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Pierre_Henri

Sometimes, Hern's Catalogue price is virtually 100% correct

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jwither

What you state would be true if the catalog price was based upon this sale which it was not, since the sale came after the price was published.  The list price of R50,000 was just estimated or "made up" (as with all others) and someone happened to win it at almost the exact same amount.

There is a much better reason to believe that the bidder used the catalog as their reference point for value but yes, it happened to coincide.

Given the illiquid nature of all numismatic (as opposed to bullion or bullion substitute) coins, it's much better to use a range  for value, a fairly wide range as used in auction estimates.

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EWAAN Galleries
On 10/29/2018 at 2:35 AM, jwither said:

What you state would be true if the catalog price was based upon this sale which it was not, since the sale came after the price was published.  The list price of R50,000 was just estimated or "made up" (as with all others) and someone happened to win it at almost the exact same amount.

There is a much better reason to believe that the bidder used the catalog as their reference point for value but yes, it happened to coincide.

Given the illiquid nature of all numismatic (as opposed to bullion or bullion substitute) coins, it's much better to use a range  for value, a fairly wide range as used in auction estimates.

Totally agree - I love how Heritage uses best estimates for a coin like this they would put eg $1500 - $2000 - and it would sell for more than their estimates :)

Seems Randcoin driving up the prices like they did with the 1892 Ponde they took prices up to R120k + when the market was hot....maybe dealers need stock as not much UNC pond around? 

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jwither
17 hours ago, EWAAN Galleries said:

Totally agree - I love how Heritage uses best estimates for a coin like this they would put eg $1500 - $2000 - and it would sell for more than their estimates :)

Seems Randcoin driving up the prices like they did with the 1892 Ponde they took prices up to R120k + when the market was hot....maybe dealers need stock as not much UNC pond around? 

Auction firms are known to provide low estimates supposedly to encourage bidding.  At least with art (Christies and Sothebys), estimates are probably used as the basis for providing advances to consignors.  I don't know the specifics but it's common sense that prudent risk management would lead to it.

My experience is that most collectors don't have any idea that the listings in price guides are either entirely or mostly fabricated, as in fictional.  Many experienced collectors obviously know that there is a noticeable and permanent variance but I haven't seen anyone else other myself actually state this mostly self evident fact.

It is less true with US coins and particularly so with the more widely collected which sell with some regular frequency.  Price guides may (and I stress may) be reasonably accurate for some "world" coinage for the same reason, such as maybe from Britain.

Elsewhere, there isn't any debate about it, in the internet era.  The listings in both my Hern and Randburg guides bore limited reality to actual prices.  Same concept for the US Krause guide which for South Africa, had identical prices in the 1998 and 2010 editions.

The fictional prices are most evident with coins where there is every reason to believe no public sale has occurred or not in the listed grade.  There are also entries where there is a distinct possibility the coins don't and maybe never did exist.

From Union, I have never heard of any sales for most of the 1931 silver in the listed grades.  Krause still somehow finds a way to value the 1931 florin in UNC at $1250 while the 1925 florin is supposedly worth $2250.  In my older editions, Hern at least also valued the 1931 below many other dates, a total absurdity. 

Krause also somehow finds a way to value the 1752 Peru 4R, even though only one is believed to exist and I suspect it has never sold publicly even once.  They have a price for multiple grades up to XF, an amazing feat as I had no idea a single coin can simultaneously exist in multiple grades.  Similar concept for most pillar minors from Peru, Bolivia, Guatemala and many from Mexico.  I mean, I can't find it to buy it because there is no prior auction record (or else they would presumably use it), dealers don't sell it and the best collections disproportionately contain lower quality or awful coins, yet Krause still somehow finds a way to price it all the way up to XF.  Same idea for another series such as the Chile quarter real and many Bolivia Republic decimals.

The primary instance where I believe guides drive actual prices is for low value coins where collectors buy it at "retail" from dealers.  The dealer will use the catalog list, the collector doesn't know any better and so it sells for the list price.  However, if sold collector to collector or at a true auction, the usual sale price will be a noticeable "discount" or even a fraction.

