By Mark Ferguson – MFRareCoins.com
The prices that coins have sold for at auction contain very valuable market information. This information is used in a variety of ways. Increasingly, these values are used by buyers of coins who want to know how much like-kind coins have been bringing on the open market so that they don’t overpay for coins they are buying. This use has been greatly enhanced by the Internet.
For example, Heritage Auctions provides a very efficient Internet resource for searching their auction sales, by coin issue, for values that coins have sold for. The PCGS website also has a search function that lists auction prices realized from several different auction firms – all by coin issue. Most auction companies list their prices realized from each sale on their websites. These are usually displayed as a list comprised of auction lot numbers and the prices the coins sold for. You’ll need an auction catalog, either a printed copy or an online listing, that provides descriptions of the coins for each lot; then you can look on the list to find the prices those coins sold for.
Price guide writers use prices realized from coin auctions as the basis for establishing the values they publish, especially for higher end coins. Prices for common modern coins or other circulated coins not normally found in auction sales are derived from other sources. Coin appraisers also use auction prices realized for performing appraisals, for estate purposes, for example.
Importantly, the interpretation of what is represented by the prices coins have realized at auction is of key importance to using these values. For example, one auction price for a coin issue does not make a market trend. That coin may be a high end example which sells for a much higher price than average coins for the issue typically sell for; or prices can go to the other extreme on the low side. Therefore, a trend must be established. A market trend should also be large enough to represent what’s going on in the market. Just two or three sales of a coin issue may not be enough to really give a good picture of the true market value trend of a particular coin issue.
This brings us to the point of this article. Rare coins sold at auction are purchased by both dealers and collector/investors. On the very high end of the market – let’s say for an 1804 silver dollar or a 1913 nickel, examples of both which have realized $3,737,500 at auction in recent years – prices don’t matter whether these coins have sold to collectors or dealers – it’s “the market.” At the other extreme, a common MS 67 1879-S silver dollar, graded by either NGC or PCGS, may have sold for anywhere between $575 and $862.50, which has been the recent trend.
Obviously each of these coins is unique and has different characteristics, but the average of these two points (not the whole) is $718.75. Does this mean this is the price a “retail” collector is paying for this coin issue? Or do auction prices represent dealer “wholesale” prices that get marked up and then sold to collectors at a higher price? Many coins purchased from auctions by dealers also get re-sold to other dealers who then sell them to collector customers, or even again to other dealers.
One belief is that auctions are “wholesale” venues and collector/investors can reward themselves by buying at the “wholesale” price level by going through the work of buying this way. Others believe auctions are “the market” and there is no “retail” or “wholesale.” Many dealers represent collector clients at auctions and help them by viewing the coins and offering advice and then bidding on those coins in the auctions, services for which they receive a commission. I have also done this for clients on a flat fee basis so that if a coin sells for a high price my client doesn’t have to pay me a higher commission, and I also get paid for my time and expertise either way, whether we win the coin or not.
Similarly, collectors who buy at auctions must take the time to do their homework by looking at the coins, either in person or online, researching and figuring out the prices they will pay for the coins and then travelling to the auction venue or taking the time to place bids online. In essence, they’re doing the same work a dealer does, so does that mean they are buying at “wholesale” from auctions? So maybe coins sold at auction deserve “retail” price markups to find their true market values.
There may be no clear cut answer to the question posed by the title of this article – just opinions. If you have “the answer” or want to share your opinion about whether coins sold at auction represent “retail” or “wholesale” values – please submit your comments to CoinWeek. Thank you.
Mark Ferguson has been dealing in high-end rare coins and precious metals since 1969. He has graded coins professionally for PCGS and was the Market Analyst for Coin World’s Coin Values magazine between 2002 and 2009. He has written feature articles and regular columns for Coin World, Coin Values magazine, The Coin Dealer Newsletter, Numismatic News, The Numismatist, ANA Journal, Coin News – a British publication, and currently writes a weekly column for CoinWeek. He is a recognized authority in appraising rare coins and a recognized expert on the 1804 silver dollar, which is known as “The King of American Coins.” Mark can be reached at Mark Ferguson Rare Coins, LLC (www.MFRareCoins.com).