Page 2 of 3 FirstFirst 123 LastLast
Results 16 to 30 of 45
  • Thread: A comparison of the market characteristics between the United States and South Africa (45 Posts)
  1. #16
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Here are the last of my prepared comments for item #3.

    Comparing South Africa to the US, first few coins were struck prior to 1892 which is why I estimated 1500 versus 7500 available coins to collect. Second, the actual variety even from 1892 forward is much less because all ZAR and Union denominations have the same obverse design. This is important because it apparently influences how coins are collected in your country which is a major factor in pricing. To give the most obvious example, I have never heard of a SA collector who primarily buys only KGV pennies while thousands of US collectors prioritize the Lincoln cent over others. For the SA collector, this “collection” would be pointless since it only includes 14 coins. Third, SA coins are also either typically scarcer or much scarcer. Lastly, then there is the fact that a disproportionate percentage of SA collectors only want the ‘best” coins and will not even consider lower grade specimens that collectors in other countries normally buy. When these four factors are combined, it should be obvious that if prices explode like most on this board apparently want and believe should happen, the traditional collector is not going to have anything worth buying (by your local standards) from either Union or ZAR.

    In the US, a large number of series consist of mostly common dates and a few “key” dates. But in most instances and especially with the most widely collected, these “key” dates are not scarce, only expensive. In South Africa and many other countries, a disproportionate percentage or even the majoriy of dates in a series meet the definition of “key” by US standards, except that the coins are actually scarce and sometimes almost impossible to find, at least in the grades that most actually want (hint: think MS). Take a look at Union 1/, 2/ and 2/6 and you will see what I mean. Or with the Mexican (or any) pillar 4R, ALL dates are “key” because NONE of them are common and especially in any decent grade. These comments are simply another way of restating the limited supply which exists for many collectors of non-US coins..

    For much higher prices to be even logically possible in South Africa, the only realistic options would be for South African collectors to 1) adopt US specialization in large numbers, 2) prefer RSA coins far more than they do today so that they would pay a lot more (even if only proportionately) for a (much) larger number of them, 3) start paying more or a lot more for “lower” grade (especially up to AU-58) coins, or 4) adopt “type” collecting. These practices are necessary because it would enable a much larger number of potential buyers to still acquire coins they actually want if the best Union and ZAR increase in price substantially. Today, compared to other countries such as the US, there is little to buy that most SA collectors both want and can afford to buy even at current prices. With these additional options, then from this expanded pool of buyers, some small percentage would be much more likely to pay the (much) higher prices which everyone on this board seems to desire. One or more of these may eventually become widespread, but unlikely anytime in the near future to alter what I am describing here and which is reflected in pricing today.

    Based upon how coins are collected today in South Africa, the price explosion desired by the lopsided majority on this board contradicts common sense. And since it does, absent a big change in collecting practices as just described, this is why I do not believe that prices of South African coins are going to increase (and stay there) as most on this board think should happen. It contradicts common sense because it would leave most of the better coins in the hands of “investors” who I believe are disproportionately not real collectors at all and therefore, they will dump them as soon as the coins become too expensive to achieve their ROI objectives. I believe that this is a big part of the explanation for the current price weakness today versus late 2011.

    In South Africa, the price spreads between “conditional rarities” and those in slightly lower MS grades are already absurd and so are many of the spreads between low grade MS and higher grade AU. While some expansion of price spreads can happen from today’s levels even as nonsensical as they are now, I see no reason to believe that they are going to increase by a factor of 5, 10 or even more (as in my prior theoretical example of the 1949 2/6 in MS) which is exactly what would be required for the most ridiculous price forecasts I have seen. And yes, these are the multiple expansions that will be necessary for the implied forecasts to be fulfilled because it should be obvious that most real collectors cannot or will not pay substantially more for the more common Union and ZAR in MS or for most AU and lower grade scarcer ones. Probably, it is both.

    In many other countries with limited numismatic traditions, the dynamics are similar. In my recent NGC posts, I used the example of Mexican coins since I am somewhat familiar with them. Given US demographics, there are likely to be a lot more US collectors of Mexican descent who will want the “best” Mexican coins. This will be both a larger potential buyer pool than for Union or ZAR and one which is more likely to have the ability and willingness to pay (much) higher prices. Problem is, the supply is restricted just like it is in South Africa except that in one respect, it is even worse. The more recent (post 1870) coins are more available than many Union or ZAR, but not the earlier ones (dating back to the 1530’s) which are those most collectors want the most. In my opinion, these are even less available. So what exactly are these potential collectors going to buy either?

    What I just described, it is equally true for the other Spanish colonial coinage I collect and also many Latin American countries. In my opinion, this lack of supply is going to be an impediment to price appreciation just as I believe it will be in SA because most collectors are not in the habit of pursuing coins that are disproportionately difficult or impossible to acquire, even if many more collectors want and can in theory afford them at current prices than own them today. I believe some of these coins can still appreciate a lot from current levels (hint: such as the "celebrity" coins in my post) as they can in SA, but only in isolation or in low proportion. It will not be to the point where most will remotely replicate US pricing (even at much lower levels), even considering that they are disproportionately much scarcer.

    Finally, taking a (defunct) country like Southern Rhodesia which has been discussed here several times, there isn’t much to collect period, whether the coins are expensive or not. With maybe 100 coins to complete the entire series and the prospect of a disappearing collector base, I see limited prospects for these coins and any others like them. Longer term, I expect the relative prices of these coins to be lower or much lower versus others such as South Africa except in isolation.
    Last edited by jwither; 14-04-13 at 01:04.

