The collusion game between big eBay sellers

Simplistically, there are two things that drive the price of products - supply and demand. We all took Economics 101, or have heard of this relationship before. For collectors of certified coins who participate in the registry, these two things boil down to:

Supply = certified coin population counts (primarily NGC and PCGS)

and

Demand = Number of collectors interested in a particular set

Simple economics, right? Well, not so fast. There are a few additional variables to mix things up.

Even if populations are relatively high, if all of the available coins are in the possession of shady dealers, collusion (be it direct or indirect) is a fairly common practice. And collusion amongst all of the big dealers is basically the same as a monopoly (it is by definition an oligopoly). The hot-bed of collusion has really been eBay. This isn't a new development and this is something I'm sure someone else has written about at great length. The way it works is the following:

1) Because eBay allows selling as "Buy it Now", throwing the idea of the auction out the door, a dealer can ask whatever he wants when he/she lists a coin for sale.

2) All of the reasonably priced coins of that type are eventually purchased, leaving the inflated priced coins to sit on eBay for months, if not years at their ridiculous price levels.

3) A new collector to a set wants to complete his/her set with the best coin available. Because of the process I just explained in points 1-2, the only coins he/she can find are on eBay and are at ridiculous collusion-fixed prices. He/she buys a coin at this price -- and gets screwed in the process -- but additionally encourages these sellers to keep their prices high.

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The most obvious example of this process in the world at large is the price of diamonds. More than 90% of all of the diamonds mined in the world currently sit in warehouses to maintain a "favorable supply" for the diamond sellers. There is no sugar-coating this practice -- it is PRICE FIXING. Limiting supply available to the general public so as to maintain high prices.

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My experiences with this phenomenon in coin collecting are mostly limited to the coins I collect. Thus, I know this problem is particularly rampant for modern coins (or as some of you call them "ultra modern" coins -- or as others call them, "modern trash"). These coins are what I collect, because they are what I enjoy. I'm not going to get into some political diatribe or defensive state to justify this choice. I'm merely using this to illustrate my point in an arena that I know well.

EXAMPLE: I have been looking at a particular modern coin for one of my sets for some time. In fact, for well over 9 months. The market for this particular coin is currently pretty stagnant -- of the 6 available examples of the coin on eBay, they are all priced above $600, and NONE have been up for a real auction in the past 9 months. Accordingly, none of them have sold...one has been posted on eBay for more than 18 months!!! These 6 examples are all NGC graded, and come from an NGC population less than 20 coins, none finer. (Strangely, and tangentially, there are 60 PCGS coins of the same grade, none of which have been listed on eBay in the past 9 months.) The Numismedia FMV for the coin is $125, THUS, all of these coins are listed at more than 4 times the current Numismedia FMV. The only PCGS value I have seen listed was $450 about a year ago, but as we all know, that value is highly inflated and modern coins rarely sell at the PCGS value (besides the fact, NONE of these coins for sale are graded by PCGS -- so this is a moot point).

I have placed several offers for this coin using the "Make Offer" button on eBay. Four of these 6 available coins are "controlled" by two of the regular culprits...whom I will not name here, but if you want to know who I am talking about you can send me a private reply to this post. These two dealers (er...I mean eBay commercial sellers...) rejected my offers of $400 and subsequent offers of $500. They did not reject these offers with a cordial email reply, but rather by means of the "auto-reject" method on eBay. I have never won an item from these two sellers, and try to avoid them at all cost -- this was just reaffirmation that my opinion of their dealings over the past 2 years was accurate.

This week I placed an offer of $400 for one of the remaining 2 coins listed on eBay. I didn't get the automatic-reject message, so that was a first step in the right direction. My offer was recanted with a counter-offer of $550 (halfway between the posted price of ~$700 and my offer of $400). The counter-offer was accompanied with a nice note, and cordial reply. I sent a personal note to the dealer laying out the population facts, the details of why my offer was fair, etc. I received a very detailed email in reply, that was again cordial, factual, and extremely respectful. In summary, we agreed on a price acceptable to both of us, and well below any current price on eBay. THIS seller was a true gentleman and it was reassuring to me that, despite many money grubbing almost criminal sellers on eBay, there is hope and still integrity among some.

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