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Offline Birdman

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"A Culture of Bidding: Forging an Art Market in China"
« on: October 28, 2013, 08:21:37 AM »
Today's NY Times has an interesting article on how the culture of bidding in auctions is different in China than it is elsewhere.  It is written about bidding on art, but from what I have read elsewhere, the same culture can apply to bidding on coins.  Consider it a cautionary tale regarding bidding on coins in Chinese auctions.  Know what you are doing before you dive in...

"A Culture of Bidding:  Forging an Art Market in China"
New York Times, October 28, 2013.
http://www.nytimes.com/projects/2013/china-art-fraud/?hp

A few quotes that caught my eye:

"Price manipulation is rampant, analysts say, as collectors and investors, perhaps an art investment fund with large holdings in a particular artist, bid up a work to boost the value of their entire inventory. Sometimes, experts say, auction houses themselves throw in fake bids. The Chinese have a name for the price-boosting process. They call it “stir frying.” "

"Auction houses have typically papered over the nonpayments, reporting aborted transactions as true sales, even posting record prices and seldom correcting the record. This has misleadingly burnished their revenues, making the market seem hotter and propping up prices, industry experts said."

"The bribery of public officials with art is so widespread that the Chinese have coined a term to describe this kind of aesthetic corruption.  They call it “yahui” or “elegant bribery.”"

Offline pandamonium

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #1 on: October 28, 2013, 08:54:50 AM »
Good article.  Deep pocket collectors/investors should buy authentic graded MCC, I have several for sale under $10 million each...... :)   

Offline ghostrider80811

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #2 on: October 28, 2013, 09:04:47 AM »
So the question becomes; when is the money from the art market going to start transferring into MCC's?  Isnt China the #1 highest grossing Art Industry in the world or something to that effect?   Well, Im sure this news will not instill confidence in the markets.  Makes sense...however, it should be noted damn near every country in the world has bad apples and good apples.  The US isnt any different...


Also, is this what happened to the 95 Gold Unicorn 1oz?  Didnt it sale for near 20,000 USD in PF69 during the the last 1.5 years or so?  I believe it was Stack Bowers I seen it on.  I believe that was a BS auction.  I have also made purchase decisions based on these BS auctions (Im sure some of them were real) and have heard rumors of it AFTER I had made my purchase!!  Hell, the 95 1oz Gold Unicorn sold for around 7500 USD recently on US eBay and Pricepedia didnt include it in the recent issue either?  Was it sold too low?  or was it too late to include into the recent Pricepedia?  Sorry didnt mean to get too off topic but some of my observations, cheers.


Offline 1668Chris

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #3 on: October 28, 2013, 09:16:43 AM »
All unicorns, whether gold, silver or platinum have been on the downtrend for about 2 years since the peek in 2011.  As for the Stacks auction, I personally bought a coin at a price I was willing to pay, and very happy with my purchase.  Also, while I always reference the pricepedia since it is the most comprehensive guide, it is just one data point.  I always use multiple sources of information prior to making any purchase.  Information is key and the most up to date information is the most valuable. 

Offline ghostrider80811

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #4 on: October 28, 2013, 09:20:52 AM »
I agree with you on the one data point as one would need many but I believe correct information at the right time can make a hell of a difference.  Unfortunately as the economy gets worse we will see more manipulations in damn near ALL markets.  Wait until WWWIII kicks off and watch the prices spiral out of control.  Sucks but true...

Offline pandamonium

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #5 on: October 28, 2013, 09:52:37 AM »
I agree with you on the one data point as one would need many but I believe correct information at the right time can make a hell of a difference.  Unfortunately as the economy gets worse we will see more manipulations in damn near ALL markets.  Wait until WWWIII kicks off and watch the prices spiral out of control.  Sucks but true...


You sound like some tin foiled hat, right wing nut but I do agree w/ you.........

Offline GDG's

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #6 on: October 28, 2013, 10:07:15 AM »
Price manipulation exists everywhere. Re: Modern Chinese Coins the number of people collecting enables the number of dealers manipulate prices all day long.

eBay price manipulation goes on constantly with shill bidders. I recently watched one go off on ebay. They try to sucker someone to jump in with their "price point" and if no one does they just leave good feedback and try again another day. Everyone should bid with caution.

