Where does CAC buy and sell coins?

According to their website, CAC has bought over $400M in coins. Where do they buy them? Where do they sell them? Do they deal only in CAC-approved coins? Does their buying and selling affect the premium that green-stickered slabs get over non-green-sticked?

Cal

 

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I asked a similar question recently. I'm not 100% sure how to get you to that post but here is the link as it appears in my browser:

https://www.cointalk.com/threads/how-does-cac-make-their-money.279789/#post-2441999

 

Thanks for the link, SilverMike.

Wonder what it's like to be "a very high-level dealer who has far more lucrative revenue streams" than the coins he deals?

Someday that will be me...

 

Looked at your thread, Mike. Tried a search before my post, but the search engine rejected CAC as having too few characters. The thread gave me partial answers, but maybe that's the best that can be determined for a privately held company. Has anyone seen CAC buying/selling at an auction or show? Of course, buying/selling at an auction can be completely anonymous. Perhaps they buy from or sell only to dealers. If they don't buy from or sell to collectors, then they are purely wholesalers. That's fine with me. Just curious about that side of their operation.

Cal

 

They are dealers.

 

Not to mention their numerous connections

 

Remember the "reclusive collector" thread? There are a few of those type of collector involved in CAC, too - big money folks, the types who order 5-digit coins from their dealer connection and expect the first presented to be acceptable.

 

I do, and that is a very good point as well. If I had the money to assemble a collection at that level they would be one of my first calls.

 

CAC has thousands of active Bids on the CoinPlex.com trading network. In areas of their particular focus, these bids are the basis of many of the printed CDN levels for Greysheet bid.

On a more personal note, you can always contact CAC if you have stickered coins for sale. They are major market makers for the coins they want. I spoke to John Albanese this morning and he told me he is in dire need of stickered gold coins at the moment. (Not surprising given what's going on in the metals market, of course.)

 

CAC being a dealer makes me wonder about potential for conflict of interest. Possibilities: 1. Buy un-stickered slabs, put on stickers and re-sell them for a higher price. 2. When slabs are submitted for grading, make offer to submitter, then for acquired slabs, put on stickers and re-sell them. There are variations on these scenarios. Do they have a "Chinese wall" between their grading department and trading department? Many large banks have a barrier between their trading department and other departments. In the case of banks though, government regulators keep an eye on things (not always successfully); doubt that happens at CAC. Hard to know whether company-owned coins get special consideration by the grading department. It can be a subtle, slippery slope. Ever see a slab with a green sticker and wonder why such a coin merited it?

Cal

 

CAC was created by dealers, for dealers, because they were sick and tired of low-level coins in TPG slabs. Biased? Of course they are, biased in favor of being able to send each other, sight-unseen, coins in slabs whose grades they trusted. No doubt they were aware their efforts would raise prices on some coins, but the whole point is John Albanese felt that prices were deflated by the presence of dogs in slabs diluting the market. As it turns out, he was right, based on what collectors like us are willing to pay for CAC'd coins.

They're not setting those prices. We are, with our auction bids.

 

CAC could have been set-up as a secondary (NOT second tier!) grading service without also being a dealer. It would have accomplished the same goals without the possible conflict of also being a dealer. Some have said the dealing subsidizes the grading. Unless their books are made public, that remains unknown except to CAC insiders.

And, yup, the collector market probably is the main price-setter. However, that does not preclude CAC from making extra dough by giving a nod to company-owned coins, subconsciously or not.

Cal

 

You're missing quite a bit of fact here. CAC was founded by John Albanese, a major dealer who was also NGC's first President and part of the founding team of PCGS as well. They are composed of major dealers and some very high-level collectors who had become sick and tired of not being able to trust slabbed coin grades. They advertise "making a market" in CAC coins, meaning they plainly state in public that the dealers involved will and do pay more money for CAC'd coins. To the tune of hundreds of millions of their own dollars invested in CAC'd inventory.

 

How is it a conflict of interest if you are only buying coins that you would sticker? We aren't talking about a small operation here, their market is hundred of millions overall they don't need to slap a sticker on something to sell for a hundred bucks here or there. All that would do is destroy their market over time anyway.

But if you really want evidence they they won't just slap a sticker on everything they can make a buck on, go through the early Pogue actions and enter the cert numbers into the CAC database to see what stickered and what didn't. If it was just about what they could make a buck on more would have stickered

 

I am quite aware of each every fact mentioned above and have been for some time. Grading operations should be separate from trading. If they're not, there is the inherent potential conflict of company-owned coins being given more favorable treatment than other coins.

I have had a single dealing with CAC, and it was indirect. A coin that I sent to a major auction house was submitted to CAC by them prior to auction and at their suggestion. It was approved.

I am purely a collector, not a dealer, grading service, auctioneer, etc. As a collector, I would like to know that all coins submitted to a grading service will be given equal consideration.

Cal

 

Then I've no way to understand what or why you're thinking; I was trying to be kind. The whole point of CAC is that the principals have a vested interest in the results - they're staking their reputations as dealers on them. That - at least to me - inspires greater confidence than I'd have in a TPG whose only vested interest was in making profit.

 

It's a conflict of interest if company-owned coins are given more favorable treatment than other coins. And, no, they won't kill their business as long as they are selective on what they buy and then sticker. And, I'm sure they are smart enough to play it straight with highly visible collections or extreme rarities. It is still not fair though, even if unconsciously or without direct knowledge of owners, if company-owned coins get more favorable treatment than coins submitted by collectors or dealers who are not owners.

Cal

 

Those two sentences are really a contradiction of each other. Conflicts of interest imply substandard work in the name of making a few extra dollars. If they are being selective (which they are) then they are doing exactly what they are supposed to be doing.

 

My thinking is along the same lines that SEC, FTC, and DOJ have when it comes to trading security instruments versus evaluating them. If Moody's or S&P had trading departments, you can bet that these government entities would require and closely inspect the wall between those departments and the ratings department. Otherwise, bonds that are owned by the trading department might suddenly go from BBB to AAA. Even AA to AAA could earn a profit of millions.

Cal