how real are prices on either side of a price jump?

I've been watching Morgan dollar prices carefully lately, and it
appears to me that the Greysheet, Coin Values, and the PCGS Price
Guide are all wet when it comes to pricing coins on either side of
substantial price jump (e.g. 18XX CC in MS65 is $800, in MS66 it is
$11,000).

I say this because even for PCGS and NCG graded coins, EBay auction
bids almost never come close to, for example, the Price Guide quoted
price for a coin which grades on the high side of a price jump, and
auction bids frequently exceed the Price Guide quote for coins which
are graded on the low side of a price jump.

I've noticed the same thing with several dealers advertising in Coin
World - they are willing to sell Morgans graded on the high side of a
price jump for less than Greysheet bid, but they typically want more
than the retail quoted price for coins which grade on the low side of
a price jump.

I've seen this enough to convince myself that it is really happening,
and I even think I understand several reasons why buyers and sellers
act this way. What I don't understand is why the price guides set
these prices the way they do. I'm still having a hard time "believing
my eyes," because I'm sure the Greysheet, Coin Values, etc. people use
the same care in setting these prices that they do with other prices.

So this is a contradiction I'm having trouble understanding. Is there
some huge market out there that makes what happens on EBay and with
Coin World dealer pricing largely irrelevant? Are these prices
accurate for the non-Ebay auction market, and this market swamps Ebay
and Coin World dealers in volume? Or what? I really would like to
understand everything that is going on around this phenomena.

In addition to Morgans, I think I've seen the same phenomena occurring
with other coin types, but I haven't been looking carefully enough to
say for sure.

I suspect you're seeing evidence that sight-seen and sight-unseen markets
attract different types of coins within a particular grade, and that the
price sheets you're reading omit or underweight data from sight-unseen
markets.

For example, a seller of an 18XX CC Morgan might choose to sell it on eBay
if he feels it's on the low side of MS66, but send it to an auction house or
premium dealer if he believes it's PQ. PQ coins are harder to sell on eBay,
partly because it's hard to get good enough pics to showcase their PQ-ness,
but also because eBay buyers are likely to apply a discount to any coin they
can't personally look at before buying. And let's not kid ourselves--in
person sales pitches are more effective than eBay write-ups. An exception to
this rule would be someone like Ira, who through pictures and reputation has
carved out a PQ niche in the eBay market.

Also, price guides may not count eBay sales, for both biased and unbiased
reasons. These pubs harbor natural conflicts of interest that pressure their
reported prices upward more than downward. On the "unbiased" side, they may
rightly have the same issue that eBay buyers have--sight-unseen markets are
dicier than white-shoe venues, and they may consider eBay prices less
reliable.

While I don't think the cause for this is elasticity of demand I discussed
with Jorg Lueke in the thread entitled, "Help with and Economic Term", your
post gives an example of how elasticity can be used as a barometer of
economic activity. Had you said that coins on the high side of the "price
jump" are a lot lower than reported while those on the low side were a
little lower, it could have been an indicator that the market was turning
down, since supergrades/low-pop coins are likely less elastic than their
low-side brethren, their prices could be expected to drop faster than
mid-market coins in a downturn (and go up faster in an upturn). Had you said
that prices were more erratic on the high side, it would likely have been
(and probably is) an indication that the high end markets are less liquid
than the mid-market.

--Chris

"Tetradrachm" wrote:
I've been watching Morgan dollar prices carefully lately, and it
appears to me that the Greysheet, Coin Values, and the PCGS Price
Guide are all wet when it comes to pricing coins on either side of
substantial price jump (e.g. 18XX CC in MS65 is $800, in MS66 it is
$11,000).

I say this because even for PCGS and NCG graded coins, EBay auction
bids almost never come close to, for example, the Price Guide quoted
price for a coin which grades on the high side of a price jump, and
auction bids frequently exceed the Price Guide quote for coins which
are graded on the low side of a price jump.

I've noticed the same thing with several dealers advertising in Coin
World - they are willing to sell Morgans graded on the high side of a
price jump for less than Greysheet bid, but they typically want more
than the retail quoted price for coins which grade on the low side of
a price jump.

I've seen this enough to convince myself that it is really happening,
and I even think I understand several reasons why buyers and sellers
act this way. What I don't understand is why the price guides set
these prices the way they do. I'm still having a hard time "believing
my eyes," because I'm sure the Greysheet, Coin Values, etc. people use
the same care in setting these prices that they do with other prices.

So this is a contradiction I'm having trouble understanding. Is there
some huge market out there that makes what happens on EBay and with
Coin World dealer pricing largely irrelevant? Are these prices
accurate for the non-Ebay auction market, and this market swamps Ebay
and Coin World dealers in volume? Or what? I really would like to
understand everything that is going on around this phenomena.