In the pre-internet age, price guides were actually useful but only due to communication limitations.  Now, it is obsolete.

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Pierre_Henri

That is all true - the only guide that "works" is the one that is based on the latest sales of that particular coin in that particular grade by that particular grading firm.

However, the second best option the newcomer-buyer has is to relate to the catalog book in which that particular coin is listed.

Besides that, what on earth has he/she as a buyer to go on?

The true value of coin-catalogues is to look up the relative scarcity of coins and their issuing numbers  - and simply ignore the "actual values" they provide...

Printed coin-catalogues will always have an imported role to play - but believing them in their estimates of the true coin-values is more than doubtful I agree.

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jwither
2 hours ago, Pierre_Henri said:

That is all true - the only guide that "works" is the one that is based on the latest sales of that particular coin in that particular grade by that particular grading firm.

However, the second best option the newcomer-buyer has is to relate to the catalog book in which that particular coin is listed.

Besides that, what on earth has he/she as a buyer to go on?

The true value of coin-catalogues is to look up the relative scarcity of coins and their issuing numbers  - and simply ignore the "actual values" they provide...

Printed coin-catalogues will always have an imported role to play - but believing them in their estimates of the true coin-values is more than doubtful I agree.

Agree with your comments with limited qualifications.

The problem with valuation is that most buyers seem to believe that catalog prices are the "real price".  I'd say most in the US probably believe it (less so on coin forums) and the historical posts on this forum seem to indicate that most in your country probably do also.  To give you an example, back when I initially joined this forum, Alex Urruzi used the Hern prices to illustrate price increases in chart format.  I presume he considered it the real price or else wouldn't have used it and if he did, there is every reason to believe that most others did also and probably do now.

Using relative comparisons from catalog data may be useful but not always.  The problem with mintages is that it doesn't indicate much of anything with actual and sometimes even relative scarcity.  For South African coinage, the TPG population data is better as long as the person knows how to interpret it.  My experience on this forum and on occasion US forums is that many intentionally choose to fool themselves into believing the data is a lot more accurate (as in complete) than there is a reason to believe .

Relative prices are useful with US coinage (and some others such as the UK) because the coins sell often enough and the relative scarcity is much better known.

Sometimes though, historical price data still doesn't tell you how much to pay.  Here is another example using the 1770 Bolivia NGC MS-62 4R:

First sale on Heritage maybe four years ago: about $6200

Recent (as in the last three months) sale by Stacks Bowers: about $2500

Offer price by dealer 1: $5950

Currently on offer by dealer 2: $6850

So how much is this coin worth and how much should a prospective buyer pay?  My answer is probably about what dealer 2 paid to buy it from dealer 1.  Whoever buys it from dealer 2 will expose themselves to a similar loss as the seller who bought it from Heritage.  (I would have bought the coin if I knew it would sell so cheaply at Stacks but missed the first part of the auction.)

I also recently bought the 1755 (JM variety) NGC MS-61 Peru real for about $800.  There is no prior sale for a graded coin (any grade) that I know.  This coin is a "slider" (probably actually an AU-58) with clean surfaces (not bag marked), a good strike and nice toning but with what I consider light uniform wear.  An ungraded example (not as nice but maybe eligible for the same grade) sold for $299 back in 2006 at Heritage.  I also bought the 1756 in NGC MS-61 from a dealer in 2013 for $475.  This coin is a real uncirculated to me but quite darkly toned, not as nice and somewhat more common.

In this instance which is hardly unusual, I knowingly probably overpaid because I wanted the coin.  It was either overpay or "miss out" and I was willing to "eat" a potential future loss which I consider a consumption expense.  I'll do it with a coin like this one because of its relative numismatic credentials but would never do so with any coin which isn't hard to buy, regardless of grade or "eye appeal".

