Splain it to me Lucy

[rons]

I don't get it.............. First Strike coins have a premium on the PCGS price guide and apparently on ebay. Early Release have no premium on numismedia price guide and I am not certain about the bay. What drives individuals to pay more for such a stupid label? Is this a sign that the hobby has lost its power of reason and common sense?

[Jeffrey Cardona]

I don't get it either. Why did/do people fall for this marketing ploy by the TPG companies. I guess people refuse to check facts and fall for any gimmik that promises more money/value.

 

Just like shampoo directions...wet hair...latter...rinse...repeat. Why repeat? Your hair is already clean...just a ploy to use more thus buy more

[michael]

a _______ and his money are soon parted

 

fill in the blank above with YOUR answer based on your situation

[cpm9ball]

Do you think PCGS would debase one of its own slabs?

 

Chris

[cpm9ball]

I don't get it either. Why did/do people fall for this marketing ploy by the TPG companies. I guess people refuse to check facts and fall for any gimmik that promises more money/value.

 

Was it really the TPG that came up with this idea, or was it some of the marketers like Coin Vault that pressed for it?

 

Chris

[James_OldeTowne]

Our fine hobby has become distorted and disfigured to great extent by such foolishness. This is why I often believe that it is NOT beneficial to bring more "collectors" into the fold.

[johnny9434]

its almost to bad that its gotta work out that way. its still a good hobby

[RWB]

"stupid" You just answered your question.

[ultra-crepidarian]

Without people with different motivations and perspectives there would be no markets.

 

The people who post in this forum are numismatists or collectors – this is our hobby. We understand the underlying ridiculousness of paying a differential for one perfect coin over another simply because of a label. “Buy the coin not the label” is our mantra.

 

But remember “Early Releases” or the more misleading “First Strike” labels only apply to modern bullion coins. The people most involved in this sub-segment of the market are not collectors.

 

One group involved in this market is the pure investor. The pure investor cares less about the aesthetics of a coin than the underlying bullion value. The fact that collectors value a mint state gold coin more than a circulating gold coin seems foreign to them. Why does it matter? They both have the same gold content and hence should be equally valuable. Their mantra is “Buy physical gold and silver at the lowest markup possible”.

 

The third group is the hybrid-investor. This is the group of interest to this discussion. The hybrid-investors are primarily motivated by the bullion value of the coin but they hedge their bets by purchasing graded bullion. These people want to hold MS and PF 70 coins and they want to hold “Early Releases” or “First Strikes”. They hope that by holding high quality gold and silver coins in this form they can cut the volatility of constantly changing precious metal prices while perhaps benefiting from a numismatic premium over time.

 

The reason the hybrid-investor wants to hold “Early Releases” or “First Strikes” is that the market clearly pays a premium for this designation and the hybrid-investor is motivated not by the aesthetics of the coin but by its potential future value.

 

From the perspective of the collector, the market may indeed be irrational in favoring “Early Releases” and “First Strikes” designations. But given that the market clearly does pay a premium for this designation it is not irrational for the hybrid-investor to acquire these coins. It may seem to be a circular rationale but that is the way it works.

 

Hope this helps and sorry for the long post. I am a professor and I’m old, once I get started, I just can’t help myself.

 

[rons]

Thanks for a great perspective on the market, collectors, and even a little psychology Your explanation helps get to the mystery that is numismatics

[cpm9ball]

Without people with different motivations and perspectives there would be no markets.

 

The people who post in this forum are numismatists or collectors – this is our hobby. We understand the underlying ridiculousness of paying a differential for one perfect coin over another simply because of a label. “Buy the coin not the label” is our mantra.

 

But remember “Early Releases” or the more misleading “First Strike” labels only apply to modern bullion coins. The people most involved in this sub-segment of the market are not collectors.

 

One group involved in this market is the pure investor. The pure investor cares less about the aesthetics of a coin than the underlying bullion value. The fact that collectors value a mint state gold coin more than a circulating gold coin seems foreign to them. Why does it matter? They both have the same gold content and hence should be equally valuable. Their mantra is “Buy physical gold and silver at the lowest markup possible”.

 

The third group is the hybrid-investor. This is the group of interest to this discussion. The hybrid-investors are primarily motivated by the bullion value of the coin but they hedge their bets by purchasing graded bullion. These people want to hold MS and PF 70 coins and they want to hold “Early Releases” or “First Strikes”. They hope that by holding high quality gold and silver coins in this form they can cut the volatility of constantly changing precious metal prices while perhaps benefiting from a numismatic premium over time.

 

The reason the hybrid-investor wants to hold “Early Releases” or “First Strikes” is that the market clearly pays a premium for this designation and the hybrid-investor is motivated not by the aesthetics of the coin but by its potential future value.

