A Letter from Mark Salzberg
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Spurred by the COVID economy, collectibles have emerged as an asset class, with certification providing the confidence, transparency and security that are necessary for a vibrant market.  Read more

 

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WC ur condemnation of MS letter is surely echoing throughout the numismatic community....true collectors have been ushered to the fringes of the numismatic world ever since the advent of TPG when MS65-70 coins became king, try talking to the high level dealers about an VF/XF variety coin at a busy coin show....with the assault on the world by the covid virus, the collectors universe just became more compounded, being forced into online sight unseen buying has pushed the collector even further out on the fringes as the commercial (read $) aspect of numismatics scrambles to capture the infusion of investment monies into the hobby...multitudes of buyers with multitudes of money r looking for places to transfer that money into anything that shows financial potential, hence the attempts to classify coins as future assets with liquidity classification....but, just try to go into any bank n use ur numismatic assets as collateral to buy a house n u will see just how non-liquid they r, n heaven forbid if u collect stamps....yes, the TPG n auction houses have long sought to move numismatics closer to investors n further away from collectors, the hobby suffers....I would ask u to expound on ur statement ..."attempting to replicate the US collecting culture elsewhere"......im not quite sure how u envision this is being attempted, the numismatic world needs to know....

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I Congratulate MS And NGC. Capitalism is a wonderous thing.

If lumber hadn't risen 300% I would have been able to enjoy the plandemic as well. 
But I did get a new surf rod and have enjoyed a beautiful summer.

 

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Personally, I found Mr. Salzberg's letter to be both interesting and informative.  As for WC's "TPG are attempting to replicate the US "collecting" culture elsewhere" I can't recall one instance where anyone twisted by army to buy a TPG slabbed coin or pounded my head with a mallet to buy an NGC or PCGS graded coin.  If I absolutely adore a slabbed coin but would rather it be raw and in my album I just take a pair of pliers to the very tip of the slab and 'crack' goes the weasel!  And then I can be just like the Euros and put all my gold coins in a paper bag.  

My congratulations also to NGC for helping make my coin collecting experience more profitable and fun.

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50 minutes ago, zadok said:

I would ask u to expound on ur statement ..."attempting to replicate the US collecting culture elsewhere"......im not quite sure how u envision this is being attempted, the numismatic world needs to know....

By attempting to make TPG prevalent in other countries, just as it is in the United States.  It's my opinion most of the demand for TPG for world coins is driven by US collectors but the TPG have also opened submission centers around the world.

Not sure where you are from but at this point going by the population data, it's predominantly accepted in South Africa (a market I know very well though don't live there), China and maybe Canada.  With Canada, I suspect (but don't know) it's substantially US collectors driving TPG preference but this is an assumption only, as there is a local service.  Also somewhat in Australia (mostly NCLT but somewhat in predecimal) and South Korea, though once again, I can't tell you whether most of the submitters are US based or not.

Particularly what's been happening since the internet made most coins available is that US collectors are shifting somewhat (a low proportion to this point but noticeable) to world coinage and world NCLT from US coinage.  For some (though not necessarily most) they can't afford what they want from US coinage, so they buy the better coins from other countries and while they are at it, inflate the price level noticeably due to the limited supply and use of the Sheldon scale. 

Due to so much "investing" in the US market, the US has an outsized percentage of affluent buyers (versus elsewhere) who are used to paying a lot more because US coins are so much more expensive.  So they run up the prices of the coins elsewhere where traditional collectors either cannot or choose not to compete, leaving them to buy the "leftovers" from the most desirable coinage.  (This isn't true of developed country markets but is most everywhere else.)  Local collectors may choose not to compete because there is no market locally at US prices and contrary to this article, coins are not financial widgets which can be sold as easily but must frequently be shipped for sale to the US to get a US price.

The good news is that this financialization ultimately will fail because these inflated prices are conditioned on first, the existing credit mania (which will ultimately collapse) and second, there can never be any scale in most countries where TPG will be widely accepted anyway.  US collectors may succeed in turning collecting into "widget" trading for the most desirable world coinage but most collectors aren't going to waste their limited collecting budgets submitting predominantly low value coinage because it makes no sense.

