Rarity: Absolute or Conditional?

Discussion in 'Coin Chat' started by physics-fan3.14, Aug 21, 2016.

  1. physics-fan3.14

    physics-fan3.14 You got any more of them.... prooflikes? Supporter

    I just read an interesting and thought-provoking article by Doug Winter on CoinWeek about Rarity. Before proceeding any further, take a look at the article here: http://www.coinweek.com/us-coins/condition-rarity-vs-absolute-rarity-in-coin-collecting/

    So, the question for discussion: how do you approach rarity in your collection? Do you seek out conditional rarities, or do you look for absolute rarity (without regard to grade). Or, like Doug Winter, do you seek the rarest dates in the rarest grades?

    Seeking out absolute or conditional rarity can be somewhat harder depending on the confines of your collecting goals. If you are doing a date set, you'll get the rare coins as well as the common coins. If you, however, are buying "what you like, when you like it," with no traditionally defined set, that means you can chase rarity when you want.

    So, does rarity play a factor in your collecting approach at all?

    For me, as a collector of prooflike coinage, I can say that I am squarely in the realm of "conditional" rarities (the condition here being PL, not so much "numerical grade.") I don't necessarily seek out low mintage or rare dates - I chase the mirrors. I appreciate absolute rarity, but the goal of my set is not such.
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  3. Paul M.

    Paul M. Well-Known Member

    I collect primarily by type, and I look for coins I like to look at. :) I guess that's conditional rarity of a sort.
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  4. World Colonial

    World Colonial Active Member

    I don't collect any US coins so my experience differs from most here.

    I originally selected the series I collect due to a combination of liking the designs and having lived in these countries when I was younger.

    It was only after I started collecting them that I became aware of their relative scarcity and most of them are at least somewhat hard to find in the quality most US collectors will accept and many are either "grade rare" and certainly absolutely scarce.

    Due to availability, I don't even attempt to buy conditionally scarce coins. The quality I will accept depends upon a combination of factors: how much I like the series relative to the others I collect and when deciding between multiple coins available at the same time, my guesstimate of how hard both are to find if I do not buy both or all of them.

    I'm not really attempting to complete any sets, certainly not date sets due to a combination of budget limitations and availability. In the series I collect, there are many coins I have never seen or in such un appealing quality (combination of damaged and lack of detail) that it is either impractical or effectively impossible. I will eventually complete multiple type sets and all of these coins will be "choice".

    Its possible I may move in another direction (though I haven't done so since resuming collecting in 1998) due to budget constraints. But if I do, I will specifically avoid practically any coin or series which is common.

    I don't find it interesting or challenging to collect a coin or series which can be bought on demand or short notice. I also don't find the differences between various MS grades or specializations practiced by US collectors significant either.
  5. Catbert

    Catbert Evil Cat

    I don't see my collection as being a significant investment and when I buy something, it's because it appeals to me from a design/appearance perspective. So, if I were spending 30K on a coin, I guess I might care about Winter's argument.

    I define a coin's value in terms of the joy it brings me and, if I have to sell a piece, I consider it satisfactory if I don't lose a significant part of my purchase price (of course I'd wish to earn a little bit back).

    For example, Peace Dollars are an attractive design to me and so I want to own one in a condition that is appealing. I chose a very generic date, MS66, with golden toning. I figure my available $ will go farther towards my goal than having to pay to obtain some level of rarity. So, I guess that makes me a condition collector!
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  6. Jwt708

    Jwt708 Well-Known Member

    I collect exonumia and ancients so it's really more about the absolute rarity. Sure, ancients were produced in such a way that there can be coins of a better grade but that's not really important to me. With my token collection there's no way of knowing how many of a particular issue may have survived and then there are the ones that aren't in the catalog so again it's about the absolute rarity. Taken from the article, "A coin does not have to be expensive to be an absolute rarity." Rarities are common in ancients and I'm inclined to believe the same holds true exonumia. Cost is all about supply and demand.
  7. Paul M.

