The Myth of Fair Market Value (FMV) 1 1

[Henri Charriere]

Unbeknownst to the highly-regarded seasoned veteran whose off the cuff statement plainly explaining rarity in terms of supply and demand, it is he who provided the impetus for this topic. In deference to the long-time member, now deceased, who dismissed another's wordsmithing skills, I will briefly cite three cases to illustrate my point.

1.  Whatever the trials and tribulations one may endure in acquiring a piece or collection, out-of-pocket expenses are exempt from consideration. And any related costs, e.g., certification, and everything that it entails, is a cost the collector must assume and make individually. Most coins, I suspect, are eligible for encapsulation, but don't expect a return accompanied with a note stating, politely, "Your submission is declined because it makes no economic sense."

2.  Elsewhere.on the Forum you will be enthralled by the exploits of those who travel extensively to acquire pieces for ownership or resale. The god known by its abbreviation, FMV, will rear its ugly head and you will be told merchandise acquired during the course of extracurricular activities, doesn't count. Those only apply to Life, Liberty and the pursuit of Happiness.

3.  There is a member who, on another thread, reveals an all-too-familiar predicament of collectors, generally.  Where my brother kept the chassis of a vintage car on blocks in a garage in the hopes of fulfilling a dream he was never to realize... the rent bills continued to be paid until it was brought to his attention that they had exceeded the cost of his dream car.  In response to a query by one member to another on a different thread, the reply lamented the fact the majority of his collection lay in a storage box unappreciated by anyone because he hadn't accessed it in years. If any reader, lurkers included, are familiar with the case of the Collyer Brothers in NYC who lived and died in 1947 in a house stacked floor-to-ceiling with debris, you will understand why I live in my humble abode, windows and front door unlocked (ironically double-locked by my wife at nite!).  My feeling is this: FMV will most assuredly rob me blind. And if something untoward occurs in the interim, its finder of my small Treasure of the Sierra Madre is fully deserving of the fruits of his labor. Auction records, Red books, Blue books, White Books and Greysheets notwithstanding, they reflect the then and there. Not the here and now, IMHO.  Your take? 

[GoldFinger1969]

I think by FMV -- in the context of the estate/inheritance debate on another thread -- I/we meant a REASONABLE approximation of the current market price.  I think being within 5-10% is accurate enough for FMV purposes.

I referenced FMV along with others because some NGC posters were very wary of their heirs getting like 10 cents or more likely 50 cents on the dollar.  That is clearly leaving too much on the table, IMO....but I think if you get 75% or more of the FMV that's not a bad job.

It depends on 2 things for me:

• How many coins are we talking about.....a few dozen...or hundreds...or thousands ?  The more coins, the more difficult it will be to liquidate them, especially for a non-numismatist, in a timely manner.  No executor or heir wants to be selling coins on Ebay for 2 years or visiting coin shops every few weeks for a year.

• How liquid are the individuals coins ?  Are we talking gold or silver bullion....gold or silver numismatics...where the underlying metal is a good chunk of the coin's current market value ?  Or are we talking Mercury Dimes, Wheat Pennies, Franklin Halfs, etc....where the numismatic value dwarfs any metallic value.

I know nothing of art....but if a wealthy relative left me 5 or 6 paintings worth a decent amount of $$$...it might be fun to investigate selling them and doing some research.  OTOH, if I was left dozens of art pieces worth all over the place from $200 to $20,000 -- it could be a bit of a PITA.  

I guess that's how some of our heirs might feel with our coin collections. 

I'll continue to strive to have the bulk of my coin collection in 1 or 2 MCMVII UHRs...a couple of MCMVII HRs.....and select 5-figure coins Saints/Liberty's/Morgans...all easily sellable. 

Edited May 17, 2023 by GoldFinger1969

[VKurtB]

Hmm. I have many coins, an almost sick number. The vast plurality are what many might describe as junk foreign coins. I honed my attribution skills by researching them and finding their KM numbers (and other similar systems for countries with incompatible alphabets). I call these my Level 3 coins, those that are not slab worthy under any standard. Many have minimal value. My Level 1 coins are those that are auction house worthy. Level 2 are “collector coins” that are all exceptional in condition or rarity, but not $300+ coins. They are almost as numerous as Level 1 now. The Level 2a are solid BU rolls as they collected them in the 1960’s and 1970’s. I have scads of those, too. Just those weigh well over 700 pounds  

Here’s why it works for me. My wife, my son, AND my new daughter-in-law are ALL ANA member numismatists. My son is a certified judge in European coins. Here’s the key - if I didn’t have anybody to carry on after I assume ambient temperature, I would have probably stopped collecting decades ago.

