Pricing methodology 0

[World Colonial]

7 hours ago, bernard55 said:

Registry I get (a bit expensive for that, but it makes sense). Counterfeits I get too (I know that market well given some past roles)--but you really have to be motivated by the value of what you own to a certain degree to care to test your ability to not recognize a fake--but I respect your point here and for the most part agree.  The item on your list that's interesting is "improves marketability" -- this is all about selling and you sell to get an appreciated value of what you collected.  That seems to go against the momentum of what everyone is saying--don't get into this if you (or more likely your heirs) want to get money back out of it someday.   Forgive me if I'm being a pain.  For me, these are important questions that I am finding it hard to get honest answers.  I really like this hobby but not enough to lose money.  Maybe for a guy like me--it's just a bad idea or maybe I'm not savvy enough to make below market purchases to ensure I don't lose money.

TPG is mostly about money.  There is nothing wrong with that but you are just never going to hear hardly anyone admit it primarily because it's an unpopular opinion.

There are far more affluent buyers now versus the past (primarily prior to the 70's) which makes it more feasible for some to treat coins most of us consider expensive as a partial or mostly consumption expense.

Concurrently, it should be evident based upon what most collectors are actually buying  where the price is "meaningful", that they wouldn't buy it at the price they pay if they didn't expect to get most of their money back.  There is no practical difference between most of these coins most of the time; certainly not as perceived before the "hobby" became financialized, even between multiple TPG grades.  Collectors exaggerate these differences but that's all it is, an exaggeration.  We can know this because it only exists where TPG is preferred.  No one here has first hand knowledge of it but I saw the same exaggeration with South African buyers before prices crashed.  

Most US coins can be bought practically at any time, even those that are scarce except in some narrow quality or specialization.  With world and ancients, a lower proportion can but it's mostly due to the lower price level and less efficient market.

It isn't about being savvy, it's just how the economics works.  On occasion, it's possible to buy coins "below market" and some are better at it than others but it's a lot harder to do it with US coins due to the more "efficient" market".  It's more feasible with non-US coinage but still low probability and there is no financial scale.

The most probable option for most buyers is to time their purchases at a favorable point in the price cycle.  As with other markets, that's not easy to do, especially if the market is in a longer term downtrend and with the wide buy-sell spreads.

[bernard55]

<There is nothing wrong with that but you are just never going to hear hardly anyone admit it primarily because it's an unpopular opinion.>  That's a fascinating comment.  There seems to be some unwritten rules here (some secret code of conduct) that I've yet to learn in regards to this market's economics.  Its almost like everyone "in the know", knows the market is kinda broke but won't admit publicly.  I guess there is entertainment value in watching people pay 23k+ for a coin that everyone "in the know", knows is worth far less.

My wife tells me to stick with what I'm good at (programming) and to focus my time on building something for this industry versus investing in it--she says it would keep me involved but not losing $ that would really annoy me.  Maybe she is right--she usually is... Let me know if you see any problems that could be solved by some good code...

thanks again for your insight.

[VKurtB]

7 minutes ago, bernard55 said:

<There is nothing wrong with that but you are just never going to hear hardly anyone admit it primarily because it's an unpopular opinion.>  That's a fascinating comment.  There seems to be some unwritten rules here (some secret code of conduct) that I've yet to learn in regards to this market's economics.  Its almost like everyone "in the know", knows the market is kinda broke but won't admit publicly.  I guess there is entertainment value in watching people pay 23k+ for a coin that everyone "in the know", knows is worth far less.

My wife tells me to stick with what I'm good at (programming) and to focus my time on building something for this industry versus investing in it--she says it would keep me involved but not losing $ that would really annoy me.  Maybe she is right--she usually is... Let me know if you see any problems that could be solved by some good code...

thanks again for your insight.

A really good collection management app that would work on both smartphone and a PC that might communicate between both through either “over the air” or wired updates to a database housed on the PC or in the cloud. 
 

By the way, your wife is correct.

[bernard55]

that would be very simple to build for the cloud.  if you send me a message with the features I'll spend some time on it.

