A Game That People Pay

[ilLOminatus]

Happy New Year 2017!

 

Happy New Year 2017! It looks like it is going to be an exciting year for modern silver collector like me, with mints around the world racing to release as many varieties of their main coin series as possible. Cue in the RCM, with a record issue of privy marked maple leaves released (at least 8) in 2016. Seems that if you can think about it, they will privy mark it on their maple! So let's see what they are going to stamp this year.

 

Which brings me back to the title of this journal, somehow it just comes to my mind that this is a game that I am paying: they release a coin, I pay to buy and slab it, then I get my reward when I enter that NGC slab number into my collection and see my points and sets rise! I am currently ranked #529 and was #609 at the close of the year 2016. A few of my sets actually made it to #1 which in turn motivate me to collect more so I can enter more numbers to rise higher and more and more and more!

 

So who sets up the rule of this game? The mints? The slab companies? Our own competitive mind?

 

Happily pondering this train of thought...

 

Cheers

 

See more journals by ilLOminatus

[coinsbygary]

Hmmm... Let's cut to the chase here. The mint makes a profit by the desire of the collector to have a complete set. The grading companies while providing a service by authenticating and grading coins also make a profit. Both the aforementioned profits are paid by the collector. The competition of the registry set feeds into our human nature to be the best.

 

That said, I willingly pay the premiums because I enjoy the hobby. There are ways however to minimize the cost of acquiring coins and in effect game the system. Buying from the mint and submitting them for grading is a shoot and not cost effective.

 

If you submit a coin for grading and get a 70 you can make out pretty good. But how many coins of all the coins submitted will get a 70? This then is the genius of the registry to encourage collectors to submit NUMEROUS coins in hopes that one is graded a 70.

 

Rather, if your goal is a collection of all 70's buy the coin already graded from a dealer who submits their coins in bulk and gets them graded a better rate than you do. On the other hand, if you can live with a collection of 69's, dealers will sell these at a cut rate. Translated, 69's are a good deal for you!

 

In the end you set the rules of the game with your wallet. You gotta pay to play. Your collecting goals then will determine at what level you play. Even if your goal is a collection of 70's, there are ways to minimize the costs to you. Savings that you can use to buy more coins!!!!

Gary

[RWB]

Charles Ponzi must be smiling.....

[jackson64]

Great post Gary--and Happy New Year to you.

 

I especially like your point about "settling" for the 69's and that being the most cost effective way to collect modern issues you like. I'll add in that also some patience works--wait until July or August to get the "new" 2017 coins because by then the prices on 69's can be had at inventory clearance costs.

 

If you collect moderns, do it simply for the love of it and don't really take resale value into it at all or you wouldn't do it. You can get 50-60% tops for re-selling your moderns and will NEVER come close to getting your output back.

There may not be others with your passion for the same coins and by the time you factor shipping, slabbing and buy fees/sell fees..you lose big time.

 

The mint makes a product and sells at a premium. TPG's provide a service- nothing else and the registry is a very clever way to encourage interest in having coins encapsulated ( as well as being enjoyable for many collectors.)

 

Keep it simple and for the love of collecting--but if you are ever in a pinch and need to sell for money, expect a HUGE loss on the funds you spent.

[ilLOminatus]

Well I have personally submitted to NGC over 300 modern silver coins in their original mint packages and so far the hit rate of 70 is about 30%. I have analyzed the business model of the big quantity slabbers (MCM, JMBullion, APMEX) etc and the calculation works out. Their ebay stores sell the 69s at cost and they sell the 70s at least with a 50% premium. So there is only profit when you have the time to spend (to buy, grade and sell the 69s).

 

Sample calculation:

1. Buy 100 silver Britannia / Kookaburra / Kangaroo, etc, $20 each

2. Slab them $16.40 each (even cheaper if you do bulk, but I pay $16.40)

3. Sell 70 coins that return as 69 at $37 to $40 dollar to cover the cost

4. Sell 30 coins that return as 70 at $55 to $60 and up

5. Profit of 30 coins x $15 = $450 for 100 coins

 

Notes:

1. Do not apply to US silver eagles, there is just too many of them

2. Do not apply to mints that have "bad" quality control, like Austrian Philharmonics and few others

3. You will make more if you do proof coins, as their base price is higher

4. My submission is about equal number of BU and proof coins so far

 

[ilLOminatus]

Great post Gary--and Happy New Year to you.