In addition to Morgans, I think I've seen the same phenomena occurring
with other coin types, but I haven't been looking carefully enough to
say for sure.




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Thanks for your response.

So what you're saying is that there IS a much more important market
than Ebay or Coin World dealers as far as the price setters at the
Greysheet, Coin Values etc. are concerned, and that is the
"sight-seen" market. Other than non-online auctions, what does this
market consist of, that is, what are its other major components? What
do the people at the Greysheet etc. pay so much attention to?

On Mon, 16 Feb 2004 18:17:01 -0600, "Chris S"
chris(at)imt.xohost.com wrote:

I suspect you're seeing evidence that sight-seen and sight-unseen markets
attract different types of coins within a particular grade, and that the
price sheets you're reading omit or underweight data from sight-unseen
markets.

For example, a seller of an 18XX CC Morgan might choose to sell it on eBay
if he feels it's on the low side of MS66, but send it to an auction house or
premium dealer if he believes it's PQ. PQ coins are harder to sell on eBay,
partly because it's hard to get good enough pics to showcase their PQ-ness,
but also because eBay buyers are likely to apply a discount to any coin they
can't personally look at before buying. And let's not kid ourselves--in
person sales pitches are more effective than eBay write-ups. An exception to
this rule would be someone like Ira, who through pictures and reputation has
carved out a PQ niche in the eBay market.

Also, price guides may not count eBay sales, for both biased and unbiased
reasons. These pubs harbor natural conflicts of interest that pressure their
reported prices upward more than downward. On the "unbiased" side, they may
rightly have the same issue that eBay buyers have--sight-unseen markets are
dicier than white-shoe venues, and they may consider eBay prices less
reliable.

While I don't think the cause for this is elasticity of demand I discussed
with Jorg Lueke in the thread entitled, "Help with and Economic Term", your
post gives an example of how elasticity can be used as a barometer of
economic activity. Had you said that coins on the high side of the "price
jump" are a lot lower than reported while those on the low side were a
little lower, it could have been an indicator that the market was turning
down, since supergrades/low-pop coins are likely less elastic than their
low-side brethren, their prices could be expected to drop faster than
mid-market coins in a downturn (and go up faster in an upturn). Had you said
that prices were more erratic on the high side, it would likely have been
(and probably is) an indication that the high end markets are less liquid
than the mid-market.

--Chris

"Tetradrachm" wrote:
I've been watching Morgan dollar prices carefully lately, and it
appears to me that the Greysheet, Coin Values, and the PCGS Price
Guide are all wet when it comes to pricing coins on either side of
substantial price jump (e.g. 18XX CC in MS65 is $800, in MS66 it is
$11,000).

I say this because even for PCGS and NCG graded coins, EBay auction
bids almost never come close to, for example, the Price Guide quoted
price for a coin which grades on the high side of a price jump, and
auction bids frequently exceed the Price Guide quote for coins which
are graded on the low side of a price jump.

I've noticed the same thing with several dealers advertising in Coin
World - they are willing to sell Morgans graded on the high side of a
price jump for less than Greysheet bid, but they typically want more
than the retail quoted price for coins which grade on the low side of
a price jump.

I've seen this enough to convince myself that it is really happening,
and I even think I understand several reasons why buyers and sellers
act this way. What I don't understand is why the price guides set
these prices the way they do. I'm still having a hard time "believing
my eyes," because I'm sure the Greysheet, Coin Values, etc. people use
the same care in setting these prices that they do with other prices.

So this is a contradiction I'm having trouble understanding. Is there
some huge market out there that makes what happens on EBay and with
Coin World dealer pricing largely irrelevant? Are these prices
accurate for the non-Ebay auction market, and this market swamps Ebay
and Coin World dealers in volume? Or what? I really would like to
understand everything that is going on around this phenomena.

In addition to Morgans, I think I've seen the same phenomena occurring
with other coin types, but I haven't been looking carefully enough to
say for sure.




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On Tue, 17 Feb 2004 03:45:58 -0800, Tetradrachm
wrote:

Thanks for your response.

So what you're saying is that there IS a much more important market
than Ebay or Coin World dealers as far as the price setters at the
Greysheet, Coin Values etc. are concerned, and that is the
"sight-seen" market. Other than non-online auctions, what does this
market consist of, that is, what are its other major components? What
do the people at the Greysheet etc. pay so much attention to?

I believe there's also a certain set of dealers hom they use to help
identify prices. It's probably mentioned somewhere on their site. Also,
one wonders since so many people use greysheet for buying/selling if it's
not a bit of a self fulfilling prophecy.

