Archive for March, 2019

Irrationality in the U.S. Coin Market

March 9, 2019

This is posted mainly for my numismatic friends. It concerns crazy high prices being paid for coins based on increments of condition perfection that are actually meaningless. The “slabbing” mentioned refers to coins in sealed capsules whose authenticity and grade is assigned by certification services. A version of this piece was just published in Coin World, but much condensed, omitting some significant points (and, oddly, the first line). So here is my complete text:

This Emperor has no clothes.

The U.S. coin market, that is — when it comes to the highest grades — especially for modern coins and the “top of the pop” thing (coins graded highest in the slabbing services’ population reports).

Let’s start with what’s rational about coin prices. They’re keyed to rarity and quality.

Rarity is a matter of supply and demand. The fewer the examples available to desirous buyers, the higher they’ll bid the price up.

The quality factor might seem similarly straightforward: better quality brings a higher price. That’s true of any goods. Numismatics in particular entails an aesthetic aspect. Better condition coins are nicer to look at. Thus, “eye appeal.” But note the complication that beauty is in the eye of the beholder, and collectors differ in what attracts them. There’s also a pride-of-ownership factor. Our collecting is a reflection of ourselves. (In my own collecting of world and ancient coins, I’m something of a condition snob.)

The rarity and quality factors are synergistic: in general, higher quality is rarer. Though not always. For 1883 “No Cents” nickels, or 1997-S Proof dimes, lower quality is actually the rarer. Of course, nobody will pay extra for that kind of rarity (except those pursuing “worst of” sets for the sake of numismatic perversity). But in the more usual situation — say, 1897-S dimes — high grade (mint state) coins are far rarer than well-worn ones, and command correspondingly higher prices.

There is also the concept of “condition rarity” where a coin otherwise common is hard to find in the best grades.

In all such cases the price disparity is rational and understandable to anyone. But what about, say, MS-67 versus MS-66 for modern coins? PCGS may have graded ten times more 66s than 67s. Does that make 67 a condition rarity? Should the price be ten times that of 66? Let alone a hundred times or more?

Basic human psychology comes into play here. I’ve mentioned pride of ownership. There’s a part of us — especially men, and coin collectors are mostly men — that wants to be the best and have the best. We call it “bragging rights.” And there’s also competitiveness, the desire to beat out the other fellow and thump one’s chest.

I see this in my own auctions. Some guys just don’t like the idea of being outbid, as though it’s losing a competition, even a knock to their manhood. They will top someone else’s bid just for the sake of claiming a victory. Probably they don’t consciously think this way, it’s unconscious. But it sure helps my prices realized.

Hugely feeding this is the advent of registry sets (a cunning invention by the grading services, to get fees on many common date coins that wouldn’t otherwise be worth slabbing). Now one can actually literally be certified as having the best collection of, say, Lincoln cents. So if you’re in that game, and suppose there’s only a few 1954 cents slabbed as MS-67, you’ve gotta have one. And you’ll pay way more than for a “common” MS-66. Way way more. Would you believe $31,200? That in fact is what an MS-67 1954 cent realized at Heritage’s 2018 FUN auction.

To be clear, 1954 is not even a scarce date. The bid price for MS-66 red is $55; though outside of a slab a BU, even if really nice, goes for maybe a buck. Meantime, for $31,200 you could literally buy a full roll of key date 1885 nickels — in Proof!

Something is seriously out of whack.

This carries the concept of condition rarity to an extreme that’s beyond irrational. Let’s take a deep breath and remember that while the difference between, say, EF and mint state 1897-S dimes is obvious and material (and the price difference is not huge), the distinction between MS-66 and MS-67 1954 cents is nothing of the kind. I am talking not about the market difference, but the actual physical quality difference. It’s awfully close to being a distinction without a difference.

We must also remember that this is all ultimately about aesthetics. People do not need coins. We collect them only because it is in some way pleasing to do so. Upon this foundation a gigantic economic edifice has been built, but at the end of the day, coins have no value except insofar as they confer pleasure on their owners. (Thus I sometimes say in my auction catalogs, “Love your coins for what they are, not for what they’re worth.”)