 

[World Colonial]

37 minutes ago, bernard55 said:

<There is nothing wrong with that but you are just never going to hear hardly anyone admit it primarily because it's an unpopular opinion.>  That's a fascinating comment.  There seems to be some unwritten rules here (some secret code of conduct) that I've yet to learn in regards to this market's economics.  Its almost like everyone "in the know", knows the market is kinda broke but won't admit publicly.  I guess there is entertainment value in watching people pay 23k+ for a coin that everyone "in the know", knows is worth far less.

In your example which I presume is the 1800 dime MS-62, the coin is roughly worth this amount now.  Concurrently, the price and the entire US price level has been vastly inflated due to financialization, especially from TPG and now CAC.  It's outside the scope of this topic but it's also a function of the current asset bubble in the broader economy evident in other markets.

Decades from now, it's been my opinion for years that most coin prices are going to mostly reflect prior collector value, adjusted for price changes. On a relative basis, there are far too many coins whose actual collectible credentials are totally disproportionate to the current price.  Of the two examples you initially gave, I consider the 1880-O Morgan more overpriced than the 1800 dime.  It's a lot cheaper but the 1800 dime has been expensive longer than I have been alive, even before coins were widely bought as "investments".  

[bernard55]

World Colonial - <1800 dime MS-62, the coin is roughly worth this amount now. > If that is the case, how was the current owner of 29795124 able to buy it for 16.8k (includes Buyers Premium) and turn around and list it for 26.4k.  That's almost a 10k delta on 1 transaction.  If they are able to sell it they make 10k but new owner has a coin worth 16k that they paid 26k for and likely needs to use an auction site to sell it --so they (or their family based on inheritance) might only get 16k * 85% (HA premium).   When I look at this I shake my head and say--it's good to be HA... It's risky to be the dealer holding the asset.. and it's bad to be the collector... but again, i have a different way of looking at what I collect than most of the people that responded here--love the hobby but hate to lose money (one trumps the other). 

If I can find an API for auction data, I can easily build an app to expose the reality of pricing so this market becomes a bit more transparent than it currently is today.  Looking.

Edited June 11, 2020 by bernard55

[MarkFeld]

34 minutes ago, bernard55 said:

World Colonial - <1800 dime MS-62, the coin is roughly worth this amount now. > If that is the case, how was the current owner of 29795124 able to buy it for 16.8k (includes Buyers Premium) and turn around and list it for 26.4k.  That's almost a 10k delta on 1 transaction.  If they are able to sell it they make 10k but new owner has a coin worth 16k that they paid 26k for and likely needs to use an auction site to sell it --so they (or their family based on inheritance) might only get 16k * 85% (HA premium).   When I look at this I shake my head and say--it's good to be HA... It's risky to be the dealer holding the asset.. and it's bad to be the collector... but again, i have a different way of looking at what I collect than most of the people that responded here--love the hobby but hate to lose money (one trumps the other). 

If I can find an API for auction data, I can easily build an app to expose the reality of pricing so this market becomes a bit more transparent than it currently is today.  Looking.

The price that the current owner chooses to ask doesn't necessarily say anything about whether he obtained the coin at a favorable price. For all we know, he could list it at $100,000, but still might not be able to get his cost out of it.

[World Colonial]

9 minutes ago, MarkFeld said:

The price that the current owner chooses to ask doesn't necessarily say anything about whether he obtained the coin at a favorable price. For all we know, he could list it at $100,000, but still might not be able to get his cost out of it.

Yes, I agree.  I misspoke.

[bernard55]

MarkFeld - but that's the point. The market spoke on that coin.  lets say 1000 coin people looked at that coin over the course of that auction.  1 ended up with it for 16k.  the 1000 people market said that coin was worth 16k (not 26k). but a sucker like me might come along an buy it for 26k or someone smart like all of you might have told them you would buy it for 17k.  Without easily accessible transparency to what the market says something is worth (not TPG services) suckers like me will get taken over and over and become unhappy with the hobby--example of what I'm feeling...

