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Author Topic: Are Chinese Coins Truly a Free Market?  (Read 1696 times)
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groovemachine
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« on: 2011 Jan 26, 01:25:19 am »



Yes, Virginia, Chinese coins are a free market, but yet there are blatant attempts at market manipulation.  The moral of the story is that each individual needs to do their own due diligence in regard to their personal investment decisions.  Don't trust me.  Don't trust Badon.  Don't trust anyone without drawing conclusions for yourself.

The first thing you need to do is remove your emotions from any purchasing situation.  Sadly, some dealers are no different than a used car salesman and will try every emotional appeal tactic in the book.  You have to remember that anyone using such tactics is short-sighted and not on your side.  Stay cool, calm, and collected and know what you want to accomplish in making a purchase.  Please see the email exchange at the end of the article for a recent example of atrocious dealer behavior I encountered.

Another thing to be aware of is that the same old tactics unscrupulous eBay sellers have been using since eBay's inception are still being used.  Watch out for shill bidding.  Know what you're willing to pay and set your limits.  Pay attention to price trends so you can spot anomalies.  The other thing to be wary of are record setting BIN prices.  There may be dealers working in tandem to create the perception of high sales prices, assuming demand is inelastic.  A true auction devoid of shill bidding is the only price discovery mechanism that can be trusted.  Pay attention to Hong Kong auctions and Peter Anthony's Pricepedia as other gauges of the marketplace.

I have also had many pleasant interactions with dealers, so I don't mean to cast a bad rap on the entire market.  However, I would encourage dealers to consider what is best for themselves and this market in the long-run.  This market is ripe for the picking in it's own right.  Any attempts at manipulation leave a sour taste in collectors' mouths and scare off new entrants.  Manipulation only serves to increase volatility in the marketplace and create confusion.  Just let nature take it's course and be fair and honest in your dealings.  Would you rather have a thousand customers once or one customer a thousand times?

The marketplace will zero in on the true prices over the long haul in spite of any greedy dealers.  So, be savvy, think outside the box, and keep your eyes open and you should have no trouble achieving your objectives in this exciting, fast-paced market.

Bonus assignment: Google “price floor” and “pump and dump” and let's discuss their effects on a market in responses to this thread.  Also, here is the email correspondence mentioned above (there is so much I could pull out from this, so let's discuss!):

____________________

Dear xxxxx,

Hello...I'd like to make an offer, but I'm wondering if the price is for 4 coins as pictured or for 1 individual coin? If I submit an offer, how many individual coins am I making an offer on? 3 coins or 3 sets of 4? Thanks!

- groovemachine
____________________

Dear groovemachine,

Hello. The price is for ONE coin. If you want 2 coins, you submit a price for 2 coins, ie $195 each for 2 coins = $195 x 2 = $390. I hope this helps. The market for China Mint is red hot so unless you are within pennies of my asking price, you will not buy these coins. That is just the nature of a RED HOT market that is going up and up. Over 1 billion Chinese people and not enough coins. I worked for a China Mint distributor for 12 years so I am one of the handful of coin dealers in the US who truly knows. xxxxx 800-xxxxx-xxxxx Please deposit $100 for the next 60 minutes (just kidding) but my time is really worth that since 1987,,,really

- xxxxx
____________________

Dear xxxxx,

xxxxx,

I really appreciate your insight! Yes, this market is HOT!!! However, I'm really cheap and these coins haven't caught on with people enough yet. I believe the highest realized price for this coin is $109 and many go for much less than that. However, I think you will see your price at some point in the future. Best of luck to you and maybe our paths will cross again!

Thanks,

- groovemachine
____________________

Dear groovemachine,


There are maybe 5 or 6 coin dealers who have worked or work as/for distributors of China Mint and I am one of them. 12 years. I know what I am talking about/doing. You can speculate all you want. Being cheap, you will MISS the boat. Sorry but true. I am on a first name basis with most of the China Mint distributors worldwide since 1989 and one Chinese gentleman would say to you that you must step up to the plate and swing. You will be on the sidelines and years later talk about how the KEY DATE WAS $195 AND you passed the price went to 250 and you passed and it went to 500 and 750 and then $1000 and you missed the boat. Have a nice evening. I am not cheap but frugal but I know when to PULL THE TRIGGER.

- xxxxx
____________________

Dear xxxxx,

xxxxx,

I have no regrets passing at that price. I don't believe it to be the key date and I will accumulate these elsewhere at lower price points for now and/or put my money into rarer coins. I purchased two pandas in the last day that are rarer than this one for around $70 per coin. I agree that someone who doesn't want to dig into details and just wants to buy and forget for a few years should pull the trigger on your coins.