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Mike Klee

I think that a price guide is exactly that: a "guide". Factors affecting the market value of a coin at a particular time are:

  • scarcity
  • condition
  • precious metal value - eg Krugerrands
  • prevailing economic conditions
  • anticipated economic conditions
  • the pool of numismatists interested in the particular genre of a coin
  • the number of businessmen who see coins as a means of capital appreciation
  • individuals who perceive coins as an easily transportable/exportable wealth

However, I believe that the actual price that a coin will fetch in the marketplace is often due to the "wow" factor experienced by a potential buyer.

This "wow" factor can be stoked by in-your-face marketing, such as what happened with the Mandela coins. "Everybody is buying them, so why am I not?" coupled with greed ("look how much these coins have increased in value. Of course the price will keep rising...").

It can also be because a coin is of particular significance and a buyer just has to have it at any cost. I remember a famous American numismatist - I think that it was Louis E. Eliasberg - who became known as "The Lighthouse". Why? Because this numismatist was so passionate about coins that he attended an auction for one coin that he really, really wanted. The auction room was full and the bidding up until the coin he was desperate to acquire was fierce and time-consuming. When his desired coin came up and the auctioneer opened the bidding, Louis Eliasberg immediately stood up with his paddle aloft, turned and stared silently stared down all the other attendees and by his body language made it absolutely clear that whatever anybody else was prepared to bid, he would go higher. Mr Eliasberg did indeed win his coin.

 

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jwither
9 hours ago, Mike Klee said:

I think that a price guide is exactly that: a "guide". Factors affecting the market value of a coin at a particular time are:

  • scarcity
  • condition
  • precious metal value - eg Krugerrands
  • prevailing economic conditions
  • anticipated economic conditions
  • the pool of numismatists interested in the particular genre of a coin
  • the number of businessmen who see coins as a means of capital appreciation
  • individuals who perceive coins as an easily transportable/exportable wealth

However, I believe that the actual price that a coin will fetch in the marketplace is often due to the "wow" factor experienced by a potential buyer

If there is any evidence that the prices in any guide actually reflect the factors you listed, I would really like to see it.  The reality is that the publishers have no clue about the economic items in your list.  Moreover, I have never seen any claim by anyone anywhere else that anything remotely close to your description is used.

I don't have a recent South Africa guide.  The last one I have is either 2008 or 2010.  Aside from not buying these coins anymore, when I did it never provided any assistance in determining how much to pay because it had and has no relation to reality.  The editions I have don't even use the Sheldon scale.  It's a complete joke given that this is how any SA coin of any value is priced and sold.

My understanding is that publishers (in the USA at least) obtain the prices from a population of contributors ("experts") who are supposed to be knowledgeable in the coin or series.  An example for US coins would be Lincoln cents and in world coinage for the Krause manual, one or more series (such as the pillar coinage I collect) or countries. 

Given the examples I provided, it's obvious the Krause listings aren't even updated frequently or the contributor has no clue. It's equally obvious they don't have access to actual sales most of the time since the data isn't readily available if at all.  With South Africa guides, similar idea as the prices in the editions I own have no relation to actual prices at the time either, except for low value coinage.

As for the "wow" factor, this is the exception and not representative.  With South African coinage, in the editions I owned, the market was increasing and many of the prices were too low in "UNC" for the approximate TPG grade.  For XF especially but also others below, a complete fantasy for coins of any meaningful value given the actual price structure. 

The other thing I can anticipate is that since prices have been crashing for almost seven years, most of the listings have probably been (far) too high versus in recent editions.  (I have noticed this in BoB listings where the seller attempts to give the impression that the ask price is supposed to be some "bargain" even though in actuality, it's equally a fantasy ask price and a complete rip off.)  I equally anticipate this is at least partially intentional since the falling price level is bad for business from a dealer standpoint and contrary to what "collectors" want to admit.

Edited by jwither

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Mike Klee

You have misunderstood my comments insofar as a "guide" is what it is - simply a "guide". In contrast to a price guide, the actual market value is what a coin will fetch in the open market at a particular time - and I am sorry that I did not make this clearer.