Offline PandaCollector

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #7 on: October 28, 2013, 02:50:17 PM »

Also, is this what happened to the 95 Gold Unicorn 1oz?  Didnt it sale for near 20,000 USD in PF69 during the the last 1.5 years or so?  I believe it was Stack Bowers I seen it on.  I believe that was a BS auction.  I have also made purchase decisions based on these BS auctions (Im sure some of them were real) and have heard rumors of it AFTER I had made my purchase!!  Hell, the 95 1oz Gold Unicorn sold for around 7500 USD recently on US eBay and Pricepedia didnt include it in the recent issue either?  Was it sold too low?  or was it too late to include into the recent Pricepedia?  Sorry didnt mean to get too off topic but some of my observations, cheers.





If my memory is correct I spoke to the collector who bought that coin at Stack's. He paid for it and the sale was 100% legit.

Best wishes,
Peter

Offline PandaCollector

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #8 on: October 28, 2013, 02:57:47 PM »
Hell, the 95 1oz Gold Unicorn sold for around 7500 USD recently on US eBay and Pricepedia didnt include it in the recent issue either?  Was it sold too low?  or was it too late to include into the recent Pricepedia?  Sorry didnt mean to get too off topic but some of my observations, cheers.


It's in the November issue.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.com

Offline PandaCollector

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #9 on: October 28, 2013, 03:21:33 PM »
FWIW, I know auctioneers who are accused of bidding up prices and knocking down prices, sometimes at the same time by different people. In live auctions I think that collusion to hold prices down is more serious than bidding prices up. Holding a price down effectively steals money from the consignor. I can think of one coin that not long ago only went to $70,000 where bidding stopped. A group of dealers was working together to buy it. An outsider bid at the last moment to break through the logjam and the coin closed at $190,000 + juice.

Anyone who supports prices aggressively by bidding them up eventually ends up "owning" the market and fails. At least in coins. In art, where supply might be extremely limited this may not apply.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.com

Offline bonke

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #10 on: October 28, 2013, 07:39:19 PM »
Remember, not long ago, coin forum members were clamoring for the 2nd Edition of Gold & Silver Panda Coin Buyer's Guide.  Peter Anthony was diligently trying to complete this new edition and mail it to all of us. 

During this time period, I purchased a 1995 China 100y gold unicorn on Ebay for $7700.07.  It is a nice gold unicorn coin.  I was pleased with its condition and price. 

This sale/purchase was not immediately shown in Pricepedia.  I noticed this omission.  Still, I also realized Peter's time was being consumed with issues associated with the 2nd Edition of his book.  This was an understandable omission during a stressful time.  Certainly, it is inappropriate to suggest such omission had a nefarious intent.

Many reasonable purchases will be made by all of us in this weakened market for modern Chinese coins and medals.  Enjoy yourselves.  This is a buying opportunity.

Mark Bonke

 

 

Offline KeyDate1/2ozPandas

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #11 on: October 29, 2013, 01:05:00 AM »
The goal of every auction house is to have items sell for as much as possible, because their commission and reputation is based on how well their listings sell.  They don't really care if you overpay by 50%-100% relative to the market price because it just shows how successful their brand is relative to other sellers. Along the same lines they don't want things to go below market because that shows weakness in their brand or ability to reach the best paying customers, so many auctions houses bid on their own items or allow consignors to bid on their own items with negotiated buy-back fees ranging from 0%-10%.  This self-bidding or shill bidding is a win-win for the auction house and consignor, but may be illegal in some countries or on some platforms. 

The goal of dealers/investors bidding on auctions is to buy things as low as possible with the intent to either resell immediately for a profit or hold as an investment.  This situation often creates opportunities for collusion which will always lead to lower realized prices for auctioned items.  A very important point to understand about auctions is, the under bidder is the one that really establishes the final price of the item, if you one or more under bidders are convinced out of bidding the realized price will be much lower than simply one bid increment, often it can be several bid increments.  Collusion is a win-win for well networked dealers/investors, but may be illegal in some countries and is almost always illegal from auction house rules (read first paragraph above to understand why).

