Luxury brand owners know that much of their appeal comes from their perceived high prices and the sense of exclusivity those who can pay these prices feel when they do so.
Most collectors do not spend $1,240 in a year on their hobby. Yet many were frantic to buy the new gold Kennedy half dollar at that price when it was first released on Aug. 5 because everybody else seemed to be doing it.
The mad scramble for coins at the American Numismatic Association convention, the Mint’s retail sites at the Denver Mint, Philadelphia Mint and headquarters was the physical manifestation of a panic to take part.
Online buyers snapped up over 54,000 coins in the opening hours for the same reason. They cared less about the coin itself than about the stamp of approval a grading service could give them certifying that they were among the very first to acquire one.
This is luxury.
Why not wait until today and buy a virtually identical coin? If the coin is what matters to collectors, it would be logical to wait. Why put yourself through such aggravation otherwise?
The rationale, of course, is that buying them quickly was what is necessary in order to sell the coins on the secondary market to those who value the luxury good of an early release even more highly than the original buyers.
How high is up?
Well, using round numbers, in selling those 54,000 coins, the Mint took in more than $67 million. If prices of all of those coins doubled to $2,480 on the secondary market, it would take $134 million to buy them. If prices triple, it would take $201 million to buy them.
These are sums that just do not exist in the hands of the usual purchasers of Mint products.
The high secondary market price cannot be funded with all 54,000, but through the magic of labels, it can be applied to a portion of them.
For coins purchased at the Chicago ANA and graded Proof-70 Ultra Cameo by the Numismatic Guaranty Corporation, an email offer that came my way yesterday had them priced at $4,849.95 each.
If all 1,500 coins sold in Chicago made this grade, it would take just $7,274,925 to gobble them all up.
That sum of money is not particularly difficult to find in the secondary market.
Of course, not all the coins sold in Chicago would make such a grade, reducing that figure further.
Paying a high sales price such as this offers the buyer that coveted sense of owning a luxury good that few others can have. It also creates the illusion that all coins should have such a high value and motivates buyers ahead of time to try to get in on the action.
It is this sense of exclusivity and the resentment of those who are excluded that fuels the market.
But just like luxury brand products that wear out, the shelf life of a label is also limited.
Let’s check these prices next year.
Every coin collector should know what it is his money is paying for. Then he or she can determine whether it is worth paying.
Buzz blogger Dave Harper is winner of the 2014 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."