 

From the perspective of the collector, the market may indeed be irrational in favoring “Early Releases” and “First Strikes” designations. But given that the market clearly does pay a premium for this designation it is not irrational for the hybrid-investor to acquire these coins. It may seem to be a circular rationale but that is the way it works.

 

Hope this helps and sorry for the long post. I am a professor and I’m old, once I get started, I just can’t help myself.

 

You needn't apologize for your comments. There are many people here who agree with you wholeheartedly.

 

Welcome to the neighborhood!

 

Chris

[JJSingleton]

Marketing gimmickry. All in the sake of making money on the uniformed.

 

Sadly the TPGs put dollars ahead of credibility when it comes to these gimmicks. Buy the label, not the coin they say. And there is a huge market of suckers out there that have been hooked thinking they own something special.

[ultra-crepidarian]

Last night, I bought at auction (over the Internet) a NGC 1957 PF69* Franklin Half-Dollar. I bought it at a fair price and I am excited to get the coin. The auction was held in California, I live in Texas. I saw a picture of the coin but I haven’t physically examined it.

 

In reality, didn’t I buy the slab and the coin? As experienced collectors you tend to think of the slab and the coin as separate entities. As a novice collector I depend a lot on the authority inherent in the slab. I view the coin and slab as an integrated entity.

 

Would anyone suggest I crack out my new acquisition from the slab once I take physical possession? Of course, that wouldn’t do anything to the actual coin but would it be smart to put my grade and Star designation at risk? Isn’t it true that, in a sense, the value of the coin depends on both the coin and the slab? Isn’t that how the hobby has evolved?

 

If we can think of the graded coin in terms of an integrated entity then perhaps such apparent anomalies like price differentiation between different grading entities for the same grade coins and Early Releases and First Strike premiums might make more sense.

 

The fact is that the market does indeed make these differentiations and we need to take that reality into consideration when we buy and sell coins. One very interesting modern case is the price differentiation on the 2009 Ultra High Relief P/L MS70 coin. According to the NumisMedia Price Guide the coin is valued at $4,440 for the Regular Label and $8,750 for the Early Releases Label. In this case, the label is just about as valuable as the coin! Go figure.

 

An Observation:

 

I was just reading the July 19 Coin World and there is an advertisement by a well know modern coin dealer for four piece sets of 2010 MS-70 Gold Eagles. The NGC Regular Label price is $2985 per set and the NGC Early Releases price is $3685. So you are paying a $700 premium for the Early Releases labels. But wait, it gets more interesting: the one ounce Eagles are only available in sets but the fractional coins can be bought individually in either the Regular Label or the Early Releases Label at the same price! So in reality the $700 premium for the Early Releases is entirely associated with the one ounce Eagle coin.

 

Now I know that most of us would never pay this high of a premium on a one ounce Early Release Gold Eagle but let me ask you this: If you were in the market for some fractional Eagles and the Regular Label and the Early Releases Label were the same cost, which would you put in your shopping cart?

 

[Houston Investor]

I see it as a component as seller marketing / pricing strategy. Many sellers will add a premium to the asking price for any kind of pedigree or something like first strike, etc. One fellow I know refers to the PCGS price guide for all his slabs irregardless of TPG. Another guy uses CDN as a markup basis with a premium added for pedigree, first strike labels, CAC, etc. Others use CW Values and just tack on a 10-20% premium for pedigree (omaha bank hoard), CAC, first strike, etc. As the CDN market indicator assigns about the same value for PCGS / NGC coins many in the business think its silly to dictate one price guide for one and not the other. A guy I know dropped the blue sheet, and went to the CDN just once a month (cost cutting measure). This left tabs for him to insert CW Value Trends and Bank Note Reporter so he has retail along with wholesale at his fingertips in one book like at a show for instance.

 

Pricing rare coins is a subjective process and one has to develop a pricing method which is consistent in pricing the coin and where it falls in the grade range not to mention an ROI yield in line with the business profit plan. There are many price guides out there: CW, CDN, PCGS, Numismedia, etc and we could argue all night which one is superior.

 

In reading the post above, I am astounded someone would pay a $700 premium for an early release label on a coin that melts for approximately $1200. What a fantastic profit in itself for that dealer for a bullion coin it cost him probably $15 to slab. Those people paying that are probably rarer than the coins themselves but just one would pay for his ad. Who says bullion coins are just low markup? I do recall the ad mentioned and many find it a useful tool in pricing their material. When you go to sell that bullion material at a shop, they will probably just offer you melt (if even that much) regardless of label or slab grade. I see it all the time at shops I visit in the Houston area and at shows. The statement they give "I can pay you 98% of melt, the refiner only gives me 97%."