First of all, I want to point out that coin price guides are just that… GUIDES! For convenience, they list just one price for a given grade of a coin. It’s important to note that different coins of the same issue and grade often trade for higher and lower prices than the published prices that appear in price guides. This is most often because there are coins that are strong for a grade, often just missing the next highest grade, and there are coins that just make a grade, which of course will sell for less than the former.
But sometimes market conditions result in coins selling for higher or lower prices than what is published in these guides. At other times, it’s actually the prices established by the price guide writers that miss the real market – by a little or a lot. I know… I’ve been there. I can speak with authority on this issue, after having been the Market Analyst for Coin Values magazine during 1997 and again between 2002 and 2009. Since then I’ve also consulted with other price guide publishers.
Many other factors influence how price guides establish their prices for coins, but their accuracy really comes down to the individual people who interpret and report the market for coins, and their motivations, methods and systems. Prompt timing in performing updates is also another crucial factor. Some series in popular price guides may not get updated for months, or even years! For this reason alone it’s very important to compare prices from various price guides. In years past my business used to sell coins by “mail bid sale,” which is a type of auction sale. I provided sales estimates in my auction catalogs, along with the coin descriptions and photos. In establishing those sales estimates, I regularly compared prices from at least three different price guides. I was frequently astounded to find prices for the same coin issues and grades that varied enormously!
Today, because of the Internet, a popular method many buyers of rare coins have been using to estimate the prices they should pay for coins is by using prices realized from auctions. Collectors, investors and dealers are doing their own research, rather than relying solely on price guides. However, there are cautions urged in using this method. Are the individual coins sold at auction high-end for a grade, or low-end? Were they purchased by collectors to hold for the long-term, or by dealers for quick resale? Are there large runs of the coins you’re researching in a particular sale, or are you researching a scarce coin that rarely makes an auction appearance? Are you researching a coin for which there are few buyers, or is it a popular coin that many people want? Has a particular auction been well publicized, or is it a quiet, unknown sale? Did the coins really sell, or did they go back to the consignor because reserve prices weren’t met?
I could go on and on with examples of considerations in your auction market research, but these ideas should give you an idea of what to take into account in doing your own market research. However, writers of price guides are often limited in their knowledge of the market as well, especially for private transactions. This is the nature of the coin market – it’s a private market, unlike the stock and real estate markets, for example, in which transaction information is more public.
Other considerations to think about are the influences of Registry collecting upon auction prices, in which collectors are vying for the best coins of the best; or in the case of a close-knit group of buyers, like for early copper coins, in which most of the advanced collectors know each other, and know who’s currently in the market for which coins and who’s out? Knowing the personalities in the market, when it comes to such specialized collecting and investing is a big advantage in buying and selling and in knowing how to price coins.
The methods and systems by which price guides collect their market data is another factor in how their editors establish price guide listings for coins, and so is the purpose of a price guide. There are currently five prominent price guides that publish “retail” values for coins, which are what collectors pay when buying from dealers, and just one prominent guide that publishes “wholesale” values for coins, which are dealer-to-dealer prices. This distinction between dealer purchases and collector/investor purchases is blurred at auction.
The Coin Dealer Newsletter, popularly known as “The Greysheet,” along with its family of publications, is the most widely used price guide that publishes wholesale prices of coins trading between dealers.
[EDITORS’ NOTE – With the passing of Shane Downing, CDN was sold. John Feigenbaum, formerly president of David Lawrence Rare Coins, is the managing partner of the new ownership group, which includes Jim Halperin, Steve Ivy, Mark Salzberg and Steve Eichenbaum. Read the full story here.]
Retail values are found in: A Guide Book of United States Coins, which is popularly known as “The Redbook,” annually published by Whitman Publishing; Coin Values, which is no longer a stand-alone magazine, is now found in a special monthly edition of the weekly publication Coin World; Coin Prices magazine and Coin Market, part of another weekly, Numismatic News–both published by Krause Publications using the same prices; the PCGS Price Guide; and the NGC Price Guide ,compiled by Numismedia.
One important distinction between all these retail publications is the system each of them uses to compile their valuations of coins. The Redbook (and Coin Prices and Coin Market) compiles its price guides by collecting prices from dealers around the country who specialize in particular areas of the market; then editors evaluate the collected data. Coin Values uses independent “Market Analysts” to research and make “price discoveries.” The others use their own experts to maintain values, some are involved in coin trading and others operate at arm’s length, similar to the Coin Values system.
There are two schools of thought with these systems. Some experts believe that dealers are more knowledgeable and experienced in their own areas. This is true, but one concern with this system is that they can be biased and influential for their own personal benefit. Importantly, there are editors who oversee these systems. Coin Values prides itself on operating at arm’s length, however their analysts get lobbied to change values for the benefit of the dealers and collectors who lobby them and they have to make judgments about the information received. On the other hand, those dealers and collectors who lobby routinely offer valuable market information and insights. A balancing act must be performed and editors much consider the motivations of all contributors – human nature is a huge factor! And sometimes just one person, with all his or her personal biases and naiveties, mixed in with expertise, establishes values for a given series.
In addition to finding pricing information from auctions and market intelligence, dealer ads and price lists are regularly monitored from which to derive valuation data. Another important point with coin prices guides is that there are many issues of coins (date and mintmark combinations) that are not sold on the open market for long periods of time. Therefore, price guide writers must estimate values and plug them into price guides to stay current with these coin issues that don’t sell very often. This is where talented judgment comes in, to achieve accuracy.
It’s also important for price guide writers to recognize and follow trends in the coin market. When I began managing the Coin Values price guide back in 2002, an experienced dealer friend said to me, “One price doesn’t make a trend.” While I was doing that work I always kept that statement in mind. I believe it is a disservice to the hobby and market for price guide writers to not take the time to figure out market trends and just update price guide values based on one sale of a coin in one auction. As I previously pointed out, a specific coin in an auction could be a high-end coin or a low-end coin, and its auction price could skew a price guide value if it’s not compared to other sales of the same or like-kind coins.
In establishing values for prices guides I believe it’s very important to consider how values affect both buyers and sellers, and owners of particular coins. I’ve seen many people flippantly say a coin is worth “X,” not bothering to consider people’s equity positions who already own such coins. Finally, it’s also important to realize that most people typically want a discount off a price guide value most of the time. This seems to be human nature! Sometimes this is taken into account when establishing price guide values.
I’ve said for several years that price guides are the next frontier to be improved upon in the coin market, now that coin grading has been improved to the best of the ability of the professionals in the market. In my estimation, prompt timing and accuracy are the two primary concerns. I believe computerized valuation models are in store for price guides in the coin market. However, there are so many factors involved that need to be considered in developing such models, many of which I’ve addressed here, that it’s not an easy task!
Mark Ferguson is a specialist in precious metals investments and deals in all bullion products currently traded in the market. If any products or services mentioned in this article are of interest to you, Mark can be reached at (920) 233-6777 or mark@MFRareCoins.com. Mark Ferguson has been dealing in rare coins and precious metals nationally since 1969. He has written feature articles and regular columns for Coin World, Coin Values magazine, The Coin Dealer Newsletter, Numismatic News, The Numismatist, ANA Journal, and the British publication Coin News, and has writes a weekly column for CoinWeek. His website is www.MFRareCoins.com, where additional research information about precious metals is available.