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Pierre_Henri

Why have coin prices dropped so drastically recently?  

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Pierre_Henri

When I started coin collecting as a boy in the 1970s, the only option was to get coins for my collection from local dealers in Cape Town (as an example).

In those years, there were only about 3 of 4 dealers whom one could physically visit and look at their stock.

There was hardly any other option procuring coins for your collection then.

Today there are hundreds of coin dealers who sell via the internet (e.g. BidorBuy) and the numismatic trade community has enlarged hundredfold if not more.

Any person who has found an 1898 ZAR Paul Kruger Penny in his grandfather’s cupboard can now be called a coin dealer and is rightfully one

A couple of years ago, that would have been quite impossible.

So coin prices have dropped drastically due to so many new “dealers” entering the market and countering that – there was probably only a marginal rise in collectors.

But, make no mistake - the numbers of coins available as true rarities (rare coins) are still the same and even with a modest rise in the numbers of collectors, the value of truly rare coins will keep on rising as the years progress.

I have no doubt of that – investing in true numismatic rarities have outshine any other investment option that I have been following in the last 20 years.

 Pierre

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Mike Klee

I once read that, despite the popularity of numismatics, most coin collectors are people of modest means and with limited disposable income to indulge in their passion. The older I get, the more convinced I  have become that this is correct.

Sure, there has been a growth in numismatics with investors and businessmen seeking greater rewards for their capital, but the recessionary times in which we live have directed many of these investors' resources away from numismatics.

However, I must agree with you that true rarities will always rise in value at a pace that will outshine any other investment.

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jwither

I haven’t posted here in over a year for a variety of reasons but it is apparent that despite the explanations I provided previously, this topic is still a mystery when it should not be..

I have addressed the financial prospects of many coins numerous times.  For Union and ZAR here and for many other series (primarily US) on other coin forums.  Depending upon any response I receive, I have a lot more to add.

What rare coins do both of you have in mind?  Most supposedly rare coins are only “grade rare”.  Generically, there are also a disproportionate percentage of actually scarce and rare coins in the South African series but most of them don’t have any distinction which concurrently means there is no reason to believe hardly any of them will become substanbtially more valuable, possibly only in monetary terms due to currency debasement.  It’s only those who own them or think that every rare coin should be worth a lot more who believe otherwise.

I don’t believe the price level is really that low, though I don’t follow pricing as close as I did in the past.  Prices are low when compared to the bubble peak of 2011 but I don’t see that either ZAR or Union are really that cheap when compared to most coins from elsewhere.  Given the price structure, its also apparent that few bother attempting to complete any Union sets which concurrently is evidence of little interest in real collecting and since only collectors derive any utility, why would they sell for (a lot) more?.  As for ZAR, the more common coins are well, common or very common so how exactly are they really that cheap?

Historically outsized returns have been realized by a minority but for the overwhelming percentage, the absolute returns are not substantial.  The financial scale in your market is disproportionately financially irrelevant and its not going to change either.  Due to the limited scale, there is also no equivalence between “investing” in South African coins and other asset classes neither of you named which is the comparison both of you are making.  To believe otherwise is to concurrently believe that a critical mass of real collectors (as opposed to “investors”) will continue to maintain interest even as they are priced out of most or everything they want to buy.  This is “widget trading”, not real collecting, it has never happened anywhere and no reason exists to believe it ever will.

There is little if any demonstrated correlation between coin prices and aggregate economic conditons in South Africa or for that matter, any other country without an extended and widespread tradition of collecting.  During the bubble and at the 2011 YE peak, was the economy so much better?  If it was, I am aware of no evidence to support it and I certainly never heard anyone else here claim it either.

In a prior post, I listed five factors which apparently accounted for the YE 2011 price level.  Except for increasing gold and silver prices, the other four were a one time occurrence or there is no reason to believe they will repeat which concurrently means that the historical performance you reference isn’t going to repeat either except from lower or much lower levels.  Since prices are constantly trending, there will be future opportunuties but almost certaInly not to the extent up to YE 2011.

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Pierre_Henri

Two or three years ago I did a long post on this forum of great rewards that can be made from buying & selling coins on the internet.

I gave exact examples with links to specific listings and I think I quoted the prices that I bought the coins for and the prices I sold them for – the returns were extraordinary.