  2. #17
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Here are my comments for item #4, A demonstrated cultural tendency to actually pay prices which are much higher than elsewhere, even when considering the same level of scarcity and numismatic appeal. Basically the same sentiments Pierre shared in one of his prior posts here but I will elaborate if necessary.

    The only thing that needs to be said here is that it is obvious that US collectors have a habit of paying more. I cannot say why except that the US has an extended tradition of above average financial risk taking (and recklessness) compared to other countries which have traditionally been more financially conservative. Prioritizing the financial over the collectible aspects is a manifestation of this behavior. In copying US practice, SA is following the same path.

    Here are my comments for item #5, An established numismatic infrastructure

    By numismatic infrastructure, I am primarily referring to the extent to which numismatics is a business versus a hobby. Examples of this characteristic include: TPG, non-traditional sellers of coins as “investments” such as brokers, number of dealers relative to the population, number of auction firms, number and specialization of collector clubs and the practices of the national mint. The US has all of these and to a much greater extent than anywhere else.

    Even in countries that should theoretically be able to economically support all of these practices, most do not exist or are not a significant factor economically. Those that resemble the US the most in my opinion are the UK, Canada and Australia though the individual attributes vary. South Africa apparently is attempting to copy the US, but I am dubious that the size of the collector base and more importantly, real interest in collecting will achieve the same or a similar result. My opinion is no.

  3. #18
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Here are my comments for item #6, Specialization practices such as "conditional rarity" collecting die varieties, "monster" toning, special designation strikes and errors. This closes out my prepared write-up for this topic.

    The US is the only country that exhibits all of these practices but even though I list five, except for die varieties, the grade still accounts for a disproportionate percentage of the premium with the other three.

    Canada and South Africa are the only other two countries to my knowledge where TPG is widespread or preferred. But for Canada unlike South Africa, I suspect that a disproportionate percentage of TPG demand for Canadian coins comes from US residents, particularly those who live near the border. In the past, it has not been uncommon for coins from both countries to circulate in the other and older US collectors probably like them at least partly for this reason.

    I suspect (but cannot prove) that the incremental demand by Americans for Canadian coinage results in a somewhat higher (and noticeable) price level than would otherwise exist. I suspect it because the price structure of higher grade Canadian coins seems to reflect it and the logical reason is that since Canadian coins are so much cheaper than their US counterparts, it’s easy enough for Americans to afford the more expensive Canadian coins. The same is also logically true for US demand with any other non-US coins, but its just that the US demand is or is likely insignificant for most of them.

    For example, I believe that many of the better TPG coins from the UK are also disproportionately owned by Americans, but the census counts are so much lower than for Canada that it impacts the pricing structure much less.
    At this time, it’s my opinion that foreign demand is somewhat of a factor (but less than with Canada) for scarcer better TPG grade ZAR but do not believe it is a factor for Union of any consequence. Furthermore, I do not believe it will be going forward either.

    Die variety collecting is also prevalent or at least practiced in many countries, but I am not aware that it is as widespread or that the pricing varies anywhere nearly as much as the US. The same applies to error collecting except that even in the US, the prices for errors are usually much lower than for die varieties or even generically for the better and scarcer non-error coins. I covered the prospects for error collecting in South Africa in a prior post and as I stated there, financially I believe it is going nowhere.

    I have never heard of special designation strike collecting or an outsized emphasis on toning anywhere outside the US. An example of a special designation strike is a “full head’ on the 1916-1930 Standing Liberty Quarter. I consider this emphasis numismatically trivial and in many instances the price premiums absurd because the coins with this designation do not look that much better than those without it. In theory, many other series in and out of the US could also use this practice. For example, the two globes on the pillar coinage I collect are typically weakly struck. A “full globes” designation would make far more sense than with any US series using this practice today because the difference is very noticeable.

    Another US practice is type set collecting which actually is the opposite of specialization but probably has a bigger price impact on more US coins than the others. This is especially true for any series with a short life and maybe somewhat so for “key” dates in those I have termed “perennial collector favorites”. I am not aware of this practice elsewhere either and actually, adoption of this practice in SA would make the price hopes of you locals far more realistic. If ever adopted widely, it would change the opinions I have expressed on this board substantially.

    Aside from type collecting, the primary reason I believe these practices have been adopted in the US is because most US coins are so common that they are necessary to create an artificial challenge. The primary reason I do not believe any of them will ever go anywhere worth mentioning in your country (except maybe for type collecting) is because South African coins are generically so much scarcer. It is only with RSA that I see any viability. After all as I explained before, what point is there to collect the Nomisma die varieties and especially in high grade when most collectors cannot even complete the series by date? Add in the fact that the difference in appearance between “regular” coins and most of these is trivial and my prediction is that these practices are going absolutely nowhere in either Union or ZAR.
    Last edited by jwither; 18-04-13 at 18:01.

  4. #19
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    The link below is to a related topic on the PCGS Coin Forum. As anyone reading my prior comments can see, what I described above is consistent with the way many and probably most US collectors at the least think. For most (which applies more to those in the US), the price is the primary obstacle. For others (which will mostly apply to those outside the US), the lack of availability will be the obstacle.

    Collectors Universe Forums - At what level of rarity does set-builder interest drop?

    As you can read in these posts, when a collector is a real one as opposed to primarily or exclusively just an "investor", the inability to complete the chosen series will more often than not result in the decision not to pursue it at all. And as you can see in the examples provided, this will be true even if only a few coins cannot be acquired which is the situation with the more common and available US series.

    In the United States, the combination of price and availability is the reason why a series such as the 1813-1834 "Capped Head" half eagle ($5 gold) is pursued by a very small number of collectors. Most cannot possibly afford it but even if more could, many dates such as the 1822, 1815 and 1829 are not available in any grade anyway.

