Bizarre auction prices ...

Discussion in 'Ancient Coins' started by Heliodromus, Mar 25, 2022.

  1. Tejas

    Tejas Well-Known Member

    Yes, I noticed that this group included many exceptional coins, in terms of condition and especially style. Some of these coins went much above the estimates, but I could see exactly why.

    This coin below went for EUR 850 (estimate 200). The portrait is just breathtaking. My bid was EUR 720, but I knew that I would be outbid.

    Screenshot 2022-04-30 at 12.00.28.png
     
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  3. Severus Alexander

    Severus Alexander find me at NumisForums

    Interesting discussion, @Tejas! Those are three beauties that you won. I think especially the Maximus was a great price too!

    I expect we'll probably have to agree to disagree on coin values, though. I'm skeptical of both of the following points you make:

    While it's true each ancient coin is unique, there are plenty of true generalizations regarding quality. Other things being equal ("ceteris paribus"), a higher grade coin is better than a lower grade coin, a well-centred coin is better than a poorly centred-coin, a consistent patina is better than a mottled one, a genuine patina is better than an artificial one, and on and on. Of course, individual collectors will value these things differently in comparison with one another, but these true generalizations are enough to ground reasonably objective fair values. Averaging over collectors, there will be a fairly consistent ordering of coins from less to more valuable. Which means that while particular auction results aren't good indicators of value, aggregate results over time are. (Thus the success of Coin Archives and acsearch.)

    For example, I think we'd probably all agree that your new Maximus is nicer than mine! :D Because it is objectively nicer and worth more than mine. And there will be plenty of cases much more obvious than this.
    23406 copy.jpg
    (FYI this coin cost me USD 264 including fees back in 2015, which I thought was fair at the time.)

    Well, I certainly don't, and I don't know anyone (other than you?) who does! (Except for some narrow specialists who needn't look at very many coins in any particular auction.) In any case, note that you inserted the word "major"... if we include all auctions, there's no way this is true. So some variation in price – I think a large amount! – is inevitably due to the chancy matter of who's attending, what they're interested in, and how much money they have. We've all had the experience of lucking into a cheap coin through the lack of any interested underbidder, as well as the opposite when there's a bidder who is clearly intent on getting the coin no matter what. (This can even happen for the same coin a couple weeks apart!)
     
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  4. El Cazador

    El Cazador Well-Known Member

    @Tejas
    “I think with the modern auction aggregators, essentially the entire global community of coin collectors looks through each and every one of the major auctions.”

    Absolutely agree with this statement - this what helps you to know at least somewhat true value of the coin… certainly, there are nuances, but for the most part this is 95% accurate about how I go about establishing a fair market value, same concepts apply to real estate - use Zillow, Redfin, Trulia to establish a relative value of property sold at any given zipcode, timeframe, neighborhood, with similar square footage and renovations… virtually same concept applies to ancients and then you apply either premium or discount to account for upgrades or downgrades… I absolutely leverage aggregators to establish my final bid…
     
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  5. Severus Alexander

    Severus Alexander find me at NumisForums

    @Tejas's claim about aggregators (here he means like Numisbids, Sixbid, and biddr) was that basically the entire global community of collectors participates (at least looks through before auction time) every single major auction. This was to deny my claim that the audience for any particular auction was highly variable, leading to individual prices that vary widely above and below fair value.

    I agree with you that auction record aggregators (like acsearch) allow us to establish something close to fair value, based on generalizations like the ones you describe for real estate. I assume Tejas would deny this, as he doesn't think there's such thing as fair value for ancient coins.
     
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  6. Tejas

    Tejas Well-Known Member


    I don't think that our positions are that far apart. We all formulate price estimates in our heads before bidding on a coin. For the Maximus above, I thought it would fetch around 350 to 400 and was hence surprised to get it for 280. However, there is objective value. A coin that is rubbish to one collector can be highly valuable to another.

    You could of course go to acsearch and look for all EF rated Maximus denarii of the Pietas type and calculate an average price. This average price may be called "fair value". However, you will likely find a large variance around that average price.

    While I would explain this variance by such things as toning, style, eye appeal, you would probably argue that the price variance is due to the random composition of the group of bidders that considered the offer. I think neither is wrong, it is just that I think that the first is (increasingly) more important than the latter.
     
    Last edited: May 1, 2022
  7. savitale

    savitale Well-Known Member

    I agree that ancient coins have a fair value, at least according to the definition of the term provided by Investopedia.

    "The fair value of an asset is usually determined by the market and agreed upon by a willing buyer and seller, and it can fluctuate often."

    I think with rare exception there are no bizarre auction prices. Now rare might mean 1 in 1000 so there could be an exception in every auction. But, assuming no shenanigans, in an auction there have two be at least two people who are willing pay that amount. The probability of collision of two highly ignorant and wealthy individuals is rare.

    The value is set by that coin, the buyers present, at that moment in time. To show that a price is bizarre I believe one would need to show that one could have purchased an equivalent or better coin at a much lower price from some venue that a reasonable person should have known about, such as the online stock of a major dealer. Note that "equivalent or better" doesn't include coins that are "almost as nice", and "at that moment in time" implies the comparison must be available for purchase at the time of the auction.
     
  8. Tejas

    Tejas Well-Known Member


    NAC is offering a similar coin for more than 10 times your price:
    https://www.numisbids.com/n.php?p=lot&sid=5688&lot=76

    NAC's coin is in better condition, but in my subjective valuation, I prefer your coin for USD 264 to NAC's coin for USD 3000. Others may have a different subjective preference, however, which does not mean that they are wrong.
     