I think I said that these were the following possibilities (there could have been one or two more)

1)    Buy a raw coin and sell it raw (unslabbed)

2)    Buy a raw coin and have it slabbed and sell it

3)    Buy a slabbed coin and sell it slabbed

4)    Buy a slabbed coin, break it out, have it reslabbed and then sell it

I gave specific examples of each and the return on investment was something like 60% – 100% within a few months.

I truly do not know of any other investment that gives this kind of return – this is from a numismatic dealer’s view and I cannot speak for “investors” or “collectors” or whoever else may be buying & selling coins for whatever reason. (I am of late neither an investor nor a collector).

If one has an eagle’s eye for numismatic rarities and can grade them correctly, there is truly lots of money to be made.

I will give one last example to prove my point

The following item was bought by a friend of mine at a flea market in Cape Town earlier this year. He saw the word “Durban” on the medal and as an avid collector “knew” that it was rare – he just had that inkling that here was something truly special and rare – he paid R200 for the medal and it sold for 10 times that a month later.

Extremely Rare 1914 Norwegian Medal: DURBAN (Natal) : Unrecorded in South...

THAT was what I was referring to when I said that truly rare numismatic items will outperform any other investment I am aware of …

BUT there is an Afrikaans saying “Skoenmaker, hou jou by jou lees” which roughly translates to “Shoemaker keep to your own trade

That is way so many people are burning their fingers when it comes to investments in art, numismatics, philately, property, stocks, bonds etc. …they invest in things they know little about.

Zoom in on something you truly love, do your research deeply and spend your money wisely – and the ROI will stun you.

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jwither

I was able to do what you did though presumably to an even lower scale from 2002-2010.  I can't do it anymore because I don't live in South Africa but your experience doesn't change anything I wrote in my last post or in the past.  In a prior post, I even stated the exact same options you did except for the first one, since it is by far the least profitable except for the cheapest coins where it isn't even worth the bother of grading it.

What you are describing doesn't have any scale, exactly as I stated in my last post.  The returns can be outsized as they were in your experience or mine but to imply that coins are a viable alternative to a real financial market (which is exactly what you and Mike are both claiming with your opinion that it is the best investment) is very misleading.  I am also aware that it is the IMPLIED consensus opinion on this forum since I joined in 2009 or at least certainly until about 2012 or a year after the price peak but that doesn't make it an accurate one. 

The reality: it's an option to a very low number of participants but nothing more.  It is financially irrelevant, exactly as I stated in my last post.   A very low number can participate to a meaningful financial scale.  A somewhat larger number can do so but only at levels that by any sensible standard won't make any difference whatsoever to their financial position.

Let me put it into another context for you.  Below is my current estimate of the market value of "investment" eligible Union and ZAR, by the implied standards of this forum, not mine.  Mine is even less not due to the price level, but because most lower grade MS and proof coins aren't really "investment" coins at all.

ZAR and pre-Union:

Veld Pond: $1MM to $1.5MM USD.

Burgers Pond: $2MM to $3MM USD

1898/99 Pond: $2MM to $3MM USD

Kruger “patterns”, including 1898 “Single 9”: $2MM to $4MM USD*

1892 Proofs: $2MM to $3MM USD**

All other “patterns”: $1MM to $2MM USD**

All other ZAR gold: $10MM to $15MM USD

ZAR silver and bronze: $2MM to $3MM USD

Total market ZAR: $22MM to $34.5MM USD

Union:

All patterns: $2MM to $4MM USD*

Sovereigns: $1.5MM to $2MM USD

1926 proofs: $1MM to $2MM USD*

Other KGV proofs: $2MM to $3MM USD**

KGVI proofs: $1MM to $1.5MM USD

KGV silver and bronze: $1.5MM to $2MM USD

Other Union: $500,000 to $1MM USD

Total market Union: $9.5MM to $15.5MM

Total market ZAR and Union: $32.5MM to $50MM USD

*These coins are effectively never offered for sale.

**Most of these coins are seldom offered for sale.

By point of comparison, Collectors Universe or CLCT (owner of PCGS) has a current market value of $231MM last time I checked a few weeks ago.  It trades on the "pink sheet" in the OTC market in the USA because of its size.  Yet even at the 2011 peak, Union and ZAR were still likely worth at most as much as CLCT is now and this was during a bubble. 

