Fractional ownership... of baseball cards... ? This can't be good. 0

[GoldFinger1969]

8 hours ago, Conder101 said:

Hate to tell you but this has been going on in coins for years already.  It isn't too unusual for high end coins to be jointly owned. Leon Hendrickson had a partner back when he bought the Dexter 1804 dollar back in the 1980's.  He did eventually buy out his partners share a couple years before the coin nearly became the first coin to sell for a million dollars (sold for $990,000.)  I've known of many coins that have been purchased at auction by a joint partnership.

But 2 guys who know one another partnering on a coin is one thing.  They know each other...trust one another...can split ownership of the coin.

Big difference when you have 1,000 guys each with a $10,000 share on a million-dollar coin.  Can't be passed around, nobody knows anybody in the group.

[GoldFinger1969]

4 hours ago, zadok said:

...regard the 1794 SP dollar...its not that there weren't non-collector investors that wouldn't buy it, it was more that those investors wouldn't buy it at the reserve price...

People who are not serious collectors have to KNOW about the coin....know it's available...know the story behind it.

The 1933 Saint-Gaudens that went to auction in 2002 was well-known to many wealthy non-collectors because Saint-Gaudens was a sculptor...the coin's pedigree was well-known....many wealthy people owned a premium Saint or their parents or grandparents did and told them about it.

[World Colonial]

24 minutes ago, zadok said:

...oxy-moronic statement...commodities r financial assets, all stocks r speculations n financial assets...im sure the irs n many financial institutions would strongly disagree with ur assessment...

I never said commodities are financial assets.  Where did you get that?

As most people define it, there is no difference between "investment" and speculation.  I can elaborate further if necessary.

I was writing about scale and liquidity preference which matters.  As one example, I can buy oil major Chevron which has a current yield of 7.5%.  I believe the price will decline further, the dividend will be cut, it's in an out of favor industry and in a asset class (US stocks) which I consider absurdly overpriced. I would still buy it strictly for "investment" over any coin worth any meaningful price and so would practically every non-collector, if choosing between the two.

In the interim assuming the dividend isn't cut (which neither of us actually knows anymore than the future price of either), anyone can collect the 7.5% and trade it with zero commission at a spread of one or a few cents.  The tax treatment is also far more favorable due to capital gains rules especially if you buy it in a Roth.  Depending upon the person's liquidity preference, they can also sit in cash to time their purchase.  Yes, I know no can time the market but everyone still does it even under "buy and hold".  There is only good timing and bad timing but it cannot be avoided, even if not actively trading.

The coin?  It carries a negative yield due to variable carrying costs.  It's also much less liquid to sell, whether outright or fractional ownership.  If the fractional ownership makes it subject to securities regulations, the carrying costs won't be insignificant.  This is more likely for any attempt to sell "mega-priced" coins or a "coin portfolio" to non-qualified investors.

Claiming any coin is a better alternative over CVX is a complete "cr*pshoot".  It could turn out to be better, eventually.  But I don't think hardly any impartial buyer would think so.  Mostly coin collectors who would choose it anyway.

[GoldFinger1969]

9 hours ago, World Colonial said:

None of this has anything to do with collecting.  Anyone it brings into "collecting" will abandon it, just as the "collectors" who participated in the late 1980's TPG bubble when it collapsed.   Same thing with the South African speculation when the price peak occurred around YE 2011.  It took a few years but these buyers also left, many of them bag holders.  It won't be any different next time.

I'm not so sure about this.

If a "bubble" does develop you may be right.  But you also may just develop a new form of competition for high-end coins that wasn't there previously.  You could have people creating what we used to call "blind pools" and today are called SPACs (Special Purpose Aquisition Companies) where a large number of people give $$$ to someone to invest.

I could see someone raising $1 MM or $2MM or even $5 MM for "The Saints Collective" and only buying high-end Saints and reporting back to his/her hundreds or thousands of investors.  Similar to the old Merrill Lynch/Kidder Peabody pooled funds that never materialized but still led to a stampede in 1988-90. 

This may run into CFTC, SEC, or other state/federal investment or commodity laws.