    With another set like the Barber half dollar (1892-1915) which I profiled once before under another topic, many can in theory pursue it because no coin is "rare" (except maybe as a die variety) but the number of coins (about 70 for all date and mint mark combinations) makes it impractical or a poor choice compared to the alternatives. From the financial side, even in a grade like VF, the set will cost $25,000 or near it and maybe a lot more if the coins are "original". (That is, they look as if they have not been cleaned, dipped or conserved.) Combine the cost with the existing disproportionate collector tendency to prefer better grade (especially high grade or "conditional rarity" coins) and the result is that the number of collectors who pursue this series is not very large. Likely it is a few hundred which is nominal given the size of the US collector base.

    The above two examples provide the most logical explanation why a disproportionate number of US collectors pursue the "perenial collector favorties" such as the Morgan dollar, Lincoln Cent or Mercury dime. These series have "key" dates but none of them are actually scarce though some are relatively expensive such as the 1893-S Morgan, 1909-S VBD cent and 1916-D dime. Most US collectors will also adjust their collecting goal to fit their budget by reducing the minimum grade, especially for "key" dates. Those who do not choose a series such as these will buy others such as the Barber half by type which is where most of the demand for these coins originates.

    For the non-US collector whether from South Africa or elsewhere, I'm not sure what their definition of "completion" is used. I have asked this question before here and nobody answers. To some extent, it may or does matter less because the coins are generally scarcer or much scarcer and it is the only option if collecting is going to happen at all. It is an individual preference. However, "some" difference does not mean that most collectors (once again real ones) are going to pursue their collecting with a complete indifference to accomplishing their goal (whatever it may be) and instead pursue coins as they would any number of "widgets". There is no basis to hold that position or believe in that outcome at all.
    Last edited by jwither; 02-05-13 at 17:29.

  5. #20
    Join Date
    Nov 2006
    Location
    Cape Town
    Posts
    318
    Post Thanks / Like

    Default

    Hi jwither,

    The old saying or advice that, when you start out as a collector, you should concentrate on items and series' that can be completed relatively easily, seems to fit in here. Some that start out with high hopes and low budgets soon lose interest and disappear, others adjust their sights and collections.

    The speculator/investor has little interest in completing a series unless the financial rewards make sense to him.

    This brings me to my point again about the difference in value between the high end coins, conditional or not, and the second, third best etc. The collector, who is looking to add to his type collection, comes into play with these, and brings with him or her a more conservative and sensible budget. Coinoisseur commented in another post that some unc's seem to be becoming more scarce. Maybe this is because of collectors holding back, or maybe there are more collectors, but most of these will still be within the reach of ordinary collectors.

    As to when is a set complete? Never for a collector, because the investor got the best bits!
    Last edited by Cold Sea; 02-05-13 at 18:39.

  6. #21
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    I agree with you generically which is one of the reasons why I do not believe that collecting is that popular in your country or that this will change much going forward.

    In the United States, there are many different sets and variations of sets to pursue. Hundreds depending upon the definition used and these can accomodate a wide range of financial budgets because most of the coins are both common and cheap. Yes, a large number are not either but the proportion of these is low or relatively low. Including specialization practices of die varieties, special designation strikes, toned coins and errors also creates the (artificial) challenge of pursuing "rare" but still mostly affordable coins.

    In South Africa, I still do not know how most buyers define "completion". By my definition, there are six primary series in Union (KGV, KGVI and QE II for business strikes and proofs) and a similar number for RSA prior to 1994. After 1994, I have lost track because I do not pay any attention to these coins. For ZAR, I think of it as two, patterns and all others.

    In ZAR, I have always presumed that any collector who has actually planned their acquisitions collects the circulation strikes up to the 5/ if they cannot afford the gold and 1892 proof set. If they can can afford both, they probably also buy some or many of the "pattern" bronze 1D and 2D. Almost no one even bothers with the other "patterns" but they are both rare and desirable enough to still command really strong prices..

    For Union, I really have no clue. When I started in 1998, I set a cut-off of $500 per the Krause manual and just tried to buy all I could find in the best quality I could find. I presume that most locals exclude most of the KGV proof sets and the scarcer KGVI (like the 1939) but other than that, I do not know.

    Aside from the cultural aspects which apparently make ZAR much more popular than Union in your country, the other difference is that many collectors can buy all of the 1D through 5/ if they will compromise on the grade which is exactly what appears to happen just as it does in the United States. With Union, the problem is that first, fewer will accept lower grades (as evidenced by the prices) but even where they might, many of the coins are not (apparently) available in any quantity anyway.

    If the issuance of SA coins resembled the US, Union collectors could narrow their focus down to one or maybe more denominations. Maybe that happens to some extent (per posts here), but I doubt it is that common of a practice. Collecting only by portrait reduces the cost if KGV is excluded, but many KGVI are also "key" dates. All or at least most of the QEII are more available, but because of the poor strike, not in a quality which most (including myself) are going to like. Limiting a collection to farthings or crowns might be feasible, but that is about it. I do not see anyone specializing in a single denomination within KGV, KGVI or QEII because there isn't enough to collect. And with most of the denominations, there are still a disproportinate number of key dates that make completion even in this limited sense unachieveable for many or even most collectors. This is why I believe that "type" collecting is a logical alternative to current practice in SA but I have never read even one comment here which indicates that this happens at all, much less that it is widespread.

    Reading the historical post content on this site and in private communications, one of my interpretations is that a disproportionate number of SA collectors and especially "investors" have completely misinterpreted what the scarcity or apparent scarcity of Union coinage means from the standpoint of future pricing. The consensus thinking is that because many of these coins are really scarce, that the prices should be much higher. Well, given how low prices were when I started in 1998, that was true but not so much anymore for the reasons I have provided.

