Market Report - May 2009

Auction Representation

The Central States Convention is always a much-anticipated event. This year's show was held in Cincinnati, Ohio between April 29 and May 2. While dealer attendance was fairly good, collector attendance was slightly low. The main collectors from Chicago, Tennessee and Pennsylvania showed up, but there didn't seem to be many new faces. The show was made, as we dealers say, in the buying.

While there was a decent amount of available Flying Eagle and Indian Cents, I was interested in finding the real beauties that are always difficult to find. The reason these are hard to find is that they will get sold quick. If I don't see it first, I won't get it. Since there were fewer collectors, I had better luck finding a few beauties.

The auction featured the "Joseph C. Thomas", collection, Part1. His real name is a top secret. Ever since the Gorrell sale in 2003, this well-funded collector would snap up every top Flying Eagle and Indian Cent that came on the market. He was "the voice on the phone" who would bid, and bid, and bid until he got the coin. This created some real astounding prices over the past eight years. I will fully detail the auction in the June issue of Longacre's Ledger (you can join by clicking on the Fly-In Club link).

At the auction, I was representing five different bidders and was successful on 90% of the coins I wanted. I would like to make some observations about the consignor of the "Thomas" collection. It looks like he bought all his coins through Heritage Auctions, bidding on his own behalf over the phone. This may be an OK way to buy coins, but the strategy of bidding until you buy a coin, can pose some problems. If you always bid the highest amount and win every coin at any cost, then when you sell, you need a clone of yourself bidding on your coins to get your money back. With top coins, there may be another bidder with a "Buy it at any cost" mentality, but there may not be - especially in the current economic environment.

The collection was sold unreserved. I heard that a tally of the "Thomas" Collection prices were about 35% under the purchase price. Ouch! The owner of this collection bought with abandon and sold unreserved. I think he could have used a little bit of representation.

Representation costs 5%, sometimes less. What you get is honest advice on the quality of the coin, the value of the coin, an estimate of the final sale price and information about the strength of the market and interest of others in your particular lots. This will help you get the right coin at the right price. If you want to stick your hand up until you win, you'll certainly get the coin, but at a price that you may not be able to recover without a long holding period.

On the selling end, I represent sellers at auction too. Some of the advantages are getting their coins in the right venue, getting the best terms, setting the proper reserves and if the collection warrants it, even writing the catalog for the auction company, which I did for the Gorrell collection (Heritage 2003), Heathgate (Goldberg's 2006) and the upcoming Lutzel collection (Bowers & Merena June Baltimore auction).

The auction venue may work for some collections, but I also take collections on consignment or purchase them outright. I consider your success in building a quality collection for fair value as my own success as your dealer. I also consider your satisfaction when you decide to sell as my own success as well.

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