[World Colonial]

48 minutes ago, bernard55 said:

World Colonial - <1800 dime MS-62, the coin is roughly worth this amount now. > If that is the case, how was the current owner of 29795124 able to buy it for 16.8k (includes Buyers Premium) and turn around and list it for 26.4k.  That's almost a 10k delta on 1 transaction.  If they are able to sell it they make 10k but new owner has a coin worth 16k that they paid 26k for and likely needs to use an auction site to sell it --so they (or their family based on inheritance) might only get 16k * 85% (HA premium).   When I look at this I shake my head and say--it's good to be HA... It's risky to be the dealer holding the asset.. and it's bad to be the collector... but again, i have a different way of looking at what I collect than most of the people that responded here--love the hobby but hate to lose money (one trumps the other). 

If I can find an API for auction data, I can easily build an app to expose the reality of pricing so this market becomes a bit more transparent than it currently is today.  Looking.

I didn't go back and read your original comments.  Mark is right but I confused the ask price with the list prices you included intially.

[World Colonial]

1 minute ago, bernard55 said:

MarkFeld - but that's the point. The market spoke on that coin.  lets say 1000 coin people looked at that coin over the course of that auction.  1 ended up with it for 16k.  the 1000 people market said that coin was worth 16k (not 26k). but a sucker like me might come along an buy it for 26k or someone smart like all of you might have told them you would buy it for 17k.  Without easily accessible transparency to what the market says something is worth (not TPG services) suckers like me will get taken over and over and become unhappy with the hobby--example of what I'm feeling...

You are not a sucker if you buy with full knowledge (to the extent possible), like what you buy and are willing to accept that you might only be able to sell it for less later.

Earlier, that's why I wrote that it mostly comes down to the buyer's attitude toward collecting.  It's also why few (particularly US) collectors will ever try to collect the same coins I do.  The supply is very limited but even aside from that, there is very limited data to price anything I buy.  The coins are a lot cheaper but that's why it's important that I like what I buy enough.  Currently in my primary series, I value it at somewhat more than $40k but if I tried to sell it now, I could receive a lot less but likely only somewhat more. 

The pricing is a lot more predictable due to the much better liquidity, but that's a primary reason why I'll never buy most US coinage precisely because I share your sentiments a lot more than for what I collect now.  No one can collect the types of coins I do and consistently be satisfied if they are more concerned about the financial outcome.

 

[bernard55]

World Colonial - that is a healthy way to look at it... I enjoy collecting Roubles (especially 1742-1762).  working on several now.  it is amazing what you can purchase them for compared to US coins.  Amazing history to hold in your hand...

[MarkFeld]

47 minutes ago, bernard55 said:

MarkFeld - but that's the point. The market spoke on that coin.  lets say 1000 coin people looked at that coin over the course of that auction.  1 ended up with it for 16k.  the 1000 people market said that coin was worth 16k (not 26k). but a sucker like me might come along an buy it for 26k or someone smart like all of you might have told them you would buy it for 17k.  Without easily accessible transparency to what the market says something is worth (not TPG services) suckers like me will get taken over and over and become unhappy with the hobby--example of what I'm feeling...

That's why it's very important to view auction results and not just price guides, even though neither should be relied upon, blindly.

[bernard55]

MarkFeld - which brings me full circle to my original question (How do these companies set these prices?  How do you determine the price you purchase at? Who do you trust (a company or the auction data)?) -- I think you now gave me my answer... These TPG pricing companies can not be trusted... only the auction data can and only after you do the research on that specific specimen.  it is amazing that they have been able to build the companies they have built around providing value guidance.

[VKurtB]

19 hours ago, kbbpll said:

I'm not a member either. I don't know where they get their data. They just seem to update it more than the TPG price guides, for "widgets" anyway. They have your 1800 10c MS62 at $25940 with a big down arrow from $29,060.

@VKurtB those aren't mesas, they're escarpments.

I stand corrected. Escarpments. Truly they are. 

