World Colonial

There are a lot of directions this thread could take. If your question from the title of this thread is measured by the price level, this is a very imprecise metric. I understand why people do it, but it doesn't really provide an accurate reflection of the state of collecting as a hobby. The example from the article is primarily reflective of financially motivated buying and so are most other purchases anywhere near or above this price, especially for US coinage. For all but a handful of buyers, there are plenty of comparable substitutes (either in slightly lower quality or another date/MM) at much lower prices. To anticipate a possible reply, the distinction I am trying to make is that while no one may buy an expensive coin believing or intending to lose money, presumably they will be more willing to risk it for the low proportion of coins with higher collector appeal. The only reason this coin sold for $34,000 previously is because it was bought during an unprecedented speculative environment.

It's this one though you will have to read much of the article to get to it. https://coinweek.com/opinion/at-the-ana-many-attempts-to-bridge-the-coin-collecting-divide/

The one I saw was by Charles Morgan in Coin Week where they referred to or quoted him. It's in the OP in a thread on this forum a few years ago. I did read part of the link. If anyone held a losing positions for a bubble coin they had then, there is good chance they are still deeply underwater now. I don't buy coins as "investments" but if I did, I'd still cut my losses when I conclude I was wrong. That's what I do with anything else. In the past when I haven't, I usually ended up losing even more.

I agree with you, assuming anyone would even make a market in such an instrument at all. If anyone would, other than the hypothetical generic US pre-1933 gold/Morgan dollar fund, it's not going to be any financial services firm (hardly) anyone knows. Likely, it would be some metal dealer or firm in the coin business. Look at the spread in bullion coin silver like ASEs since late March. It's down noticeably from the peak but still a lot more than this now (well over 10%) and this is for an asset that is traditionally easy to sell. I believe the spread would be much larger, since it should be a lot less liquid.

No, not this coin or even the series specifically. Only that I have seen similar reports for numerous coins over the years across different series. There was another thread here several years ago linking a Coin Week article where apparently, dealer Scott Travers still had a Barber quarter in a similar grade he bought at (or near) this time that used to be worth over $30,000 more recently worth about $6,000. This is my recollection though I may not have the exact specifics. The article mentioned the coin but didn't comment on the grade.

Yes, I have read that. I presume it's primarily directed at stocks such as Amazon and BRKB which trade for thousands since low or no fee commission stock trading has reduced or eliminated most if not all of the motivation for stock splits. Either that, or companies finally woke up and realized it's a waste of money to attract this type of stock buyer. This indicates that the existing long term financial mania has plumbed new depths.

To my knowledge, yes. This also highlights the difficulty of pricing the fund and valuing any fractional interest. Probably need to use a combination of CCE and Greysheet for generics and CAC for everything else. There isn't a standing third party bid for anything else anywhere else that I know. This limitation would potentially noticeably limit what the fund could or at least would likely own. Otherwise, there would be constant "slippage" in both directions every time a fractional interest transferred.

To the prior posts on the Teletype System, I saw it at one dealership in 1977 or 1978, World Numismatics in metro Atlanta. It sounded like a dot matrix or similar printer which it probably used. My understanding is that it was the predecessor to the CCE but not sure what coins were covered, since certification was limited and this was prior to NGC or PCGS..

I infer you are attempting to be nice about it but there is no "seems" in the equation. It's theoretically "possible" one of these fractional arrangements "could be" as liquid as GLD but no actual reason to believe it and no actual evidence that it would be. GLD is a multi-bullion dollar ETF (77.1B as of today's close) tracking one of the more liquid assets in the world (somewhat less recently). As I write this post, I see a bid of $178.30 and an "ask" of $178.35. There isn't a reason to believe any fractional collectible instrument will ever trade for a remotely comparable spread or at anywhere near an equivalent buy-sell commission ($0 for listed ETF's where I have my account) either. Except maybe the one exception I provided holding pre-1933 US generic gold and common Morgan dollars, no such instrument would have any realistic possibility of trading on an exchange. It would never meet exchange listing requirements and no firm of any significance would likely act as a market maker for it either. What this combination means is that it would have higher recurring management fees + higher transaction costs + higher buy-sell spread if it had one. Not just a little higher but a lot, both proportionately and absolutely. As for volatility, GLD has a 52-week range of $136-$194. This isn't exactly stable but potentially a lot less volatile than any coin fund. The only reason I can see it would not be is that the coins held may sell so infrequently that no one really knows what it's worth at any point in time. This isn't unusual for other funds (real estate or bonds as examples) either. Another risk with a coin fund is that if bought at a (substantial) premium to NAV, everyone would take a hit upon liquidation, even assuming it was accurately valued. This isn't an inconsequential factor given that higher than average expenses would require it to either intermittently sell more shares or regularly pick winners it would periodically sell to have cash on hand. Even in a decent market, there is no guarantee either option would be available. If anyone wants a coin themed investment, wait for a favorable entry point to buy CLCT. Or if someone has the connections, buy into a successful coin dealership. Both should or will more consistently make money than the vast majority of coins.

