Featured Do 21st Century Coin Collecting Methods Drive Prices Down and Hurt our Hobby?

Discussion in 'US Coins Forum' started by coin0709, May 4, 2018.

  1. coin0709

    coin0709 CT Supporter

    Hi Friends,
    I am wondering how many of us build our collections almost exclusively from 'business purchases' and/or 'business profits from cherry-picking'? I am exclusively a US circulating coin collector and a very small time dealer here in SC. I place ads in local circulars, have a google page, and a Yelp page for my registered business. My opinion is, if we continue to buy coins this way we are going to drive prices down on many coins because we likely buy low and are willing to sell lower than brick and mortar dealers that have large overhead.

    When I do splurge on coins for my collection, I never pay full blown retail at shows or at local coin shops and instead cherry-pick online (eBay, Facebook groups, etc). I only collect raw coins as you might expect. With a limited budget and a need to save for 3 college tuitions, in this way I've still been blessed enough to build a pretty respectable collection I think. I'd love to hear from others. What is the state of our hobby in terms of how we collect and its impact on future pricing? Is our hobby on a downward trend in terms of pricing and popularity w/ younger folks? Thanks.
     
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  3. V. Kurt Bellman

    V. Kurt Bellman Guardian of The Farce, & Dead-Eye Master

    That which we support will continue to exist.
    That which we eschew will die off.

    This is one major reason why I attempt to do nearly NO numismatic business online, and try to do everything either face to face or at a "many faces facing an auctioneer" venue.
     
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  4. -jeffB

    -jeffB Greshams LEO Supporter

    I'm a notorious cheapskate. The way it plays out for me is that I don't buy very much, because usually there's someone willing to pay more.

    If people are willing to pay more, prices will rise. If they aren't, prices will fall. I don't see how this is any different from the past.
     
  5. baseball21

    baseball21 Well-Known Member

    There is some truth to this. The internet certainly has been adjusting prices in a lot of area's particularly things like common date common grade things as sellers engage in a price race to the bottom to get theirs to sell over all the other ones.

    It's fine with younger folks, they just do most of their collecting online and are much more open to moderns and world coins.
     
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  6. Sullysullinburg

    Sullysullinburg Well-Known Member

    The supply, of most coins, is fairly fixed. Thus the prices is going to be most effected by demand. Regardless of why people are buying said coin, if more people are interested, the price will go up.
     
  7. coin0709

    coin0709 CT Supporter

    I like to call myself an opportunist collector. Very rarely will I buy something on impulse. I suspect there are an increasing number of online collectors that may change our hobby even more as online shopping becomes easier and easier.
     
    Last edited: May 4, 2018
  8. GDJMSP

    GDJMSP Numismatist Moderator

    Buying coins online has basically been possible since the late 90's. In that time frame, prices have skyrocketed upwards, and, skyrocketed downwards - to an almost equal extent. In point of fact the coin market as a whole is even a little lower today than it was in '99. But it's close.

    My point is this, given that, it seems quite unlikely that the capability of being able to buy coins online had much of anything to do with coin prices in general. But rather that there were other forces, other reasons, for both the rise and fall of coin prices.

    Now understand, I'm NOT saying that being able to buy coins online has not affected the hobby. Quite the contrary, I think being able to buy coins online has had a large effect on the hobby - just not on prices.
     
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  9. coin0709

    coin0709 CT Supporter

    I think making supply far far greater than ever before via internet, and largely keeping demand the same (same # of collectors) has driven prices down on most coins. Especially the common coins needed to fill holes in people’s albums. Also, our ability to easily track realized prices on eBay and other sites going back years may drive prices down too.
     
  10. calcol

    calcol Supporter! Supporter

    Pretty much agree with you, Doug. I think the internet has had and will continue to have an effect on coin prices, but basic supply and demand are far more important. The internet has made the coin market more efficient in two ways: 1. buyers can more easily view the offerings of more sellers, 2. some overhead costs of sellers have been reduced. So, the internet probably has made coin prices lower than what they would have been without it, but not a whole lot less.

    Cal
     
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  11. Randy Abercrombie

    Randy Abercrombie Supporter! Supporter

    Hello fellow Carolinian... I am on old collector pretty much set in his old collecting ways.... Meaning I am far more likely to drive over to my dealers place when a coin “need” strikes me..... I have been watching the combined effect of web sales and The whole religion that exists around TPG graded coins. I long felt that the two combined to drive coin prices to unrealistic levels. I rather believe our market is somewhat correcting itself after the unsustainable (in my view) coin price levels we have been seeing. Just an old guys two cents (1 1/2 adjusted for inflation)...
     