We do, once more, pay higher for better quality coins because they confer more pleasure. Again a matter of how a coin looks to the eye. But distinguishing between MS-66 and MS-67 requires close examination under magnification with special lighting. Otherwise they look just about identical — apart from any toning, which may actually have a far bigger impact on visual appeal than the bare number grade. Moreover (as Q. David Bowers keeps reminding us), those numbers don’t take account of strike either, a big aspect of a coin’s true quality. Thus the number grades reflect what is really a peculiar sort of tunnel vision. And still further, the numbers falsely imply a sort of scientific precision, when in fact they are a matter of subjective judgement, upon which even experts typically disagree.

Given all that, it might make sense to pay a little bit more for a coin that a grader at some grading service, on a particular day, after a particularly good lunch, decided to call MS-67 than for one in an MS-66 slab. But to pay multiples more — indeed, many hundreds of times more — is insane. In the fullness of time, collectors will come to their senses. As did the Dutch tulip speculators.

The original Sheldon scale contemplated just three quality levels for mint state coins (with one of them an almost impossible nirvana of perfection). Maybe a couple of finer differentiations would be reasonable. But expanding it to 11 (and even more, really, with pluses and Wings) stretched the concept of quality differentiation beyond what makes reasonable sense, given the subjectivity involved. Especially when a fetishistic obsession has emerged over distinguishing among inconsequential gradations of virtual perfection. This has sent U.S. numismatics down a rabbit hole pursuing an illusory holy grail (if I may mix my metaphors, and alliterate).

How Democrats in 2020 can make America great again

March 6, 2019

Democratic presidential hopefuls are scrambling to get right with the left — the party’s left-wing activist ideologues. Free college, Medicare for all, jobs for all, the big government “Green New Deal,” etc. Bernie Sanders and Ocasio-Cortez seem to be calling the tune.

Many of those activists glory in the word “socialism,” in an in-your-face kind of way. This is political insanity. Trump is eager to make 2020 a referendum on socialism. The activists fantasize winning it by just soothingly explaining that socialism merely means anything government does. Not true; but anyway, if that were really all they mean by “socialism,” and if their actual policies are so wonderful, then why not just advocate those policies without the albatross of so toxic a label as “socialism?” What branding genius. Might as well call it “Satanism.”

Michael Bloomberg has bowed out, judging that today’s Democratic party has no room for his kind of centrist moderation. But is that true? Is the broad base of Democratic voters really on board with the high-octane left-wing socialist populism? The Economist’s “Lexington” columnist (on U.S. politics) thinks not. While Republicans, by 2016, did go extreme en masse, the Democrats really haven’t. Their lefties may be the loudest; but the party is large; it contains multitudes.

Lexington points to the evidence of the midterms. Ocasio-Cortez was a fluke, not representative of most newly elected Democrats. Their voters’ main concern is opposing Trump, not a specific policy agenda. Indeed, most of them don’t see America as in a systemic or economic crisis such that the radical restructurings envisioned by the activist left are what’s needed. The crisis is Trump, and draining the Trump swamp will go far toward putting America right.

Of course, just being against Trump is not enough, and Democrats must be clear about how their administration will differ programmatically from his. But that shouldn’t mean veering far from the political center — a vast territory they should instead take this opportunity to seize.

Lexington thinks Bernie’s strong 2016 run was more about dissatisfaction with Clinton than support for his radicalism. And in November she lost not because of her policies but because of her personality and character image. So a different candidate, not radical left-wing policies, is the ticket for 2020.

Which brings us to Biden. If he were contending against a single white knight bedazzling the lefty activists, they’d likely overwhelm him. But their mojo is divided among a whole bunch of aspirants all trying to be Ocasio-Sanders. Biden would be nuts to join that scrum for the rabid vote, when he can instead grab the sober responsible center, practically all to himself. Which is where the party’s majority probably actually is. And against a fragmented field, he can mop up primaries with 30% of the vote (just like Trump did in the early 2016 primaries). Add in Biden’s aura of experience and gravitas, head-and-shoulders above all the rest, this is the path to the nomination. (Blocking Bloomberg’s path, the real reason he quit.) Biden offers the best prospect of steering the party out of its leftward lurch and preventing the nomination of a fringe-y candidate.