Re "  I have never seen any claim by anyone anywhere else that anything remotely close to your description is used ", then why is there:

  •  a premium on the  (scarcer) coarse beard Burgerspond versus the fine beard Burgerspond ?
  • a premium on a (same grade) single shaft 1892 ponde vs double shaft 1892 ponde ?
  • a higher value for a gold Krugerrand vs a silver R1 coin?
  • a higher value for a MS64 veldpond than an AU55 veldpond?
  • higher prices for South African rare coins 7 years ago than today?
  • a surge in people buying Krugerrands when something really unsettling hits South Africa and our future looks bleak?
  • poor prices (relatively) for South African pattern coins, which have low mintages and are almost works of art in themselves? There are very few such South African pattern collectors and the poor prices of recent attest to this
  • the way that the Mandela coins were marketed as a sure way to wealth creation suckered many normally astute businessmen into parting with enormous amounts of money into what turned out to be a disastrous (for them) "investment"

As regards the "wow" factor, I don't believe that there isn't one numismatist who hasn't had his/her heart set on a particular coin and, after buying it, reflected that maybe.....just maybe....that they paid too much for it.

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jwither
4 hours ago, Mike Klee said:

Re "  I have never seen any claim by anyone anywhere else that anything remotely close to your description is used "

Yes, I misunderstood your post and interpreted in the context of price guides.

 

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Mike Klee

No problem!!!

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Cold Sea
On 12/1/2018 at 9:37 PM, jwither said:

In this instance which is hardly unusual, I knowingly probably overpaid because I wanted the coin.  It was either overpay or "miss out" and I was willing to "eat" a potential future loss which I consider a consumption expense.  I'll do it with a coin like this one because of its relative numismatic credentials but would never do so with any coin which isn't hard to buy, regardless of grade or "eye appeal"

 You were prepared to pay a premium regardless of the catalogue price, with your perceived wow factor deciding the final bidding price instead. I think that this is how catalogue prices are decided, trying to find a level where the interested collector would have a guide as to what would be a fair price, commission included, after which demand or personal preference will decide the final bid price, whether it is more or less. You might say this is obvious, but how else do you decide a starting price for any item based solely on fancy and low demand. 

Edited by Cold Sea

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jwither
6 hours ago, Cold Sea said:

 You were prepared to pay a premium regardless of the catalogue price, with your perceived wow factor deciding the final bidding price instead. I think that this is how catalogue prices are decided, trying to find a level where the interested collector would have a guide as to what would be a fair price, commission included, after which demand or personal preference will decide the final bid price, whether it is more or less. You might say this is obvious, but how else do you decide a starting price for any item based solely on fancy and low demand. 

The evidence doesn't support this assumption, certainly not for the Hern editions I own or any Krause manual.  

In the example I provided of myself with the 1755 Peru real, Krause only provides data up to XF.  I had nothing to use except the prices of other coins in the same series (Peru real 1752-1760) some of which are public knowledge but often not. I happened to buy many and maybe most of these coins sold in the last 10 years but another buyer wouldn't have this advantage.

You are giving the publishers far too much credit.  There is no evidence that the catalog prices are anything other than "made up", as in invented by pulling  a number out of a hat.  The prices in my Hern editions and Krause are so obviously wrong as to be completely useless.  It might be the price the publisher thinks the coin is worth but that still doesn't make it anything other than useless.

The only reason these price guides even sell is because most buyers must have the incorrect belief that it is directionally if not specifically accurate, depending upon the knowledge of the reader.  This belief becomes reality for low priced coinage predominantly sold in a retail coin shop setting but is obsolete in the internet age for any coin of any meaningful value predominantly sold at auction.

As to your last sentence, one of my primary points is that there is actually little and often nothing upon which to base a price.  My bid of $650 plus buyers fee and shipping for the 1755 Peru real wasn't based upon anything.  The reserve was $600 which presumably was the minimum the consignor would accept.  There were two bidders but if the reserve had been lower or if none existed, it's possible the coin would have sold for less.