US coins which are larger than all other countries combined have a much greater scale than SA yet I have never read any post on a US coin forum where anyone has made the claims made on this forum.  The only reason why you are able and I was able to get the returns you describe is because Union and ZAR coins are not an "efficient" market and prices are so erratic that it provides an opportunity to a few like both of us to obtain the results you describe.  That isn't a real financial market. 

You reference a prior post and I will do likewise.  In my last set of posts in 2016, I compared the bubble in ZAR and Union (which is exactly what it was) to the US TPG bubble in the late 1980's.  Guess what?  Prices are still lower now than they were in 1989 for any number of coins, many of them.  This is exactly what I expect will happen for many Union and ZAR measured in constant prices.  The "rarest" will likely perform better as they have in the US but it won't make any difference to most buyers because these coins cannot be bought except maybe at "stupid money" prices, as in mayy of the reserves at the DNW Bakewell sale which no one wanted to pay.

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jwither
On ‎5‎/‎8‎/‎2017 at 0:04 PM, Pierre_Henri said:

I will give one last example to prove my point

The following item was bought by a friend of mine at a flea market in Cape Town earlier this year. He saw the word “Durban” on the medal and as an avid collector “knew” that it was rare – he just had that inkling that here was something truly special and rare – he paid R200 for the medal and it sold for 10 times that a month later.

Extremely Rare 1914 Norwegian Medal: DURBAN (Natal) : Unrecorded in South...

THAT was what I was referring to when I said that truly rare numismatic items will outperform any other investment I am aware of …

BUT there is an Afrikaans saying “Skoenmaker, hou jou by jou lees” which roughly translates to “Shoemaker keep to your own trade

That is way so many people are burning their fingers when it comes to investments in art, numismatics, philately, property, stocks, bonds etc. …they invest in things they know little about.

Zoom in on something you truly love, do your research deeply and spend your money wisely – and the ROI will stun you.

I can make two points in response to this example.

First, what gives you the idea that this item will ever be worth a substantial amount? 

There is absolutely no evidence that hardly anyone will pay "high prices" for an item just because it is rare.  This claim is no different than numerous other similar claims on this forum for any number of Union, ZAR and RSA coins.   Contrary to opinions expressed here, there is no reason to believe that hardly any of them will be worth "high" prices because the broader SA series has an unusually high proportion of scarce and rare coins.  To believe otherwise will lead to "widget" trading as I have explained numerous times in prior posts and it has never happened anywhere, ever. If your example turns out to be worth a lot more, it will be due to demand from a handful of buyers with no predictive value in any subsequent sale.

If your example increases five, ten or 20 times from R1990 in the future even in constant prices, so what?  You and I have sold coins for higher gains.  To reiterate one of my prior examples, I bought an 1892 ZAR penny in October 2002 for the Krause list price of $50 USD.  In 2005, it graded NGC MS-64 RB PL.  I disposed of it in 2010 and I presume you have an idea of its value.

What I have attempted to explain, though no one else who has posted on the subject here will see it, is that the run-up to 2011 was a "one shot" deal.  Your coinage was cheap prior and during part of the run-up but the higher grade scarcer coins aren't cheap now and few are compelling anyway.  The factors which caused the increase aren't going to repeat, except for an increase in gold and silver prices.

Because of the severity of the decline and shallow market, there will be opportunities for high proportional future gains but there is no reason to believe anything close to a repeat of the late 1990's to 2011 experience will occur, except in your depreciating currency.  To believe this is also to believe in the feasibility of "widget" trading because it will also price most collectors in your country out of the coins they want to buy due to the limited supply, limited variety in Union and ZAR and lack of interest in RSA.

Second, to use a specific coin (or medal) would be the same if I were to use Alphabet (Google), Apple Inc, Facebook or any number of other individual shares and make the same claim for the stock market as an assets class, even though it is literally composed of tens if not hundreds of thousands of companies.  These shares have bettered practically any coin.  Anyone could have bought them in the past at a financially meaningful scale which as I explained in my last post, isn't possible above a very low number for ZAR and a mere handful for Union.

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Pierre_Henri
On 6/4/2017 at 4:20 PM, jwither said:

I was able to do what you did though presumably to an even lower scale from 2002-2010.  I can't do it anymore because I don't live in South Africa but your experience doesn't change anything I wrote in my last post or in the past.  In a prior post, I even stated the exact same options you did except for the first one, since it is by far the least profitable except for the cheapest coins where it isn't even worth the bother of grading it.