Many keep raising various points against Biden (not least his age). He’s not a perfect candidate. I used to be a Republican, remember, and was no Biden fan. But this is a perfect case for not letting the perfect be the enemy of the good. In Biden-versus-Trump, Biden’s defects are molehills as against Trump’s mountains upon mountains. Biden is basically a good human being. I see him as the Democrat best positioned to slay the dragon. I would vote for him with more alacrity than ever in my life.

As Lexington observes, in 2016 too many voters went for the crazy option, and some at least are repenting. They won’t be receptive in 2020 to replacing one kind of crazy with another. What’s wanted instead is not fire-breathing radicalism but rather human decency, a steady hand, the tried-and-true, the reassuring and comfortable. The restoration of the fundamental principles, the ideals, the values, that truly did make America great.

Making America Great Again Chapter 896

March 3, 2019

Otto Warmbier, American student, visiting North Korea. Propaganda poster in his hotel, thought it would make a cool souvenir. For this, tortured to death.

Kim Jong Un disavows knowledge, and Trump takes him at his word. Previously said he’s “in love” with Kim. Who’d had his uncle killed with anti-aircraft guns. His half-brother poisoned in a foreign airport. The world’s most viciously repressive dictator.

His underlings handling an American prisoner without Kim’s full knowledge and direction? Preposterous.

But Trump takes him at his word. Like he took MBS’s word that he knew nothing about Kashoggi’s dismemberment. And Putin’s word that he had nothing to do with subverting our 2016 election.

But U.S. intelligence services? Their word he doesn’t take. Mainstream media? “Fake news.” And Canada’s prime minister — him Trump calls a liar. (Does Trump, himself a pathological liar, know what truth is?)

But —

Why do I bother? Doesn’t everyone know all this? Don’t I get tired of writing such stuff?


With past presidents, I wouldn’t call out everything I didn’t like; merely par for the course. Trump is different. Now I’m resolved to let nothing pass. That would be to accept monstrousness as normality.

Which indeed is what’s happening. Recently a commentator remarked that things which, before, would have been big scandals, today hardly even register.

Example: remember Trump claiming he couldn’t release his tax returns because they were under audit? That was a lie — auditing is irrelevant to making returns public. But now we learn there was no audit.

Does anyone care? This bombshell went almost wholly unremarked. Showing how inured we have become. Now we just shrug.

I refuse to shrug. I refuse to become inured to monstrousness. To the utter degradation of my beloved country. I must bear witness.

“A racist . . . a con man . . . a cheat”

March 1, 2019

Old news — to anyone paying attention.

Yet Republicans continue denial of reality. Evolution, climate change, and Trump’s moral depravity. Despite their longtime righteous preening. Remember “The Moral Majority?”

Republicans at Wednesday’s hearing hysterically flayed Michael Cohen as a liar. As if he falsely smeared a good honest president because . . . well, why?

Yes, Cohen lied before. Lied, indeed, for Trump. Now searingly candid about what a fool he’d been, letting himself be corrupted, paying a very heavy price. And pointedly warning those Republicans they’re on the same road to perdition.

Nevertheless, they persisted. Undaunted in their Cohen-bashing orgy. Asking not a single question about Trump. Not even about, for example, the smoking gun check, emblazoned with Trump’s own flamboyant signature, of which he’d denied knowledge, that constituted both a criminal violation of campaign finance law and plain old financial fraud.

Nor, one radio reporter noted, did Republicans in the hearing ever actually try to defend Trump. Why not? They can’t.

Nor did they seem to realize, so fixated on painting Cohen as the scum of the earth: if that’s true of Trump’s closest henchman, what does that say about Trump himself?