 

[GoldFinger1969]

55 minutes ago, zadok said:

...oxy-moronic statement...commodities r financial assets, all stocks r speculations n financial assets...im sure the irs n many financial institutions would strongly disagree with ur assessment...

Stocks and bonds pay dividends and/or participate in the REAL growth of the economy.  Precious metals and coins do neither.

[GoldFinger1969]

1 hour ago, World Colonial said:

I'm aware this is possible.  None of this ultimately gets around the fact that the ultimate end user for coins is the coin collector.  I see absolute no basis to claim that non-collector "investors" are going to perpetually trade coins (fractional ownership or otherwise) with each other at constantly higher prices as "widgets" while collector hobbyist buyers mostly or entirely sit and watch from the sidelines.  If you are telling me this is already happening, my response is the one I gave before.  What this thread (not just you) is describing is just one more aspect of the full blown mania which has been going on for over 20 years.  (It started in the early 80's shortly after coins were firat widely bought as "investments".   Most people have no clue it's a mania because they think it's "normal".)  Given the absurd financial behavior we see in other areas, I'm certainly not going to tell you it will never happen.  I am going to tell you that if it does, it will only last as long as the bigger bubble which makes it possible.

Outstanding post, WC.

Ultimately, people have to be willing to HOLD PM's or coins and not based on The Greater Fool Theory of someone coming along to pay more.  Stocks and bonds can be held because they participate in the growth of the real economy and/or pay dividends and interest. 

Coins do neither.

That said, I can certainly see a few isolated "blind pools" or SPACs dedicated to coins coming out.  But its one thing to simply pool existing $$$ from existing coin collectors.  Let's see MORE people become coin collectors and/or more WEALTHY individuals want to spend $$$ holding PMs and coins (maybe some of the Silicon Valley super-rich  ).  That would expand the coin collecting base...bring in new $$$ for many years or decades (not a 1-2 year bubble)....and maybe enrich people to understand that coins are not just pieces of metal but art, history, and our nation's story all rolled into one.

Edited October 30, 2020 by GoldFinger1969

[GoldFinger1969]

WC....FWIW....I believe Chevron's dividend is safe.  Good balance sheet. 

Edited October 30, 2020 by GoldFinger1969

[GoldFinger1969]

Just a thought....has ANYBODY been talking about or hearing about fractional COIN ownership ?  Or did we just segue into it from baseball cards ?

[Revenant]

8 minutes ago, GoldFinger1969 said:

WC....FWIW....I believe Chevron's dividend is safe.  Good balance sheet. 

I never thought I'd see a day where I was watching XOM drown slowly to defend a dividend.

I work in oil and gas so my wife is opposed to buying the stocks of such companies. She doesn't want a downturn threatening my job and our stocks at the same time. 

But I digress...

[Revenant]

Just now, GoldFinger1969 said:

Just a thought....has ANYBODY been talking about or hearing about fractional COIN ownership ?  Or did we just segue into it from baseball cards ?

In my OP I said I didn't want this coming to coins and it spun off from there.

[GoldFinger1969]

6 minutes ago, Revenant said:

I never thought I'd see a day where I was watching XOM drown slowly to defend a dividend.

I work in oil and gas so my wife is opposed to buying the stocks of such companies. She doesn't want a downturn threatening my job and our stocks at the same time. 

But I digress...

XOM made some terrible decisions like buying XTO Energy when natgas was $7/mcf.  They paid $40 billion for something probably worth $10 billion at most.  And they've been pursuing growth instead of worrying about the balance sheet.

Your wife is actually pretty smart.  No need to double-up with both your job and financial investments in 1 sector.  That said, there could be a once-in-a-lifetime buying opportunity in coming months for the whole sector.

Paul Sankey, my old colleague, is now setting up his own shingle and his commentary and thoughts on the sector are free (at least now) if you want to read them.  Paul is probably the preeminent energy analyst the last 3 decades:

https://www.sankeyresearch.com/2020/10/18/sunday-fall-sankey/

Edited October 30, 2020 by GoldFinger1969

[GoldFinger1969]

7 minutes ago, Revenant said:

In my OP I said I didn't want this coming to coins and it spun off from there.