Finally there is the collector, the true end user or long term owner for the item, they come in and bid what they can afford to pay based on research, personal desire or irrational exuberance because they got to have it. This group is often not aware of what is stated in the two paragraphs above and just bids  independent of interactions between auctioneer and dealers/investors.  They are the ideal customers an auction house needs to be successful, otherwise many of the consignors can simply just sell to dealers/investors directly and partially split the seller/buyer premiums that auction house takes in to cover their expense and earn profit. 

From my experience at any given point in time one of the 1-2 groups really control the outcome of the auction.  In rising markets the collectors and dealer/investors dominate the setting of prices.  In flat markets the auction house and dealer/investors share in setting the outcome of prices, collectors are less passionate to get involved.  In down markets the auction house dominates the setting of prices via shill bidding (where it is legal) and/or buyback agreements. 

Arif

Offline KeyDate1/2ozPandas

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #12 on: October 29, 2013, 01:34:38 AM »
Anyone who supports prices aggressively by bidding them up eventually ends up "owning" the market and fails. At least in coins. In art, where supply might be extremely limited this may not apply.

This is one of few times I will slightly disagree with Peter's insight, even though on balance his statement is correct for most coins out there.   

Where I disagree is for reasonably rare coins, such as, most 1/2oz gold panda, almost all 1990s gold panda, key coins for a set (2002 1/10), etc one can buy up the market and control the supply well enough to push prices up very fast in a flat to rising market.  The reason one can control the market is many of the gold pandas are rare enough that if someone wanted to buy 5-20 of a given coin they probably can't do it in a reasonable amount of time without spiking prices. In March of 2013 we had "super spike" in gold panda prices simply because say 50 complete gold panda sets (1982-2013 1oz-1/20oz) needed to be made to fill a buy order from a large customer.  The making of those 50 sets drove prices up 20-200% for some coins within 1-2 months, it was amazing to see how quickly the market changed the from slow October-January period to "pandamonium" in February-March.  For those that had the insight to buy key coins of the complete 1982-2013 set during slow market period from October 2012-January 2013 and hold them tightly did very well in March 2013 assuming they let go of some or most of those key coins when prices really took off. 

From my experience it is reasonably possible to buy the market for most key coins (my estimate is there are 35 key coins in gold panda series from 1982-2013) and hold them until the market really appreciates their rarity or desirability.   

Arif

Offline PandaCollector

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #13 on: October 29, 2013, 03:36:30 AM »
This is one of few times I will slightly disagree with Peter's insight, even though on balance his statement is correct for most coins out there.  

Where I disagree is for reasonably rare coins, such as, most 1/2oz gold panda, almost all 1990s gold panda, key coins for a set (2002 1/10), etc one can buy up the market and control the supply well enough to push prices up very fast in a flat to rising market.  The reason one can control the market is many of the gold pandas are rare enough that if someone wanted to buy 5-20 of a given coin they probably can't do it in a reasonable amount of time without spiking prices. In March of 2013 we had "super spike" in gold panda prices simply because say 50 complete gold panda sets (1982-2013 1oz-1/20oz) needed to be made to fill a buy order from a large customer.  The making of those 50 sets drove prices up 20-200% for some coins within 1-2 months, it was amazing to see how quickly the market changed the from slow October-January period to "pandamonium" in February-March.  For those that had the insight to buy key coins of the complete 1982-2013 set during slow market period from October 2012-January 2013 and hold them tightly did very well in March 2013 assuming they let go of some or most of those key coins when prices really took off.  

From my experience it is reasonably possible to buy the market for most key coins (my estimate is there are 35 key coins in gold panda series from 1982-2013) and hold them until the market really appreciates their rarity or desirability.    

