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How-why Does Coins Take A Hyperbolic Rise In Price?

 
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Pillar of the Community
United States
1804 Posts
 Posted 03/16/2014  11:50 am Show Profile   Bookmark this topic Add Domain555 to your friends list Get a Link to this Message
How-Why does coins take a hyperbolic rise in price?

For instance.......

A MS65 coin might be valued at $120...
Then a MS66 runs to $1,400.
Then a MS67 goes to $12,500?

Is it ALL just about rarity?

With 10s (or 100s) of millions of coins minted in a particular series ... I don't think for a nano second that only 3-4-5-6 coins made the trip through time ... at the highest level.

With millions and millions of collectors over the centuries and in a particular series, that only 6 coins out of 200,000,000 minted were at that top level of grade.


The idea you have a $120 coin OR a $1,400 coin gives me a shiver.

Bluntly spoken ... TPG-ers have a financial vested interest in restricting grade levels. Worrisome.

What if there were a system with tenths between grades ... like MS61.8 ... or MS64.9?

Thoughts Please?
Pillar of the Community
United States
1656 Posts
 Posted 03/16/2014  12:16 pm  Show Profile   Bookmark this reply Add Numismat to your friends list Get a Link to this Reply
You kinda answered your own question. Condition rarity. Once you go up to MS65 and beyond, the population of known coins in a specific grade diminishes as exponentially as the price for each subsequent grade.
TPG's can't do too much grade restricting either. There are too many sharp eyed collectors out there that would and do make them pay dearly for inaccurate grading.
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 Posted 03/16/2014  12:40 pm  Show Profile   Bookmark this reply Add SsuperDdave to your friends list Get a Link to this Reply

Quote:
Is it ALL just about rarity?


Yes, with an occasional sprinkling of hype, leavened by demand. Keep in mind, these coins were not minted with the idea of preservation in mind - they were struck to circulate as money. Mint procedures do not lend themselves to pristine coins - they're handled by machine, shoved by a mechanical arm into the press and then shoved out by another arm, to fall a distance into a bucket. Then they get dumped into a bag, which is thrown around.

And TPG's are hesitant to bestow high grades on Conditional Rarities, for the reason Numismat mentioned - they'd be crucified if they "created wealth" with an unworthy coin.
Valued Member
United States
253 Posts
 Posted 03/16/2014  1:11 pm  Show Profile   Bookmark this reply Add Singer to your friends list Get a Link to this Reply
This is a concern of mine as well. As a Morgan collector (primarily), I try to find the best coin I can afford up to the jump price. For instance, the 1901 in AU is $250. It jumps to $2500 in MS60. I would target an AU58.

In order for me to purchase higher value specimens, I need to be able to feel confident in both the accurate/consistent grading and population reporting by the TPG's. The collector in me wants to believe that the coins I've obtained are reasonably expected to maintain their grade and that grade's corresponding value which may increase or decrease over time.

I also agree that classic coins are valued on condition and rarity. Factor in supply, demand and availability into the equation as well. As others have said, these coins were meant for circulation, so higher grade KNOWN specimens are less populated. The two things that worry me the most are the discoveries of "hoards" which could likely change population reports and the proliferation of increasingly better counterfeits appearing on the market.

Take for instance the recent gold coin "find" in California. Experts agree these are some of the finest known examples which will undoubtedly skew population reports unfavorably for existing owners of similar coins. And at the prices of these coins, the dollar amounts involved could be very substantial.

Numismat and SsuperDdave make an excellent point about TPG's reluctance to "create wealth" on Classic coins.

That being said, I agree that the TPG's have a financial interest as well. On modern coins, I think they are creating a market for their product as any business needs to do. On bullion coins, the "First Strike", "First Day of Issue", " ANA" labels are just another way of creating "rarity" in my opinion. Premiums associated with these will most likely narrow in the future. Add to this the apparent gaming of the system by the big boys -MCM, APMEX, HSN (and others) " who routinely offer MS70 bullion items for pre-sale and the concern deepens.


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 Posted 03/16/2014  1:43 pm  Show Profile   Bookmark this reply Add SsuperDdave to your friends list Get a Link to this Reply

Quote:
On modern coins, I think they are creating a market for their product as any business needs to do. On bullion coins, the "First Strike", "First Day of Issue", " ANA" labels are just another way of creating "rarity" in my opinion. Premiums associated with these will most likely narrow in the future. Add to this the apparent gaming of the system by the big boys -MCM, APMEX, HSN (and others) -- who routinely offer MS70 bullion items for pre-sale and the concern deepens.