Well...in fairness these Forums are about coins so I guess going off tangent from baseball cards to coins is allowed. 

I find both interesting so let's keep talking about 'em both.  

[World Colonial]

11 hours ago, GoldFinger1969 said:

I'm not so sure about this.

If a "bubble" does develop you may be right.  But you also may just develop a new form of competition for high-end coins that wasn't there previously.  You could have people creating what we used to call "blind pools" and today are called SPACs (Special Purpose Aquisition Companies) where a large number of people give $$$ to someone to invest.

I could see someone raising $1 MM or $2MM or even $5 MM for "The Saints Collective" and only buying high-end Saints and reporting back to his/her hundreds or thousands of investors.  Similar to the old Merrill Lynch/Kidder Peabody pooled funds that never materialized but still led to a stampede in 1988-90. 

This may run into CFTC, SEC, or other state/federal investment or commodity laws.

 

Not picking on you but once again, your response is just abstract theorizing.  That's what I have read in every single response by anyone who considers it plausible.

It's evident that non-collectors are motivated to make money off coins if they believe they can do it, but this isn't the real question.

The actual question is, why would they believe it and why would they choose to do it with coins instead of something else?

That's why I used CVX as a counterexample, one I presume you agree with from our prior post exchanges.  It's evident to anyone who will look at the relative prospects impartially that this is a much better option.  We can't know the outcome in advance, but at current prices with an approximate annual cash flow yield differential of at least 8%, there isn't a reason to believe a single non-collector would choose any coin fractional ownership arrangement over it if they have any clue at all what they are doing.

The only people who are realistically motivated to buy a fractional ownership interest in US coins are current or prospective US coin collectors, not anyone else.  I state US coin collectors because there is no reason to believe any collector outside the US would do it either.  This is the reality, even if this hairbrained scheme ever gains more than minimal traction in the future and follows the pattern in the other examples cited here.

And yes, in your example, I think it would be subject to securities regulations which would only increase the carrying costs and noticeably.

Edited October 30, 2020 by World Colonial

[GoldFinger1969]

The baseball card bubble was almost certainly a 1-time event caused by a confluence of 1-time events: baseball being the national pastime for almost a century (not anymore)....kids growing up on baseball (TV, Little League)....kids flipping the cards (me !).....mom throwing out our old baseball cards leading to scarcity. 

In short, there's hardly any interest today in baseball cards (as the video I posted showed).  But there's steady demand for coins via interest in precious metals, gold, silver, specific coin types, etc.

Saw some video while looking for the one I posted....it showed like 18 card stores in a 1-hour driving triangle of Orlando that were there 30 years ago and today are all gone.

[World Colonial]

11 hours ago, GoldFinger1969 said:

WC....FWIW....I believe Chevron's dividend is safe.  Good balance sheet. 

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.

[GoldFinger1969]

5 minutes ago, World Colonial said:

It's evident that non-collectors are motivated to make money off coins if they believe they can do it, but this isn't the real question...The actual question is, why would they believe it and why would they choose to do it with coins instead of something else...The only people who are realistically motivated to buy a fractional ownership interest in US coins are current or prospective US coin collectors, not anyone else.  I state US coin collectors because there is no reason to believe any collector outside the US would do it either. 

I agree, it would only appeal to current U.S. coin collectors.....maybe.  It might turn out to be a fad but I can see it materializing with some people who want to give it a 1-time shot.

OTOH, it might not have appeal to coin collectors who are used to buying something and then having possession of it. 

 

[World Colonial]

4 minutes ago, GoldFinger1969 said:

The baseball card bubble was almost certainly a 1-time event caused by a confluence of 1-time events: baseball being the national pastime for almost a century (not anymore)....kids growing up on baseball (TV, Little League)....kids flipping the cards (me !).....mom throwing out our old baseball cards leading to scarcity. 

In short, there's hardly any interest today in baseball cards (as the video I posted showed).  But there's steady demand for coins via interest in precious metals, gold, silver, specific coin types, etc.