It's a lot more accurate to think of pricing in terms of a range, not as a price point as listed in price guides and as stated by most collectors.  This is how auction firms publish (their usually inaccurate) estimates.  The $812 USD (all in) I paid for this coin isn't really what the coin is "worth".  If this coin or practically any other were to sell again in close proximity, it likely would sell for a noticeable premium or discount to the last price.  (Probably less for this coin if I weren't a bidder.)

In the pre-internet age, price guides provided price stability due to communication limitations and the effective monopoly dealers had as the intermediary.  In the internet age, that monopoly is gone and it's never coming back.  The previous price stability provided by price guides is gone with it, forever.

There is no point in pretending otherwise and to believe it is voluntary self-delusion.

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Cold Sea

I use my catalogues mainly as a type reference and not a price guide. But what sort of price guide would a new collector have if there are little or no recent internet sales of the low priced items. To you and me Hern might seem completely out of sinc in your particular field of collecting, but if you buy a low priced item as a new collector and overpay by 20 or 30 %, is this really going to matter. A guide such as Hern's is invaluable to new collectors, both as a research tool and an indication of how much prices can be affected by condition, rarity and demand. You are right, the days of printed catalogues are numbered, but this does not mean that they should be ignored.

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jwither
1 hour ago, Cold Sea said:

I use my catalogues mainly as a type reference and not a price guide. But what sort of price guide would a new collector have if there are little or no recent internet sales of the low priced items. To you and me Hern might seem completely out of sinc in your particular field of collecting, but if you buy a low priced item as a new collector and overpay by 20 or 30 %, is this really going to matter. A guide such as Hern's is invaluable to new collectors, both as a research tool and an indication of how much prices can be affected by condition, rarity and demand. You are right, the days of printed catalogues are numbered, but this does not mean that they should be ignored.

Low priced coins, yes.  I didn't disagree with you on this.  "Low" priced of course is relative since it is dependent upon the market level and the budget of the particular buyer.  I'd define "low budget" buyer in South Africa as substantially below one in the United States which makes the catalogs even less useful.

Someone who pays 20% or 30% over guide is not "overpaying" simply because it's above the guide price.  I know that you were only giving an example but it still infers that the price guide bears some resemblance to reality.  Going by listings on BoB on the few occasions when I bother to look, I can still conclude that it does not.  It's disproportionately a complete fantasy.  Otherwise, sellers wouldn't even mention it, the only logical intent being that they are trying to convince any potential buyer that they are getting a "bargain" at a (noticeable) "discount".

I don't see the primary problem with price guides as the prices being wrong.  In the internet age, it's obsolete the moment it is published.  The problem comes from the almost certain belief by many (maybe most) collectors that it is accurate and that when they buy a coin at (or near) the listed price, it's worth what they paid.  This is particularly relevant since it's evident that your country has an outsized proportion of financial buyers but even when the buyer isn't one, most people still won't pay any meaningful price except under the false assumption that they can get most or even all of their money back if they sell it right after they bought it.

Is this assumption accurate?  How prevalent is this?  I don't know but if it isn't, I have no idea why anyone would buy more than one edition for attribution.  The guides don't change much since all that's being added is current circulating coinage and newly issued NCLT. In the USA, some people collect the "Red Book".  I have multiple older editions someone gave me from the 60's and 70's that I use for historical purposes (since the prices were reasonably accurate).  Same goes for the 1950 and the 1962 Kaplan.  The second Hern guide I bought was a waste of money.

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Cold Sea

There's no reason to buy more than one of Hern's coin catalogues. It's much like buying a dictionary every year, but you should have one. I also have a feeling that the majority of first time buyers everywhere will have the romantic idea of making a profit, not just only in SA. I am not completely familiar with the "Red Book", but why would the price guide have been useful in the 60's and 70's, and not now. Is it because your market is so much bigger, and your present economy allows for extravagance, giving the first time buyer an inflated entry price. How then, not using the Red Book, would the first time collector determine a reasonable price in the States today, and why is this any different to using Hern as a guide, then and now.