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35 minutes ago, Alex in PA. said:

Personally, I found Mr. Salzberg's letter to be both interesting and informative.  As for WC's "TPG are attempting to replicate the US "collecting" culture elsewhere" I can't recall one instance where anyone twisted by army to buy a TPG slabbed coin or pounded my head with a mallet to buy an NGC or PCGS graded coin.  If I absolutely adore a slabbed coin but would rather it be raw and in my album I just take a pair of pliers to the very tip of the slab and 'crack' goes the weasel!  And then I can be just like the Euros and put all my gold coins in a paper bag.  

My congratulations also to NGC for helping make my coin collecting experience more profitable and fun.

If you are substantially motivated by money in your collecting like so many US collectors especially on both this forum and PCGS, obviously you will be in favor of increased financialization.  I am not but you are free to prefer otherwise.

Whether you choose to keep your coin in the holder or not, TPG has still inflated the price level.  No one can deny that it has brought in a large pool of financially motivated buyers into the US coin market.

The inflated price of US coinage isn't an issue for me because I do not collect any US coinage.  But one reason I made this decision back in 1998 when I resumed collecting is because I couldn't afford hardly anything I considered worth buying and bought something else.

Obviously, like anyone else I would prefer to sell my coins for more than less when I sell it but TPG also inflates the price of what I want to buy just as it helps at sale.  Since I am a collector and never started collecting with a profit motive, I would rathe pay less.  I did make good money off of my South Africa collection but the only reason I changed to what I collect now is because of what I wrote here, the inflated price level for financialization created by TPG.

Edited by World Colonial

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Also to be clear, I wasn't  criticizing the letter per the earlier above post.  I was pointing out that what MS wrote has nothing to do with collecting, at all.  I find the letter exaggerated and substantially wishful thinking of what the US coin industry (for lack of a better term) fervently wishes will happen but that's another consideration entirely.  It's no different than the predominant sentiments I read from South African "collectors" after TPG inflated that price level until it crashed and burned.

Edited by World Colonial

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WC thanks for expanding on ur rationale, yes I would agree that attempts to migrate the TPG efforts to a global acceptance would disenfranchise even more pure collectors n drive them from the numismatic mainstream...that's why many US collectors sold off their US collections n migrated to collecting the more interesting n challenging foreign issues, there was still opportunities to actually collect, I divested myself of approximately 80% of my US collections several years ago n found that I could get more bang for my buck n more collecting satisfaction in several of the foreign issues....im sure the heavily promoted TPG efforts will receive initial success but the more entrenched foreign collecting fraternities wont go along willingly...n eventually the pure investors will become disenchanted n go on to the next asset escalation, especially after the inflated prices collapse....the real issue here is collecting versus investing, sure we all hope we don't lose money if when we sell, but filling that last whole in ur album is as they say...priceless

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6 hours ago, zadok said:

WC ur condemnation of MS letter is surely echoing throughout the numismatic community....true collectors have been ushered to the fringes of the numismatic world ever since the advent of TPG when MS65-70 coins became king, try talking to the high level dealers about an VF/XF variety coin at a busy coin show....with the assault on the world by the covid virus, the collectors universe just became more compounded, being forced into online sight unseen buying has pushed the collector even further out on the fringes as the commercial (read $) aspect of numismatics scrambles to capture the infusion of investment monies into the hobby...multitudes of buyers with multitudes of money r looking for places to transfer that money into anything that shows financial potential, hence the attempts to classify coins as future assets with liquidity classification....but, just try to go into any bank n use ur numismatic assets as collateral to buy a house n u will see just how non-liquid they r, n heaven forbid if u collect stamps....yes, the TPG n auction houses have long sought to move numismatics closer to investors n further away from collectors, the hobby suffers....I would ask u to expound on ur statement ..."attempting to replicate the US collecting culture elsewhere"......im not quite sure how u envision this is being attempted, the numismatic world needs to know....

I think people may be missing the fact that there are many perspectives of everything.  Every dealer depends on the robust health of coin collecting but is only naturally going to see the passion of coin collecting from the perspective of opportunity and profit.  

I don't believe ANY collector is being pushed to the fringes and if mainstream collectors had embraced new coin collectors in 1999 rather than excluded them this wouldn't be an issue in all probability.  

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5 hours ago, World Colonial said:

Also to be clear, I wasn't  criticizing the letter per the earlier above post.  I was pointing out that what MS wrote has nothing to do with collecting, at all.  I find the letter exaggerated and substantially wishful thinking of what the US coin industry (for lack of a better term) fervently wishes will happen but that's another consideration entirely.  It's no different than the predominant sentiments I read from South African "collectors" after TPG inflated that price level until it crashed and burned.