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  12. Gilbert

    Gilbert Part time collector Supporter

    I think prices of many coins have a long way to fall. When large numbers of a particular coin languish with few sales, that tells me that severe price corrections are on the horizon. On the other hand, the price of some not-so-abundant, relatively inexpensive coins will increase.
     
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  13. baseball21

    baseball21 Well-Known Member

    Yes but not to the extent today. Even 10 years ago it was no where near as accessible or easy as it is today when you can now order online from an app on a watch if you wanted. It's definitely substantially expanded since the 90s/2000s.

    There's honestly no way they couldn't have impacted the prices when certain things just constantly have a glut of them available at any time. On the flip side it has almost certainly driven auction prices up on some of the best stuff given that anyone can bid from anywhere now if they want to.

    This, plus the fact that fewer collectors are doing full set album style collecting and a lot more are either doing type collecting or buying what they like type thing.
     
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  14. swish513

    swish513 Penny & Cent Collector

    I agree. I think type collecting has become more popular and is affecting prices. Why should I get an 1877 IHC in VG8 when I can get a 1901 in MS65 for about the same price? It's a type set, so any nice example will do. It gives a larger pool of coins from which to choose, therefore creating lower demand and lowering prices.
     
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  15. baseball21

    baseball21 Well-Known Member

    Without question that's been happening. Many of the 1900s "keys" were exposed at how available they are as well. You are spot on though type collectors a lot of the time want the best they can get, unless a branch mint is involved or toning many pass up things for the highest grade possible hence the pressure on quality
     
  16. coin0709

    coin0709 CT Supporter

    I could not agree more. If I never see another batch of 1876-1878 seated quarters or common seated dimes in Fair/AG/G not selling for $15-$25 each, I will be a happy man. These and other common 19th century coins are the most in need of a value correction in my opinion.

    Another issue that puzzles me, is the Grey Sheet. I freely admit, I've never bothered to learn how to use it, but is it really that accurate as compared to realized eBay prices? Does it just give you a reference much like the Red Book for rarer dates, or do dealers and buyers actually use the values? The reason I am skeptical of it, is I will never buy a coin at a show or LCS (where pricing is based on some Sheet) for x% more than I could buy the identically slabbed coin online using Buy It Now. Appreciate any thoughts.
     
  17. GDJMSP

    GDJMSP Numismatist Moderator

    What you're asking about is pretty complicated. There is a lot one has to know, has to understand. To understand price guides of any kind, one first has to know what the given price guide uses as their source for the prices they list. All price guides tell you what their sources are - all you have to do is take the time to look. And then, you have to know how many different sources there are for coin prices. And then you also have to know if that source is a reliable source or not. And if so, just how reliable ?

    Of course if one does not have a good understanding and a good knowledge of the coin market, and how it all works - making any kind of objective and accurate judgement about all of this is just about impossible. And since very few people have that knowledge and understanding, it's all too, too, easy to make bad judgements.

    Going back at least 6 or 7 decades coin dealers have largely relied on the electronic dealer markets to establish coin prices. This was clear back in the day when they used ticker tapes to do this. In today's world they use computers, and there are several different electronic dealer markets. What those dealer markets show dealers is the current, real time, Bids and Asks for any given coin in any given grade being offered by all dealers across the country. It is those Bids and Asks that establish the real world prices for coins - all day, every day. And they change all the time. It works just like the stock markets do. The prices of coins don't change for the same reasons the stock markets do, but the method of tracking the prices, the principle of keeping track of them is the same.

    Now a lot of folks don't even know this, aren't aware that electronic dealer markets even exist. And most of them don't have access to these markets.

    For over 50 years the Grey Sheet reported what the prices on the electronic dealer markets were on a weekly basis. As such the Grey Sheet was the single most reliable published source there was in existence for coin prices - that collectors had access to.

    But then a couple of years ago, the Grey Sheet changed everything, they no longer use the electronic dealer markets as their sole source of information for coin prices. Today they include other sources, just like all other price guides do. And in fact some of the same sources that other price guides do. To my way of thinking, that puts the current reliability of the Grey Sheet in question. Other opinions may vary.

    You mentioned ebay, and that you thought realized ebay prices were accurate. Well, think about ebay for a minute. Think about how many posts you see on this and other coin forums where people laugh and joke, and make fun of what some people pay for coins on ebay. Think about all the times that it is said that a person would have to be completely out of their minds to pay what they did for a given coin on ebay. Think about all the bidding wars there are on ebay. Think about how many times people buy counterfeits, or how many times people by problem coins, or how many times people buy stupidly graded coins in bottom tier slabs that nobody in who even remotely knows coins would even look at - let alone buy a coin in one of those slabs. Think of the very word bidiots, a word that was coined specifically to describe people who grossly overpay for coins, and just how many of those people there are and how often they overpay for coins - that such a word as bidiots deserved to be coined in the first place. And then think about this - ALL OF THIS occurs on ebay, every single hour of every single day !