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  9. Heliodromus

    Heliodromus Well-Known Member

    I think you're in danger of a self-affirming tautology there ... if we define market price as the changing price point every time a buyer and seller meet, then of course there's a market price, and by definition coins always sell for market price, never bizarre prices! These become meaningless statements.

    Rather, I'd say the very notion of market price really requires it to be predictable ahead of time (as in "current market price is X"), even if only as a range. In cases where prices are so unpredictable that you can't even define a meaningful range ahead of time, then it seems meaningless to talk about "fair/market price".

    If something sells for well outside of an expected market price range, then at some point it seems reasonable to note that as "bizarre" if the discrepancy is large enough. If something sells for 5-10x expected market price, is that bizarre? To me, yes, YMMV.

    Your belief that a price should only be considered as "bizarre" if a near-identical item was available at time of sale for a much lower price seems unrealistic in the ancient coin market. For sure some ancient coins (e.g. Gordon III ants, perhaps) are almost commodity goods and we might expect to continually see near-identical specimens for sale, but most ancients are not like that.

    Finally, I don't think investopedia is the best source of market definitions relevant to the ancient coin market! Financial markets are characterized by identical commodity goods in constant supply, and constant demand, typically with market makers guaranteed to buy at a market price (point, not range!) they define. None of these really apply to ancient coins. More similar markets might be classic cars, fine art, etc.
     
  10. savitale

    savitale Well-Known Member

    I didn't write near-identical, I wrote "equivalent or better". Although each ancient coin is unique, I think much of the time you can find an equivalent or better example. If you truly cannot find anything equivalent or better, then what is the basis for saying a price is bizarre? If the item is the best of its kind or is truly unique in a meaningful way, then the sky is the limit for pricing.

    The notion of available at time of sale is important. The bidders are acting at that moment in time. Calling a price irrational or bizarre suggests the buyer did something that puts their judgement into question. I think the only way to really support that is to show that there was a readily available alternative specimen for less money. If there was not, then I don't see a strong case for labeling the price bizarre.

    Also, there is a lot of subjectivity in ancient coins. Some feature of a coin may be worth a $5,000 premium to me, but not to someone else, and vice-versa. It is like art. Many people have looked at a painting that sold for millions and have said, "My five-year-old could have made that." A difference of taste doesn't make a price bizarre though.
     
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  11. Heliodromus

    Heliodromus Well-Known Member

    Well, in defining a market price, relative to which a sales price might be judged bizarre, you have to take into account the nature of the ancient coin market. While there are exceptions, I think that fairly often a comparable coin may only come up for sale every few months at best (or even less often) - at least this is the case for many of the coins that I collect. So, to me, if a similar coin had sold for very much less within that sort of time frame, then that's notable. If the type in question actually comes up in similar grade more frequently, then that's even more notable, as for example has been the case for some of these recent slabbed owls.

    Yes, indeed! If with a few months patience you could buy a coin for $200, and you pay $1000 at auction, then it rather does either put the buyer's judgement into question, or indicate they they are simply not sensitive to price at all. I remember a dealer's anecdote about a high roller who'd attend in-person auctions and would "bid" by just holding his paddle up until the item hammered.

    Of course it takes two or more to bid an item up, which makes the this all the more strange when it happens... Perhaps a new class of (2 or more) non-traditional bidders who are either not price sensitive/aware, and/or highly competitive among themselves?
     
  12. Valentinian

    Valentinian Well-Known Member

    Auction prices can certainly be bizarre. The Week had a note about NFT that made headlines. The first tweet of the founder of Twitter sold in March 2021 as an NFT for $2.9 million. It was offered since then for $48 million. Finally it was put up for auction in April and the top bid was $13,940! (I don't think the high bid met the reserve.)

    https://www.cnbc.com/2022/04/14/2po...orseys-first-ever-tweet-plunges-in-value.html

    There is no there there and some collectors/investors are beginning to realize that about NFTs.
     
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  13. Severus Alexander

    Severus Alexander find me at NumisForums

    There are many ways of being wrong. One way to be wrong is to choose a coin that is further away from fair market value than another... in that sense, it would be wrong to buy the NAC coin rather than mine - we agree on that. By contrast, if someone wants the finest coin, no matter the price; or if they have a minimum grade requirement which my coin doesn't meet, then buying my coin would be wrong.

    I think you're right, that ultimately we pretty much agree that fair market value exists, but you think individual prices are more likely to reflect that fair market value because you think individual auction circumstances are less variable/important than I do. It would take a rigorous scientific study to prove which one of us is right on that nuance!

    Another way we differ, I think, is that I'm rarely willing to buy something unless it's a really good deal (a bargain), whereas you're often willing to buy something if it's not a bad deal (severely overpriced). In other words I'm cheap and you're not. Which may explain why your collection is so much nicer than mine. :D
     
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  14. Tejas

    Tejas Well-Known Member

    No, not really. For somebody dying of thirst it is absolutely not wrong to pay 1000 dollars for a bottle of water. If the bottle saves his live there is nothing bizzare about paying that much.

    People have different budgets and different preferences. If a buyer wants the coin (the exact coin at this exact moment in time) and if he values it more than owing 3000 dollars his purchase is not wrong, in fact, he may justly regard it as a great bargain (compared to his own budget and preferences - maybe he needed it now, not next year or at the next auction).

    I don't want to belabor the point, but I don't get your difference between a "really good deal" and "not a bad deal". Everybody want the best possible deal, but the measure is your own means and preferences, not somebody elses means and preferences and not some hypothetical historical average price.
     
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  15. Tejas

    Tejas Well-Known Member

    In a fair auction prices can be high or low, according to buyers' means and preferences, but they should not be "bizarre". When auction prices are truely bizarre like in the example above, we should consider the possibility of money laundering or other forms of fraud and price manipulations at work.
     
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