Has the royal mint turned the corner?

[LawrenceChard]

6 hours ago, sovereignsteve said:

Mmm I notice he is keeping quiet about this. Smoke? Fire?😎

Smoke? Fire? Charred?

😎

[kimchi]

12 minutes ago, LawrenceChard said:

Smoke? Fire? Charred?

😎

My goodness, I can just imagine the headline news:

Founder of Famous Blackpool Precious Metals Dealership Found Barbecued!

Police say a 'reckless and criminally negligent' amount of charcoal was used, and the result was therefore clearly not fit for human consumption.

In order to avoid civil unrest, hungry patrons have temporarily been diverted to the chippie around the corner.

[AppleZippoandMetronome]

18 hours ago, LawrenceChard said:

You are talking as if "secondary market price" means "higher price" which is not necessarily so.

As @GoldDiggerDave points out, it is often lower.

Which did you mean?

😎

Yeah you are right to point that out especially given that I agree 100% with @GoldDiggerDave and have often pointed out on here myself that most proof releases only ever fall in value over time.

What I was trying to refer to in my post was the situation the OP made reference to where a release is bought up instantly leaving the only option for collectors to attain these coins being higher prices on the secondary market. If the RM is making an effort to curb that then good for them. I don't think they'll ever stop it completely but even making a token effort to appease the collecting community is a step in the right direction given how poorly they seem to treat their customers generally.

I do think long term none of this matters. Once the hype dies down on pretty much any release the values tend to drop and we've sure seen a lot of that happening in the last year or more with coins that were way overhyped at release - how many have lost money on modern proofs in the last year or two? It occurs to me that the best thing you can be in this hobby if there are coins you want is a patient collector. When it comes to modern proofs eventually you'll get the chance to get the coin for a much lower price. There are exceptions, of course but generally they do all tend to drop in value over time.

[LawrenceChard]

23 hours ago, Silverlocks said:

You might say it's a licence to print money . . .

Journalists often do say stuff about the Mint having printed some new coins, but that's because they are clueless about the subject they are writing about. I do realise you are just having fun with a pun.

😎

[Silverlocks]

31 minutes ago, LawrenceChard said:

Journalists often do say stuff about the Mint having printed some new coins, but that's because they are clueless about the subject they are writing about. I do realise you are just having fun with a pun.

😎

It would have worked better if the RM did banknotes as well, but the interwebs say that's done by another outfit called De La Rue.

[LawrenceChard]

19 hours ago, LawrenceChard said:

You are talking as if "secondary market price" means "higher price" which is not necessarily so.

As @GoldDiggerDave points out, it is often lower.

Which did you mean?

😎

41 minutes ago, AppleZippoandMetronome said:

Yeah you are right to point that out especially given that I agree 100% with @GoldDiggerDave and have often pointed out on here myself that most proof releases only ever fall in value over time.

What I was trying to refer to in my post was the situation the OP made reference to where a release is bought up instantly leaving the only option for collectors to attain these coins being higher prices on the secondary market. If the RM is making an effort to curb that then good for them. I don't think they'll ever stop it completely but even making a token effort to appease the collecting community is a step in the right direction given how poorly they seem to treat their customers generally.

I do think long term none of this matters. Once the hype dies down on pretty much any release the values tend to drop and we've sure seen a lot of that happening in the last year or more with coins that were way overhyped at release - how many have lost money on modern proofs in the last year or two? It occurs to me that the best thing you can be in this hobby if there are coins you want is a patient collector. When it comes to modern proofs eventually you'll get the chance to get the coin for a much lower price. There are exceptions, of course but generally they do all tend to drop in value over time.

It is easy to think that every new issue will go up in price, and some people do assume so.

While most collectors do not necessarily buy primarily as an investment, I think most don't want to see the value of their purchases and collections drop, so it probably needs a fine balancing act by the Mint. 

While it must be tempting for any business to maximise its short term profits on every occasion, especially when it has a monopoly, but it should be aware that this risks its long term prospects, as many people would become disenchanted with collecting if everything they bought dropped in value.

Ideally, issue limits would be guessed correctly. Too high, and some people would be put off from buying, too low, and the flippers jump in, so that regular genuine collectors get frustrated by having to queue, miss out, or get price-gouged; none of these are ideal.

I am aware many on TSF are flippers, possibly in addition to their stacking or collecting. While it is probably unfair to blame anyone for flipping, the situation which encourages it is not ideal.