There's no wishful thinking involved.  

Perhaps Mark Salzberg is merely ahead of the curve here.  

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A couple of points to the above post.

Since prices are set at the margin, a low proportion of primarily US collectors can still make the TPG pricing structure applicable elsewhere, even contrary to the preferences of everyone else.  This has already happened with some of the best world coinage, fortunately just almost never with the equivalent price spreads of US coinage.

Whether and where TPG will predominate in additional markets is mostly a function of US buyer preferences and the local collecting culture.  South Africa is a small market (probably ranked between #20 and #30 in financial scale) but a test case of what happens where a disproportionate percentage of financially motivated buyers with little to no interest in collecting dominate.  The price level is still higher (for now) but undoubtedly, the "hobby" has been negatively impacted by those who lost noticeable proportion of their investment during the bubble.

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3 minutes ago, cladking said:

There's no wishful thinking involved.  

Perhaps Mark Salzberg is merely ahead of the curve here.  

Good luck with that.  I can easily explain why the level of financialization expressed in the letter is never going to happen.

But given what a hugely inflated opinion you have of the appeal of coin collecting to the noncollecting population where you project such inflated prices for the coins you like, I can see why you would believe otherwise.

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8 minutes ago, cladking said:

I don't believe ANY collector is being pushed to the fringes and if mainstream collectors had embraced new coin collectors in 1999 rather than excluded them this wouldn't be an issue in all probability.  

Yes, this is how you once told me that there is no "shortage" of coins where collectors will endlessly go down the "food chain" to buy what they can still afford.  Supposedly, if collectors can't afford to buy what they do now or in the past, they will buy something with a much lower preference as a replacement.

The only reason you hold this view is because you don't understand collector motivation at all.  It's evident in our prior exchanges.  Collectors never acted as you claimed in the past, they don't act this way now, and I have never read one post of yours where you provided any reason to believe they will in the future.

No one is excluding anyone not now and not in 1999, anymore than they are "avoiding" the coinage you like most.  There have been plenty of new collectors since 1999.  This claim is unsubstantiated.

Most of these new collectors just didn't and don't prefer the coinage you think they should.  This is the internet age where anyone can collect anonymously and needn't care what anyone thinks of their collecting, which they mostly never did anyway other than how it impacts the price.

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11 hours ago, World Colonial said:

 

But given what a hugely inflated opinion you have of the appeal of coin collecting to the noncollecting population where you project such inflated prices for the coins you like, I can see why you would believe otherwise.

It has nothing whatsoever to do with the pricing  of moderns and other coins I like.

It has everything to do with the opportunity to collect great coins and learn about money, circulation, and the nature of real coins for little or no cost.  Many people have the idea that coins which aren't worth hundreds or thousands of dollars are "not significant" as though that is sufficient reason to not collect them and not get started in the greatest hobby on earth.  I believe the real "opportunity" with moderns are the fun and social contacts one might enjoy.   It's simply irrelevant that if many people began enjoying these that prices would have to explode even more than they have.  

There are billions of coins in circulation and tens of millions that are scarce and getting scarcer every day.  They are getting scarcer because few are collecting them or preventing their destruction and degradation.  This isn't really of any concern to me either except to the degree that future collectors might be put off by the unavailability of the coins.  

 

I like all coins.   I even like modern NCLT and old classic varieties  in VF condition (or even lower).  I don't know why a whole generation of collectors hate moderns except that they hate base metal.  But younger collectors who are and will be taking over the hobby do not hate base metal at all.   It simply remains to be seen if US and world collectors will find these popular.  But the fact is the coins are fun to collect and in many countries they are already gaining enough interest to increase many fold.  

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"Yes, this is how you once told me that there is no "shortage" of coins where collectors will endlessly go down the "food chain" to buy what they can still afford.  Supposedly, if collectors can't afford to buy what they do now or in the past, they will buy something with a much lower preference as a replacement."

 

You've misunderstood.  

If a Indian cent collector can't afford an AU/ XF collection he might collect in VF rather than switch to Morgan dollars.  

Nobody is going to decide he can't afford BU clad quarters and switch to bust half dollars in low grade.  Not many bust half collectors will switch to circulated zincolns but this will happen.  

 

"The only reason you hold this view is because you don't understand collector motivation at all."