Edited by Cold Sea

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jwither
5 hours ago, Cold Sea said:

There's no reason to buy more than one of Hern's coin catalogues. It's much like buying a dictionary every year, but you should have one. I also have a feeling that the majority of first time buyers everywhere will have the romantic idea of making a profit, not just only in SA. I am not completely familiar with the "Red Book", but why would the price guide have been useful in the 60's and 70's, and not now. Is it because your market is so much bigger, and your present economy allows for extravagance, giving the first time buyer an inflated entry price. How then, not using the Red Book, would the first time collector determine a reasonable price in the States today, and why is this any different to using Hern as a guide, then and now.

I don't believe that most collectors outside of South Africa have the illusion that they will make a profit upon resale.  This is an assumption but a reasonably supported one based upon the coins most of them buy initially and the proportion who seem to buy the more expensive coins in any given market.

It's evident from my time on this forum that, at least during the bubble, a disproportionate percentage in your country immediately start with the more (though not necessarily most) expensive coins in Union, ZAR, or RSA NCLT as "investments".  The percentage in the US seems to be a lot higher than practically everywhere else but I don't believe anywhere near as high as in SA.

Second, the Red Book would have been useful in the pre-internet age for the same reason South Africa guides used to be.  Prior to the internet, most collectors were limited to buying from local dealers, trading with local collectors or finds in their pocket change.  Sure, you could have bought from mail order dealers, bid remotely at auction or traded with non-locals but the communication limitations should be self-evident.  Most collectors also buy over the internet now but still don't bid at live auction because this type of collecting is either out of their price range or most of the coins they can afford can be bought for less elsewhere.  

This communication limitation created much lower liquidity but also much greater price stability.  Since most collectors bought most coins worth a premium from dealers, the dealer would have bought and sold based upon the Red Book price which was "retail".  Since most coins sold this way, it was the actual value.  What I describe here, I presume it equally applied in South Africa prior to BoB, as I don't see how it could be any different.  If anything, it would have bene worse due to far fewer dealers and the much smaller collector base.

Today, since most US coins are so common, I don't believe the Red Book really reflects prices even for low priced coinage, even below the highest grades.  In a recent PCGS forum topic, the discussion centered around the 1970-S mint small date variety cent.  Out of curiosity, I checked eBay and for all three mints and numerous die varieties, over 400 sold in the prior three months.  Obviously, only some fraction were this variety but any prospective buyer can find a recent sales history for this one variety in multiple TPG grades (up to at least 66RD), ungraded, as a single coin, in rolls (of 50) and as proofs and circulation strikes.  The difference between this level of liquidity and all lower priced South African coins (even many RSA) should be apparent.

So to answer your question, I presume (not actually knowing) that most US collectors buying lower priced coinage will still use the Red Book or one of the monthly magazines for pricing.  The more knowledgeable ones won't though because the price guides don't provide the pricing granularity (by TPG grade) that they require.

Another distinction between South Africa and the US is the working definition of "low priced" coin.  Today, I'd estimate that 80% don't buy coins valued above $300.  I'd define this level as "low priced" and for US coinage, I doubt the difference between the Red Book and other price guides (coin magazines, Coin Dealer Newsletter or "Grey Sheet") differ noticeably much of the time.  I haven't compared because I don't collect US coins though I have researched prices on Heritage, eBay and PCGS Coin Facts on numerous occasions for information purposes.

Personally, I have also partially switched my buying habits due to the lower liquidity and increased transaction costs.  Most coin prices seem to either be stagnant or declining, even while grading fees, eBay fees, auction fees and postage costs keep increasing.  I almost exclusively buy pillars and though I will still buy a lower priced example if I want it for my collection, financially I don't want to bother with coins worth less than about $250 anymore since I don't buy any US coinage.  Recently, I sold a few coins on eBay (one Spanish and one Mexican pillar) and the postage for registered mail was $30 without insurance.  This makes it uneconomical for buyers in many countries since I won't ship just anywhere without using registered mail.  Additionally, a local dealer here told me that Heritage doesn't really want to bother with coins below $250 either.  That's why they have a minimum buyers fee of $19.

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