    The other thing I have noticed is that, because of the lopsided preference for only higher prices, there is and has been a bias to believe that most Union coins are scarcer than they almost certainly actually are. As I have said before, for those who wish for higher prices, it would be better if the coins are somewhat more available anyway because to most actual and prospective collectors, it is pointless to even start when you know in advance that completion of your goal is not going to happen. I have circumvented this psychological obstacle by choosing to collect a number of series from many countries but the lopsided majority are not going to do that.

    The posts I have included under this topic spell out exactly why this is likely true. It is only for "investors" who treat their purchases as "widget" buying that they likely did not both consider this obvious reality and did not care.
    Last edited by jwither; 02-05-13 at 20:14.

  7. #22
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    More wishful thinking

    Below is another link to the PCGS Coin Forum. This link contains posts similar to the one on the NGC Message Boards I provided before. The difference between these two and the comments I posted above is that in this instance, there are those who are under the illusion that the coin market as a whole is going to be so compelling to non-collectors that it is going to resemble the art market and that prices (especially for US coins) will sell for "moon money". Unfortunately, the link to the Legend Numismatics article which started the whole conversation is no longer available, but the second link below from Coin Week is apparently a summary. In any event, this is pure wishful thinking. There is no reason to believe that outcome whatsoever.

    The comments that I consider insightful are those by "Coinarefun", "Realone", "Secondrepublic" (especially), "Roadrunner" (especially) and Andy Lustig (a dealer). These comments describe the differences between coins and the collectible fields with the most money, including the lack of market depth. They also distinguish between the non-financial characteristics that are probably equally (If not more) important and which make these other fields more appealing and compelling to those with the most money.

    Of note on the other side is a comment by contributor "Sanction II" who apparently has the same type of opinion that I have seen expressed here many times. The examples this person gives are of coins that no non-collector has ever even heard of and that non-US collectors certifiably do not give a hoot about. The idea that any non-US collector other than through pure random chance is going to find them so compelling to pay "moon money" is completely nonsensical.

    The third link below is to another article on Coin Week. In this article, the proprietor of Legend Numismatics purportedly makes the claim that
    what is in actuality an obscure coin (a US 1907 "normal edge" NGC PR-67 Indian Head eagle) which sold for $2.185 million in May 2011 is so compelling that it could be worth $15 million in ten years. This also reminds me of some of the more hyperbolic claims on this forum up until about late 2011 when prices peaked.

    If you read the reason given, there is actually nothing that significant about a pedigree tracing a coin back to a obscure and long dead Mint Director that most people have never even heard of. Other than providing "conclusive" evidence that the coin is real, why would anyone care? I do not see any foreign collectors or non-collectors except "widget" "investors" who will ever buy this coin.

    In the first link, a purported claim is made that the US coin market is "global". This firm is supposedly in a position to know because it is probably the number one dealer in the world from the standpoint of selling "investment" coins. But I still suspect that every single foreign buyer of theirs (which is still only going to be a few given their revenue of $45MM in 2011) is actually an "investor". The idea that non-US collectors in any meaningful number are going to find US coins so much more compelling than those from their own country to pay even the existing absurd prices, much less the theoretical much higher future ones, contradicts common sense and is unsubstantiated by anything in collecting that I have ever seen.

    There are a few US coins that non-collectors have heard of such as the 1804 dollar, 1913 Liberty Head Nickel and 1933 double eagle. These are the same coins that have been mentioned here by others. The other US coins I have mentioned, I doubt anyone reading my posts had ever heard of them before and does not care either. Why would they?. Two examples include the 1920-S Indian Head Eagle NGC MS-67 which last sold for $1.75MM and the 1861 "Pacquet Reverse" double eagle which is probably worth several million USD but which some apparently think might now be worth $10MM. These two I consider irrelevant though some others are significant or somewhat significant to me but much less than apparently to the typical US collector. The idea that either non-collectors or non-US collectors are ever going to find them compelling except as "widget" "investments" is unsubstantiated and pure wishful thinking.

    Collectors Universe Forums - New Legend Market Report posted PCGS Link

    Why the Rare Coin Market Isn't the Art Market | CoinWeek

    Are coins undervalued as an asset class? | CoinWeek
    Last edited by jwither; 04-05-13 at 20:30.

  8. #23
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Coins and competing alternatives

    Following up on the last post, I have included a few examples of alternative forms of art (and yes, some but not all coins can be considered art) that those with money or "big money" who are not coin collectors may prefer.

    The first link is to the 2004 Forbes sale of Faberge Imperial Easter Eggs held by Sotheby's which I mentioned once before. The sale was canceled but the pre-sale estimate for the entire collection ranged from $80 million to $120 million. Presumably the centerpiece of the collection, the Coronation Easter Egg had an estimate of $18MM to $24MM. I do not know what these are worth now, but I do not believe that any coin should sell for more and I do not believe that any non-collector who is aware of both is going to pay more either.

    Forbes' Faberge Eggs - Forbes.com

    For those who do not have $24MM, the image below is a late 19th century Viennese porcelain and gilt center table sold by Heritage last year. At just over $4,000, I think it is a better value than any coin in this price range. It certainly looks much better and actually has some practical use. If I owned a home where it would "fit" (which I do not), this is the type of alternative art that I would want to acquire.

    A ROYAL VIENNA-STYLE PORCELAIN AND GILT WOOD CENTER TABLE . | Lot #66150 | Heritage Auctions

    The next link below is to a British Boer War artifact presumably made to commemorate the end of the war. Not sure it would be of interest in South Africa (I presume not), but it certainly is unique and at about $3500, also competitive versus most coins in this price range.

