressed here many times. The examples this person gives are of coins that no non-collector has ever even heard of and that non-US collectors certifiably do not give a hoot about. The idea that any non-US collector other than through pure random chance is going to find them so compelling to pay "moon money" is completely nonsensical.

 

The third link below is to another article on Coin Week. In this article, the proprietor of Legend Numismatics purportedly makes the claim that

what is in actuality an obscure coin (a US 1907 "normal edge" NGC PR-67 Indian Head eagle) which sold for $2.185 million in May 2011 is so compelling that it could be worth $15 million in ten years. This also reminds me of some of the more hyperbolic claims on this forum up until about late 2011 when prices peaked.

 

If you read the reason given, there is actually nothing that significant about a pedigree tracing a coin back to a obscure and long dead Mint Director that most people have never even heard of. Other than providing "conclusive" evidence that the coin is real, why would anyone care? I do not see any foreign collectors or non-collectors except "widget" "investors" who will ever buy this coin.

 

In the first link, a purported claim is made that the US coin market is "global". This firm is supposedly in a position to know because it is probably the number one dealer in the world from the standpoint of selling "investment" coins. But I still suspect that every single foreign buyer of theirs (which is still only going to be a few given their revenue of $45MM in 2011) is actually an "investor". The idea that non-US collectors in any meaningful number are going to find US coins so much more compelling than those from their own country to pay even the existing absurd prices, much less the theoretical much higher future ones, contradicts common sense and is unsubstantiated by anything in collecting that I have ever seen.

 

There are a few US coins that non-collectors have heard of such as the 1804 dollar, 1913 Liberty Head Nickel and 1933 double eagle. These are the same coins that have been mentioned here by others. The other US coins I have mentioned, I doubt anyone reading my posts had ever heard of them before and does not care either. Why would they?. Two examples include the 1920-S Indian Head Eagle NGC MS-67 which last sold for $1.75MM and the 1861 "Pacquet Reverse" double eagle which is probably worth several million USD but which some apparently think might now be worth $10MM. These two I consider irrelevant though some others are significant or somewhat significant to me but much less than apparently to the typical US collector. The idea that either non-collectors or non-US collectors are ever going to find them compelling except as "widget" "investments" is unsubstantiated and pure wishful thinking.

 

Collectors Universe Forums - New Legend Market Report posted PCGS Link

 

Why the Rare Coin Market Isn't the Art Market | CoinWeek

 

Are coins undervalued as an asset class? | CoinWeek

Edited by jwither

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jwither

Coins and competing alternatives

 

Following up on the last post, I have included a few examples of alternative forms of art (and yes, some but not all coins can be considered art) that those with money or "big money" who are not coin collectors may prefer.

 

The first link is to the 2004 Forbes sale of Faberge Imperial Easter Eggs held by Sotheby's which I mentioned once before. The sale was canceled but the pre-sale estimate for the entire collection ranged from $80 million to $120 million. Presumably the centerpiece of the collection, the Coronation Easter Egg had an estimate of $18MM to $24MM. I do not know what these are worth now, but I do not believe that any coin should sell for more and I do not believe that any non-collector who is aware of both is going to pay more either.

 

Forbes' Faberge Eggs - Forbes.com

 

For those who do not have $24MM, the image below is a late 19th century Viennese porcelain and gilt center table sold by Heritage last year. At just over $4,000, I think it is a better value than any coin in this price range. It certainly looks much better and actually has some practical use. If I owned a home where it would "fit" (which I do not), this is the type of alternative art that I would want to acquire.

 

A ROYAL VIENNA-STYLE PORCELAIN AND GILT WOOD CENTER TABLE . | Lot #66150 | Heritage Auctions

 

The next link below is to a British Boer War artifact presumably made to commemorate the end of the war. Not sure it would be of interest in South Africa (I presume not), but it certainly is unique and at about $3500, also competitive versus most coins in this price range.

 

Copeland Spode Queen Victoria Porcelain Commemorative Boer | Lot #36185 | Heritage Auctions

 

The fact of the matter is that there are many other collectible fields that compete for both money and attention. The link below is to an article summarizing Heritage's 2011 results. In 2011, the world coin category had prices realized of about $39MM while comic books and comic related art totaled about $26MM. World coins were (and are) growing faster, but I include it to show that even a category such as this one (which most reading this post may not even be aware of as a collectible field) is also substantial.

