Jeff Garrett: The Rare Coin Business 2.0

Posted on 1/26/2023

New technologies are changing the rare coin market and how numismatic companies do business.

The rare coin market was profoundly changed about 25 years ago when the internet started to become a tool for business instead of something for computer hobbyists. Forward-thinking dealers began to build websites and find ways to capitalize on this new technology. Collector access exploded and the demand for rare coins has been rising each year ever since. As technology improves, rare coin companies are able to leverage these advances to grow their business.

A recent transformational change has been the near elimination of live rare coin auctions. Improved photography, more historical data, elimination of travel expenses and privacy have made online auctions the preferred venue for most companies and buyers. It’s staggering to me that many collectors will bid on six- and even seven-figure coins without seeing them in person. The widespread trust in third-party grading services, such as NGC, makes this possible.

Many now wonder what technological advancements will be created next that will have an impact on the hobby. A lot of great minds in the business are looking for ways to compete using the latest ideas from Silicon Valley. In recent weeks, I have become convinced that Artificial Intelligence (AI) will be the next big thing to expand numismatics.

A recent article I ran across stated, “The world of work is changing. Artificial intelligence and automation will make this shift as significant as the mechanization in prior generations of agriculture and manufacturing. While some jobs will be lost, and many created, almost all will change.” In my opinion, this will apply to the business of rare coins as well.

As consumers, we all deal with the annoyance of AI regularly. Anyone who has called customer service has probably been talking to a computer. I must admit, however, that some companies have invested in more advanced systems and the experience is becoming more tolerable. Delta Air Lines now has a customer service system using computers that work fairly well. They will only get better.

In the near future, large rare coin telemarketing companies may utilize advanced AI systems to make sales calls. From what I have been reading lately, it will soon become difficult to know whether you are talking to a real person or not. The promise of a commission-free automated sales force will become too tempting for companies to ignore once the technology makes this possible. It will be interesting to see if government regulation requires disclosure of the use of AI in sales calls. Government regulators always struggle to stay ahead of technology, so it may take some time once it rolls out.

The next big change using AI will be accessing information using machine learning. When companies list coins online, one of the biggest friction points has been the creation of a compelling description. These take time and expertise to create. Imagine how much effort and expenses auction companies such as Heritage and Stack's Bowers spend writing text for the thousands of coins they offer in a typical sale. Small companies lacking knowledgeable staff find the problem to be even more pressing. Coins with a good story and data sell better.

Further, there are companies that are already using AI technology to create numismatic content. The following rare coin description was created by Digital Studio NW (a dealer software company) using AI machine learning:

The 1840 50C Liberty Seated Half Dollar NGC PR64 is a highly sought-after coin for collectors. With a mintage of only 6, this coin is extremely rare and valuable. The coin was designed by Thomas Sully and Christian Gobrecht and features the iconic Liberty Seated design.

Measuring 30.00 millimeters in diameter and weighing 13.36 grams, this coin is made of 90% silver and 10% copper. The coin features a reeded edge and was struck at the Philadelphia Mint.

The coin received a grade of PR64 by NGC, which is a highly desirable grade for collectors. This coin is a must-have for any serious collector of Liberty Seated Half Dollars, or anyone looking to add a rare and valuable coin to their collection. With its low mintage and high grade, this coin is sure to appreciate in value over time. So don’t miss out on the opportunity to own a piece of numismatic history with the 1840 50C Liberty Seated Half Dollar NGC PR64.

From the few examples I have seen, the accuracy of the information is sound, but it may need some tweaking by humans. It will not be long before dozens of numismatic companies are using this technology to enhance their online offerings. In the future, many numismatic writers will become more like editors compared to creators of new content.

Another major leap for the hobby utilizing AI and machine learning will probably be computerized grading. The idea has been around for a long time, but early attempts were marginal at best. I have heard that in the past computers could be trained to grade with about 75% accuracy, but the other 25% was way off. Some experts feel computers could never replace the human eye when it comes to grading. There are too many nuances to be considered. This may be true for vintage coins, but my guess is that the technology already exists to grade modern coins as accurately as humans.

When PCGS and PSA were sold, there was a rumor that the new owners were eyeing tech to attack the mountain of sports cards that had backlogged in their system. Modern sports cards can be measured for margins, edges, color, etc. for all of the factors that make up the grade for these collectibles. NGC is also on the forefront of exploring any new technology that will enhance accuracy and efficiency. The cost savings and possibility of improved grading accuracy will make the use of AI hard to ignore for any large-scale grading operation.

Most of the major Silicon Valley tech companies are racing to develop or invest in AI. The New York Times ran this story on Monday, January 23, 2023.

Microsoft said on Monday that it was making a “multiyear, multibillion-dollar” investment in OpenAI, the San Francisco artificial intelligence lab behind the experimental online chatbot ChatGPT.

The companies did not disclose the specific financial terms of the deal, but a person familiar with the matter said Microsoft would invest $10 billion in OpenAI.

Microsoft had already invested more than $3 billion in OpenAI, and the new deal is a clear indication of the importance of OpenAI’s technology to the future of Microsoft and its competition with other big tech companies like Google, Meta and Apple.

It won't be long before the numismatic community is able to use these new innovations to market rare coins. Many hobby leaders spend a lot of time trying to figure out how to grow the hobby. Like the internet 25 years ago, technology is probably the answer.

The above article was created by AI, or was it?

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