grading service designation insurance?

[truthteller]

With all the discussion, do you think Lloyds of London, State Farm or ANA will provide 'designation" insurance for the grading services? Just in case.

 

 

TRUTH

[RobertB]

With all the discussion, do you think Lloyds of London, State Farm or ANA will provide 'designation" insurance for the grading services? Just in case.

 

 

TRUTH

 

They would never do that. It would be a sure loss!!

[LAWMAN-migration]

This idea is how you make the whole system really accountable. I would bet that the services have some kind of insurance backing them up for when they get it wrong. This would creat a whole intermediary insurance market, like re-insurers. Hmmm.

[michael]

well if lloyds would charge for designation review insurance for the guarantee of deep cameo proof designations for pre 1915 federal coinage and cameo proof designations for 36 to 42 cameo coinage

 

one grading service located on the west coast would not be able to get the insurance as their payout rates would be greater than the premimus no matter what premium lloyds would charge

 

michael

[Newmismatist]

Designation of what?

Grade?

Color? (Copper coins)

Strike attribution?

Pedigree?

 

Or a separate catagory for each with a separate premium?

 

One easy way taking the 1927-S MS65FH SLQ as an example: The insurance premium would be based on risk, so the buyer would have to have the insurer assess the risk - The insurer would look at the price differential, and say to the buyer, if you want to pay $250K for that coin, and you want us to insure that it's a FH, they would have to then set a "premium" for that risk (maybe @ $244K) - High risk of possible loss, high premium. On the other hand, if it were a 1930, the premium would be considerably less. Who would the insurer being insuring? the Buyer or the TPGS? Probably would make a difference in the premium. Who determines the value differential? the Grey Sheet (thy've never bought a coin to my knowledge) Auction sales, dealer ask prices?

 

I doubt if any insurers will be wading into this market which is solely based on someone's opinion as to what they think is the grade of a coin on the day they graded it. It's difficult to quantify by actuarial detemination the accuracy ( risk ) of someone's opinion.

 

Interesting question - sort of like: Can you buy insurance on the stocks you buy to prevent you from incurring looses if the market goes down? I know of no such insurance, is there any such thing, If so there's probably more than one person who's gonna sue his broker for not telling him about it when they recommended that the investor buy Enron & World Comm!

 

 

[chinook]

Actually you can buy "insurance" on stocks. To "insure" against a stock going down one can buy a put option. This gives you the right to sell a stock at a predetermined price up to a predetermined date in the future.

 

For example: IBM as I write this is trading at $89.17 per share. Lets say you buy 1000 shares but want to protect your investment against a big loss. You can now buy 10 puts ( 1 put covers 100 shares) with a strike price of 85 that expire on the third friday of January 2004. You will pay a premium of $235 per put for a total of $2350.

 

This now gives you the right to sell your 1000 shares of IBM at $85 at any time up to January 16,2004. If IBM goes down to $65 then you can exercise your put and sell the stock for $85. You lost money ($7267) but you would have lost over $24,000 if not for the put. You could minimize the loss by buying a put with a different strike price or maturity.

 

 

[LAWMAN-migration]

Why not a coin futures market? Common and rare. This is one where you would actually want to take delivery, but the questions is at what price and how far out? Would, of course, have to be slabbed by the best in the bus (NGC or PCGS). Let everybody predicting how long this bull market will go, put their money where their mouth is. Anybody want to buy futures on extremely high grade common coins? How about patterns, Barber proofs? That is one way to put it all to the test.

[Newmismatist]

Why not a coin futures market? Common and rare. This is one where you would actually want to take delivery, but the questions is at what price and how far out? Would, of course, have to be slabbed by the best in the bus (NGC or PCGS). Let everybody predicting how long this bull market will go, put their money where their mouth is. Anybody want to buy futures on extremely high grade common coins? How about patterns, Barber proofs? That is one way to put it all to the test.

 

I'd rather collect coins

[jom]

Hey all! I've got a wonderful, novel idea! How about this:

 

How about everyone being PERSONALLY RESPONSIBLE for their own GRADING and NOT having to rely on the grading services? You can use the TPG for an OPINION, which it only really is after all but not as a FACT.

 

Not only would this diminish the control the services seem to have over the market I wouldn't have to read all this crappy ( ) posts about moral and legal issues of grading. We could actually talk about COINS for once!

 

Now ain't that just a wonderful idea?

 

jom

[SilverEagleCoins]

When I was first reading the title I assumed the insurance was to make sure the coin is as labeled. For example Jadecoin bought a coin expecting the coin's pedigree to match the label details. Jadecoin then takes out a policy on that label. Since then, Jadecoin finds out the coin did not match the label, the insurance company would pay out to Jadecoin.