    Now I ask you, given all of that, just how accurate do you think the realized prices on ebay could possibly be ?

    Are there some accurate realized prices on ebay ? Sure, I have no doubt at all that there are. But how do you tell one from the other, accurate from inaccurate, if you don't already know what an accurate price is ? And if you're looking at ebay to determine that - you rather obviously don't know what an accurate price is.

    All of this kind of stuff is the reason that all price guides are worthless - completely and totally worthless.

    The one and only chance that anyone has of determining a reasonable price range for a given coin is to use the realized auction prices from the big auction houses as their basis. Or, get access to and use the electronic dealer markets.

    Now a lot of folks will disagree with and dispute what I've had to say here. Why ? Because in most cases that's not what they do themselves. And people would rather disagree with almost anything than they would admit to themselves, let alone anyone else, that what they are doing and what they believe is wrong. Admitting that you are wrong - to yourself - is one of the hardest things there is to do.
     
  18. coin0709

    coin0709 CT Supporter

    I really appreciate the thoughtful reply GDJMSP. I am familiar with your posts here and I respect your opinion greatly. Thank you for the education. I do not dispute any that you write above, but do notice a void in what you covered. There are many collectors out there that do not have the means and/or the desire to purchase slabbed (i.e. $ trackable) US coins. For the raw coins (problem ones or not), it has become very clear to me that realized prices online (eBay, Facebook, etc) are almost always way less than the asking prices at shows and in LCS. Sure there are 'bidiots' out there that get wed to a coin for one reason or another, but I do not think this is inaccurate. I understand why this occurs, and I also understand now with your help why it does not really matter when it comes to Grey Sheet and those similar guides.
    Its just a little frustrating going to coin shows or LCSs and not buying anything for my collection routinely because I know I can get them for far less online, if I'm patient. I miss the camaraderie at the shows. Maybe I just need to pay for it. Thanks again. :)
     
  19. GDJMSP

    GDJMSP Numismatist Moderator

    For whatever it is worth, it has long been my experience that you can get just about any coin for less money at coin shows or from a dealer than you can get the same coin on ebay. Sometimes you can even buy them on Heritage or from one of the bigger auctions houses than you can on ebay.

    Are there some exceptions to this ? Yeah, I'm sure there are. But based on everything I have seen those exceptions are few and far between.

    Now what I'm saying about being able to get coins for less from dealers than you can on ebay - that doesn't mean just any dealer. There are plenty of dealers, in their shops and at shows that ask ridiculous prices. I readily agree with this. You have to look around, and sometimes many places, but it can definitely be done, and often. This is largely because dealer asking prices usually vary so much. For example, it is not at all uncommon for dealer A to be asking 50% more or even up to twice as much for a given coin as dealer B is asking for the same coin.

    So, given the experience you are relating, I would suggest that you start looking at other dealers and not just the same ones you regularly look at.

    There are also a couple of other things that play a part in this. When you're dealing with raw coins and the asking prices, a big part of what determines those prices are the grades assigned to the coins by the person selling them - whether that person is on ebay or a dealer's shop or a dealer at a show. What I'm saying is this - who knows how accurate that grade is ? What is VF to one may be F, or XF to another - including you. Also, the coins on ebay may be problem coins, and thus the cheaper prices, and you just don't realize it.

    But when all things are equal, it is quite rare that you cannot get a given coin for less from a dealer than you can from ebay.
     
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  20. baseball21

    baseball21 Well-Known Member

    Same thing goes for shows and shops where there are certainly some coins being sold raw that used to be in a details holder. A good percentage of the "better" online raw stuff does likely have problems as it isn't a secret that they generally get penalized for being raw though there are some smaller sellers ect that just refuse to have anything graded for whatever reason. That said I would avoid the vast majority of raw stuff online if it's of value aside from low value things, or ultra moderns.
     
  21. baseball21

    baseball21 Well-Known Member

    For most people that's not really true anymore. Sure if you can order from the dealer networks it probably holds up, but if you have to drive a few hours round trip to a show or travel to get to one by the time your trip expenses are paid for it would have been cheaper to stay home and order it online. That's even assuming the online price was higher to begin with
     
    Last edited: May 7, 2018
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