Edited May 17, 2023 by VKurtB

[numisport]

NGC Price Guide, PCGS Price Guide, Numismedia Fair Market Value, Grey Sheet, I consider all of these FMV although auction prices are also a reasonable idea of value. But these listings are all different for any one coin ! So really its only somewhat relative to me. It's the actual coin that I look at compared to others I have viewed.

[VKurtB]

I very rarely pay anything close to FMV for any coin. I buy at live auctions and concentrate on what’s NOT “hot” at any given time. I’m not afraid to let things go. You can never get back what you spent overpaying. I can scarcely believe some of the steals I got on large cents and V nickels during silver booms. 

Edited May 17, 2023 by VKurtB

[zadok]

On 5/17/2023 at 12:36 PM, VKurtB said:

Hmm. I have many coins, an almost sick number. The vast plurality are what many might describe as junk foreign coins. I honed my attribution skills by researching them and finding their KM numbers (and other similar systems for countries with incompatible alphabets). I call these my Level 3 coins, those that are not slab worthy under any standard. Many have minimal value. My Level 1 coins are those that are auction house worthy. Level 2 are “collector coins” that are all exceptional in condition or rarity, but not $300+ coins. They are almost as numerous as Level 1 now. The Level 2a are solid BU rolls as they collected them in the 1960’s and 1970’s. I have scads of those, too. Just those weigh well over 700 pounds  

Here’s why it works for me. My wife, my son, AND my new daughter-in-law are ALL ANA member numismatists. My son is a certified judge in European coins. Here’s the key - if I didn’t have anybody to carry on after I assume ambient temperature, I would have probably stopped collecting decades ago.

...interesting approach,i often study the thought processes behind how other diversified collectors consider their collections...too often i see collections sold where u can tell the collector had no real process n just went with a "shotgun" approach n bought everything, the end results of these collections when being liquidated reflect that lack of process, often with minimal interest n return...in some cases the auctioneers struggle to organize as to how to sell the items, whereas organized collections or those assembled with a defined process normally do quite well....

[zadok]

On 5/17/2023 at 2:37 PM, VKurtB said:

I very rarely pay anything close to FMV for any coin. I buy at live auctions and concentrate on what’s NOT “hot” at any given time. I’m not afraid to let things go. You can never get back what you spent overpaying. I can scarcely believe some of the steals I got on large cents and V nickels during silver booms. 

...well if u stay pre-ambient temp long enuf u mite recover ur over payment...but as poor richard said "the smart coin collector gets the good buys", birds n worms withstanding...buying "whats not hot" usually will serve u well...u mentioned collecting bank rolls of coins in a previous comment, these r definitely "not hot" at the moment n go begging...i recently attended a local estate auction that had a fairly substantial coin collection, there were literally hundreds of lincoln cent bank rolls, the auctioneer started by trying to sell them by individual rolls by date, no takers he ended up selling them by groups of tens mixed dates to get rid of them...i had gone to buy unc groupings of european gold, which i did at slightly over melt value, but again in lots of tens, while the US common date gold sold well above price guide levels...as an interesting side, that supports ur comments, i bought two bank rolls of 1950-D jeffersons (the ones that at one time reached $1500/roll) for 1/6 of the price guide value, upon inspection later the coins will average ms65-66, no one was remotely interested in those coins....

[Henri Charriere]

On 5/17/2023 at 2:37 PM, VKurtB said:

I very rarely pay anything close to FMV for any coin.... You can never get back what you spent overpaying....

For arguments sake, let's pretend I have no idea I what I am talking about. Two questions:

What was the FMV of that "manufactured rarity" the silver 1995-W ASE prior to its release?  And what happened shortly thereafter?  And since?  What was the issue price of that coin while ensconced in its original set? What was the highest price it commanded when its entombment was vandalized? [What is its present valuation?]  To the numismatists amongst us: how is any of what happened "fair" market value when deliberate man-made manipulation was involved?

As to your second declaration, if recent auction results are any indication, I seriously doubt E.C., the present owner of the '33 Double Eagle bid as high as he did without the expectation of recovering back every dollar -- and then some, in his quest to own a unique rarity as defined by law regardless how many more hoards, shipwrecks and safe-deposit boxes are discovered, recovered and opened. I maintain the Fair Market Value of that piece, presently, is unknown and if I understand member, JB, correctly, will remain unknown until its owner is made an offer he cannot refuse.  Recently on its website, a consortium representing a number of dealers overseas offered 21 examples of the very same coin with the same date and grade encapsulated by the same TPGS. If FMV exists, why did all 21 coins bear different prices within a $100 range?