 

Every collector is different and every collector has unique motivation.  If you can't understand this then you can never really understand a collection of people.  The only real measure of understanding of anything is the ability to predict.   It is irrelevant that the only thing that can't be predicted is the future because insights are possible.  I would read Mark Salzberg's words very carefully because I believe he has some real insights and a keen understanding of current conditions.  

Edited by cladking

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...I personally do not believe that MS letter is addressing any BU clad quarter collectors or circ Lincoln collectors....its all about the whales coming to eat the krill...

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TPGs are gaining popularity in other countries for the same reason they gained popularity in the US. 1) They remove the need for knowledge. I don't need to know the strikes and luster or grade of any series. I just need to be able to read the insert. If I'm truly scared and pathetic, I can double down and require a CAC sticker. I don't need to learn about cleaning and how to detect alterations. I can be completely dumb and enjoy the hobby. 2) It lowers the transaction costs. We have an outside arbiter of condition. I know what an NGC MS63 should look like and you should too. This reduces haggling, transaction time, and disagreement about condition. 

The idea that TPG are moving coin collecting from a hobby to an investment vehicle is ridiculous. There has always been a wide range in numismatics. Does anyone honestly think that 50 or 150 years ago the people who purchased expensive coins didn't think about the financial benefits of their investment?

I collect coins because I enjoy it. I like the history, the designs, the challenge of finding that one piece that is both rare and nice condition. However, I'd be a liar if I said that the investment portion of it didn't weigh heavily on purchase decisions. 

My one strong disagreement with Mark Salzberg's letter is that he appears to believe the strong run up in bullion is signs of a vibrant market. Bullion is the purchase of the scared. It is a hedge against inflation. It is not a collectible, even if the mint stamps a pretty eagle on it and sells it for a premium. 

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...CAC "endorsement" can be beneficial in certain areas of US coin collecting....I wont go into that on this thread....but, most "old time" pure collectors rely on their own acquired grading knowledge to determine whether the coin they r considering buying meets their standards or needs, they don't require TPG or stickers or beans....after all, u know if the girl is pretty or not regardless of the dress she is wearing...

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2 hours ago, zadok said:

....CAC doesn't sticker foreign coins.....

Give it time...

There is Wings that does foreign coins. Pretty much zero demand for this service.

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On 9/26/2020 at 10:22 AM, cladking said:

Every collector is different and every collector has unique motivation.  If you can't understand this then you can never really understand a collection of people.  The only real measure of understanding of anything is the ability to predict.   It is irrelevant that the only thing that can't be predicted is the future because insights are possible.  I would read Mark Salzberg's words very carefully because I believe he has some real insights and a keen understanding of current conditions.  

This is really funny.  Your exaggerated claims bear no relation to how collectors actually collect yet you tell me this?  None of your claims will ever happen and your posts demonstrate that yuu understand virtually nothing about what motivates collector behaviour.

I read what MS wrote.  The only thing he described are the characteristics of a hyper financialized market where coins are traded as "widgets".  That's what claiming coins are a viable alternative asset class and fractional ownership represents.  What does this have to do with collecting?

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On 9/26/2020 at 11:16 AM, zadok said:

...I personally do not believe that MS letter is addressing any BU clad quarter collectors or circ Lincoln collectors....its all about the whales coming to eat the krill...

Of course he was not.

But I also don't believe it is just directed at the "whales" because while the coins are individually expensive, there aren't enough to make a material difference financially.  If you add up the estimated value of all the US coins listed in the PCGS "Million Dollar Club", It's the equivalent of a handful to very low number of the most expensive paintings.  What kind of financial scale is that?

It’s not even feasible if the inference is limited to the relatively low number of most elite (US) coins.  If will never last more than temporarily, as this coinage would be uncompetitive versus similarly priced objects in other areas, such as paintings and Faberge Eggs.  None of these coins are interesting enough to the non-collector where they will pay about the same price or a lot more.  

Here is the bottom line. The idea that there will ever be any financially meaningful scale with coins doesn't have any merit.  With US coinage, the amounts are meaningful to individual predominantly middle class collectors but not to the ultra wealthy, much less in the context of global financial flows.

It's even more extreme with world coinage and this is what I told those in South Africa.  On one occasion a few years ago, I provided a detailed estimate of the value of all "investment" eligible ZAR and Union coinage (their "classics") which was about $30MM to $50MM.