    Paul M. Well-Known Member

    Yep, here's a great example concerning civil war tokens. First up, a R9 token, which means 2-4 known to exist, certified NGC MS64: http://www.civilwartokens.com/Listi...NGC-MS64-Marshall-Michigan-R9-Civil-War-Token

    Next up, an R5, which means 75-199 known to exist, certified NGC MS63: http://www.civilwartokens.com/Listi...n-Massachusetts-MS63-Civil-War-token-MA115E1a

    The R9 is currently on sale in a fixed-price listing for $1350, while the R5 sold at auction for $1450. Both could objectively be considered "rare," in a sense, but the R5 consistently sells for more because of its popularity.
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  8. Jwt708

    Jwt708 Well-Known Member

    I never win any of his auctions.
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  9. physics-fan3.14

    physics-fan3.14 You got any more of them.... prooflikes? Supporter

    Very good points about rarity versus price. This is a common misconception, and one I see over and over again even here on CoinTalk. If there are only 4 of a thing, then I think we will all agree that it is rare - but if only 3 people want it, then there are plenty to go around.
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  10. Coinlover67

    Coinlover67 Well-Known Member

    It was a good article, I do not worry about rarity right now as i only have limited funds to spend on coins, but I think a good example of coins that are rare and cheap are the Liberty Seated coin if I remember correctly.

    Sent from my A463BG using Tapatalk
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  11. Jwt708

    Jwt708 Well-Known Member

    I think absolute rarity appeals most to specialists within a field. When I first started collecting I was more interested in condition. Time went on, tastes changed. Nothing wrong with any approach.

    I think a collector would do well to figure out what they're more interested in - conditional or absolute rarity - so they don't get caught up in any kind of rarity hype.
  12. GDJMSP

    GDJMSP Numismatist Moderator

    Everybody's gonna have different taste, as well as different priorities when it comes to what makes a coin important, or unimportant, to them. So as has been echoed several times already there is no right or wrong to it when it comes to conditional rarity and absolute rarity.

    Where I typically see people make mistakes is when they consider something as being rare when it isn't. And yeah that goes for conditional and absolute rarity both. Absolute rarity is kinda hard to argue with, except when it comes to the definition of what qualifies as rare. I've seen people call coins rare when there's over a thousand of them, others when there's over a hundred. In neither of those cases would I consider the coin rare, but I'll definitely agree people have different ideas on the subject and there is no given number as to what defines rare carved in stone someplace.

    With conditional rarity, depending on what the coin is of course, even a top pop should not be considered as "rare" to my mind. And that's because there may be quite a few more of them out there that just haven't seen a grader's desk yet. And this is not just true with moderns, it's especially common with many world coins that far pre-date any US coin. But because a TPG has said it's XX they consider the coin rare. Now in some cases it may actually be rare, but in a whole lot of other cases it won't be at all. And to know which is which a collector must have sufficient knowledge about the coins he's collecting. And that's usually when he gets into trouble.

    Even with US coins conditional rarity and absolute rarity can easily, and quite does, come into play when varieties are involved - or errors. What may be thought of as rare one day a few months or even a few years later suddenly isn't.

    Bottom line you gotta know your subject matter before you go calling a coin rare and scarce, and even semi-scarce. And you have gotta know the difference between them. What you think of as scarce or rare may be thought of as being quite common to somebody else, and maybe a whole lot of somebody elses. So before you go paying premiums, you better know what you're doing.
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  13. iPen

    iPen Well-Known Member

    Absolute and relative rarity definitely plays a role in my collecting, but it's in terms of prioritizing which ones to get first, as I'll be given more time to search for them as (if) they come up for sale (I don't like seeing recently sold listings of difficult to find coins at below average cost, since I could have prioritized the rarer coins first - especially if these coins just don't show up for months at a time).

    Anyway, I created a thread on here that looks at rarity in terms of the ratio of the total supply and the quantity demanded. In terms of absolute rarity, one can look at the mintage to the collector base population. In terms of relative rarity, one can look at the (# of listings available for sale + # of listings sold) / # of listings sold over a span of a few months or so (via eBay). For instance, the relative rarity ratio for a 2016 Isle of Man 1 Angel silver 1 oz is 1.199; while, the ratio is similar for a 1949 Mexico Onza at 1.1. Though they're not absolutely among the rarest, especially compared to many ancient coins and in "high grade", they're generally rarer than most modern and classic coins in terms of their market availability. In contrast, the 1942-P Walking Liberty Half Dollar has a ratio of 2.001 (recent market demand sales = number of offerings). Some coins go much higher in number (e.g. 4.0+).

    I like to buy coins with a low ratio closer to 1.0, which also has a low mintage figure, while the coin is offered at below average price at a given grade (I use MS-60 for classics, and MS/PR-69 for moderns). I get into more complex calculations that are done automatically on a spreadsheet.
  14. World Colonial

    World Colonial Active Member

    Absolute rarity is a data point, nothing more. If there at least 250,000 and 10,000 series as I have guesstimated in my prior posts here, there must be thousands which are scarce or (near) rare.

