Frustrating Nuclear Bids in Auctions

I was looking this item which appeared in Davisson's action, which closed yesterday. It is a AR hardi d'argent of Edward the Black Prince who was the son of British King Edward III. This is a really exceptional example, but the estimate was only $500. I bid $600 but was outbid a few days before the sale.

After Googling the Internet for quite a time, I saw that the previous prices for pieces, not quite as nice were in the $500 range. I bid my maximum which was $1,500 and was out bid by the bid on the book. I took it to $2,000 partly as an experiment, but the book went to $2,200. I quit after that.



I have really come to hate and dread auctions. At best you always over pay if you win the item. At worst you come away disappointed. Auctions are just no fun.

I've seen the same item sit in a dealer's inventory for months at a retail price. Then it goes up on eBay and sells for hundreds (20%) more. What is it with auction bidders? Do they think that something is great just because others are bidding? Why pay more when you can buy it privately for less? I don't understand it.

I am getting ready for another auction where the bids will go nuclear. I have 12 items that interest me, and really want one. I doubt that I will get it, even if I post an all-time high bid for it. None of this material is made of gold or silver. It's all tokens and medals that are made of copper and base metal. It's like money is worth nothing these days, and everyone has an infinite supply of it.

If I fail in that auction, I'll go back an over pay for an item I have seen in a bid-buy auction. At least there, you know you'll get the item if you really want it.

 

Log in or Sign up to hide this ad.

Although there are good deals at fixed prices there are also comically high prices as well. Many dealers will not budge on price even if something has been in their inventory for years. They would rather tie up their capital than fail to break even on a deal. How can a collector know if a fixed price represents great value?

There is a herd mentality at auctions. If there are any bids at least one other person sees potential. This makes it easier to imagine acquiring the coin, enticing more bidders. Maybe a few perform due-diligence and find something like an old auction sale that reassures them to bid more.

I use the “wish list” feature on fixed price sites. If my auction bids fail consistently I can cushion the blow with some really nice alternates.

 

That's a gorgeous coin, but not at that price.

But should you be surprised? We're seeing posts for slabbed/boring LRBs going for over $1000 and they're worth $60 on a good day.

And some may wonder why I rarely post new purchases anymore, I just haven't been buying like I did over the years because of prices.

 

This piece is raw with no certification. The next auction is the same way with no certified pieces. Some items would get "no grades" or "details" if they were submitted for grading. It will be interesting to see how much these guys overpay.

 

There are some dealers who always have high prices, and you know that they are a waste of time. As a retired dealer I respect respect that fact that a merchant has to make a living, but you don't need to make your whole day on one sale with a killing.
Some dealers have that philosophy. If they were paying prices that reflected their retail numbers, I could run around the bourse floor and sell to them, but you can't.

When I was a dealer (U.S. coins and tokens), nothing sat for more than 6 to 8 months. After that, I blew it off. I lost on maybe two or three coins a year. One dealer told me that if you didn't lose on something now and then, you probably too conservative in your buying. I found that to be good advice.

 

This is generally my experience with auctions as well in the last 18 months. Many hammer prices are multiples of all time highest prices and they aren't even historically the best examples. It's insane and insanely frustrating. Every once in a while I find a "reasonable" buy but its rare. I also spend a LOT of time looking at everything I can thats coming to market and look in more obscure places. I even take a risk with crap photos from time to time. Here are 4 recent wins for at or below what I would consider retail, two of them well below retail. The Celtic imitation tet was from Davissons- I got blown away on 1 other lot there.

 

That is a very attractive OP coin, but the hammer price seems high. I'm really not a collector for that period, but it appears that you were in a situation where someone else wanted that coin to the point of putting an extremely high book bid.

All sorts things are at work with auctions, whether electronic or floor. The overriding factor for all auctions and even private sales is the huge amount of cash in the hands of collectors and investors who have the means to acquire a desired coin regardless of the cost. This is especially true for attractive coins, such as the OP coin, or coins of great or even moderate rarity.

So here are some of the things at work at auctions. based on my experience:

1. The availability of a coin type - Coins, once considered rare or scarce, are almost suddenly numerous, due to a hoard or hoards hitting the market. At auction this usually depresses hammer prices, but certain types are not as adversely affected when hoards appear, such as Syracusan coins and even Athenian owls seem to have fairly solid hammer price "floors" given their appeal and desirability.

2. The investor factor - With the influx of investors from Asia and elsewhere, solid, even exorbitant bids can occur. The focus here is investment: holding the coin for a certain period with the expectation of a nice gain down the road.

3. The Ego factor - What's a coin worth in an auction? If at least two bidders are vying for a coin, even one that is available elsewhere, the bidding process can become one of gaining the high bid and hammer price regardless of the coin's market value. In other words the bidding process morphs into a game of gratuitous competition.

4. The shill factor - I am sure this is not a practice condoned by the more reputable auction houses, but it might be a factor elsewhere, such as eBay.