    Copeland Spode Queen Victoria Porcelain Commemorative Boer | Lot #36185 | Heritage Auctions

    The fact of the matter is that there are many other collectible fields that compete for both money and attention. The link below is to an article summarizing Heritage's 2011 results. In 2011, the world coin category had prices realized of about $39MM while comic books and comic related art totaled about $26MM. World coins were (and are) growing faster, but I include it to show that even a category such as this one (which most reading this post may not even be aware of as a collectible field) is also substantial.

    The main advantage that coins have over most other fields is their liquidity and portability. If someone ever needs to transfer their wealth in an emergency, it will be easier to move it than master paintings or antique furniture. However, under these circumstances, i would still expect it to lose substantial value, probably just less than most or all other areas. The main disadvantage coins have is that they lack the same appeal, for a variety of reasons.

    Rare U.S. Coins post $196 million total at Heritage Auctions in 2011 | CoinWeek
    Last edited by jwither; 05-05-13 at 23:59.

  9. #24
    Join Date
    Jun 2009
    Posts
    917
    Post Thanks / Like

    Default

    Quote Originally Posted by jwither View Post
    Coins and competing alternatives

    Following up on the last post, I have included a few examples of alternative forms of art (and yes, some but not all coins can be considered art) that those with money or "big money" who are not coin collectors may prefer.

    The first link is to the 2004 Forbes sale of Faberge Imperial Easter Eggs held by Sotheby's which I mentioned once before. The sale was canceled but the pre-sale estimate for the entire collection ranged from $80 million to $120 million. Presumably the centerpiece of the collection, the Coronation Easter Egg had an estimate of $18MM to $24MM. I do not know what these are worth now, but I do not believe that any coin should sell for more and I do not believe that any non-collector who is aware of both is going to pay more either.

    Forbes' Faberge Eggs - Forbes.com

    For those who do not have $24MM, the image below is a late 19th century Viennese porcelain and gilt center table sold by Heritage last year. At just over $4,000, I think it is a better value than any coin in this price range. It certainly looks much better and actually has some practical use. If I owned a home where it would "fit" (which I do not), this is the type of alternative art that I would want to acquire.

    A ROYAL VIENNA-STYLE PORCELAIN AND GILT WOOD CENTER TABLE . | Lot #66150 | Heritage Auctions

    The next link below is to a British Boer War artifact presumably made to commemorate the end of the war. Not sure it would be of interest in South Africa (I presume not), but it certainly is unique and at about $3500, also competitive versus most coins in this price range.

    Copeland Spode Queen Victoria Porcelain Commemorative Boer | Lot #36185 | Heritage Auctions

    The fact of the matter is that there are many other collectible fields that compete for both money and attention. The link below is to an article summarizing Heritage's 2011 results. In 2011, the world coin category had prices realized of about $39MM while comic books and comic related art totaled about $26MM. World coins were (and are) growing faster, but I include it to show that even a category such as this one (which most reading this post may not even be aware of as a collectible field) is also substantial.

    The main advantage that coins have over most other fields is their liquidity and portability. If someone ever needs to transfer their wealth in an emergency, it will be easier to move it than master paintings or antique furniture. However, under these circumstances, i would still expect it to lose substantial value, probably just less than most or all other areas. The main disadvantage coins have is that they lack the same appeal, for a variety of reasons.

    Rare U.S. Coins post $196 million total at Heritage Auctions in 2011 | CoinWeek


    Hi Ernesto

    Sorry for my absence but I have been running around like you know what.

    About 5 weeks ago there was an interesting article in our Sunday Newspaper (The Sunday Times) about the collecting preferences of the world's rich and famous.

    If I remember correctly - at the top of their list was art followed by cars.

    At the bottom of their list (whatever that may mean - they surely do not collect butterflies or smurfs) are Stamps & Coins.

    That was sort of a blow to me hoping that at least philatelics and numismatics would be somewhere in the middle - but at the bottom? The article was probably bought from an overseas news company and written by a junior reporter - but still - it was not nice reading it.

    Thank you for all your wonderful posts on this forum

    Pierre

  10. #25
    Join Date
    Nov 2006
    Location
    Cape Town
    Posts
    318
    Post Thanks / Like

    Default

    The main disadvantage coins have is that they lack the same appeal, for a variety of reasons.
    But what then gives value to a coin. A combination of precious metal content, demand, rarity and condition seems to be the consensus.

    Coins have the one-up of precious metal content, which gives it the liquidity edge. (That reminds me of my attempt at collecting good wines. I thoroughly enjoyed it.) However, a Faberge egg or Picasso must be as liquid as any piece of gold. But as you rightly pointed out, liquidity does not always equates to profit.

  11. #26
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Pierre,

    Thanks for your compliments.

    The last two posts I included to provide some perspective on how most non-collectors (of coins) presumably typically or likely see the hobby. I think coins have a lot to offer collectors and (under the right circumstances) even "investors" but mostly or even only if bought at the right time and for a reasonable or the "right" price.

    Reading the posts on the PCGS Coin Forum, NGC Message Boards and also on this board, someone might actually get the idea that those who do not collect coins generally or US coins and South African coins specifically are going to find them so compelling in the future that they are going to pay huge premiums versus what they sell for today, what I have been labeling "moon money".

    In my opinion, a substantial number of US coins already sell for "moon money" and are absurdly overpriced even today. Other US coins which sell for a lot less are still expensive and absurdly overpriced based upon their actual numismatic and even artistic merits which are actually at most average or mediocre and in many instances, downright inferior. There is no logical basis to expect these coins to sell for substantially more though given the way most people think (with a complete lack of logic and common sense), many undoubtedly will do so anyway if financial conditions permit it.