    Most of them have low survival rates because they were struck centuries ago or if more recent, because they disproportionately originate from obscure countries with low populations and limited to no traditions of collecting.

    With NCLT, comparing them to circulating coinage is an apples to oranges comparison because practically all of them exist in their original state (or near it), nobody real wants them except as bullion in lower quality and they are more common in equivalent quality than 98% or even 99% of all circulating coins ever struck. Regardless of the coin, most of the time there is almost certainly far more supply than real collectors who will buy it except for speculation. I suspect that MOST buyers of these coins are buying it because of the low mintage which if true, means the price is either going absolutely nowhere or will only increase temporarily.

    Below is a link to coin from a series I collect, a 1726M (Madrid) Spain one real. Heritage provides an estimate of $1000 to $1500. I'd say a more reasonable value is probably $200 to $300. The NGC census currently lists 16 in 66 and 67 which is most of them. I also don't believe there are any duplicates because I equally don't see anyone other than an uninformed US buyer ever paying a grade premium for this coin.

    I expect the coin to go unsold but if anyone buys it, they will be "buried" in it. I see this coin ungraded regularly and despite its age, its likely the actual number in "high" grade is much larger then the current population counts.

  15. physics-fan3.14

    physics-fan3.14 You got any more of them.... prooflikes? Supporter

    Interesting analysis, iPen. On a similar note: When I was first starting collecting, I heard some old timers talking about how they knew if a coin was rare. These were dedicated collectors in their specialties, and tracked all major (and many minor) auctions, looking for their next catch. They basically said that if a coin came up for auction a couple of times, or a few times a year, they considered it scarce. A coin which came up for auction once a year or less they considered rare (many of the really rare coins only come up every few years).

    I know that while tracking my prooflike coins, I've noticed this correlation as well. Sure, there are pop reports, but how many times does a coin come up for sale? Walker PLs show up every couple of years - they are genuinely rare. Seated Libs, while they have low pops, show up several/many times a year (depending on the denomination). They are some of the most common PLs.

    As mentioned previously, I don't think rarity is a function of demand at all (in contrast to your post). Demand will affect value (or price), but rarity is solely a function of supply (in my opinion).
    Last edited: Aug 21, 2016
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  16. iPen

    iPen Well-Known Member

    Rarity by definition and itself, yes, I agree with you that it's a function of supply.

    However, I utilize rarity into a ratio that compares supply and demand, to see if supply or demand outpaces one or the other (or if they're even). So it may be more accurate to refer to it as a "rarity-to-sales ratio/rate" or something of that nature. It's sort of like taking your example of folks looking at how often it shows up, and knowing how "rare" something is, but it's a bit different from that. It looks at how relatively available something is if I wanted to buy something right now "regardless" of supply.

    For example, the 1942-P US penny proof coin has a ratio of 2.316, which suggests that it's available if you want to buy it, since buyers aren't purchasing them at the same rate they're supplied. In the last few months or so of eBay data, there were a total of 28 of these proofs supplied, while 18 of them sold. Even though there are only 10 for sale now, they're not being snatched up as quickly as the 1949 Mexico Onza example mentioned earlier, which has a much lower ratio of 1.1 despite its much higher mintage of 1 million (vs. the 1942 US penny's 21,100 mintage figure).

    A ratio of 2 would suggest that demand and supply are met equally. If the ratio is even higher (say, 4) and continues to rise, then that coin's price should drop. Otherwise, it's overpriced. In another example, in terms of the ratio, the 1893 Isabella quarter has many overpriced listings, with a ratio of 2.788. Even if hypothetically there are high grade examples in, say, MS-68, but no one wants it and it doesn't sell, the practical suggestion by the ratio is that it's overpriced, at least in the short term.
    Last edited: Aug 21, 2016
  17. Paul M.

    Paul M. Well-Known Member

    Well, since the very page you linked to shows another 1726M in MS65 that sold somewhat recently for $352 inclusive of buyer's premium, you might just be right there. :)
  18. World Colonial

    World Colonial Active Member

    I didn't even notice that prior sale. I own the 1729S real in NGC MS-66 and its apparently a much scarcer date/MM combination, as I don't recall another one. I paid just over $200 for it back in 2002.
    Paul M. likes this.
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