5. The currency factor - If a country's currency has a strong exchange rate versus other currencies, this factor could put bidders from the country in a stronger position to place higher bids than they would otherwise. This is especially true for overseas auctions.

These are a few factors. There might be more.

 

When I was a dealer, I had other dealer ask me to bid on the coins he had up on eBay. "You won't have to pay for them," he told me. I declined to play the game.

 

Nice coins! I really like your Alexander III imitation tetradrachm - nice style and strike.

 

In my limited experience with ancient coins, it certainly seems that buyers have a herd mentality.

For example, take a look at what's going on with high quality bronzes from Pantikapaion (especially at the last Leu). They're going for ridiculous amounts even though recent hoards have flooded the market. Could it be the anticipation that they'll become scarcer due to the war? I don't know.

The thing is, certain coins or coin conditions suddenly come into vogue. It's like fashion. Everyone and their cat has to have one. However, there are always other coins that are ignored.

Take for example these two bronzes. Both are from Nikomedes I. Both are similarly rare. The first commonly goes from 400 to well over a 1000 at auction (a copy at the latest Leu went for 800). The second typically goes for under 100. Why? I'm not really sure, but I can say that the first coin was originally all we had from Nikomedes I, so it had a history of high prices. The second was unearthed more recently, and initially sold at Savoca, which generally receives lower prices.

Going forward, I suspect buyers researched the coins to see that the first type went high while the second one didn't. Personally, if I wanted an example from Nikomedes I, I'd grab the second coin since it's cheaper and a bit more interesting. However, I suspect some buyers just feel that a more expensive coin must be better.

(FWIW, when I bought these I knew about both copies but for the longest time could only find the first one. Due to its condition, it sat at the dealer's for a long time so I picked it up on sale. I later grabbed the second at auction.)

 

6. The appropriation factor - When starting prices are low (as they generally are at big auctions), the items will soon attract some prebids. From that point on the bidders will likely consider the item as theirs, even though it's only potentially theirs at this stage. Should someone else win the coin, their brain will consider they've lost their coin, hence more bidding. I view it as slightly different than the ego factor (#3)

Q

 

I participate in auctions that do not offer exceptional coins. Because I cannot afford exceptional coins.
I have seen in the last year or so coins that obtained simply absurd prices. Even for cheap coins, I refuse to pay 100 EUR for a coin that is common and can be found for 40. Some people do not share the same opinion, apparently.

My strategy is very simple. Before an auction I prepare a wish list. Usually 10-20 coins and I get 5-8. I inform myself about prices, I try to find the prices obtained in the last 1-2 years, I decide what would be a correct price and I rarely overpay.
Depending on my interest for the coin, if it's very important for me I might pay 10-20% over my estimation. If not, I try to get it lower than standard market price. And I usually make it.

If I see the price going over the roof/bidding war, I just forget about the coin. Even if I like it, everything has a limit.
What amuses me is when I see in the same auction 2 very similar coins, same type, almost the same condition. For one there is a bidding war and the price reaches 150 EUR (for a ~50 EUR coin). The second, after a few lots, remains under 50. I can't explain, probably the underbidder got depressed and left the auction.
In auctions there is the competition factor, some people get carried away and don't know when to stop. If there are at least 2 people fighting for a coin, this is a very plausible explanation. I tried to avoid this behavior.

 

Good point!

 

I also participated in yesterday's Davisson's sale. To my surprise, I was able to purchase this for an almost bargain price. It isn't perfect but I like coins with character.

So much of what I collect has been selling for well over "book" price.

 

100%, and this is something I've had to make sure I'm consciously aware of when I'm bidding. Helps to avoid placing unwise, last-minute bids just because someone topped you.

The best thing to do is do your research, see what prices a similar coin has brought in the past at auction and at dealers, decide beforehand what your top bid will be, and stick with it. Place it days in advance or 10 seconds before the hammer - doesn't matter, as long as you don't let yourself get caught in a bidding war with someone else who is richer and more pig-headed than you.

Admittedly, this is easier said than done...and I've been guilty of last minute over-bidding. But it's a good rule to keep in mind.

 

It's to the point now where I dread seeing a desired piece show up in a CNG auction. I know I'll be paying premium for it.

 

A new Vcoins dealer is listing slabbed coins marked up at astronomical prices. One piece hammered at 2K and is now listed at 67K!

 

You mean the dealer currently offering this 5/1 beauty for the low, low price of $2,400?

https://www.vcoins.com/en/stores/mi...ch_au_strike_5_surface_1/1620093/Default.aspx

54-68 AD Nero Silver Denarius NGC CH AU Strike 5 Surface 1


According to their "About Us" spiel, "We are perhaps the largest dealer of U.S. Rare Coins." Am I surprised? Not surprised.

 

That would be him!

 

Lol, they're located in Palos Verdes, Ca. We here call it P.V., it's a rich area. Amusing to me. Its only a few miles from me.

Fun fact, Eddie Albert of "Green Acres" & Buddy Epson of "The Beverly Hillbillies", both coin collectors, lived in P.V.