How Does CAC Make Their Money?

Discussion in 'Coin Chat' started by SilverMike, Jun 11, 2016.

  1. SuperDave

    SuperDave Free the Cartwheels!

    Ultimately, though, they make no money as a group unless they sell to individual collectors. They wholesale to each other - that's why there's a Greysheet - and the only notable profit margin for any of them lies in retail sales.

    Do you really think a guy who was in on the founding of both major TPG's would start a third similar business if he didn't have to? The whole point of TPG's was so he could trade sight-unseen to have coins to sell the people who really made him money. If that weren't the case, Albanese would still be working far less hard running NGC or PCGS than he does now. Of course there was profit margin calculated into the CAC business model - doing it at a loss would be stupid.

    CAC has almost 57,000 Morgans and almost 20,000 Saints in its' archives. 6,000 Bust Halves and 11,000 Wheats. I daresay everything else they've done might add up to as much as those put together. Call it 200,000 coins at $10/pop.

    How do all of them get rich on that? Heck, there are players involved who spend that much on one coin.
     
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  3. Goldee

    Goldee Supporter! Supporter

    I'm sorry this was posted in the wrong thread.
     
  4. brg5658

    brg5658 Well-Known Member

    Your math is a bit shaky Dave. The primary users of CAC are dealers, and dealers pay by coins submitted, not by coins stickered.

    Regardless, as I already stated, the stickering is a loss-leader, not a profit maker. CAC makes money on many fronts. CAC makes a ton of money on offering low dollar generic bids on coins with exceptional eye appeal, and then selling preferentially to certain dealers who mark them up 2 fold. That's just the tip of the iceberg of shady money making opportunities for a company who is by their own definition buying coins with good upgrade potential. In my opinion there are all kinds of conflict of interest issues with a company offering an opinion on a coin that they are then directly in the market to buy. In the antiques world that kind of business is frowned upon but it is also (strictly speaking) unregulated like the coin market. Elsewhere these kinds of insider deals are regulated.

    Trust me. John Albanese may be a super coin genius, but he is no saint or hobby martyr to be. He's making money hand over fist and laughing the whole way to the bank that he could get collectors to believe first that they need slabs and guarantees, but then again by starting a company to then tell collectors they need yet another opinion of their coin -- oh and if you really want to sell, then CAC will offer you generic money for an exceptional coin. Fooled you once...fooled you twice...

    The USA truly rare (conditionally or otherwise) coin market is shady beyond belief. Constant churn, regrades, and a lot of other unmentionable activity. CAC has done little if anything to protect collectors, but has given dealers more ammunition to tell us all how special a coin supposedly is even when our own two eyes don't agree.
     
  5. SuperDave

    SuperDave Free the Cartwheels!

    You have a good point about the failed submissions, but how many failures does it take to add up to significant profit spread across all the principals/investors in CAC?

    I dunno, maybe you're right. To admit that, though, is to completely divorce John Albanese from any commitment to numismatics itself, and assign him only profit-oriented motives, and I'm not quite ready to do that. Additionally, why didn't he just sit back and exert a whole_bunch_less effort getting rich from the TPG's inflating grading standards, giving him higher grade coins to sell for more money?

    It darn near smacks of conspiracy theory to me, and like any conspiracy theory, it denies the plain human inability to keep that many people dedicated to the deception without wavering, in the long term.
     
  6. brg5658

    brg5658 Well-Known Member

    To be frank: I don't trust anything that Laura Sperber has her fingers in. And, she's one of the financial backers of CAC...of course she loves it, as most dealers do -- it gives dealers a reason/excuse to ask more for their coins. I also don't understand how CAC can be impartial to coins submitted by dealers like Sperber when she's also a financial partner. Insider market manipulation anyone? Call it a conspiracy theory if you'd like, but I see it as a "rigged game" -- one of a handful of reasons why my collecting emphasis has moved away from slabbed USA coins in the past few years.

    QUOTE FROM Laura Sperber: 2010 IN REVIEW (coinlink.com)

    "CAC
    Of course I am going to make a comment about CAC. CAC has survived and thrived from its start up period to become one of the most influential groups that helped stablize and create a huge positive for the coin market.

    2010 was CAC’s year. Its acceptence is massive and is now fully ingrained in the marketplace. CAC coins are now traded on the major CCE dealer exhange. The naysayers have been silenced across the board. Unless you are selling major “fresh old time collection”, CAC coins by far bring the MOST money. Why? Coins with CAC stickers are trusted. Think about where the coin market would be without CAC. You’d have great coins fetching LESS, consumer confidence would be at an all time low, and we’d be losing even more collectors (more than just normal market attrition). CAC has been a critical step in helping the marketplace be self policed (for lack of a better term). I’m sure the chatroom weenies will have a field day with me on this, but facts are facts.

    The ONLY people who still dislike CAC are the ones who CAC is costing money. Well isn’t that too bad?

    Legend Numismatics and its three partners, Laura Sperber, George Huang, and Bruce Morlean are ALL proud shareholders in CAC."
     
    Last edited: Jul 6, 2016
  7. TheMont

    TheMont Well-Known Member

    CAC, like any other company, is in business to make money, and they are doing very well. The purpose of a CAC Sticker, as I understand it, is to indicate a coin is at the high end of its grade and it has eye appeal.

    On the the other hand I just bought a 1830 Capped Bust 50c coin graded by PCGS as VF30, It has a CAC sticker. How a coin graded VF30 could be considered to have eye appeal is beyond me and IMHO it is not in the higher Grade level of VF30.

    Their advertisements in coin magazines are geared to the average collector, so they are targeting that market.
     
  8. mlov43

    mlov43 주화 수집가

    Tells you something, doesn't it?
    -Signed,
    mlov43, the "chatroom weenie" that Laura Sperber talked about.
     
    micbraun likes this.
  9. TheMont

    TheMont Well-Known Member

    From the CAC website:
    "
    WHAT THE CAC STICKER MEANS:
    • Verified. Your coin has been verified as meeting the standard for strict quality within its grade.
    • Guaranteed. CAC stands behind our verification by making markets in most actively traded coins."
     
  10. Dimedude2

    Dimedude2 Member

    having a CAC sticker is nice, but it certainly does not encourage me to buy it above what I think it is worth.

    Regarding the CAC business, they are making money on this and I think it compliments their other businesses. Albanese, Sperber and Co. are definitely not worried about their retirements nest egg.
     
  11. green18

    green18 Unknown member Sweet on Commemorative Coins

    Disclaimer: Didn't read the whole thread. Skipped right to the end.........

    They make their money by taking yours.
     
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