Can anyone explain how CDN (Graysheet), NGC, and PCGS set their prices in their ‘price guides’?

Here is another question I’ve wondered about for years… Can anyone explain how CDN (Graysheet), NGC (NumisMaster for WW), and PCGS set their prices in their ‘price guides’? Is it set from auction data found on eBay, HA, GreatCollections, and CoinArchives? …and how often is it updated?

Sure, I understand that price and value are different (price being the amount to be paid to get something and value implying the worth of the coin to an individual) and value can never be determined in terms of money and varies from customer to customer. But… my question is, how are these companies setting the price (not value).

I also understand the Greysheet represents sight-seen transactions while PCGS/NGC prices are for the sight-unseen market regardless of the coin’s eye appeal representing a ‘floor’ of the lowest prices coins are trading for… but that doesn’t give me any insight into how they set their prices.

Is the price determined by supply and demand as in normal markets—I assume it is…? If that is the case and supply is fixed (sure, new hoards can be found) then supply’s impact on price is the assets rarity based on mintage, as well as, the population estimate at each grade.



… and demand is driven by design (size of Mogan or a thaler is more desirable than a 3 cent nickel), bullion content (intrinsic/melt value), and the ups and downs of gold and silver bullion markets (link) coupled with disposable income and the % of fear in the general market of an economic downturn.

But how do these supply and demand variables get used to come up with the published number?

Many comments in the past have been that ‘the number doesn’t matter’. I get that sentiment but that is more valuable for the ‘value’ side of the discussion. I’m interested here in understanding how they set the price.

 

Log in or Sign up to hide this ad.

Here is what CDN publishes in the Greysheet under the heading "Using The Greysheet":

"The monthly Greysheet...reports the national wholesale rare coin market by monitoring dealer-to-dealer transactions, public auctions, trade-shows, online trading networks (CDNX, CCE), subscriber feedback and other sources."

I could go on quoting a much lengthier description as published but you get the idea. Also, the Greysheet lists both "sight seen" and "sight unseen" (Bluesheet) pricing.

While the paper edition of the Greysheet is obviously a lagging indicator due to printing and mailing lead times, CDN claims that the on-line version is updated regularly, for some issues sometimes as often as daily.

As far as I know PCGS and NGC do not list any "sight unseen" pricing but just because I haven't seen it doesn't mean it doesn't exist. I wonder if I can squeeze another negative into that sentence?

Also, Greysheet is supposed to be a wholesale dealer-to-dealer bid price guide, not a retail guide. The pricing seen at PCGS and NGC is retail and generally considered to be high retail. I don't know how PCGS and NGC come up with their pricing. CDN also publishes a retail price guide which normally has prices that fall between the Greysheet and the PCGS/NGC prices.

Certainly supply and demand play a part in the pricing and value (using your definitions of those terms) of coins but I don't think any of the pricing services utilize any demand/supply algorithms in establishing their pricing guide values. After all, why should they? The pricing they are amalgamating from the market already has all the supply and demand infinite variables baked into those prices. That's what a market is in economics terms - a price discovery mechanism.

The topic of bullion price versus numismatic gold coin premium has been discussed at length here at Coin Talk with some notable treatises by @GoldFinger1969. I think if you were to search and read those threads you might come up the same very, very general conclusion that I did: "Numismatic premiums for common date pre-1933 US gold coins are inversely proportional to gold bullion spot price and is a lagging function."

Hope that works for you.

 

The key word (at least in theory) is "report" as opposed to 'set', 'calculate' or 'estmate'.

 

I'll borrow this from @paddyman98

 

I did see this from CDN but it didn't get into any specifics... just generic comments.

 

Well, I'm at a loss understanding what you want to know. Without mind melding with Mr. Feigenbaum, he's explained how they determine pricing.

 

https://www.caccoin.com/forums/discussion/43/cac-pricing-discussion

 

@baseball21 this thread is incredible and exactly the type of understanding I was hoping for--a summary of his comments below. Thank you for pointing it out. John Feigenbaum, President, CDN Publishing, gets an A+ for transparency. The '1843 liberty seated 25c'shows he is true to his word. Hope NGC/PCGS's new leadership becomes this transparent.

"We really don't use a formula. I would simply state that we use a "mark to market" strategy. Specific prices can change based on recent sales of the same item, of that type in general, or more-broadly the entire market, Everything matters. For example, if the last 5 7-figure coins have sold at higher levels than in recent years, we aren't surprised when the 6th one follows suit. On the contrary a declining market will make us more aggressive about following price down. Fortunately, we are currently in a bullish market overall at this time."

"coins that trade frequently (think common MS66 CC Morgan dollars) are influenced heavily by their most recent trades (90 days). It doesn't matter much what they sold for 3 years ago."

"A coin that doesn't trade often has fewer comparison points and we look harder at the quality, but we still believe that the most recent sale is the most relevant."

"In the absence of a market bid on CDN Exchange for a specific coin, and/or relevant CAC auction records we will generally assign a 15%-20% premium to a CAC coin. Frankly, in most cases, this probably isn't enough but we are conservative by nature. Meaning we'd rather set a price lower than higher until we have more data."

 

.....and continues to do so, even this past week, on the CAC Board. All anyone here with questions has to do, is go to the CAC Board, and pose the question. He is most gracious and helpful.