What you are describing doesn't have any scale, exactly as I stated in my last post.  The returns can be outsized as they were in your experience or mine but to imply that coins are a viable alternative to a real financial market (which is exactly what you and Mike are both claiming with your opinion that it is the best investment) is very misleading.  I am also aware that it is the IMPLIED consensus opinion on this forum since I joined in 2009 or at least certainly until about 2012 or a year after the price peak but that doesn't make it an accurate one. 

The reality: it's an option to a very low number of participants but nothing more.  It is financially irrelevant, exactly as I stated in my last post.   A very low number can participate to a meaningful financial scale.  A somewhat larger number can do so but only at levels that by any sensible standard won't make any difference whatsoever to their financial position.

Let me put it into another context for you.  Below is my current estimate of the market value of "investment" eligible Union and ZAR, by the implied standards of this forum, not mine.  Mine is even less not due to the price level, but because most lower grade MS and proof coins aren't really "investment" coins at all.

ZAR and pre-Union:

Veld Pond: $1MM to $1.5MM USD.

Burgers Pond: $2MM to $3MM USD

1898/99 Pond: $2MM to $3MM USD

Kruger “patterns”, including 1898 “Single 9”: $2MM to $4MM USD*

1892 Proofs: $2MM to $3MM USD**

All other “patterns”: $1MM to $2MM USD**

All other ZAR gold: $10MM to $15MM USD

ZAR silver and bronze: $2MM to $3MM USD

Total market ZAR: $22MM to $34.5MM USD

Union:

All patterns: $2MM to $4MM USD*

Sovereigns: $1.5MM to $2MM USD

1926 proofs: $1MM to $2MM USD*

Other KGV proofs: $2MM to $3MM USD**

KGVI proofs: $1MM to $1.5MM USD

KGV silver and bronze: $1.5MM to $2MM USD

Other Union: $500,000 to $1MM USD

Total market Union: $9.5MM to $15.5MM

Total market ZAR and Union: $32.5MM to $50MM USD

*These coins are effectively never offered for sale.

**Most of these coins are seldom offered for sale.

By point of comparison, Collectors Universe or CLCT (owner of PCGS) has a current market value of $231MM last time I checked a few weeks ago.  It trades on the "pink sheet" in the OTC market in the USA because of its size.  Yet even at the 2011 peak, Union and ZAR were still likely worth at most as much as CLCT is now and this was during a bubble. 

US coins which are larger than all other countries combined have a much greater scale than SA yet I have never read any post on a US coin forum where anyone has made the claims made on this forum.  The only reason why you are able and I was able to get the returns you describe is because Union and ZAR coins are not an "efficient" market and prices are so erratic that it provides an opportunity to a few like both of us to obtain the results you describe.  That isn't a real financial market. 

You reference a prior post and I will do likewise.  In my last set of posts in 2016, I compared the bubble in ZAR and Union (which is exactly what it was) to the US TPG bubble in the late 1980's.  Guess what?  Prices are still lower now than they were in 1989 for any number of coins, many of them.  This is exactly what I expect will happen for many Union and ZAR measured in constant prices.  The "rarest" will likely perform better as they have in the US but it won't make any difference to most buyers because these coins cannot be bought except maybe at "stupid money" prices, as in mayy of the reserves at the DNW Bakewell sale which no one wanted to pay.

I simply do not understand your post.

If you say for example that the "market value" of Union Sovereigns is “$1.5MM to $2MM USD” or the “market value” of “other Union coins”  is “$500,000 to $1MM USD”

What does that mean? What are you saying?

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jwither

It means that if you take the estimated number of coins in existence and multiple it by the estimated average current price, the result is the "market capitalization".  This is how the total value of shares are computed, by multiplying the share price by the share float (number of shares outstanding).  Since you and Mike were comparing coins to other asset classes, this is the best measure of (potential) liquidity in the comparison. 

Taking the Veld pond above, I estimate there are somewhere between 300 and 500 in existence.  If the average value is somewhat over $30,000 USD, multiplying it by 300 to 500 will result in $1MM to $1.5MM.  I actually suspect there are less than 500 but more than 300 but don't really believe the average price today is near $30,000 because that's likely the current value for an MS-63 and the average grade (by current grading standards) is certainly lower.