 

The main advantage that coins have over most other fields is their liquidity and portability. If someone ever needs to transfer their wealth in an emergency, it will be easier to move it than master paintings or antique furniture. However, under these circumstances, i would still expect it to lose substantial value, probably just less than most or all other areas. The main disadvantage coins have is that they lack the same appeal, for a variety of reasons.

 

Rare U.S. Coins post $196 million total at Heritage Auctions in 2011 | CoinWeek

Edited by jwither

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Pierre_Henri
Coins and competing alternatives

 

Following up on the last post, I have included a few examples of alternative forms of art (and yes, some but not all coins can be considered art) that those with money or "big money" who are not coin collectors may prefer.

 

The first link is to the 2004 Forbes sale of Faberge Imperial Easter Eggs held by Sotheby's which I mentioned once before. The sale was canceled but the pre-sale estimate for the entire collection ranged from $80 million to $120 million. Presumably the centerpiece of the collection, the Coronation Easter Egg had an estimate of $18MM to $24MM. I do not know what these are worth now, but I do not believe that any coin should sell for more and I do not believe that any non-collector who is aware of both is going to pay more either.

 

Forbes' Faberge Eggs - Forbes.com

 

For those who do not have $24MM, the image below is a late 19th century Viennese porcelain and gilt center table sold by Heritage last year. At just over $4,000, I think it is a better value than any coin in this price range. It certainly looks much better and actually has some practical use. If I owned a home where it would "fit" (which I do not), this is the type of alternative art that I would want to acquire.

 

A ROYAL VIENNA-STYLE PORCELAIN AND GILT WOOD CENTER TABLE . | Lot #66150 | Heritage Auctions

 

The next link below is to a British Boer War artifact presumably made to commemorate the end of the war. Not sure it would be of interest in South Africa (I presume not), but it certainly is unique and at about $3500, also competitive versus most coins in this price range.

 

Copeland Spode Queen Victoria Porcelain Commemorative Boer | Lot #36185 | Heritage Auctions

 

The fact of the matter is that there are many other collectible fields that compete for both money and attention. The link below is to an article summarizing Heritage's 2011 results. In 2011, the world coin category had prices realized of about $39MM while comic books and comic related art totaled about $26MM. World coins were (and are) growing faster, but I include it to show that even a category such as this one (which most reading this post may not even be aware of as a collectible field) is also substantial.

 

The main advantage that coins have over most other fields is their liquidity and portability. If someone ever needs to transfer their wealth in an emergency, it will be easier to move it than master paintings or antique furniture. However, under these circumstances, i would still expect it to lose substantial value, probably just less than most or all other areas. The main disadvantage coins have is that they lack the same appeal, for a variety of reasons.

 

Rare U.S. Coins post $196 million total at Heritage Auctions in 2011 | CoinWeek

 

Hi Ernesto

 

Sorry for my absence but I have been running around like you know what.

 

About 5 weeks ago there was an interesting article in our Sunday Newspaper (The Sunday Times) about the collecting preferences of the world's rich and famous.

 

If I remember correctly - at the top of their list was art followed by cars.

 

At the bottom of their list (whatever that may mean - they surely do not collect butterflies or smurfs) are Stamps & Coins.

 

That was sort of a blow to me hoping that at least philatelics and numismatics would be somewhere in the middle - but at the bottom? The article was probably bought from an overseas news company and written by a junior reporter - but still - it was not nice reading it.

 

Thank you for all your wonderful posts on this forum

 

Pierre

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Cold Sea
The main disadvantage coins have is that they lack the same appeal, for a variety of reasons.

 

But what then gives value to a coin. A combination of precious metal content, demand, rarity and condition seems to be the consensus.

 

Coins have the one-up of precious metal content, which gives it the liquidity edge. (That reminds me of my attempt at collecting good wines. I thoroughly enjoyed it.) However, a Faberge egg or Picasso must be as liquid as any piece of gold. But as you rightly pointed out, liquidity does not always equates to profit.

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