[VKurtB]

1 hour ago, bernard55 said:

MarkFeld - which brings me full circle to my original question (How do these companies set these prices?  How do you determine the price you purchase at? Who do you trust (a company or the auction data)?) -- I think you now gave me my answer... These TPG pricing companies can not be trusted... only the auction data can and only after you do the research on that specific specimen.  it is amazing that they have been able to build the companies they have built around providing value guidance.

I don’t believe that value guidance is anything more than a tiny part of their business model, Bern. Except maybe to the extent that grading is valuation by other means. Certainly publishing a price guide is not a major part of their business. There are many out there, and all are not so hot. The best way I can describe any retail price guide’s prices are “these are the prices you may pay at retail if you’re in a ridiculous hurry and stink at comparison shopping and negotiation”.

[MarkFeld]

12 minutes ago, VKurtB said:

I don’t believe that value guidance is anything more than a tiny part of their business model, Bern. Except maybe to the extent that grading is valuation by other means. Certainly publishing a price guide is not a major part of their business. There are many out there, and all are not so hot. The best way I can describe any retail price guide’s prices are “these are the prices you may pay at retail if you’re in a ridiculous hurry and stink at comparison shopping and negotiation”.

I agree about the price guides being only a very small part of NGC's and PCGS' businesses.

I will say, however, that there are many instances in which the guide prices are considerably too low, as well. The key is figuring out which are too high, and which are too low. It can be done, but it usually takes quite a bit of time and effort..

[VKurtB]

23 minutes ago, MarkFeld said:

I agree about the price guides being only a very small part of NGC's and PCGS' businesses.

I will say, however, that there are many instances in which the guide prices are considerably too low, as well. The key is figuring out which are too high, and which are too low. It can be done, but it usually takes quite a bit of time and effort..

The cynic in me (a guy taking up a lot of room in there) might suggest that the prices that are too low suspiciously match any particular dealer's inventory. Jus' sayin'.

[MarkFeld]

4 minutes ago, VKurtB said:

The cynic in me (a guy taking up a lot of room in there) might suggest that the prices that are too low suspiciously match any particular dealer's inventory. Jus' sayin'.

A dealer wouldn't want published prices for coins of the type he carries, to be too low. Though he very might want prices to be too low if he's trying to acquire such coins. Regardless, I think you're being overly cynical.

[VKurtB]

17 minutes ago, MarkFeld said:

Regardless, I think you're being overly cynical.

Vhy, sank you, Doktor. Zat vuss vhat I vuss goink for.

[Crawtomatic]

7 hours ago, bernard55 said:

MarkFeld - but that's the point. The market spoke on that coin.  lets say 1000 coin people looked at that coin over the course of that auction.  1 ended up with it for 16k.  the 1000 people market said that coin was worth 16k (not 26k). but a sucker like me might come along an buy it for 26k or someone smart like all of you might have told them you would buy it for 17k.  Without easily accessible transparency to what the market says something is worth (not TPG services) suckers like me will get taken over and over and become unhappy with the hobby--example of what I'm feeling...

I'm not nearly as experienced in coin collecting as the rest of these guys but I do have some observations for this.

1.  There are so many auctions available each night of the week.  HA has at least 4 a week I believe.  GreatCollections has the 1 on Sunday. eBay is constantly churning.  Then there's a multitude of non-numismatic specific auction companies (online estate sales, unclaimed property, etc...) here in the US and throughout the world.  Sometimes it's about timing.  The buyer willing to pay $26k for it may have not known it was up for auction.  You're considering it now but you didn't know it was at auction, right?  I would presume if I were the one to buy that coin for $16k I would've seen value in it at 26k.  But only if the money spent was out of my operating revenue and I expected a short term ROI.

