Is "It" Supply or Demand That Drives Value?

Is "It" Supply or Demand That Drives Value?

And the answer is......

 

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It's simple, really.

 

SURVIVAL rates count. One of the main things that collapse survival rates is war. Another is deep recessions/depressions. Another, if we were talking dollar coins, is dumb legislation like the Pittman Act.

 

But... fixed supply collectibles don't HAVE normal shaped supply and demand curves, DO THEY? Fixed supply collectibles can have a demand curve that bends backwards on itself, thereby creating more than one intersection.

It's normally shown in economics as the "luxury goods demand curve", where demand goes up as price increases, the exact opposite of a normal demand curve.

 

Perception drives price...

 

I got to go back and reread it I am trying to apply my sixth grade education.. I thought the mintage was the all the supplies made...So there minted but not available so mintage doesn't equal what's all out there for sale???? yeah going back AND READING ........ Uguys are so diversed on this its amazing............DONT SCOLD ME KURT.....

 

Mintage IS the hard ceiling above which supply cannot go. (Except for counterfeiting) It can go well below mintage.

 

Yes, mintage figures should be reliable for gross production of coins made for circulation and their corresponding proofs. There are some coins, like most patterns and a few proofs corresponding to business strikes, for which mintages were never published, and no records have yet been found. Estimates of production are primarily from public sales and museum collections. There is a long timeline for many of these, but who knows, maybe a hoard of a thousand $4 stellas will be found tomorrow. Production numbers for varieties are lacking in most cases too. Again we have to rely on data from public sales and museum collections.

Cal

 

You inquired, Is "It" Supply or Demand That Drives Value? I am saying, it is neither one nor the other, but BOTH. Price (i.e., "value") is a function of BOTH supply and demand, as those curves intersect in the marketplace. Can they, the curves, be manipulated? Is Grant buried in Grant's Tomb?

Bottom line, to suggest that one or the other, supply or demand, is the sole determinant of price (i.e., "value"), and then to make a quiz out of which one that is, is patently ridiculous, Kurt, I'm sorry to say...

 

What do I think?

I think it's demand which drives down prices in the "Coin World".

What this means is that, if there are only 5 made, but nobody wants them, then the consumer controls the price.

Look at the Presidential Dollars and State Quarters.

At one time, very popular and very robust markets.

Now that the programs are over, their respective markets are dead. No Demand. Populations (supply) haven't changed as they are at the levels they were at when the market was robust.

A little obscure for coins, sure, since typically, supply and demand relates to regularly used and/or required items. (i.e. oil, electricity, gas)

 

Yes, and "gotta have it now" demand is what causes bubble pricing just after a sold-out release. But it ALWAYS fades at least somewhat, and frequently it downright CRASHES.

 

I'm still looking for "no edge lettering" Prezzies. I bought all of them (Prezzies) when current, so no, I don't need more of the typical ones.

 

Let's not forget the "marketplace" that houses that particular Supply and Demand.

The same coin, stereotypically, sold by someone with advanced knowledge can garner more $$ for it, than someone with minimal knowledge. Also if sold on a specific website versus other website, stores, etc.

Also on the flip side. The knowledge of the buyer. A lower educated buyer may pay more than the Supply/Demand intersection than a more knowledgeable buyer who will walk.

So there is going to be a deviation of the intersection based upon the (a) type of marketplace and (b) knowledge of the seller/buyer and (c) how quickly one wants to cash out or obtain a piece; (d) any economic pressures which could be correlated or not to (c). and probably many more factors.

 

It also depends on the length of time that we'd be looking at, to which demand and/or supply applies to a given coin.

The interaction between demand and supply is what matters... if you have low survivorship and no demand at all, then only time will tell. And that's when speculation, to whatever degree, enters in.

 

Are we just calling supply what is generally available at any given time or total number we know to exist? I ask because with some series there is a decent supply if we talk total number, but generally the collectors are strong hands where the pieces won't see the market again for quite a while eventually emlinitaed large amounts of the supply practically speaking

 

I think I like this answer, but I am unfamiliar with the term "strong hands". I am getting a context idea here, but I'm not certain. To answer your question, I am talking about currently obtainable supply.

But please, if you don't mind, give me an example of "strong hands" and a counter example.

 

Another thought: sometimes a TINY difference in total maximum supply can create a MASSIVE difference in prices, aka the "key coin effect". Example? The price history of some proof sets or modern commemoratives.

 

Strong hands would be a collector who is financially well off where you could reasonably expect that they would never need to have to sell. If they wanted to hold them for their life span they almost certainly would be able to

I would also as a very big fan of the piece. One of those you would have to blow them away with an offer for them to even consider selling

 

Ah, I get it. Allow me to use that language to describe my local coin market. My area is loaded to the gills with extremely strong hands collectors right up until their hands go maximum weakness - aka, they drop dead. There seems to be a never-ending local supply of them. Result: so-called "fresh to the market" material that has been off the market for decades, available on a nearly weekly basis, usually at auction. A few of them "glossy thick catalog" worthy. That's a few per year.

 

Hey, I'm that guy, exactly!

A while back I started a thread about 1909-S vs. 1909-S VDB rarity: Why is 1909S VDB more expensive than 1909S?

The overall rarity is well known, but less well known is that 1909-S in MS grades has only one-fourth the population of 1909-S VDB. Yet, the 1909-S VDB demands four times the price.

To my thinking this is a 16-1 disparity, if supply were the only indicator of price. In this instance the mystique about this coin drives demand, and demand drives the price imbalance.