Structurally, yes it is but this doesn't indicate anything about who will buy a similar paper substitute (coin or otherwise) and hold it. The difference is psychological and cultural.

This episode is also evident in the PCGS 3000 and component indexes, even now where prices have not fully recovered for many of the target coins. Some of it is presumably due to "gradeflation" where a prior MS-65 may now be an MS-66 but even accounting for this, many and maybe most of these coins are still big losers, certainly adjusted for purchasing power which is what actually matters to individuals (as opposed to institutions).

The primary point I was trying to make here was that it's easy enough to assume a different reality by attributing motives to people they obviously don't have or don't demonstrate. That's what I see from posts which disagree with me, both here and with claims that non-collectors want to buy any mega-priced coin. They literally almost never do because if they did, they would be doing it now. It's credible that a low to very low number of existing collectors might find this arrangement appealing because they are already collectors. It's credible that non-collectors might also be interested in buying metal substitutes (pre-1933 gold and Morgan dollars) as it's evident from the population data that most of this coinage isn't owned as a collectible. A third option I didn't mention before is institutions. There is a lot of dumb money buying all sorts of garbage, both now and in the recent past. This is the only realistic possibility where anyone would buy coins as "widgets" while ignoring the behavior of actual collectors. A fund manager may do it because it isn't their money if they believe they won't get fired and it won't put them at a competitive disadvantage by underperforming their benchmark. Other than these three reasons, there isn't any realistic reason to believe this is going anywhere. Maybe a handful to low number of funds will exist but there is no reason to believe it's going to make any long term difference to the price level of hardly any coins which is the entire purpose for doing this in the first place.

True. If it's a small circle of individuals who know each other, the primary difference I see is formalizing what is a current informal arrangement. If it's going to be treated like a fund, I don't see how it could be much less than the numbers I gave, as there would be no motive for any financial professional or financial services firm to bother with it. Earlier posts referred to a fund as small as $1MM. Is it likely that such a fund (even noticeably larger) would have annual expenses of 50 to 100 bp? For a $1MM fund, seems hard to believe it could be done with professional management for $5K a year. With marketing, whatever the format, it would be a drag on returns. Except under what I would describe as highly optimistic expectations, anything similar to the Stanley Gibbons brochure would make it even less appealing. The trade-off here would be between lower returns from increased fees and varying levels of liquidity.

Not 100% sure either way. I later read that one was liquidated at a loss. But yes, you are 100% correct that someone else "front ran" these funds to run up the prices of the (potential) target coins. If this is ever attempted on any meaningful scale, it will happen again. There is no scale in "investment" eligible coinage, except in the context of a low number of somewhat affluent individuals. There isn't even a unified coin market, even within US coinage since collectors don't collect this way. Within the collector base, some coins have broader appeal than others and will be bought at a believed to be favorable price but it's not the same.