Undoubtedly, and I'm no fan of the practice. For you as a Morgan collector, though, that's an encouraging sign - they've pretty much exhausted the Classics as a cash cow. With that said, though, I'm in a "position and hold" status on Morgans (and most Classics) at the moment, with the discovery of the 57th Street Hoard. Who knows what Conditional Rarities are about to become obsolete, with a million coins about to hit the market?
Bedrock of the Community
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 Posted 03/16/2014  2:08 pm  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply
Special labels have been going strong for years, it's time to concede they're here to stay. Cars come in different colors some colors cost more too, it's the same car but there's no chance we return to the model t days of all black. It's the same thing.

Yes though rarity is what does it. Hoards can be found but they don't happen often with maybe the exception of Morgans. The danger is certainly greater though for conditional rarities than rarities imo

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 Posted 03/16/2014  2:09 pm  Show Profile   Bookmark this reply Add Singer to your friends list Get a Link to this Reply
SsuperDave,

I agree. The only Morgans I'm buying at present are for my date set. All VG or better (or best value on commons). $20 to $35 each.
Bedrock of the Community
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19070 Posts
 Posted 03/16/2014  2:16 pm  Show Profile   Bookmark this reply Add just carl to your friends list Get a Link to this Reply
Although rare and grade are sort of important, I feel one of the most important reasons for prices of any coin is popularity. For example if looking into all the varieties of Lincoln Cents you would find almost every year there have been Doubled Dies. Yet due to popularity, the 1955 stands out as the most valuable and mostly due to popularity. Just start a conversation about Doubled Die coins and someone will always say the 1955 Lincoln Cent. And it's grade will shy rocket too as, again, popularity kicks in. With Mercury dimes everyone says just have to have that famous 1916D. That is where popularity again kicks in. And although many would say the 1945 with FSB's is worth 4 times more, still popularity makes the 1916D the one to look for.
If you could get enough people to start saying the 1964 Jefferson nickel is the rarest coin on Earth, even that coin's prices would jump from $0.04 to $0.06.
just carl
Pillar of the Community
United States
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 Posted 03/16/2014  2:56 pm  Show Profile   Bookmark this reply Add Domain555 to your friends list Get a Link to this Reply
Singer............


Quote:
That being said, I agree that the TPG's have a financial interest as well.


Deep down ... DEEP down, I really hope it in NOT true that WHALES (who submit thousands & thousands of coins), are NOT given the benefit of doubt ... occasionally speaking.

Businesses (in general) ... do grease the whales.
Bedrock of the Community
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 Posted 03/16/2014  3:14 pm  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply
Grease the whales for what? The problem with the conspiracy theories is they aren't thought through well.

Using your example that 12.5k Morgan PCGS/NGC charged between 32-50 dollars to grade more that likely. So they're going to increase their liability by over 10k for basically the exact same price as the 1k coin? That makes no business sense at all.

Then there's the simple fact that the graders don't know who the submitter is when grading unless it's an exception like the saddle ridge hoard.
Edited by basebal21
03/16/2014 3:27 pm
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 Posted 03/16/2014  3:18 pm  Show Profile   Bookmark this reply Add SsuperDdave to your friends list Get a Link to this Reply
The only advantage to a whale in this environment is in terms of pricing. Albanese rocked the two major TPG's with the establishment of CAC; it was a repudiation of the two companies he played a personal part in founding. CAC - to my view - forced a tightening of grading standards on its' own, and no submitter regardless of size is going to benefit from liberal grading these days.
Pillar of the Community
United States
1804 Posts
 Posted 03/16/2014  3:43 pm  Show Profile   Bookmark this reply Add Domain555 to your friends list Get a Link to this Reply
SsupperDdave............


Quote:
The only advantage to a whale in this environment is in terms of pricing. Albanese rocked the two major TPG's with the establishment of CAC; it was a repudiation of the two companies he played a personal part in founding. CAC - to my view - forced a tightening of grading standards on its' own, and no submitter regardless of size is going to benefit from liberal grading these days.



Thank you sincerely, for taking down some of my dumb paranoia.
Pillar of the Community
United States
1804 Posts
 Posted 03/16/2014  4:00 pm  Show Profile   Bookmark this reply Add Domain555 to your friends list Get a Link to this Reply
Bassbal............


Quote:
Then there's the simple fact that the graders don't know who the submitter is when grading unless


I knew this ... but in my paranoia ... I forgot
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