Saw some video while looking for the one I posted....it showed like 18 card stores in a 1-hour driving triangle of Orlando that were there 30 years ago and today are all gone.

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?

[GoldFinger1969]

8 minutes ago, World Colonial said:

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.

I think the Original Bubble was a result of overestimating the liquidity of coins as TPGs were brand-new (<3 years old) and you also had people afraid of financial assets because of the October 1987 Stock Market Crash.  Then you had the real possibility of Wall Street $$$ buying coins en masse and this drove up the prices like 100% overnight.  When the $$$ didn't materialize... KABOOM !!! 

 

8 minutes ago, World Colonial said:

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?

Absolutely none, I agree.  To me, anybody buying into fractional has to do it for any non-financial benefits.  Maybe you shrink the pool of investors and the coin(s) can be seen by one and all at a big coin show or something.

Fractionals combining their buying power might be able to have influence by going after high-end best-in-class coins that are sought by super-collectors for their registry sets.  

 

Edited October 30, 2020 by GoldFinger1969

[World Colonial]

11 minutes ago, GoldFinger1969 said:

IOTOH, it might not have appeal to coin collectors who are used to buying something and then having possession of it. 

 

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.

[World Colonial]

9 minutes ago, GoldFinger1969 said:

To me, anybody buying into fractional has to do it for any non-financial benefits. 

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.

13 minutes ago, GoldFinger1969 said:

Maybe you shrink the pool of investors and the coin(s) can be seen by one and all at a big coin show or something.

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.

17 minutes ago, GoldFinger1969 said:

Fractionals combining their buying power might be able to have influence by going after high-end best-in-class coins that are sought by super-collectors for their registry sets.  

 

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.

[LINCOLNMAN]

No clue whether fractional ownership of collectibles will "sell" or be sustainable, but I would bet against it. The only sure winners will be the owners and whoever manages the instruments, and possibly owners of similar collectibles. But only for a short time IMO. As a collector I would have no interest, would rather go to Vegas. Important works of art on the other hand have broader appeal. I might take a piece of a nice Monet.    

[GoldFinger1969]

2 hours ago, LINCOLNMAN said:

Important works of art on the other hand have broader appeal. I might take a piece of a nice Monet.    

Agreed....but some ultra-rare coins might be able to market themselves as such.

[World Colonial]

6 hours ago, LINCOLNMAN said:

No clue whether fractional ownership of collectibles will "sell" or be sustainable, but I would bet against it. The only sure winners will be the owners and whoever manages the instruments, and possibly owners of similar collectibles. But only for a short time IMO. As a collector I would have no interest, would rather go to Vegas. Important works of art on the other hand have broader appeal. I might take a piece of a nice Monet.    

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.

Edited November 1, 2020 by World Colonial

[ColonialCoinsUK]

This has been a very interesting thread - although this is quite common for race horses, personally the only 'collective' investments I have are in real estate as I could only afford the deposit to buy a single property which increased the risk dramatically compared to spreading theinvestment out over 30 or so selected properties - plus this generates an income. There are several US platforms that allow this type of investment but only one decent one in the UK

A few years ago, here in the UK, Stanley Gibbons tried this for rare stamps and coins - having not heard anything for a while I guess it hasn't been very successful.

Hopefully I am allowed to add links??

https://www.telegraph.co.uk/finance/personalfinance/investing/8582410/Investors-warned-off-stamp-collectors-promise-of-rich-returns.html

(most of the above link is behind a paywall but there is enough to get the idea)

https://intelligent-partnership.com/AiR/reports/rare-stamps-and-coins-2015/rare-stamps-and-coins-2015/assets/common/downloads/Rare Stamps and Coins 2015.pdf

This is download of a PDF file which is interesting reading anyway concerning alternative investments.

You can also do something similar with whisky - personally I drink the stuff

https://www.whiskyinvestdirect.com/#

[World Colonial]

3 hours ago, ColonialCoinsUK said:

A few years ago, here in the UK, Stanley Gibbons tried this for rare stamps and coins - having not heard anything for a while I guess it hasn't been very successful.

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.