For the non-collector, I believe pooling funds would work best for "widget" coins such as pre-1933 gold (not the 1933 Saint) and Morgan dollars, as these are the coins I infer from the population data that they are buying for the largest aggregate $$$ anyway. Not sure it would accomplish what i surmise, but if it did I could see that it would have the most appeal financially. The total amount "invested" still wouldn't be meaningful (maybe a few hundred million).as anything noticeably more would run up the price of the component holdings and make it uncompetitive with alternative metal options. For the collector, I think you are right. However, I still think this has very limited appeal, as most of the most expensive US coins are only condition rare and not prominent. Apparently, I wasn't clear. I was referring to common US gold dated before 1933, as opposed to modern NCLT. I agree. Regardless of the format, I don't see any practical difference in the outcome with the prior LP from Merrill Lynch and Kidder Peabody if it has any scale at all (even in collecting terms) and isn't primarily directed to collectors. If it's a professionally managed fund, I'd guess the annual costs would be at least 2% of the fund's net assets, maybe somewhat less. If it's a real small fund, maybe noticeably higher, both depending upon whether it must comply with securities regulations. Look at the substandard performance reflected in the US coin price level since at least 2008. Sure, it can be better in the future but it's a much tougher sell to the non-collector now versus then. The CVX comparison was only an example but no rationalization can get around an 8% to 10% annual yield differential out of the gate. The "hobby's" financial promoters can pretend this doesn't matter but no knowledgeable financially motivated buyer is going to believe it. This poor performance also occurred during two big run-ups in gold and one in silver and the loosest credit conditions in history, the latter being the real cause behind the increase in all asset classes over the last 4+ decades. Buying it for mindless diversification (diversification for the sake of diversification) doesn't necessarily improve risk-adjusted returns either. I'd argue it increases your risk since it's a potentially more volatile asset.

I understand your point but it doesn't change anything I wrote. The mechanics of the instrument don't change the fact that the coins in this fund have to sell for perpetually higher prices as "widgets" since it is obvious that prices cannot exceed the financial capacity or willingness to pay of real collectors who are the only ones buying it as a collectible. In my subsequent posts, I clarified that maybe those who are buying coins for "investment" now (primarily generic pre-1933 gold and Morgan dollars) would instead use this format but that's more like switching money from the left to right pocket.. None of what you wrote is going to make this option more competitive versus the better alternatives. (like CVX now in my example) to motivate them to buy it if they understand what they are doing. Your post still don't explain why anyone who would want to buy it. What you have been trying to tell me isn't any different than what you wrote before about the plausibility of some Chinese buyer wanting the 1794 SP dollar. If this is credible, when and how often has it happened and why would this format make much if any difference? Where is the evidence that the prospective returns will be better even as the liquidity is much worse? It isn't a matter of absolutes but probabilities and the available evidence supports my claim, not yours. . To support my claim, I don't to disprove that somehow, somewhere in the world, a handful or very low number of buyers might randomly decide to agree with you. In the real world, there is no evidence that hardly anyone is going to act as you imply. This type of arrangement will last only until it prices out real collectors.

The report covers "investments of passion" but is more directed to Stamps. I only read part and it is a lot less biased than some claims I read elsewhere. However, it still cannot avoid the fact that the ultimate end-user is the hobbyist collector and for it to be sustainable, non-collectors have to be willing to perpetually trade coins as "widgets" at perpetually higher prices. There is no basis to believe this whatsoever. Given their target market, I don't see how it could or can succeed. The "Product" Development" page states the minimum is 15,000 GBP with at least 1,000 GBP upfront and 100 GBP monthly thereafter. There is no money in that for the sponsor which can concurrently make it worthwhile for the customer. This is evident in the table where they highlight the profit sharing. The buyer gets 30% of the profits if selling within the first year and 80% after five years while taking all the risks. If there are no profits as is hardly uncommon, it isn't clear to me how Stanley Gibbons would make more money than as a dealer or auction firm, unless it's at acquisition through higher fees. There is a reason full service brokerage firms dump their smaller accounts into a common pool or limit them to online trading. Full service as implied in this brochure is too expensive to bother with run-of-the-mill middle class customers. The best option for coins would either be a pooled account traded like a fund but it would be subject to securities regulations which would result in a noticeable annual negative yield. Or, a low number of participants who already (mostly) know each other buying individual coins of interest to them. Under either option, there is no reason to believe that it is superior to the alternatives, for both the reasons I gave and included in this brochure.

