Reducing the Supply

So I was talking to a gentlemen, who claims that with the right amount of capital, the right coin and the right market movement. He could melt down coins he purchases to increase the overall value of that type. Is this realistic, and has this ever happened?

 

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Was his name Richard?

 

Yes it is realistic for somethings. Theoretically you could with anything if you can get enough of them. Generally though you’d have to be okay with destroying old scare coins and the problem is if people figure out you’re trying to buy them all the price will keep going up

 

Didn't something like this happen with flying eagle cents back in the day.

 

I am currently trying to corner the market too. I buy all 2010 Lincoln cents I can get.
Gee, I must have hundreds of Lincolns already ;-)

 

So... um... he's buying up the supply of a coin at $10 each, then $20 and $30 and so forth as they get more scarce, in hopes he'll corner the market and be able to sell them for $100 or $1000 each.

Except that he's melted them, so he can't sell them for the higher price.

I don't believe he's thought his cunning plan through.

 

I personally think its just rude, like why in it for the money eh, why not collect it because you enjoy it instead of to melt down countless historical artifacts for a bit of money that will only help you for your life. Instead keep as many as you can so future generations can enjoy them.

 

Unless you are talking about exceedingly rare pieces, in the real world only the government could implement something of that magnitude.... And unintentionally they have done exactly that in decades past.

 

I know that some years ago I read an article or post about someone trying to buy up all the 1933-S Walkers he could get his hands on, trying to get as close as he could to "owning all of them". I can't find any online trace of the article, though. Ring any bells with anyone else?

 

Pretty stupid, really. Trying to corner the market and OWN most of them is one thing. Cause then you have done the same thing essentially (make the available coins more rare and valuable), BUT you have a ton of those, and can slowly, one by one, sell and profit. Dumb to melt or destroy them.

 

The coin world 'knows' how many are out there. Unless edited videotapes the destruction of the specific population of coins, and puts the video out there for the world to see, how would anyone know the supply chain was changed?

Better idea, as already stated here, accumulate the population of that coin and bury it in a safe for future generations to enjoy while you reap the benefits of the artificially inflated price.

 

My plan is to acquire all the 1894-S proof dimes and then really gouge the buying public. No need to melt any of them! Only 24 to go!

 

These guys approve

 

That's what I'm doing with 1938-D Walkers! I figure I'll need at least 200,000 of 'em.

So far, I have three.

 

another problem ..
why melt them? If you have half the population of a coin, then there's only at most a 50% supply in the marketplace. Of course, ignoring the strong hands concept and assuming a 100% liquid marketplace, which it's not.

But if you melt part of your supply that you've pulled out of the marketplace you have now limited your ability to "cash out". You'll be able to sell the first 10% (or whatever amount) non-melted coins at a higher value initially if demand is still high with demand that has no price limits.

But there lies the problem. As you want more for something that has a lower supply, what is the efficient pricing scenario? As the prices moves up, you'll lose buyers. Then the efficient model of valuation vs buying cost comes into play vs alternative options.

You could, price your coin out of the market where demand would flat line until your price dropped to a more efficient level as there would be alternatives to your coin, which is another indirect price pressure.

Well, see how it works though. I've been pulling 1982 D copper cents out of circulation for years now. I have bunches of them even though only 1 has been *officially* found. I have the rest of them.

 

It might be possible to do this with something believed to be common like 1971 chBU cents. These sell for very little so buying them up and spending them might cause a shortage since hundreds are in demand every year.

Frankly I think it's not going to work for any collectible though. It's just a good way to lose money with great effort.

 

I do recall reading about how someone did try to corner the market on a specific coin at some point. Anyone??

 

Remember, this hobby is often called the hobby of kings for a reason. Not everyone can afford to simply collect because you enjoy. Those of us who can are very fortunate. Even so, I 100% agree that intentionally melting collectible coins is rude. I wonder how many people think I’m rude for exchanging DEM for euros here in Germany...?

 

It’s happened before for sure on more than one occassion, I don’t recall ever hearing about someone destroying examples while doing it though.