"Jorg Lueke" wrote:
I believe there's also a certain set of dealers hom they use to help
identify prices. It's probably mentioned somewhere on their site. Also,
one wonders since so many people use greysheet for buying/selling if it's
not a bit of a self fulfilling prophecy.

Quite possible, either with or without malice aforethought. The was a recent
scandal in the energy industry over the last couple years, when it was
learned that natural gas traders had been misreporting prices to a
newsletter reporting market prices during the 2000-01 energy crisis. IIRC,
at least one person has been found (or plead) guilty, presumably to some
kind of securities fraud.

--Chris

I just discovered what I think is yet another explanation for the
effect I was commenting on. You mention the sight-unseen vs. the
sight-seen market. I just took a close look at the difference in
pricing between these two markets for very high valued coins, and
realized that at the upper end of things the difference is huge - at
the high end, bid prices are around 50% of what they are for the
sight-seen market (at least for Morgans - I didn't look at other
coins). This could go a long way toward explaining why eBay and Coin
World advertised dealer pricing seemed so low to me on the high side
of a price break. Dealers and knowledgeable collectors almost
certainly view coins from these sources as "sight-unseen."

On Mon, 16 Feb 2004 18:17:01 -0600, "Chris S"
chris(at)imt.xohost.com wrote:

I suspect you're seeing evidence that sight-seen and sight-unseen markets
attract different types of coins within a particular grade, and that the
price sheets you're reading omit or underweight data from sight-unseen
markets.

For example, a seller of an 18XX CC Morgan might choose to sell it on eBay
if he feels it's on the low side of MS66, but send it to an auction house or
premium dealer if he believes it's PQ. PQ coins are harder to sell on eBay,
partly because it's hard to get good enough pics to showcase their PQ-ness,
but also because eBay buyers are likely to apply a discount to any coin they
can't personally look at before buying. And let's not kid ourselves--in
person sales pitches are more effective than eBay write-ups. An exception to
this rule would be someone like Ira, who through pictures and reputation has
carved out a PQ niche in the eBay market.

Also, price guides may not count eBay sales, for both biased and unbiased
reasons. These pubs harbor natural conflicts of interest that pressure their
reported prices upward more than downward. On the "unbiased" side, they may
rightly have the same issue that eBay buyers have--sight-unseen markets are
dicier than white-shoe venues, and they may consider eBay prices less
reliable.

While I don't think the cause for this is elasticity of demand I discussed
with Jorg Lueke in the thread entitled, "Help with and Economic Term", your
post gives an example of how elasticity can be used as a barometer of
economic activity. Had you said that coins on the high side of the "price
jump" are a lot lower than reported while those on the low side were a
little lower, it could have been an indicator that the market was turning
down, since supergrades/low-pop coins are likely less elastic than their
low-side brethren, their prices could be expected to drop faster than
mid-market coins in a downturn (and go up faster in an upturn). Had you said
that prices were more erratic on the high side, it would likely have been
(and probably is) an indication that the high end markets are less liquid
than the mid-market.

--Chris

"Tetradrachm" wrote:
I've been watching Morgan dollar prices carefully lately, and it
appears to me that the Greysheet, Coin Values, and the PCGS Price
Guide are all wet when it comes to pricing coins on either side of
substantial price jump (e.g. 18XX CC in MS65 is $800, in MS66 it is
$11,000).

I say this because even for PCGS and NCG graded coins, EBay auction
bids almost never come close to, for example, the Price Guide quoted
price for a coin which grades on the high side of a price jump, and
auction bids frequently exceed the Price Guide quote for coins which
are graded on the low side of a price jump.

I've noticed the same thing with several dealers advertising in Coin
World - they are willing to sell Morgans graded on the high side of a
price jump for less than Greysheet bid, but they typically want more
than the retail quoted price for coins which grade on the low side of
a price jump.

I've seen this enough to convince myself that it is really happening,
and I even think I understand several reasons why buyers and sellers
act this way. What I don't understand is why the price guides set
these prices the way they do. I'm still having a hard time "believing
my eyes," because I'm sure the Greysheet, Coin Values, etc. people use
the same care in setting these prices that they do with other prices.

So this is a contradiction I'm having trouble understanding. Is there
some huge market out there that makes what happens on EBay and with
Coin World dealer pricing largely irrelevant? Are these prices
accurate for the non-Ebay auction market, and this market swamps Ebay
and Coin World dealers in volume? Or what? I really would like to
understand everything that is going on around this phenomena.

In addition to Morgans, I think I've seen the same phenomena occurring
with other coin types, but I haven't been looking carefully enough to
say for sure.




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