The problem with this concept starts by extrapolating acceptance in another area to coins. A very low proportion of US "collectors" might have interest in a very low number of the most prominent US coins depending upon the arrangement but there isn't necessarily any reason to even believe it here. As for non-collectors, it's equivalent to the same claims for buying the most prominent coins outright. Since there is no shortage of potential affluent buyers, it's obvious it's only because these people have no interest. Most non-collectors have never heard of practically any (if any at all) of these coins but even if they had, why would they want it other than because someone else thinks they should? There is no credible motive for any non-collector to opt for this arrangement, whether it ever happens or not. No coin is competitive versus the alternatives as an "investment", even though on very infrequent occasions some uninformed buyer might make more money. It has absolutely no status value either to these people which some of the others (such as race horses) do. Only collectors derive any satisfaction from coin ownership. That's the defining characteristic between coin collectors and those who aren't. They certainly don't from the attributes discussed on US coin forums which have a disproportionate impact on the price of even most of the most expensive coins, such as the quality reflected in the TPG grade, as no actually prominent object is dependent upon such an arbitrary and minor attribute for its appeal. This only applies to mass produced collectibles.

In the 1970's and 1980's, there were telemarketing firms selling 'rare" US coins (generic pre1-933 gold, Morgan and Peace dollars by the roll) as "investments" to non-collectors. One was the publisher of the "newsletter" Capital Gains which advertised this type of coinage in every issue at inflated prices. The "newsletter" was ok (very repetitive) but I never bought anything from them. I don't know if this type of sales approach is used today. Today, it's my inference that bullion dealers like APMEX and eBay have displaced them. Also, both now and then, that most of the more common Morgan (and Peace) dollars are owned primarily for financial reasons, probably by non-collectors buying it as a substitute for bullion.

I was referring to the coins, not the GSA holder. I infer from the TPG population data that some of the holders are "rare".

The one way trip from the bank to the change jar is primarily a function of the non-existent purchasing power in current denominations, even among those who pay regularly with cash. I normally pay for everything by CC to get the points or rebates but I still carry up to several hundred in folding money. I don't like to be without (hardly) any currency like most seem to now. Concurrently, I never carry any change and try to avoid receiving it back because it doesn't buy anything. Other than paying Florida tolls since I don't live there, I recall maybe a handful of times in the last five or ten years where I had to pay in cash and received change back.

Without having direct knowledge, this is my inference in other areas mentioned in other posts, like race horses. I can see that the owner(s) of the recent triple crown winner made out like bandits. Most of the time, I'd say they lose money or lay an egg. For big ticket prominent coins, I can see that it might have limited appeal where a very low numbers of buyers pool resources. But by "prominent", I'm only referring to a very low number of coins and realistically almost exclusively US. Most seven figure US coins (the vast majority) don't have sufficient appeal even among collectors. I see the primary candidates in the segments where most of the coins are already predominantly owned by non-collectors; common pre-1933 US generic gold and Morgan dollars. Take a look at the TPG population counts and it should be evident that there aren't anywhere near enough actual collectors for all the 1904 double eagles, common Saints, or 1881-S Morgans. It would make sense to create a buyer pool to acquire hundreds or even thousands of these coins. The coins are already relatively liquid (more liquid than any others except for NCLT). Administrative overhead would also be lower. The buyer would just have to be careful to avoid being defrauded by the custodian or administrator. To this pool, some of the scarcer better dates could also be added.

This Non-collectors (the few who ever actually do it) don't care about possession but real hobbyist collectors do, most even if not every single one. Per your prior post, I'm only aware of two or a handful sharing ownership (usually dealers temporarily) and it's like you said, they aren't strangers. I can't say that owning a 1% or similar interest won't appeal to any collector but it isn't many and don't believe the novelty effect would last long either.

Your first paragraph goes along with one of my primary points. It's my position that the US TPG bubble in the late 1980's was also a "one shot" deal, just as occurred with South African coinage up to about 10 years ago shortly after TPG financialized that coin market. No, history does not repeat itself exactly but contrary to what the financial promoters of the "hobby" want to everyone else believe, essentially nobody else cares about the price performance of coins, US or otherwise. It's an illiquid tiny market which isn't competitive for any non-collectors assets. Buying into this type of market when the person has no clue what they are doing is a highly risky financial proposition and except by accident, almost guaranteed to lose them money. Most collectors lose money over their lifetime, so what reason is there to believe the outcome will be any better for this option?

I think it is safe, for now. The reason I used CVX is because it's one of the few companies I know that both has a good balance sheet and is "reasonably" priced in today's manic market. As for your other question on whether there is any actual fractional coin ownership outside of what some or many us already know, good question. I read numerous comments inferring (at minimum) it's feasible but haven't seen even one example of where it actually happened. Not that one or a few even mean much of anything.