Worse in my opinion, are the many small or new dealers, who "jump on the bandwagon" and are motivated by quick, easy, short term profits. There are also some which are not so small, but seem to exist to rip-off mainly new or inexperienced coin buyers, and the senile. Some of them use highly unethical "bait and switch" sales tactics. Many of them are just retailers, and not real dealers, don't "buy-back", and have little or no interest in older or historic coins.

You will be aware that I / we are dealers, but with most new issues, we try to set fair, competitive prices, usually giving a worthwhile discount compared with RM prices. This probably does not make us popular with many competitors, possibly including the RM itself. With major new issues such as proof sovereigns, we aim to estimate how many we will sell immediately, but also aim to retain enough stock to last for later buyers. 

Effectively, we "wear two hats", one as a retail distributor happy to sell a major portion of our allocation with a week or two, and then as a "dealer", trying to balance stock, sales, and prices, so that we can maintain stocks and services for customers, ideally until the next issue or later, preferably until we start to get "natural" secondary market supplies. Sometimes we get stuck with too much stock for too long, at other times we make "windfall" profit. There is a slight risk that some will see this as profiteering, but it is an integral part of what real dealers do. Markets dictate prices. Dealers cannot afford to ignore this simple fact. 

For many years, we have tried to ensure that we can customers who buy one year's proof sovereigns from us, the next year's, and do so at RM issue price or slightly less. We managed to do this, even when we were not receiving direct supplies from the Royal Mint. In the past few years, this has been made more difficult by the big influx of new "dealers", most of whom may not stick around when the market returns to "normal".

Now that we have a direct supply agreement with the RM, it should be easier for us to resume our longer term stratagy. We are not permitted to contact customer in advance, or to take advance orders or deposits, even though this could help regular collectors.

We have previously discussed these matter with the Mint, and will continue to do so.

The typical price spike shortly after release may be partly due to some collectors wanting their new coin as soon as possible, perhaps like some new car buyers who will willingly pay a premium to get a new model early, so it is not neccessarily terrible. @GoldDiggerDave and you are right that once the new release hysteria wears off, market prices often decline for a few years before they find a stable level.

If collectors miss out initially, then exercising some patience will often bring its own reward.

😎

[GoldDiggerDave]

@AppleZippoandMetronome There's never going to be a perfect system if they produce unlimited numbers or very high mintages they will kill the demand.  Collectors want low mintage coins, it's no guarantee of a future added value or even if it will hold any of the value.   Special year sovereigns normally do okay but I just hope they don't over cook it, we will likely see a  new shield/coat of arms proof sovereign in 2023 or some point in the future I really would not want 3 in a row, a simple George and the Dragon would be good for a few years. 

 

[GoldStatue]

1 hour ago, GoldDiggerDave said:

@AppleZippoandMetronome There's never going to be a perfect system if they produce unlimited numbers or very high mintages they will kill the demand.  Collectors want low mintage coins, it's no guarantee of a future added value or even if it will hold any of the value.   Special year sovereigns normally do okay but I just hope they don't over cook it, we will likely see a  new shield/coat of arms proof sovereign in 2023 or some point in the future I really would not want 3 in a row, a simple George and the Dragon would be good for a few years. 

 

If the mint upped the mintages on collectors coins there would still be demand from collectors regardless.

More coin collectors would get the opportunity to buy the coins at RRP.

The short-term flipping market wouldn't be as noticeable as it can be for popular releases but the coins can still potentially rise in value over time.

I think most collectors know that low mintages don't automatically translate into a financial "winner" and is just one factor that goes into why they purchase a coin.

In the main I would say limiting the mintages just helps the mint sell more coins, it isn't really in the collectors best interests.

[GoldDiggerDave]

3 minutes ago, GoldStatue said:

If the mint upped the mintages on collectors coins there would still be demand from collectors regardless.

More coin collectors would get the opportunity to buy the coins at RRP.

The short-term flipping market wouldn't be as noticeable as it can be for popular releases but the coins can still potentially rise in value over time.

I think most collectors know that low mintages don't automatically translate into a financial "winner" and is just one factor that goes into why they purchase a coin.

In the main I would say limiting the mintages just helps the mint sell more coins, it isn't really in the collectors best interests.

If they minted 500,000 Mr men coins they would be lucky to sell 2% of them. What mintage would have you liked with the 2022 memorial proof sovereign that would be in the collectors best interest?