The whole point of the above numbers and my prior posts on this subject is to point out the limited liquidity for South African coins to accommodate financial flow of funds which is a necessary precondition to produce the implied forecasts expressed by others on this forum.  It is easy to talk about "investment" potential in the abstract which is what most (whether on this forum or in the USA) almost always do.

The data I provided, despite any margin of error, should make it self evident that the supply of Union and ZAR coins that most real collectors (as opposed to "investors") actually want to buy will not accommodate more than a limited to minimal number of additional funding without turning collecting in your country into "widget" trading.  The reason for this is because except in isolation, coins are not "widgets" which are interchangeable and overwhelmingly only bought as substitutes for other assets by "investors", not real collectors.

The other point I was trying to make is that a noticeable proportion of my estimates aren't even available for sale.  I'd say probably 30% to 50% of my total which means that the "float" available to be bought is also actually much less than $32MM to $50MM.  Sure, every coin is in theory available at some price, but then the price required to buy it would likely be so high (potentially a premium similar to the ridiculous ask prices I see on BoB) that it would also defeat any financial motive for buying it.

What I am describing is not unique to South Africa and is apparent in every country without an extended tradition of collecting.  It even exists for US coinage, though obviously this market is able to accommodate a huge multiple of fund inflows to yours.  (My estimate is a factor of at least several hundred.)  However, since prices are set at the margin, the reality is that a very low number of (high net worth) new buyers entering a market can send a coin, series or the entire market soaring and price most existing real collectors out of what they collect.

The reason why this doesn't generally happen is because coins are not "widgets" and only have utility to real collectors, not anyone else.  In theory, foreign collectors can inflate local markets but in practice, this either predominantly or exclusively only happens to a limited extent with US buyers because it's only occurred due to TPG and since "world" coinage is so much cheaper than US coins.  But even here, it's predominantly limited to the coin series I listed in a prior post with universal appeal (ancient Greek and Roman, British and some from Latin America) because US collectors have limited affinity for other coins which is why they are not going to pay the same prices you locals will for Union and ZAR, except at relatively nominal prices.

On the NGC Message Boards, I have pointed out that US based collectors are ruining collecting for collectors in other countries by inflating the value of the scarcest and highest grade coins.  In other words, the coins most collectors elsewhere want to buy the most which used to be affordable but increasingly now are not.  How would you like to be a long time collector and then have others elsewhere buy what you collect to where you either cannot afford it or it's financially imprudent?  When I have expressed these sentiments on the NGC Message Boards, no one has anything to say.

 

 

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Pierre_Henri

You say that you have expressed “these sentiments on the NGC Message Boards, no one has anything to say.” 

I think the reason why they have nothing to say, is that they have difficulty in following you (I don’t mean that in a negative sense as you write very technically on a hobby-based forum).  

I cannot speak for Mike, but the reason I said that investing in rare coins is a good investment, is that’s exactly what my experience was over the years. It has outshined any other financial endeavor that I ever tried (the word “investment” however may be the wrong term – see also my last paragraph).

 But unlike shares, stocks and bonds in which one simply invests (you don’t “collect” them and there are no ”joy” in the game) coins are also different in other ways, because they are chased by both collectors and investors (and speculators).   

Also, if one wishes to invest in shares, you do your homework and then simply buy the share you wish on the stock exchange at a set price at that specific moment in time. You cannot “negotiate” the price. 

I don’t know the USA coin market, but in the UK and say SA, it does not work that way. If you are a collector searching for say a Veldpond in MS63 condition, you go back on past sales information that you can source. You then get an idea what the current going rate is and then you start negotiating with sellers regarding their asking price. You will be chasing the lowest price and the harder you search, the bigger the gain will be. 

Stocks do not work that way - the price is set and if you are not willing to buy at that price, there is nothing you can do. 

THAT is why I said that “investing” in coins is (for me and many others) a better investment, because there are no set prices (like shares) involved and the harder we work, and the better our knowledge are, the bigger the ROI will be.  

In the bigger US market, the prices of coins are probably much more stabilized and there are little fluctuations in their values on the short term. But, like you say, we in SA have a much smaller market and so the value-fluctuations are much bigger. One day a coin will sell for 1000 dollars and the next day its price can jump (or fall) with a huge margin. 