 

[GoldFinger1969]

On 5/17/2023 at 8:15 PM, Henri Charriere said:

What was the FMV of that "manufactured rarity" the silver 1995-W ASE prior to its release?  And what happened shortly thereafter?  And since?  What was the issue price of that coin while ensconced in its original set? What was the highest price it commanded when its entombment was vandalized? [What is its present valuation?]  To the numismatists amongst us: how is any of what happened "fair" market value when deliberate man-made manipulation was involved?

The FMV changed.  In 1995 the coin was worth a certain amount of money, with the TPGs only operating for 7-8 years.  Fast-forward 30 years and with more ASE collectors the coin's value in a perfect grade, with added descriptives like DMPL or 1st Strike or whatever, and you have a coin that spiked to $85,000 (since fallen to probably < $20K for that and comparable coins).

The FMV of Amazon.com in 2002 was $12.  A few years later, it was worth 20x as much.  A few years more, it was worth another 10x as much.

I read that Wal-Mart in 1974, near the nadir of the bear market, was selling for $12 a share with a P/E multiple of about 13x trailing EPS of just under $1/share.  It actually was pretty EXPENSIVE back then, priced as a growth stock (about 2x the market multiple).  In fact, the FMV of the stock was $600 a share, or 50x the then-current price.  That $600 price was what would have produced a market-matching return for the next 40 years.  In other words, you should have been willing to pay $600 for a share of WMT.

On 5/17/2023 at 8:15 PM, Henri Charriere said:

I seriously doubt E.C., the present owner of the '33 Double Eagle bid as high as he did without the expectation of recovering back every dollar -- and then some, in his quest to own a unique rarity as defined by law regardless how many more hoards, shipwrecks and safe-deposit boxes are discovered, recovered and opened. I maintain the Fair Market Value of that piece, presently, is unknown and if I understand member, JB, correctly, will remain unknown until its owner is made an offer he cannot refuse.  Recently on its website, a consortium representing a number of dealers overseas offered 21 examples of the very same coin with the same date and grade encapsulated by the same TPGS. If FMV exists, why did all 21 coins bear different prices within a $100 range?

What coin(s) are you talking about with 21 examples, consortium, etc.? 

As for the 1933 Double Eagle, if the past is any guide, unless some deep-pockets guy indifferent to price (Uncle Steve of The NY Met ?  ) gets involved, if it's just savvy numismatists, the future sales price (assuming the Langbord 10 stay in KY) will probably generate a return of mid-single digits.  EC probably bought the coin for personal enjoyment and the thrill of building the greatest Saints collection ever, not to make money.

Maybe some day he'll tell us. 

[Henri Charriere]

@GoldFinger1969 :

The 21 coins were all offered by different coin emporiums operating under the auspices of highly-regarded "ma-shops," based in Germany (with an office in Sarasota, FL., I believe) -- the very same concern the late, great member, Oldhoopster, was dismayed to learn I had unsubscribed from.  

[VKurtB]

On 5/17/2023 at 7:15 PM, Henri Charriere said:

For arguments sake, let's pretend I have no idea I what I am talking about. Two questions:

What was the FMV of that "manufactured rarity" the silver 1995-W ASE prior to its release?  And what happened shortly thereafter?  And since?  What was the issue price of that coin while ensconced in its original set? What was the highest price it commanded when its entombment was vandalized? [What is its present valuation?]  To the numismatists amongst us: how is any of what happened "fair" market value when deliberate man-made manipulation was involved?

As to your second declaration, if recent auction results are any indication, I seriously doubt E.C., the present owner of the '33 Double Eagle bid as high as he did without the expectation of recovering back every dollar -- and then some, in his quest to own a unique rarity as defined by law regardless how many more hoards, shipwrecks and safe-deposit boxes are discovered, recovered and opened. I maintain the Fair Market Value of that piece, presently, is unknown and if I understand member, JB, correctly, will remain unknown until its owner is made an offer he cannot refuse.  Recently on its website, a consortium representing a number of dealers overseas offered 21 examples of the very same coin with the same date and grade encapsulated by the same TPGS. If FMV exists, why did all 21 coins bear different prices within a $100 range?

 

I bought the 1995-W set from the mint for $999. It was the only Gold Eagle proof set I ever bought. I immediately sold the gold coins for melt, $750 at the time. So I had $249 in the silver Eagle. I sold it for $4000 ten years later. I no longer care what its FMV is. That part of my collecting is over. I quit buying ANY proof silver Eagles after 2008. I switched to exclusively bullion and burnished versions. 

Edited May 18, 2023 by VKurtB