Edited November 1, 2020 by World Colonial

[RonnieR131]

I've got several horses that I'll sell discounted shares in for $25. Unlike those $200 per share horses, you can be interactive with these, up close, and clean the stalls. While cleaning, you'll notice the huge 'positive yield' that they produce. You can even take a break and drink beer with them, they love it. The oldest is named Morgan. 

[GoldFinger1969]

The end-user or hobbyist end-demand theory is correct.  But one thing that separates coins from stamps/baseball cards is that for many coins the precious metals content of some is inevitably tied to -- and dragged UP -- by moves up in PM's like gold or silver.

Ultimately, stamps and baseball cards are just pieces of paper.

At least with coins, Morgan dollars and Saint Double Eagles that are common go up or can be used as a bullion substitute when the prices of silver and gold move up.  Other coins that are part-bullion, part-numismatic value can also move up to a degree. 

Very rare coins that are worth multiples of their intrinsic silver or gold value will clearly always need the collectors to move their needles, no doubt.

FWIW, I know a few people who got into higher-end Saints and Morgans after initially just buying modern bullion gold and silver coins.

[gmarguli]

7 hours ago, World Colonial said:

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.

I think that you intentionally don't want to understand it. 

Either the investment pool is static or a manager makes asset changes. The investors don't touch the underlying assets and don't care. 

1. Investment pool is started. $5M pool with 100 shares at $50K
2. Manager buys assets on open market.
3. A set minimum amount of time passes.
4. Manager sells the assets on the open market.
5. Manager divides up proceeds among the 100 shares. 
6. Pool is closed.

At no point does an investor need to make a market or trade or even have any knowledge in the underlying asset. 

These investment pools are not traded on the open market. Their value is not tracked and published daily like a stock. They are closed. Once someone invests, they are locked into the investment for X number of years. That's why these are only available to accredited investors who have the means to hold on for the longer term and can understand the risks.

[GoldFinger1969]

Gmarg, I think what WorldC is talking about is that ultimately even the folks putting up the $50K in your example have to be willing to buy coins or fractional shares of coins.  And if others aren't, prices can drop.

In your example at #4....the manager sells the assets/coins....who buys them ?  He may have bought a bunch of Saints 50% off their highs or maybe he bought at the bubble.  But either way, he has to find willing buyers.  If it's a few million-dollar coins, his pool of buyers is more limited unless there are other fractional share partnerships.

Everything you wrote is correct....BUT....it doesn't guarantee that the coins appreciate over time...or that even when the manager wants to get out, that he'll be able to.

Let's just suppose he invests in a 1932 Saint (I need a rare coin for illustrative purposes, can be any rare coin you like).  Let's say he bought it in a condition that costs $1,000,000 and he thinks he can now sell it after 5 years for $1.2 MM.

But let's also say that for a variety of other reasons (deaths and inheritances, taxes, tired of owning it) a bunch of 1932 Saints get sold a few months before the partnership lock-up expires.  Maybe the market even for his condition is no longer $1.2 MM -- maybe all the heavy hitters are satiated and bought their 1932's during the selling glut.  So even though the partnership paid $1 MM and even though FMV a few months ago was $1.2 MM.....you can ONLY get $900,000 if you want to sell it RIGHT NOW.

That's one of the quirks of coins in general and going for ultra-rare coins whose market can be impacted by only a few transactions.

[World Colonial]

1 hour ago, gmarguli said:

I think that you intentionally don't want to understand it. 

Either the investment pool is static or a manager makes asset changes. The investors don't touch the underlying assets and don't care. 

1. Investment pool is started. $5M pool with 100 shares at $50K
2. Manager buys assets on open market.
3. A set minimum amount of time passes.
4. Manager sells the assets on the open market.
5. Manager divides up proceeds among the 100 shares. 
6. Pool is closed.

At no point does an investor need to make a market or trade or even have any knowledge in the underlying asset. 

These investment pools are not traded on the open market. Their value is not tracked and published daily like a stock. They are closed. Once someone invests, they are locked into the investment for X number of years. That's why these are only available to accredited investors who have the means to hold on for the longer term and can understand the risks.

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.