That is the reason why a lot of money can be made because the eagle eyed coin collector or investor who did his homework, will know when to pounce.  This obviously also regards other “hobby” type “investments” like philately and even art, but excludes trading in investment options like bonds, stocks and shares. 

Maybe it is the word “investment” that causes all the trouble. I think you look at the investment in coins in the same way that you are looking at say share trading, but for many of us, they are truly worlds apart.

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jwither

Yes, I understand your point and yes, I write complicated posts but the reason I do is because from a financial standpoint, it's actually a lot more complicated than most believe, in the aggregate.

At the individual level, I agree with your point that opportunities are potentially significant in South Africa coinage for a few reasons.  But the unpopular corollary to that possibility is that it applies both on the "Upside" and "Downside", the latter which has been almost entirely ignored during my tenure on this forum. 

I have on occasion bought SA coins cheaply, even since I disposed of most of my collection value wise in 2010.  I have also intentionally passed up many more coins that I thought sold cheap.  The first reason is because I do not view my collection as an "investment", even though I attempt to obtain value for what I buy and do consider resale.  I buy coins I like the most, even though my primary series (Spanish colonial pillars) has less financial potential than Union or ZAR currently.

The second reason is that I no longer actively collect Union.  The increased price level versus what I used to pay and my current budget make it impractical.  I still have somewhat over 100 TPG Union and RSA including a decent number of nice scarcer coins but nothing remotely as I had before.  To collect the multiple series I would like to pursue will result in an average collection in all of them instead of excellence in any of them.  So I have now decided to focus on pillar minors from Peru, Bolivia and Guatemala and its about all I buy. 

Lastly, since I do not live in South Africa, even if a coin sells cheaply, the chances are I won't be able to monetize the discount because no one elsewhere is going to pay the same prices locals do.  As an example, eBay has had a 1935 NGC MS-64 Shilling listed at $399 USD for months.  I suspect this is more than its current value but whether it is or isn't, it isn't a common coin and not a bad numismatic value.  I wouldn't mind buying it but this will reduce my budget for pillars and I would obtain no financial benefit.  The prices of ZAR and Union will have to fall a lot farther before it likely will make any sense for a non-local such as myself to buy these coins for "investment".

With reference to other markets, yes the USA pricing is a lot more stable.  There is a wide variation between sales compared to commoditized markets (such as shares or metals) but nothing remotely similar to the wild fluctuations for Union and ZAR.

The fluctuations are or may be greater with world coinage, but with the coins I know well, nothing remotely close to what I see in your market.  I attribute the difference to the disproportionate amount of speculative buying by buyers in your country.  As examples, some British coins may sell "cheap", but no high quality coin which is in demand by US buyers will do so because there are too many active collectors for it to be really "overlooked".  Same goes for my Spanish colonial pillars.

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jwither
Posted (edited)
On ‎6‎/‎6‎/‎2017 at 9:28 AM, Pierre_Henri said:

You say that you have expressed “these sentiments on the NGC Message Boards, no one has anything to say.” 

I think the reason why they have nothing to say, is that they have difficulty in following you (I don’t mean that in a negative sense as you write very technically on a hobby-based forum).  

Could be part of it but all of my posts are not long or complicated to follow.

Mostly, I attribute it to the unpopular opinions I have expressed on the US coin price level and relative value. The same unpopular views I have expressed here.  I find the US price level exorbitant and the prices of many (and I mean many) US coins along with their relative values utterly absurd.  It is why I don't collect them and have no intention of doing so in the future either.

Like most collectors elsewhere, most US collectors have limited awareness of the price level outside their home market or what they don't collect or for that matter, what else even exists to be collected.  They are also so accustomed to the high price level and price structure that they don't think it unusual that coins which under any impartial evaluation can only be described as mediocre and undistinguished are worth current prices.  Yet these coins cost thousands to in a few instances over a million USD.

My explanation for this behavior is twofold.  First, they have been conditioned to it.  And second, many coins which were far more affordable in the past are now so hopelessly out of reach to the typical collector that they exaggerate the merits of what they are able to afford now.  Most of the time the exaggeration is unintentional but when I see these coins profiled, it doesn't do anything for me because a similar one can be bought on demand or on short notice.  The distinction these coins supposedly carry is disproportionately either "eye appeal" or one of the specializations I have listed in my prior posts: the TPG grade, errors, die varieties and special designation strikes.