Thanks for sharing your experiences in this market! It's a fast-paced place to be right now and there is much more to come.

- groovemachine
____________________

Dear groovemachine,

I don't mean any disrespect, but it is a stone cold fact that the xxxxx is THE KEY to the series. No opinion, no speculation, just a fact.
Sorry. You can guess or speculate all you want. I have spent 20+ years of my life, mostly as an international wholesaler of this stuff, and I am I guess what you would call one of the top experts in the country and the world in modern world silver coins, including the China Mint coins. As John Wayne said, no brag, just fact. You can listen to an expert or you can be stupid. Have a wonderful evening. You may want to read some of my eBay guides I wrote, which you can access from my ME page.

- xxxxx
____________________

Dear xxxxx,

I will check out your guides. Thank you so much.

- groovemachine
____________________

Dear groovemachine,

OK. I don't mean to sound so high and mighty, but most people don't know much of anything about this stuff. I was an insider for many many years. Less than 10 people in the US know what I know about China Mint. So please don't tell me something you think when it is not true at all. Thank you.

- xxxxx
____________________

Dear xxxxx,

Oh, it's true sir...years and years of careful research. I'm guessing that by the end of 2011 what I know to be true will be accepted fact within the collecting community. Some things are obvious; some are not.

Thanks for your reviews; I read through a few.

- groovemachine
____________________

groovemachine,

You are very welcome. Thank you for the time to read those short reviews. I hope you got something from them. For me, it is not all about the money, a rarity amongst greedy coin dealers. I enjoy what I do, and I am happy to not be a corporate Ivy League educated Boston lawyer like most of my family, or a medical doctor, like many of my high school and college classmates. I was truly blessed to be a coin collector as a 9 year old boy who was able to follow his dream and turn that into a life's work. So I am always happy to help folks like you. Don't procrastinate. Being cheap or frugal is great. My brother bought his house in New Hampshire by scrimping and paying cash so I totally understand. But sometimes you have to shell out to benefit. I am very frugal myself but when it comes to buying coins or anything related, I jump in without hesitating, instantaneously.
But I am a trained professional. I find the problem with eBay buyers is they try to do it all on their own. They play a game I call "beat the dealer." Me, when I want to do something, I go to a professional: doctor, dentist, auto mechanic, lawyer, carpenter, etc.
I pay for their expertise and also listen to their advise as part of their service. Would you go to a car mechanic who is new? Would you replace your water heater at home yourself? No. But people think they can get by without working up a good relationship with a full time, professional coin dealer. Big mistake. If folks get to know a coin dealer, that professional numismatist will give them good service and treat them right. But you have to build up that relationship over time, just like with your primary care physician.
I am a really bright guy but what I do best is listen to others. That is how I learn a lot. When it comes to coins, I listen and buy books. And I learn from my mistakes. I hope some of these emails has helped you...

- xxxxx

____________________

At this point I decided not to respond any further.  This is the full, unabridged transcript of our correspondence.  Bonus points to anyone who points out exactly what happened toward the end of our exchange...there is a change in tone...what dynamics are at play?
« Last Edit: 2011 Jan 26, 01:19:27 pm by LBCeditor » Logged
dobedo
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« Reply #1 on: 2011 Jan 26, 08:10:12 am »

I find the seller making his points very forcefully. I'm puzzled about the KEY DATE question. You've got a belief and he's got a fact. Which wins out is probably an opinion, or is it?

How about his published guides? Do they impart or show off knowledge? Can you provide the link so we can all learn from this expert?

Cheers Smiley
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tamo42
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« Reply #2 on: 2011 Jan 26, 08:15:17 am »

That is the weirdest exchange I've seen in a while. He keeps trying to say that since he's been in the business, you should pay his asking price. How are the two supposed to be connected?

You are definitely right that you need to keep you wits!
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badon
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« Reply #3 on: 2011 Jan 26, 11:04:46 am »

I find the seller making his points very forcefully. I'm puzzled about the KEY DATE question. You've got a belief and he's got a fact. Which wins out is probably an opinion, or is it?

How about his published guides? Do they impart or show off knowledge? Can you provide the link so we can all learn from this expert?

Cheers Smiley

If the seller believed as strongly as he says he does, he would put his money where his mouth is and do what the other "manipulators" are doing: buying up all the inventory of other sellers. Most of the "manipulation" I've seen isn't true manipulation. There are no "pump and dump" scheme going on - people are buying aggressively, but not selling. There are plenty of people trying to corner the market, and they're buying up all the coins they can find. That's a sign of strength, and it's not something to worry about so long as the market is as strong as it is, with as much potential as it has.

