My analysis of the PCGS 3000 Index

The value of the 3000 Index, and the various other indexes that it is comprised of, is that it shows us the trend of the market, as well as specific portions of the market. That is the very reason it was created to begin with, and why the individual coins that make up the entire Index were chosen for inclusion in the Index !

To claim that the 3000 Index has no value to collectors or dealers would be akin to saying that the DOW, the S&P 500, or any of the market indexes have no value to traders on Wall St. !

The 3000 Index is immensely valuable to collectors and dealers ! But before it can have any value to you, you first have to know what it is, and then how to use it ! But if you don't, then yeah, you're right, it has no value at all.

Let's say you're a coin dealer, it's the end of 2016, and you're trying to figure out what's likely to happen over the course of the next year. and you look at this chart -



What's that tell you that is likely to happen to the coin market in the coming year ? Realizing and understanding that the chart shows you the trend of the coin market as a whole. Can you honestly say that is of no value to you ? I sure couldn't !

Now let's say that year is over and it is now the beginning of 2018, and you look at this chart -




What's that tell you ? Well it tells me that my guess at what was likely to happen in 2017 was correct, and things don't really look any better for 2018.

But now, it's the beginning of Oct. 2018, and as I always do I go check the charts to see the trend of the market shows me now. First i look at the 10 year -




Ahhhh, maybe, at last things are beginning to turn around for the first time in 10 years ! Maybe, just maybe, the coin market has finally reached the bottom of its correction. So then I look at the 3 year to get a closer look.






Yup, a noticeable increase. Significant ? Not really but at least it's a good sign. But I can plainly see from the 10 year chart that in 2014 the market tried to stabilize but then quickly fell off a cliff again and continued its downward trend. So let's not get to excited yet, but I know I need to keep an eye on things. After all, if I go back and look at the long term chart -




And I blow it up so I can get closer look, I can see that the last time the market was this low was clear back in 2003, shortly after the bull market got started. And because I pay attention and follow these charts from time to time to understand the trends, I know that markets always try to find a bottom when they are in a correction. So maybe, just maybe, after 15 years of riding a yo-yo, things might be starting to get back to normal again.


But wait a minute, what is and always has been the most popular segment of the coin market - silver dollars ! Yup, silver dollars. So let's take a look at those and let's see what's goin on.




Well whaddya know, that graph almost mirrors the trend of the entire market. Let's see what the 3 year looks like -




Yup, about the same. 'Course I already know if I look at the 1 year it's gonna show a more marked increase,





But that can be somewhat misleading at times because it doesn't do as good a job of showing me the trends, it just shows short term movements in the market.

But nahhhh, knowing stuff like that isn't of any value to anybody, least of all a coin dealer or a collector.

And yes, I am indeed trying to be sarcastic here - but only to make a point.

 

I'm going to add a quote here, a couple of them actually, both written by very wise men. The first, I'm reasonably certain that most will be familiar with it.

"Those who cannot learn from history are doomed to repeat it."

The second, far lesser known I imagine but yet perhaps even more profound.

"The purpose of history is to explain the present - to say why the world around us is the way it is. History tells us what is important in our world, and how it came to be. It tells us why the things we value are the things we should value. And it tells us what is to be ignored, or discarded. That is true power - profound power. The power to define a whole society. The future, lies in the past."

Edit - I decided to add one more quote, again, what I consider to be true words of wisdom.

"There are many gifts that are unique in man; but at the center of them all, the root from which all knowledge grows, lies the ability to draw
conclusions from what we see and what we do not see, to move our minds through space and time, and to recognize ourselves in the past on
the steps to the present."

 

I was about to reply with my thoughts on this PCGS index, and what value indexes in general have, but Doug basically made all the points that I would have made, more eloquently and with less typos. So just go re-read what Doug said.

 

And you can easily do that by looking at the Market Segment Indexes -




- found here - https://www.pcgs.com/prices/coin-index/pcgs3000

Just scroll down once you're on that page.

But just to give ya an example, even the one that had gone up almost forever, the Key Dates and Rarities Index, it too has been falling for the last 10 years.
https://www.pcgs.com/prices/coin-index/key-dates-and-rarities





As you can see, it did try and recover a couple of times, just couldn't pull it off. And if ya look at all the rest, they'll show ya they've been dropping for 10 years too.

 

Well, I'm gonna make a double post here because it's specific to this. As you'll see, and see clearly, the coins are definitely not tied to the PMs.

https://www.cointalk.com/threads/us-coin-market-stagnant.349811/page-5#post-3866428

I suppose everybody has their opinions of what might be better, or worse, when it comes to composing indexes for the purpose of tracking markets. But I do agree with one thing, there's always a balance that has to be found if you wish your index to reflect accuracy for tracking a given target, while at the same time eliminating other outside influences such as those you mention - bullion vs numismatics.

So, to see whether or not these PCGS indexes do their jobs, all ya gotta do is look at the charts involved over the same time period. So let's look at silver dollars vs silver.



https://www.pcgs.com/prices/coin-index/morgan-and-peace-dollar




https://www.kitco.com/charts/popup/ag3650nyb.html


And generic gold coins vs gold.



https://www.pcgs.com/prices/coin-index/generic-gold-coin




https://www.kitco.com/charts/popup/au3650nyb.html


Now I don't about you, or anybody else, but the obvious disparity between those charts clearly indicates to me that the coin indexes are doing a great job of tracking the value trend while at the same time eliminating outside influences such as bullion prices. And that tells me that the components of the indexes are exactly what they should be in order to do the job they were designed to do.

edit - well, same kind of date thing is happening with the PCGS charts again. Use the links to see charts ending in Oct '19.

 

I readily admit that if and when the value of coins is limited to their basic melt value, their prices are going to mimic the spot prices. And yes, the one usually lags slightly behind the other. But the charts clearly show that doesn't always happen. And if you do throw numismatic value into the mix, the tie to precious metals goes right out the window, it neither lags nor leads. In that regard we're saying the same thing.

My primary point with my posts is quite simple - the PCGS index charts do a good job of tracking the trend of the coin market, for both the generic coins (melt value coins), and numismatic value coins.

But if anybody thinks they can come up with a tool, an index, that does a better job or more accurate job - have at it, I'm all for it.

 

I know you think that would be useful but it's way, way too small of a sampling for a coin index. Now if you wanted to do it for a specific type, or even a series, then yeah that would work. But for anything beyond that, I don't think so.