 

I especially like your point about "settling" for the 69's and that being the most cost effective way to collect modern issues you like. I'll add in that also some patience works--wait until July or August to get the "new" 2017 coins because by then the prices on 69's can be had at inventory clearance costs.

 

If you collect moderns, do it simply for the love of it and don't really take resale value into it at all or you wouldn't do it. You can get 50-60% tops for re-selling your moderns and will NEVER come close to getting your output back.

There may not be others with your passion for the same coins and by the time you factor shipping, slabbing and buy fees/sell fees..you lose big time.

 

The mint makes a product and sells at a premium. TPG's provide a service- nothing else and the registry is a very clever way to encourage interest in having coins encapsulated ( as well as being enjoyable for many collectors.)

 

Keep it simple and for the love of collecting--but if you are ever in a pinch and need to sell for money, expect a HUGE loss on the funds you spent.

 

Yes, I do this for 90% fun, the 10% not-so-fun part is the money part, . Anyway I use my entertainment budget for this hobby so not a biggie. Silver modern coins are quite affordable.

 

Cheers

[jackson64]

70 of the coins at grade 69. Assuming $37 to sell and minimum $37 to purchase, pay shipping to receive from Royal mint, shipping both ways to NGC and grading fees--big assumption but I'll go with it for now.

 

However we forgot, 10% ebay selling fees, 3% paypal/credit card transaction fees and shipping to buyer--another $5 minimum.

 

So in your scenario, 70% of the coins would lose money-at a min of $350 for these 70 coins.

 

Granted, 30 perfect 70's with a markup of even double+ at $80 each ==$2400..minus the fees again of 13% and it is now at $2190 for the 30 perfect 70's

 

So let's tally it up......... $2240 for the 69's

$2190 for the 70's

$4430 in sales after fees, shipping

outlay for coins & grade$3700

 

Nets you $730--which might be worth it but that is a lot of cash outlay for a small profit, loads of time in purchase and selling/shipping/packaging and customer issues. There is also the issue of: how long will it take you to sell 100 of the same coin? Quite a while I guess--maybe even years unless you drop prices below other sellers to free up cash from dead inventory.

 

MCM and others make this work because they deal in tens of thousands of coins in thousands of different issues from mints all over the globe and get special pricing for grading, bulk purchasing and even bulk shipping deals.

 

For us little guys, this just does not work for profit.

 

One last example--a fellow board member and I (rons I hope you don't mind me mentioning you) purchased a couple of hundred PF69 moderns from US mint sets--mostly clads but even some silver half, qtr and dimes also--got the giant lot at only $7 per slabbed coin. We split the group equitably and to this day I still have dozens of these things in a box with other coin stuff in my basement. Every once in a while I'll list a few on ebay when I'm doing a sale and I may get $3 to $5 for most of them--sometimes I'm mailing them nearly free coins.

 

I'll stick with my point--collect because you enjoy it. If you are ever in need of a quick cash infusion your coins shouldn't be an option unless you expect to lose a lot of money. Best of luck to you and a great collection you are assembling.

[Lucky One]

Charles Ponzi must be smiling.....

 

yes sir, he is. I still can't understand why anyone would care about the minute differences between MS70 and MS69, especially when the coins are made in mass quantities in perfect condition. Mr. Ponzi never dreamed up such a grand perpetuating scheme!

 

I think no one should buy into a hobby expecting to win- it's a living for the dealers and they have to take their profits, which can never be gotten back by the buyer. Moderns are big and beautiful and relate to interesting subjects but they are anything but rare. The only true 'investment' in numismatics is rarity, whether it is absolute rarity, as in only a few thousand minted with few survivors or a condition rarity with very few available to collectors. Moderns are like baseball cards- just hobby material stacked up in dealer's vaults and safes across the country. If I collected them, and I admit I have thought about it, I wouldn't care if it was slabbed or still in govt packaging as long as it was a good deal, and I don't think slabbing coins is a good deal in something worth no more than the bullion in them. If anyone disagrees, just look up issue prices for Franklin mint OR US Mint issues from the past several decades and you'll see what I mean...

[Six Mile Rick]

Some pay more and some pay less. It's all fun in the end!!

 

H'mm ---- Comparing coin collecting to baseball cards? That is the second time I read that this week. Baseball cards are paper ---- Like notes (dollar bills). Coins are metallic and include Silver and Gold series. By far -- no comparison to the others.