2.  Retail vs Wholesale.  Collectors will always mention you do it for the enjoyment and don't expect a profit.  That's fine if that's your approach but alternatively I know if I run my department at an aggregate 30% profit margin that's a great year.  What do I need to be at just to stay happy and keep moving along? 10-15%  Unless you reach the level where you need a storefront coins don't take up much space and don't incur storage costs.  Of all the products I've sold, save digital items, coins also have a very efficient shipping cost.  I imagine most of the professional dealers we meet in the business operate the same way.  Don't get emotionally attached the product.  Buy it less than you plan to sell it for.  Include your shipping, buyer fees from auctions, listing fees, etc... into your calculations to get to 25% profit on it before you make the purchase.

3. Adjust prices for most widget classified coins from 50 years ago to today and you'll see that they barely kept up with inflationary increases.  Gold & Silver match more with increases in the base metal costs standardized.

4. Surprisingly friendly negotiation tactics.  I've never been involved in another hobby where dealers offer up discounts on their retail price without prompting as much as they do in numismatics.  It's weird.  And nice.  Plenty of times I've walked the bourse floor, made notes in my book, came back to the tables that had coins I could turn a profit on to pick them out (at the price listed on them) only to have the dealer pull them from the case and say something like, "oh, just give me $xxxx" (a reasonably lower cost).  This could also have something to do with stock management, though.  When you're buying and selling coins we're all just moving around the same finite stock.  Example:  "Eh, I've held this one for 6 months so I'll be glad to just let it go for anything above what I paid so I can generate some cash flow & re-invest that capital in other coin(s) to offer."

Not sure if any of that helps.  I'm still in the prime of day time job so I don't have more time to dedicate to the numismatics collectibles industry.  I appreciate coins, I really do, but I'd honestly say my hobby is chasing profits (it's not just coins).  

[bernard55]

CRAWTOMATIC - Thank you for your detailed response. 

on #1 - I've attended almost all of them over the last year at some time.  I've been noticing a few trends on sites like proxybid and liveauctioneers as examples.  I've been recording time of auction, # of attendees they publish, pcgs vs. sold, buyers premium etc. .  Prices on almost every US coin that goes for >$500 (especially US 1800 gold coins) is all going above PCGS list in the last 45 days across the board.  I've also noticed how many of those auctions are selling coins that wont professionally grade (there is a group out of Voorhees NJ taking advantage of a lot of people). I'm also suspicious of automation on these sites by the auctioneers where they outbid the last bid because they didn't get the price they wanted--hard to prove without an API but I've seen the same coin several times on same platform.  I'm also working on some software to track eBay pricing and to trigger if a coin is under the average sale price for last 30 days (only works for widgets)

on #2 -- I was beginning to think that having a financial interest in what I collect is wrong :-)  I love to collect, but I also love to hunt for value. 

#4 I did enjoy long beach but the dealers left me a bit depressed about the market.  I did purchase quite a few items at greysheet pricing which made me skeptical.   if the pittsburg show is on, I'll attend.  Maybe I can have a prototype of vkurtB's software ready by then :-) 

[LINCOLNMAN]

17 hours ago, Conder101 said:

People invest time and money in a hobby because they enjoy it and it gives them entertainment value.  Example golf. Can be quite costly, and pretty much NO ONE gets back out the time and money they put in.)  There are very very few hobbies that will return to the hobbyist the money they put into them.  That is unless you put a monetary value on the entertainment they get from their hobby over the years.

This, unless you treat the hobby more like a business or make it a business. I'm building a collection that represents about 2% of my net worth. I go in with eyes wide open, knowing that I or my heirs will likely lose something like 20% in transaction costs, probably more on my medal collection. But I enjoy the heck out of the hunt, the research and the challenge of getting the best value for my money; completing a set or goal; looking at my coins on quiet evenings like Scrooge McDuck; organizing and displaying my collection; visiting with fellow collectors and friendly dealers; learning about new, unfamiliar aspects of numismatics; tying my coins and medals to history, learning the history of the coins themselves, who designed them and why they were made. Others enjoy learning about the coining process and what can go wrong, collecting errors; cherrypicking scarce or rare varieties or die states. (P.S. I also play golf. The wife plays competitive bridge. Both are expensive and guaranteed to be poor investments.)