    Take a look at the link below to the Coin Week article on the 1787 Brasher doubloon. It is a coin which I and one other contributor here mentioned previously. One variety of this coin (there are two) purportedly changed hands for $7.3MM recently. There are seven known for both varieties. In the past, I did not care for this coin and thought it was overrated. I have since changed my opinion as I learned more and now consider it one of the most significant coins in existence. However, the reason I bring it up is because of the comparison this author makes. In this article, the author implies that this coin is substantially underpriced because a painting titled "Scream" in the last few years sold for $119 MILLION USD.

    ULTIMATE RARITIES: The Single Most Important Coin in American Numismatics | CoinWeek

    Why is this coin supposedly undervalued in comparison to this art work and by implication, generally? Because the coin is more historically significant. Now, the question I would like to ask is, does anyone reading my comments or this article believe for one second that the buyer of this art work paid this price based upon historic significance? Sure, I do not know the buyer and cannot read their mind but the whole premise is completely idiotic. Making this comparison makes about as much sense as rhetorically comparing either to the proverbial price of tea in China. If this is the best argument that someone can make to rationalize their case for future substantial appreciation, it is a very weak one. And in my opinion, this author is completely clueless and has no business writing coin articles either. Yet, I see this type of "logic" all the time from commentators like him and most likely because these are people who are supposed to know what they are talking about, some or many of those who do not know better are likely to swallow this nonsensical thinking.

    In actuality, if you look at the list of coins in the PCGS "Million Dollar Club" (the ones that are supposed to be the most desirable at least based upon their current estimated value), most of them are obscure and there isn't really that much (if anything) significant about them. Most likely, the most significant thing about them is THE PRICE. And if this is not correct, then I would really like to know what is really so compelling about them because though I am familiar with them to one degree or another, I do not see it most of the time. With a few yes but mostly no.

    Now of course, if you read the PCGS and NGC forums, the majority of comments will claim that they are compelling, but I think this is mostly because, for long time collectors, they have come think of them this way and mostly because "opinion leaders" and experts have conditioned them to do so. For new collectors, most are going to think they are compelling because long time knowledgeable collectors say so.

    But when it comes to non-collectors, I believe what I am describing is mostly how they see these coins and also others that cost much less. (The same mostly applies to coin collectors who do not collect US coins or for that matter South Africa coins or those from anywhere other than the prospective buyer's "home" country.) When you get down to it, the lopsided evidence better supports that telling a non-collector that a coin is "rare' and compelling because of trivial differences due to the slab grade, minutia differences in actual eye appeal or because this coin is "rare" because it is a particular die variety (or even as a generic date) but that there are many others which do not look that different available is simply not going to be very convincing. What I am telling you is that they are not going to find a "conditional rarity" 1920-S US $10 gold or Union 1931 circulation strike florin compelling because there are many that look like them and the date rarity is not likely going to matter. Not unless the prospective buyer is a "widget" "investor" who does not care whether they own coins or something else.

    With South African coins or those from elsewhere, the same is going to be mostly true except that the economic value proposition is so much better much of the time because the prices are much lower. However, this needs to be considered in the context of the prior considerations I described in my posts above and which I think is going to be a substantial impediment to the appreciaiton of both these coins and any others that have similar characteristics.

    To return to other collectible fields as potential competition, I think coins are superior to most others (and would likely disagree with that list in this article if I saw it) but just not the ones that are the best known. They are not superior to art such as paintings, sculptures and historical artifacts of significance. Same goes versus jewelry and precious stones. The most expensive coins are already more expensive than the priciest cars and antique furniture, so i do not think they are particularly compelling value wise versus these fields either.

    On the other side, coins are and I believe will remain more popular than currency (paper money), tokens and medals. I believe that historical medals are dirt cheap versus coins and that the rich who like other art works would probably prefer them to coins but I cannot make any compelling case that they will buy them in any quantity or push the prices of more than a few much higher.

    Other fields that you see sold by Heritage such as comics, sports memorabilia and books, I do not believe they are more popular now and I do not see them passing coins later either. Stamps I have never collected but I consider their future financial prospects rather bleak generically. Except for books, these along with coins are in reality "plebian" and middle class activities which is probably the main reason why the wealthy and those who seek to emulate them are not going to find any of them compelling for the most part.
    Last edited by jwither; 06-05-13 at 22:29.

  12. #27
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Quote Originally Posted by Cold Sea View Post
    But what then gives value to a coin. A combination of precious metal content, demand, rarity and condition seems to be the consensus.

    Coins have the one-up of precious metal content, which gives it the liquidity edge. (That reminds me of my attempt at collecting good wines. I thoroughly enjoyed it.) However, a Faberge egg or Picasso must be as liquid as any piece of gold. But as you rightly pointed out, liquidity does not always equates to profit.
    Hi Derick,

    Please also see my above comments after your last post.

    The first difference that I see (having limited direct knowldege) between coins and most other fields is an extended tradition of collecting. Coins have been collected longer than these other fields except for art, historical artifacts and maybe books and jewelry because people have always valued gold and precious stones. I believe this extended tradition gives people the confidence to both buy and to some extent, pay more because coins are definitely not a passing "fad".

    If you take other fields such as comics, sports memorabilia, vinyl records and classic cars, this tradition does not exist because their invention and existence is more recent. I do not believe these particular fields will disappear entirely but there are definitely segments within them that are likely to suffer a collapse in popularity and by extension prices because their appeal is going to be mostly to the generation which prized them because they associate them with memories of their youth or the like. It's an emotional attachment that is not going to be shared with other succeeding generations.

