Correct coin price in the eye of the beholder

Coin collectors tend to argue about prices.

Our difficulty as a group is that sometimes there is an assumption that there is one correct price.

Anything above it means the coin offered is being offered by a crook.

Anything less means the coin is a steal and the seller is not properly informed, or even just plain stupid.

The problem is real life.

It doesn’t work that way.

Let’s start with a price, say $100 as determined by a price guide.

The issue with a price guide, and this is all of them, including the one in Numismatic News, is that it is an approximation to begin with.

The compiler might be able to monitor electronic trades online and learn of auction results or buy-it-now prices that end up averaging $100

That means some traded at less and some for more.

Does that make everyone involved in trades for a price different than $100 crooks or stupid?

Out in the field there are many transactions on bourse floors.

There is no central reporting hub.

That is why a smart dealer might be able to buy something on one side of the floor and walk it over to a dealer on the other side and sell it for a profit.

Or a dealer might have an impatient client who just has to have a certain piece and is willing to pay 10 or 20 percent over market to get it right now.

Is that a correct price?

Usually future transactions bring that price right back down.

Was the impatient buyer foolish?

Perhaps it allowed him bragging rights in completing an online registry set.

Also, a dealer might have to sell something for 10 or 20 percent less than wholesale price, which is anywhere from 35 percent to 60 percent of (non-bullion) retail because he needs cash right away.

He has to move it because the rent on the shop is due.

Or the bank wants him to reduce the size of his current operating loan.

Or he might have gotten wind of a potential deal that will more than make up for selling at a discount.

There are dealers who make a good living offering immediate cash for discounted items.

Television and mail marketers get the most pushback from collectors.

They often offer coins for large mark-ups on a retail price guide price.

Why?

TV time is expensive.

Huge mail campaigns have response rates of a couple of percent.

How do you cover costs with that kind of overhead?

Would it be better that these firms were not buying material and not being market participants at all?

Then prices for all of us would be lower.

The test for marketers is whether what they offer is correctly described.

If it is, it is a transaction like any legitimate retail transaction.

I know if I walk into Macy’s, the price of something I need is likely higher than at Wal-mart, or online at Amazon.

Does that make Macy’s and Wal-mart crooks because I can get the cheaper Amazon price?

These same principles work with coins.

The key is everyone should be an informed buyer.

They should make a choice to buy based on individual needs.

Don’t get me wrong.

There are crooks that offer coins for sale, but these are the same people who also offer oil leases or other flimflams over the phone at many multiples of actual value.

It is their fast talk and high-pressure tactics that make them what they are.

But that is a topic for another day.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."

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