[bernard55]

LINCOLNMAN - I enjoy the hunt as well, and the history.  The delta on golf is that I only enjoy it when there is cash on the line... Love the game but find it a bit boring if I'm not chasing the win.   Maybe it's just that I've spent way to many years building and running tech companies and ROI has been imprinted on my psyche. 

[VKurtB]

12 hours ago, bernard55 said:

LINCOLNMAN - I enjoy the hunt as well, and the history.  The delta on golf is that I only enjoy it when there is cash on the line... Love the game but find it a bit boring if I'm not chasing the win.   Maybe it's just that I've spent way to many years building and running tech companies and ROI has been imprinted on my psyche. 

Agreed that is a problem. Passion beats ROI by a long shot.

Edited June 12, 2020 by VKurtB

[Crawtomatic]

13 hours ago, bernard55 said:

CRAWTOMATIC - Thank you for your detailed response. 

on #1 - .....Prices on almost every US coin that goes for >$500 (especially US 1800 gold coins) is all going above PCGS list in the last 45 days across the board.  I've also noticed how many of those auctions are selling coins that wont professionally grade (there is a group out of Voorhees NJ taking advantage of a lot of people). ...

I've noticed that, too.  On the non-numismatic auction sites there's a lot of...trash/garbage...that goes for far more than it should.  I imagine for some dealers it's an easy way to dump inventory you wouldn't want to retail under your brand and still probably get more than retail rates.  All upside, no negative publicity.

13 hours ago, bernard55 said:

I'm also working on some software to track eBay pricing and to trigger if a coin is under the average sale price for last 30 days (only works for widgets)

This would be beneficial to a buyer looking to retail certainly.  Widgets may not be sexy but they tend to move more often, as compared to a coin with a pop of 3.  If you could build in triggers that automate the bidding process when the price is at a set percentage below the average wholesale price (to borrow a term from pharmaceuticals) that could really help.  

[MarkFeld]

2 hours ago, CRAWTOMATIC said:

I've noticed that, too.  On the non-numismatic auction sites there's a lot of...trash/garbage...that goes for far more than it should.  I imagine for some dealers it's an easy way to dump inventory you wouldn't want to retail under your brand and still probably get more than retail rates.  All upside, no negative publicity.

This would be beneficial to a buyer looking to retail certainly.  Widgets may not be sexy but they tend to move more often, as compared to a coin with a pop of 3.  If you could build in triggers that automate the bidding process when the price is at a set percentage below the average wholesale price (to borrow a term from pharmaceuticals) that could really help.  

I wouldn’t want to have the bidding process automated. There might be a very good reason that a given coin is priced below the average wholesale price.

[Crawtomatic]

Certainly agree in a broad sense @MarkFeld.  I'm thinking if Bernard develops an application to track eBay sales data (or any source depending on who provides an API) there's 2 ways to go with that.  Tracking it all after the auctions are complete provides you a retrospective review and allows you to adjust your own bidding/buying decisions.  But the other option would be to track it realtime as compared to the database of AWP with the option to send alerts & automate bids.  Customizable by user of course and then the user is left with the decision on how to set those parameters.  There's been 3rd party automated bidding apps for 2 decades, I think, so it's just marrying the 2 ideas.

But yeah, automating bidding for most coins sight unseen would not work out well but I think if you set a parameter on a fairly low pop, say less than 100 in a certain grade, AWP-20%, then it may be a coin with less than ideal eye appeal but could still carry value if a registry hunter wanted to fill a hole/upgrade.

[LINCOLNMAN]

One of the problems in achieving transparency is that it isn't possible for scarcer coins because numerous transactions aren't recorded. Expensive coins with low populations might change hands a dozen times before they go through an auction or are transacted on the internet. In addition, even the more common mid-level coins may demonstrate a wide range of prices at similar grades, and must each be subjectively examined in hand before making a value decision (hence CAC, but their criteria may differ from yours). The messiness inherent in collecting things adds to the challenge and the fun.  

[numisport]

One pricing methodology I know of could be beneficial to some of you. You could track coins I buy and note the down arrows in nearly every coin I recently purchased.