    The second distinction between coins and these other fields is the number of buyers. As the more insightful comments on the PCGS Coin Forum link I included state, Faberge Eggs and Picasso's paintings have a universal appeal which coins lack - all of them. I do not care for Picasso's art work but those whose opinions matter do. One reason not directly mentioned in the links I included is that scores of thousands of university students are exposed to his works through "art appreciation" classes. There is no equivalent advantage for any coin.

    A third distinction is that each of these objects are unique. Sure, a particular coin may be "rare" but most of the time, this "rarity" is "conditional rarity" or one in the narrow specializations I described under item #6 above in my comments here. In other instances, even actual rarity is almost always only date rare. Let's say for the sake of discussion that an MS 1931 Union florin, tickey or half crown shows up tomorrow. To a Union collector, that will be a big deal. But what about even to a ZAR collector who does not collect Union or not primarily so? What about to a US coin collector who does not collect SA coins at all? The answer is from "not much" to "not at all". I consider this undeniably true and do not believe anyone can make a compelling case to refute it. The same applies to the significance of a US coin to a South African collector.

    OK, so now given this obvious fact, what is the likely response of a non-collector? A typical reply is likely to be, "There are other Union florin dated 192X or 193X that look just like it. And there are many of them, so what is the big deal?"

    This is not true for the two examples you gave. Pretty much anyone with any education in the western world or at least recurring exposure to western culture knows about Picasso and his paintings. Faberge is not as well known but these objects (Imperial Easter Eggs) are universally considered artistically superior and impressive, many are made of gold with precious stones and to those who know them, have a "mystique" from the Russian Romanov Imperial family and Russian Revolution which is not matched by many other objects. There is clearly a qualitative difference between these two and any coin, regardless of the fact that a few coins (absurdly) sell for more than a few Faberges.

    Within the field of numismatics, I believe that 17th to maybe 19th century European medals are those which logically have the most appeal to affluent non-collectors of coins. These are larger than most coins, many are artistically superior and compared to equivalent coins, dirt cheap. A gold medal from this period about the size of a US double Eagle (34mm) can be bought for a price of like $20,000 to $50,000 in AU or MS. I like coins more but for artistic appeal and value, I think these are much better.
    Last edited by jwither; 06-05-13 at 21:35.

  13. #28
    Join Date
    Jun 2009
    Posts
    917
    Post Thanks / Like

    Default

    Quote Originally Posted by jwither View Post
    I agree with you generically which is one of the reasons why I do not believe that collecting is that popular in your country or that this will change much going forward.

    In the United States, there are many different sets and variations of sets to pursue. Hundreds depending upon the definition used and these can accomodate a wide range of financial budgets because most of the coins are both common and cheap. Yes, a large number are not either but the proportion of these is low or relatively low. Including specialization practices of die varieties, special designation strikes, toned coins and errors also creates the (artificial) challenge of pursuing "rare" but still mostly affordable coins.

    In South Africa, I still do not know how most buyers define "completion". By my definition, there are six primary series in Union (KGV, KGVI and QE II for business strikes and proofs) and a similar number for RSA prior to 1994. After 1994, I have lost track because I do not pay any attention to these coins. For ZAR, I think of it as two, patterns and all others.

    In ZAR, I have always presumed that any collector who has actually planned their acquisitions collects the circulation strikes up to the 5/ if they cannot afford the gold and 1892 proof set. If they can can afford both, they probably also buy some or many of the "pattern" bronze 1D and 2D. Almost no one even bothers with the other "patterns" but they are both rare and desirable enough to still command really strong prices..

    For Union, I really have no clue. When I started in 1998, I set a cut-off of $500 per the Krause manual and just tried to buy all I could find in the best quality I could find. I presume that most locals exclude most of the KGV proof sets and the scarcer KGVI (like the 1939) but other than that, I do not know.

    Aside from the cultural aspects which apparently make ZAR much more popular than Union in your country, the other difference is that many collectors can buy all of the 1D through 5/ if they will compromise on the grade which is exactly what appears to happen just as it does in the United States. With Union, the problem is that first, fewer will accept lower grades (as evidenced by the prices) but even where they might, many of the coins are not (apparently) available in any quantity anyway.

    If the issuance of SA coins resembled the US, Union collectors could narrow their focus down to one or maybe more denominations. Maybe that happens to some extent (per posts here), but I doubt it is that common of a practice. Collecting only by portrait reduces the cost if KGV is excluded, but many KGVI are also "key" dates. All or at least most of the QEII are more available, but because of the poor strike, not in a quality which most (including myself) are going to like. Limiting a collection to farthings or crowns might be feasible, but that is about it. I do not see anyone specializing in a single denomination within KGV, KGVI or QEII because there isn't enough to collect. And with most of the denominations, there are still a disproportinate number of key dates that make completion even in this limited sense unachieveable for many or even most collectors. This is why I believe that "type" collecting is a logical alternative to current practice in SA but I have never read even one comment here which indicates that this happens at all, much less that it is widespread.

    Reading the historical post content on this site and in private communications, one of my interpretations is that a disproportionate number of SA collectors and especially "investors" have completely misinterpreted what the scarcity or apparent scarcity of Union coinage means from the standpoint of future pricing. The consensus thinking is that because many of these coins are really scarce, that the prices should be much higher. Well, given how low prices were when I started in 1998, that was true but not so much anymore for the reasons I have provided.

    The other thing I have noticed is that, because of the lopsided preference for only higher prices, there is and has been a bias to believe that most Union coins are scarcer than they almost certainly actually are. As I have said before, for those who wish for higher prices, it would be better if the coins are somewhat more available anyway because to most actual and prospective collectors, it is pointless to even start when you know in advance that completion of your goal is not going to happen. I have circumvented this psychological obstacle by choosing to collect a number of series from many countries but the lopsided majority are not going to do that.