Because they have been conditioned to the US price level and price structure, they (presumably) don't consider a "knock-on" effect to other coins either unusual or a negative to collecting.

Edited by jwither

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Pierre_Henri

My opinion is that it does not matter what one THINK about specific coins being rare or not, or coins being over or under priced.

One’s opinion does not really count when it comes to the true “value” of a coin.

The answer lies in what is currently going on in the market and what are scarcer / rarer coins NOW selling for.

Let’s take an example: – a Veldpond in AU53 condition would currently sell for around R150 000

Is a Veldpond in that condition rare? Is it scarce? Is the price of R150 000, overpriced? Underpriced?

It is unimportant, because that is the going rate at the moment (R140 000 – R160 000) for a coin in that condition today

Yes, one may sell tomorrow for R220 000 and an example might have parted hands at R130 000 yesterday, but informed collectors & dealers know what they are currently selling for around R150 000. (Obviously depending on many factors, one being the TPG Company involved)

Is it a good “investment” buying one for R150 000 today? No, certainly not in the short term. If you have just bought it for that price today, how can you expect a quick positive return on it?  

But if you have bought it as a collector (not as an investor), I think the price is fair and you have paid a good price. The reason simply being that you would not get that coin for a much “cheaper” price without spending weeks (months?) browsing the internet and calling every single dealer you know for ever and a day.  

On another matter, there was until recently a South African paid-for website where one could follow all recent sales of South African coins on a day-by-day basis. It recorded all SA coin sales sales on international coin websites like BidorBuy, Ebay and others.

For example, if one would check the recent sales of our Veldpond example in AU53, one would see what the going price for it is currently.

But I cannot recall the websites’ name or URL – maybe someone can refresh my memory please? Are they still operating?

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jwither
Posted (edited)
On ‎6‎/‎8‎/‎2017 at 0:38 PM, Pierre_Henri said:

My opinion is that it does not matter what one THINK about specific coins being rare or not, or coins being over or under priced.

One’s opinion does not really count when it comes to the true “value” of a coin.

 

 

Two comments.

You are presumably referring to CoinGuide SA.  The last time I tried to find the site, I could not.  I believe the service has been discontinued; a casualty of the end of the bubble.

You are correct that one's opinion of rarity is unimportant since the primary factor in a coin's price is not its scarcity, but the demand.  There are many expensive coins which are "rare" but many more which are not, because hardly anyone wants them.  Most are lost in relative obscurity and for most of these, no reason exists to believe the perception will ever change substantially, not where it will matter financially.

You used the Veld Pond as an example but I don't believe it is a good one.  This coin holds a special status above all South African coins.  It isn't the most expensive because of its availability and it's a lot more common than many others. However, it has the highest market value for its relative scarcity and availability, with the only possible contender being the Burgers pond.

Price guides and collector habits are probably the biggest influences.  The 1931 Union proof set is one of the most common KGV sets, yet it sells for more than the 1934, 1936, 1938, 1939 and possibly the 1935.  Why?  The logical explanation for its current and historical relative price is that collectors buy it as a substitute for the circulation strikes.  SA collectors didn't seem to distinguish between proofs and circulation strikes in set definition.  This is also evident in the price of proof only issues such as the 1949 1/.  

In US coinage, common 20th century "key" dates retain disproportionate prices relative to much scarcer coins because of historical perception as well.  My explanation for this outcome is the communication limitations from 1933-1965 when collecting predominantly occurred out of pocket change.  Most collectors were limited to local dealers and trading with other collectors.  Most local dealers didn't carry these coins because most of their customers couldn't afford them and they weren't available in change; therefore, collectors perceived them as "rare", even though by any sensible standard they are common or exceedingly common.

To give everyone here an idea of how exorbitantly expensive these coins were, my 1965 US Red Book lists the 1916-D (Denver mint) Mercury dime at $1000 USD in "UNC", a huge sum at the time.  The recorded mintage is 264, 000.  PCGS Coin Facts estimates 10,000 survive and the combined population reports record several hundred above MS-60, though this will include a relatively high proportion of duplicates due to the price.

Edited by jwither

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