I have mentioned in my previous article Modern Chinese coin commentary and market predictions - 2010-Dec-15 that bigger dealers are going to take control of the market. They will serve in a role as market makers, ensuring that prices remain stable. On the surface it looks like manipulation, but they wouldn't be doing it if the market wouldn't support it by rewarding them for their efforts with a healthy income.

In order for them to do that, they have to put their own money at risk by investing in the market. Instead of calling it manipulation, it's really just a sign of a healthy free market because it's attracting very smart, financially sophisticated people, who are doing the same things they're encouraging their buyers to do - but on a much larger scale.

Since the dealer in question in THIS article was NOT doing that - specifically, he was trying to sell overpriced coins when many others of the same type were available for much less money that HE should have bought himself - it's easy to conclude that he's probably overhyping his coins a bit too much.

Nonetheless, groovemachine DID agree with him that over the long term, his hype was correct, and that's interesting by itself. What that tells me is that it's safe to make mistakes in the market right now. If you make a huge mistake and pay 5 times more for something than you should have, in the long run, you'll at least get your money back. How many other investments will do that? NONE. If you make a mistake and lose your money in any other market, it's gone forever.

That's why so many people on this BUSINESS website are getting involved with investing in Chinese coins: The payoff is high, and the risk is low, even if you do something stupid! AMAZING...and fully worthy of at least a little hype Smiley
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« Reply #4 on: 2011 Jan 26, 11:20:00 am »

Since the dealer in question in THIS article was NOT doing that - specifically, he was trying to sell overpriced coins when many others of the same type were available for much less money that HE should have bought himself - it's easy to conclude that he's probably overhyping his coins a bit too much. ...

The payoff is high, and the risk is low, even if you do something stupid! AMAZING...and fully worthy of at least a little hype Smiley
So a little hype is ok, just not a bit too much. The question then becomes: what's the difference between a little and a bit too much. I hope the answer is more than a belief, an opinion, and a fact. Or is that really possible?

A better question unanswered is: what make a key date key? I was hoping the overhyped seller would provide some answers in his guides. Or maybe Badon or Groovemachine can help out here?
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badon
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« Reply #5 on: 2011 Jan 26, 11:32:34 am »

A key date is the rarest, or one of the rarest, coins in a series. It can be the key date for lots of reasons, low mintage is just one of them. Key coins are the more difficult coins to obtain.

Well, I think "hype" is generally considered to be a lot of one-sided positive press that doesn't fully explain the situation. I've been accused of hype, especially when I tell people it's OK to "overpay" for some of the rarest coins. The dealer mentioned in the article is accused of hype because he fails to acknowledge the disadvantage of buying his coins at his higher price, even when confronted with it. He continues to spout positive "buy" encouragements that we believe to be excessive, even if everything he were saying were absolutely true, AND he had the cheapest price in the business (which he doesn't).

To avoid being accused of hype, the dealer should have acknowledged that his potential buyer, groovemachine, was not a good match for his coins. Another buyer may be, but not groovemachine. Continuing to encourage a sophisticated and uninterested person to buy against his better judgement is pretty much just pure hype.
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If families are a problem for the system, then we must reject the system, not the families.
Founder of the Coin Compendium (forum, blogs, calendar, images, donate, contribute).
LBC makes you rich, with a free ebay gift certificate awarded every month!
The Coin Compendium and the china-mint.info forum, censure, disclosure.
Do not PM questions. Answers should be publicly available.
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« Reply #6 on: 2011 Jan 26, 06:23:41 pm »

As Dobedo says, "You've got a belief and he's got a fact." I believe the key fact here is that there was no sale.
Best wishes,
Peter Anthony
http://www.pandacollector.com
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groovemachine
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« Reply #7 on: 2011 Jan 27, 12:41:58 am »

dobedo:  I don't see any benefit to naming this dealer publicly, so I will refrain.  Needless to say, most of his "guides" were very short and did not serve to clarify much of anything.


Just remember that every transaction has both a buyer and a seller.  While this dealer was hyping his coins and trying to make me feel like an idiot if I did not purchase them, he was eager to sell these coins.  There are many reasons to buy and/or sell a coin, but just remember that the seller may have a very different perspective on things than the buyer.
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GhostRider808
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« Reply #8 on: 2011 Feb 25, 04:27:39 pm »

I like this article!  Something similar happened to me recently and it left a, "bad taste in my mouth". 
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groovemachine
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« Reply #9 on: 2011 Mar 05, 11:11:47 pm »

GR,

Yeah, you darn well better look out for yourself because there are plenty of interesting people out there in China coin land.  Buyer beware...DYODD...
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