    The posts I have included under this topic spell out exactly why this is likely true. It is only for "investors" who treat their purchases as "widget" buying that they likely did not both consider this obvious reality and did not care.
    I am sorry for my late respond but I read all your posts - even if posted a week or three ago.

    Just a few random shotgun points I like to make

    1) To complete a silver Union set is virtually impossible (e.g. - a graded 1944 Shilling in UNC is unknown). But it offers a wide range for both the specialist and the novice in terms of scarcity and costs.

    2) The ZAR coinage is more popular because it is a "shorter" range to collect and there are relatively many British (and overseas) collectors because of the link to the Anglo Boer War. The same possibly apply to the German East African range of coinage from the early 1900s but NOT the Rhodesian series that spans (like the Union series) a long time period.

    3) The RSA 1st and 2nd decimal series are "too easy" to collect - buy all the mint set "packs" for a few rands and all you have to do then is look out for the scarce 1965 VIP coins - not much challenge in terms of "completing" the series.

    4) The RSA 3rd decimal series is probably collected for children’s birthdays and the like.

    5) The Mandela type coins are mostly collected by speculators and not-die hard numismatists.

    6) ... and then there are the "Grade" collectors that collect the "highest graded slabbed coins" they can afford - being it a 1897 ZAR shilling in MS65 or a Mandela R5 in PF70 - these are the guys with the big pockets and where the money currently lies - if one agrees with it or not

    Pierre

  14. #29
    Join Date
    Aug 2009
    Posts
    892
    Post Thanks / Like

    Default

    Pierre,

    I agree with you that completing a Union set is a practical impossibility. But the impact this has on the decision to collect the series is not so much how I see it, but how the majority of collectors in your country do so and the same applies to non-collectors who are the potential collectors of tomorrow. (This does not apply to "investors" since they mostly could not care less whether they are buying Union coins or something else.)

    What exactly defines completion is matter of personal choice though i would still say that for most, it is driven by reference books such as Hern, the US "Red Book" or some other book which is widely acknowledge as "the source" for its particular field or specialty.. In this post you reference, I attempted to define what appears to be the definion of a set for Union and in all these posts, compared it to the United States.

    Also, in writing all of these posts, i am assuming that most collectors outside of the United States make completion a priority. If this is not true or to the extent it is less true, then the conclusion I make on the pricing impact will be less than I believe. Even though I am a US based collector, completion as defined in the United States is NOT how I approach my collecting, though it varies depending upon the series.

    For Union, I have already admitted that when I started to collect it in 1998, I did not know how scarce the coins are but I still expected/knew that the budget I had made it impractical if not impossible. Today, I have no plans to do so anyway. For my other series, I have changed my definition of completion to varying degrees over time and for some, still know it is impossible. But the key differences between my approach and what I believe to be for most others are these:

    First, I do not limit myself predominantly to one country. Most collectors do that regardless of whether it is the US or South Africa. The reason why this matters is because it still provides me with enough variety to maintin my interest in collecting and I believe that the variety and affordability of most US coins or elsewhere with established collecting has the same result.

    If I were only interested in one of my series as I believe South Africsn collectors are only interested in Union, ZAR or both, I would probably have lost interest in collecting a long time ago. If my only (self imposed) option had been to collect SA coins at the much higher recent TPG prices, I would have stopped collecting completely because unlike many "investors" in SA, there was absolutely a zero possibility that I was going to pay so much more for the same coins that I previously bought for so much less. The same applies if these coins explode in price later like practically everyone here fervently hopes. The coins are simply not compelling or desirable enough to me to do that. If I turn out to be completely wrong and prices explode upwards before I have an opportunity to buy more of them cheaply, I will simply change my definion of "completion" to a more narrow one and turn my focus to something else. The same applies to most of my other series with the pillars probably being the only exception. I would simply look to add one or more series from elsewhere because there are plenty that also interest me but I just do not buy them now.

    Second, I knew in advance before I started that I could not "complete" these series entirely, so I do not mind. I suspect (though do not know) that many new collectors in South Africa (and elsewhere) do not and that if they did or when they discover it, they do mind and maybe a lot.

    Third, I also know that I either cannot afford to buy many of these coins in "better grades" (whether MS or otherwise) or I cannot find them. That still does not bother me. Compare this to what I see in South Africa where a disproportinate number of "investors" will only or almost exclusively settle for MS and are disproportionately focused on the financial aspects and this explains why they have a completely different attitude and philosophy toward collecting than I do. From your post content, I believe you more or less see this subject the way I do.

    On ZAR, I understand the comparison you are making somewhat but I think it is more than that. I do not believe the shortness of the sets (once again, however anyone defines it) drives the popularity. I think it helps but this does not explain why more collectors will settle for circulated coins while predominantly, those who collect Union apparently do not.

    On RSA, I agree with you that defining collecting by 1st decimal series etc is pointless but this is still a contrast between how US collectors have managed to convince themselves that equally mundane collecting is somehow a challenge. They have done so through the specialization practices I described under item #6. Personally, the idea of pursuing that does not interest me at all. But regardless of the fact that I do not find it compelling, there is no question that the widespread application of these practices explains a substantial part of the price gap between US coins and those from elsewhere.
    Last edited by jwither; 14-05-13 at 03:28.

  15. #30
    Join Date
    Jul 2009
    Posts
    10
    Post Thanks / Like

    Default

    Hi jwither,

    What sought of effect do you think chinese counterfeits of collectable coins will have on the coin collecting market in the future?
    The counterfeits are getting better and better with each passing year.

Bookmarks
Posting Permissions
  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •