A Letter from Mark Salzberg
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88 posts in this topic

1 hour 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.  

Stick around - there are plenty of good discussions. Some do take on a scarcastic tone at times, but it's mostly in fun. 

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2 hours ago, World Colonial said:

I wrote in haste and admit my error.

Sorry - I wasn't talking about you. Just some folks in general on some of the other threads. A bit heated at times, which is alright as long as you aren't a newbie and don't know the rules of the road yet.  For everyone else - I hope we take it in stride. No biggie.

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I'm here for the discussions. They cost less than coins. When I do buy coins I'm into UK/colonial coinage now, rather than US coins like when I was younger, probably because I'm into English history. I'd still buy US paper currency if it didn't cost so bloody much. 

So Google sent me here after I went looking for lengthy arguments over using MS70 to dip coins (I found them). I've come back to numismatics after many years, because of, yes, covid. But I'm not investing--that's what my 401(k) is for. I buy coins because they're beautiful and they're little pieces of history. Same with banknotes.

I guess for me it's a matter of sorting out sites selling *gold gold gold!* from sites for those who are primarily coin collectors, whatever their price point. And I'm not interested in slabbed/TPG coins, either. I don't plan on selling them later, and I can't see them very well when they're encased in plastic. So I'm just "here for the beer," I guess. And looking at other people's collections. Thanks.

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I think a separate post would be good for you to introduce yourself and to describe what types of coins you have, or are looking to collect. There's plenty of experience with UK and colonial coinage here. Welcome.

Edited by Zebo
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46 minutes ago, Aiguier said:

I'm here for the discussions. They cost less than coins. When I do buy coins I'm into UK/colonial coinage now, rather than US coins like when I was younger, probably because I'm into English history. I'd still buy US paper currency if it didn't cost so bloody much. 

So Google sent me here after I went looking for lengthy arguments over using MS70 to dip coins (I found them). I've come back to numismatics after many years, because of, yes, covid. But I'm not investing--that's what my 401(k) is for. I buy coins because they're beautiful and they're little pieces of history. Same with banknotes.

I guess for me it's a matter of sorting out sites selling *gold gold gold!* from sites for those who are primarily coin collectors, whatever their price point. And I'm not interested in slabbed/TPG coins, either. I don't plan on selling them later, and I can't see them very well when they're encased in plastic. So I'm just "here for the beer," I guess. And looking at other people's collections. Thanks.

Welcome stick around and enjoy, some discussions are very good with solid information passed around and others are less so.

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I actually found MS article offputting, for much the same reason as @World Colonial pointed out.

I wonder what proportion of NGC and PCGS grading is bullion and NCLT.  The recent "partnership" with the "Royal Mint" seemed little more than cooperation to price-fix.  I think it would be advisable the TPGs maintain independence from issuing mints - the look is not a good one. (shrug)

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Just now, brg5658 said:

I actually found MS article offputting, for much the same reason as @World Colonial pointed out.

I wonder what proportion of NGC and PCGS grading is bullion and NCLT.  The recent "partnership" with the "Royal Mint" seemed little more than cooperation to price-fix.  I think it would be advisable the TPGs maintain independence from issuing mints - the look is not a good one. (shrug)

Volume wise, I think it's most of it or at minimum, a substantial minority.

Here is where I think you are on to something.  It's my opinion that the TPG business model is sustainable in it's current form only as long as prices are rising.  In the US which presumably still accounts for most of the volume, the price level has been stagnant at best (in the aggregate) for over a decade.

What does this mean?

Possibly more resubmissions temporarily to "max out" grades but that has it's limits.  That's been on-going to my knowledge but volume will drop off eventually. 

More importantly, eventually the grading fee plus shipping and insurance is going to eliminate the economic benefit of grading a noticeable proportion of all coinage, especially world coinage where TPG are undoubtedly counting on for most growth.

The first time I submitted in 2005, "World Standard" was $27 and "World Economy" was $15, both with a 10% discount for Society membership.  Now, it's at least $32 and $19 with no discount.  There is a new "World Modern" tier but that's minimal volume and likely to stay that way.  Postage costs have also increased significantly, as I found out a few years ago when selling on eBay for the first time in years.

Other than Registry sets, there isn't much reason to submit low value coins, since the cost of grading increasingly exceeds any improved marketability.

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On ‎9‎/‎25‎/‎2020 at 1:23 PM, World Colonial said:

This letter summarizes everything that is wrong with modern coin "collecting" in the US.  

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.

The replies I get when inquiring about a French coin in France remind me of that scene in Monty Python's Holy Grail.

After I mention $$$$,it becomes more cordial.

Not sure how to get them in any other way. We could invade?

They would probably just bury them. The French are always digging, digging, digging.....& sneaking around.¬¬

Edited by Cat Bath
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8 hours ago, Cat Bath said:

The replies I get when inquiring about a French coin in France remind me of that scene in Monty Python's Holy Grail.

After I mention $$$$,it becomes more cordial.

Not sure how to get them in any other way. We could invade?

They would probably just bury them. The French are always digging, digging, digging.....& sneaking around.¬¬

I don't expect anyone to completely ignore money in their collecting.  If anyone has ever read that in my posts, it's not what I meant.  The letter referenced in the OP is expressing entirely different sentiments.

Wall Street already attempted to "widgetize" US collecting in the late 1980's.  My recollection is that Merrill Lynch created a LP which was liquidated several years later at substantial losses and Kidder Peabody (now defunct but then part of GE) planned one too.  Regardless, it either failed or went nowhere.  MS should be aware of this history, so I have no idea why he would write what he did other than as hyperbole.

Second, it's been the dream of at least a segment of the professional numismatic community to attract those who buy expensive art, as this could send the prices of the most expensive coins to the moon.  The 2019 Ultra Wealth Report estimates 57,000+ worth $100MM+ and 17,000+ worth $250MM+.

It's evident from the geographic distribution of this population and the price level that only a minimal fraction (I'd guess somewhat more than 1%) are collectors but even where they are, almost never (literally) put any noticeable percentage of their net worth into their collection.  In the context of this affluence, it's a rounding error.  If even 500 had collections valued at $5MM+, that's at least $2.5B which should be concentrated in the most expensive US coinage.  Maybe someone else sees this is in the price level but I sure don't.

Neither of the two scenarios are ever going to happen where it will last more than temporarily.  I'm confident it will never happen at all (except maybe in isolated segments such as gold coinage) but can't disprove a negative.  No one else can give any credible reason why it will, only claim it by writing in the abstract.

The reason a repeat of the 1980's TPG bubble won't last is because it would price real collectors out of (practically) everything they want to buy.  If the second were feasible, a lot more of the wealthiest would be collectors right now at much higher prices.  The reason they aren't is because they don't find collecting or this coinage anywhere near as interesting as the financial promoters claim and none of it is a competitive alternative "investment".  (Mostly, they don't even know any of these coins exist.)

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4 hours ago, brg5658 said:

So when Tradedollarnut and Laura Sperber (of Legend) pulled their $10 million bid-hike shenanigans in the 2013 purchase of the 1794 Specimen $1 - did anyone actually think it was anything other than an "investment tool" to hold for a while and then sell off?  I sure didn't - the top of the top coin market is ego-milking investment trading.  That Specimen $1 is of course coming up for auction next week in Las Vegas - and I'm quite sure they won't let it go for less than the $10 million they invested in it.  It's about showmanship, bragging rights, marketing, and free advertising from the press.  :whatev:

The Eric Newmans of the world are now few and far between. :(

Assuming the collector can afford to keep a coin, the best indication of their interest is the holding period.  Many collectors own coins they don't really care about for long periods but selling a coin they can afford to otherwise keep usually indicates loss of interest.

The 1913 LHN and 1804 dollar seem to be two.  Both are rare yet aren't really that hard to buy, coming up for sale on average at least every few years.  Contrast this with the 1861 CSA half or 1792 silver half Getz pattern which are usually owned for a long time.

The reason?  Collectors who aren't primarily motivated by money find the last two a lot more interesting.

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7 hours ago, brg5658 said:

So when Tradedollarnut and Laura Sperber (of Legend) pulled their $10 million bid-hike shenanigans in the 2013 purchase of the 1794 Specimen $1 - did anyone actually think it was anything other than an "investment tool" to hold for a while and then sell off?  I sure didn't - the top of the top coin market is ego-milking investment trading.  That Specimen $1 is of course coming up for auction next week in Las Vegas - and I'm quite sure they won't let it go for less than the $10 million they invested in it.  It's about showmanship, bragging rights, marketing, and free advertising from the press.  :whatev:

The Eric Newmans of the world are now few and far between. :(

I believe that the 1794 dollar is reserved at quite a bit less than $10 million.

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57 minutes ago, MarkFeld said:

I believe that the 1794 dollar is reserved at quite a bit less than $10 million.

Supposedly at $8M. However, I think it is exceedingly likely that the coin is coming up for auction because Bruce/Laura know that there are at least two people interested in it at a certain price level. 

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21 minutes ago, gmarguli said:

Supposedly at $8M. However, I think it is exceedingly likely that the coin is coming up for auction because Bruce/Laura know that there are at least two people interested in it at a certain price level. 

Isn’t it also true that if it opens at $8 million and the auction selling it (Legend) is also the owner, that with the 17.5% juice that’s equivalent to opening at $9.4 million.  Doesn’t seem like much of a “gamble” ...

Edited by brg5658
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On 9/25/2020 at 5:05 PM, World Colonial said:

... 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.

I hate those plastic holders, for starters. I understand why the coin and the cert must remain connected, but I don't like them, especially since they are showing up in price levels where there seems to be no point in doing it, like a $15 slabbed 1963 Franklin half-dollar. Seriously? Why? 

I collected coins and currency when I was a kid, in the 1970s. When I resumed temporarily around 2003 I focussed on British/World currency because US currency was so horribly overpriced, and more so now, worse than coins. (Yet paper is more fragile, and seems to call for some kind of protection.) Same for most US coins much before the 1930s. I hope the investor classes stay away from British/Channel Islands/colonial stuff I'm interested in, I have a limited budget for this kind of thing. I honestly don't plan on selling any of these, they are for my own pleasure, so proving to someone else that an MS-64 is MS-64 and not 63 or whatever is not an issue. If I wanted to invest, I'd try to pick something that doesn't yo-yo so much in price (precious metals) and is more easily converted to liquid. You can't flip a coin on the stock exchange.

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6 minutes ago, Aiguier said:

 like a $15 slabbed 1963 Franklin half-dollar. Seriously? Why? 

I had damaged coins slabbed because they were the first coins my daughter ever picked out of a junk box (she was 3) and they are still with her coins albeit in a NCS slab. Lots of reasons for doing things. Lots of reasons to spend a buck..

Edited by MAULEMALL
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One of the more curious observations made in Mark Salzberg's letter (not yet two month's old at post-time) comes within its closing lines:

"We are only in the earliest stages of the convergence of the collecting and investing worlds, and there are still incredible opportunities for growth." (Emphasis mine.)

Whether you can appreciate the humor in this depends on when you were born and how long you've been collecting.

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52 minutes ago, Quintus Arrius said:

One of the more curious observations made in Mark Salzberg's letter (not yet two month's old at post-time) comes within its closing lines:

"We are only in the earliest stages of the convergence of the collecting and investing worlds, and there are still incredible opportunities for growth." (Emphasis mine.)

Whether you can appreciate the humor in this depends on when you were born and how long you've been collecting.

Yes, you can call it humorous.  I call it ridiculous.

I didn't remember the specific verbiage you extracted but to make this statement after US "collecting" has been substantially financialized decades earlier is ironic to say the least.  I started collecting in 1975 which was at most a few years after it started.

There are no "incredible opportunities" for "growth".  Not unless collecting turns into "widget" trading.

What this letter and anyone who agrees with it totally misses isn't just the practical impossibility of perpetually buying coins as "widgets", but that the current price level only exists because of the much bigger and broader financial asset and credit mania.  I have seen almost zero acknowledgment of this simple fact in any coin discussion. When this mania finally ends and it will "eventually", not only will there be no "growth", the price level is heading for a crash landing, if not in nominal prices then when measured by purchasing power.

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20 hours ago, Quintus Arrius said:

One of the more curious observations made in Mark Salzberg's letter (not yet two month's old at post-time) comes within its closing lines:  "We are only in the earliest stages of the convergence of the collecting and investing worlds, and there are still incredible opportunities for growth." (Emphasis mine.)   Whether you can appreciate the humor in this depends on when you were born and how long you've been collecting.

I respect anybody's position, even when it differs from mone.  And MS is OK in stating that modern coin collecting is a more liquid and transparent hobby than decades ago.

However, there are too many variables to consider coins and currency bills INVESTMENTS -- they are NOT !! :makepoint:

Tangible assets are NOT investments even if they can/do appreciate over time.  They don't pay dividends or interest, they are susceptible to numerous external influences (PM prices, supply & demand, evaporation of premiums, changing tastes, etc.).  They are SPECULATIONS that you should count on selling for LESS money than you paid -- and if this prospect frightens you, then you should NOT be buying the item in question.

As an extremely ILLIQUID asset class, our hobby can NOT accomodate large inflows of money, as was seen by the mere rumour (I'm not sure if the $$$ ever flowed in, have to double-check) of Wall Street $$$ in 1988-90.

Edited by GoldFinger1969
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"For example, the buy-sell spread for most US gold coins is minuscule, and 1907 High Relief $20 Saint-Gaudens gold coins — highly distinctive vintage rarities — trade for virtually the same price in the same grade." 

Spreads have gotten better but spreads on many listed stocks are measured in pennies or fractions of a penny....commissions are free or $10.  The most liquid non-bullion coins we have -- common Saints or Morgans -- probably trade with a bid-ask spread of 5-10% when you take into account all costs.

I'm not sure what MS means by the 1907 Saints reference. 

 

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11 hours ago, GoldFinger1969 said:

Tangible assets are NOT investments even if they can/do appreciate over time.  They don't pay dividends or interest, they are susceptible to numerous exteranl influences (PM prices, supply & demand, evaporation of premiums, changing tastes, etc.).

As an extremely ILLIQUID asset class, our hobby can NOT accomodate large inflows of money, as was seen by the mere rumour (I'm not sure if the $$$ ever flowed in, have to double-check) of Wall Street $$$ in 1988-90.

Under the most widely used definition of investment, there is no difference with speculation.  Even the dictionary definition is arbitrary and does not clearly distinguish between the two.

Under the commonly used definition, coins are lousy investments for the reasons you state.

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U.S. Savings Bonds pay interest but when one factors in the inflation rate -- or so I recall hearing years ago, they make for a poor investment choice. By your definition, every last one of us is a coin collector whether our tangible assets appreciate in value, or do not.  (Tough call made tougher by that head-pounding emoji! 😉)

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22 minutes ago, Quintus Arrius said:

U.S. Savings Bonds pay interest but when one factors in the inflation rate -- or so I recall hearing years ago, they make for a poor investment choice. By your definition, every last one of us is a coin collector whether our tangible assets appreciate in value, or do not.  (Tough call made tougher by that head-pounding emoji! 😉)

I have concluded that people use the term "investment" to rationalize financial decisions they would unlikely otherwise never make.  It's much easier to convince yourself to buy something (anything) when you tell yourself it's an "investment" instead of speculation or expensive consumption.

Think of the supposed "investments" most people usually make and then assess the practical difference to either speculation or consumption.  There almost never is any.

With coins specifically, if you are a collector, any coin purchase is a combination consumption expense and financial speculation.  If you are a dealer buying it for inventory, it's no different than any other business outlay and it's more of an investment.

To anticipate any potential disagreement (since I know many or most do), practically anything will "appreciate" if the currency is debased enough.  Back in the early 1990's when I visited Brazil, inflation was running 30% to 40% per month.  Anyone there could have "made" money by buying practically anything.

Edited by World Colonial
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2 hours ago, World Colonial said:

Under the most widely used definition of investment, there is no difference with speculation.  Even the dictionary definition is arbitrary and does not clearly distinguish between the two.  Under the commonly used definition, coins are lousy investments for the reasons you state.

Agreed....the distinction is arbitrary and sometimes a matter of semantics.   Here's why I say speculation:  when you INVEST, you let time work for you.  Stocks go up over time...bonds compound interest over time.  Let the holding period increase, and it's VERY HARD to lose money buying quality even if you buy at the wrong time (i.e., right before a bear market).

With SPECULATION....you are not letting time work for you.  You may have a short-time horizon and coins (like PMs) simply fluctuate too much in the short-term.  But even if your holding period is LONG TERM, if you bought at the wrong time (during a bubble, for instance) you might never get even.  That is certainly the case with folks who bought at the 1988-90 Coin Bubble peak.  Conversely, if you bought stocks right before the 1987 Crash or 2001-02 Bear Market or even 2008-09 Financial Crisis -- you made up your losses and then some.

Add in coins that trade in tandem with gold or silver...those coins that are purely numismatic...and those that are a combination....and the impact of a few people exiting or entering the sector (i.e., if a few of Bob Simpsons friends decided to collect high-end Saints, the prices would skyrocket)....and speculation is a better term than investment.

Edited by GoldFinger1969
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1 hour ago, Quintus Arrius said:

U.S. Savings Bonds pay interest but when one factors in the inflation rate -- or so I recall hearing years ago, they make for a poor investment choice. By your definition, every last one of us is a coin collector whether our tangible assets appreciate in value, or do not.  (Tough call made tougher by that head-pounding emoji! 😉)

The OPPORTUNITY COST of holding coins or PMs (gold, silver) has dropped dramatically in an era where $17 trillion in bonds yield 0% or negative rates of return.  So buying a gold American Eagle or a 1924 MS-65 Saint where the 10-year U.S. bond yields 0.9% is alot different than when the bond paid 4% or 6%.  Even buying a higher-end 1907 High Relief Saint -- not tied to PM prices -- is alot different than when bonds would compound your $$$ at least 30-40% over the next 10 years.

Of course, that doesn't say anything about stocks appreciating over time...but if you look at one's "safe" money as earmarked for bonds or a portion for PMs/coins, the choice to move some $$$ into PMs/coins is alot easier today than when 10-year Treasury bonds yielded 3% or 5% or 8%....let alone 12-15% back in 1979-82. xD 

Edited by GoldFinger1969
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