Not great for those of us looking through the catalogues hoping to add to our collections. But why is this? It was pointed out in a recent thread that low estimates are used to generate bids (by getting more people interested) and to get us attached to particular coins (so we’ll eventually bid more to get them). Moreover, since CNG set most of their minimum bids at 60% of the estimate, a lower estimate helps ensure fewer lots go unsold https://www.cointalk.com/threads/cleod-in-the-last-few-seconds.365143/#post-4753644. But if an estimate is simply 166.67% of the lowest price the seller would accept for their coin, is that really an estimate? It’s certainly not a great valuation, given the average result is more than double. You wouldn’t want CNG to value your collection for insurance purposes. Now for a few graphs… Interestingly, the ravages of Covid-19 don’t seem to have reached CNG auctions. Apart from one very rich auction in January, hammer prices have been on a slight upward trend. The same cannot be said for estimates – these are flat. This is illustrated when we look at hammer prices as a % of estimates. There is an upward trend, with hammer prices increasing more than estimates. But why is this happening? Just as there is an upward trend in hammer prices over estimates, there is an upward trend in the % of lots being sold. The correlation coefficient* (bear with me here) between hammer prices as a % of estimates and the % of lots sold is 0.73. Anything over 0.7 is usually considered strong. This means more lots are sold the lower the estimates turn out to be. At this point I should say ‘correlation doesn't prove causation’. We don’t know that lower estimates cause there to be fewer unsold lots, they just happen to occur at the same time.** Now, not only do lower estimates seem to mean fewer lots go unsold, but even lower estimates could mean even fewer lots go unsold. That may seem obvious, but it means there is an incentive for CNG to lower their estimates even further. If so, where will it end? With hammer prices rising, and so commission increasing, there’s no reason to stop now. But that does make the ‘estimates’ redundant for buyers and, dare I say, somewhat misleading. Estimates have become nothing more than a marketing tool offering discount prices that don’t have to be honoured. Obviously, this is not only a CNG phenomenon (they just happen to kindly publish their results). But why do they persist with valuations at all when they’re so out of alignment with the results? Katz start all their lots at EUR 5 and provide no estimates – yet bid prices soon shoot up long before the live auction begins. Given the incentives and the fact that CNG’s ‘estimates’ are not estimates at all, perhaps that’s where they’re heading too. See you at auction 476… Source: CNG, ‘Prices Realized’ https://cngcoins.com/PricesRealized.aspx?CONTAINER_TYPE_ID=2 *The correlation coefficient is a value between -1 and +1 that shows how strongly two things are related. A value of +1 is perfectly correlated i.e. an increase in one goes with an increase in the other. A value of -1 is perfectly correlated negatively, i.e. an increase in one goes with a decrease in the other. A value of 0 shows there is no relationship between them at all. **It’s also true to say that if you sell more lots your combined hammer price will go up. It may be that the increase in the % of lots sold is causing the gap between hammer prices and estimates to grow. But total estimates are getting lower while the % of lots sold increases, so that seems less likely (as well as being harder to explain).