Why would any really wealthy individual or asset manager want to place any meaningful amount in such a shallow and illiquid asset, whether in US coinage and definitely not anywhere else? 

The answer is that they don't and won't.  We already have the 1980's TPG bubble in the US as a direct example and a similar thing happened when TPG financialized "collecting" in South Africa.  I observed it in real time and told participants there it wasn't sustainable and the reason it wasn't and isn't is because of what I wrote here earlier.

There can never be any meaningful financial scale without turning collecting into “widget” trading.  Even individual collectors such as Simpson and Partrick can noticeably inflate the price of most US series if they don’t “cash out” but instead buy something else,  as there is no market depth.  (The largest scale is in generic pre-1933 gold, Morgan dollars and NCLT.  The 1904 double eagle alone has more liquidity than all other series.)  It’s much easier to take an equivalent financial position in CLCT (holding company for PCGS) than most US series and it’s a lower tier small cap stock.  Same would be true of Heritage if it were a public company and maybe Certified Collectibles Group (parent of NGC).

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22 hours ago, gmarguli said:

The idea that TPG are moving coin collecting from a hobby to an investment vehicle is ridiculous. There has always been a wide range in numismatics. Does anyone honestly think that 50 or 150 years ago the people who purchased expensive coins didn't think about the financial benefits of their investment?

I collect coins because I enjoy it. I like the history, the designs, the challenge of finding that one piece that is both rare and nice condition. However, I'd be a liar if I said that the investment portion of it didn't weigh heavily on purchase decisions. 

I agree.

The one clarification I would add though is that TPG has brought in a lot more money into coins for the reasons you gave which inflates the price level and increases the importance to more buyers of viewing it as an "investment" because of the greater financial risk.

22 hours ago, gmarguli said:

My one strong disagreement with Mark Salzberg's letter is that he appears to believe the strong run up in bullion is signs of a vibrant market. Bullion is the purchase of the scared. It is a hedge against inflation. It is not a collectible, even if the mint stamps a pretty eagle on it and sells it for a premium. 

This wasn't as clear to me in the letter but I agree with you on this also.  I haven't read any claims and in my limited observations haven't seen any indication that metals run-up up to 2011 and more recently has had much of impact on the price level.

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On 9/26/2020 at 4:08 PM, gmarguli said:

My one strong disagreement with Mark Salzberg's letter is that he appears to believe the strong run up in bullion is signs of a vibrant market. Bullion is the purchase of the scared. It is a hedge against inflation. It is not a collectible, even if the mint stamps a pretty eagle on it and sells it for a premium. 

Ain't That the truth

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On 9/25/2020 at 10:23 AM, World Colonial said:

What he describes is financialization, not actual collecting and which isn't remotely anything to celebrate by actual collectors, as it has nothing to do with collecting at all.  Don't believe me?  Look at the terms he uses, like fractional ownership and sight unseen buying.

Mr. Salzburg's letter is for marketing his product and helping NGC's bottom-line.  This letter is encouraging people to use his service with the promise of continued value for the collector.  However the letter is a showcase of how NGC can make maximum profits while encouraging new collector's to take the financial risk.  What a crock of bologna.

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1 minute ago, Cascadia said:

Mr. Salzburg's letter is for marketing his product and helping NGC's bottom-line.  This letter is encouraging people to use his service with the promise of continued value for the collector.  However the letter is a showcase of how NGC can make maximum profits while encouraging new collector's to take the financial risk.  What a crock of bologna.

Of course he is doing that.  Thanks for pointing out the obvious.  It is nothing but complete exaggeration and hyperbole.  Other than creating another temporary bubble, the sentiments expressed in this letter are never going to happen.

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1 minute ago, Cascadia said:

I was agreeing with you and using different language to support what you were saying.  Telling me I am pointing out the obvious seems rude.  There are multiple members on this message board that bully new members with seriously negative attitudes.  A message to NGC:  The negative Nancys and bullies on this message board are cutting into your bottom line.  I have no desire to spend any more time here or submit further coins.  I thought this was a place where people would be helpful but I have found that attitudes that are not shared (or ones that are agreed upon) tend to be done so in a Greek fraternity hazing ritual atmosphere. The numismatic rank and order pushes new collectors away with the supremacy attitude.  I'm off to search through clad state quarters, where I will enjoy my time thoroughly.  

I misunderstood your post and thought yours was rude.  Sorry for that.

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