Arif

Arif gives a good example of how this can happen with rare coins. Like certain art there are so few of some coins available that it is possible for a single buyer to strongly influence the market. In the case of the Pandamonium last Spring my understanding is that the buyer had an outlet in mind for the coins, they weren't bought as a long term holding. However, if anyone needed convincing the price spike confirmed how difficult to find the key gold Pandas are.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.com

Offline NBM

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #14 on: October 29, 2013, 04:41:17 AM »
So the question becomes; when is the money from the art market going to start transferring into MCC's?

Perhaps it already has?

Masterful Mock-ups

Quote
“Authenticity is very important to collectors but matters little to investors [and speculators],” said Ma Weidu, one of China’s best-known fine art collectors. “Selling counterfeit goods has become common practice, and I think this ambivalence is reflective of society in general.”

http://www.newschinamag.com/magazine/masterful-mock-ups/

Painting & calligraphy market vigorous but troubled

Quote
"For many collectors, whether the art work is real determines the greatest part of its value, while for art work investors, the price a work of art can fetch, no matter whether it is genuine or not, is what matters most," added Ma. Speculators who want to make money from the market for fakes will commission them at comparatively low prices, publicize the work to push up its value, then get a massive return on their investment at auction.

Investors and speculators have seriously complicated the traditional Chinese art market. The authorities began to take steps to control the Chinese real estate market in 2000, forcing many investors to shift their cash infusions into the art market. As money floods a market, especially suddenly and in large amounts, problems are unavoidable.

Investors and speculators are profit-oriented, but established collectors have other motives. They have also used the resulting publicity machines to get rid of unsatisfactory pieces, or even entire collections. "Before 2009, people in this market were largely true collectors, people with a genuine taste for these works, but in 2009, it all changed, with more people entering the market merely for investment," said Mou Jianping, an industry insider.

http://ecns.cn/in-depth/2011/11-11/3775.shtml

China’s broken art market

Quote
the present situation in China is clearly the worst of both possible worlds, both incentivizing and demonizing the copying which has been the heart of Chinese art for centuries. One thing is clear: it’s not sustainable, over the long term. Which means that if you’re speculating in Chinese art, you’d better have your exit planned out. Because the bubble is certain to burst, and it could happen at any time.

http://blogs.reuters.com/felix-salmon/2013/10/28/chinas-broken-art-market/

Offline pandamonium

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #15 on: October 29, 2013, 08:44:09 AM »
As bullion takes a prominent role in Worldwide finances, then the possiblity of hot money flowing into rare coins is high.  Recent NGC article is about a $1 million kilo gold MCC.  Can this gold kilo spike up to $10 million or how about $100 million as the real or fake art market has?  When will the Chinese investors lose interest in "real" art and real estate?   TV show 60 min called China's real estate a huge bubble.  The wealthy investors want hard assets so there is little to stop the flood of cash into MCC in the future.   Pandamonium in MCC will eventually happen.....

Offline PandaCollector

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #16 on: October 30, 2013, 03:13:12 AM »

Hell, the 95 1oz Gold Unicorn sold for around 7500 USD recently on US eBay...



The catalog number of this coin is NPB-16A.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.com

Offline PandaCollector

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #17 on: October 30, 2013, 12:25:47 PM »
The catalog number of this coin is NPB-16A.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.com

Note: For anyone who is curious NPB stands for the late Nick P. Brown, a great champion of the Unicorn series.

Best wishes,
Peter Anthony
China Pricepedia
www.pandacollector.com

Offline ghostrider80811

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Re: "A Culture of Bidding: Forging an Art Market in China"
« Reply #18 on: December 08, 2013, 06:19:13 AM »
As bullion takes a prominent role in Worldwide finances, then the possiblity of hot money flowing into rare coins is high.  Recent NGC article is about a $1 million kilo gold MCC.  Can this gold kilo spike up to $10 million or how about $100 million as the real or fake art market has?  When will the Chinese investors lose interest in "real" art and real estate?   TV show 60 min called China's real estate a huge bubble.  The wealthy investors want hard assets so there is little to stop the flood of cash into MCC in the future.   Pandamonium in MCC will eventually happen.....


I see the samething happening but also money pouring into crypto currencies and rare MCC.  Mark my words...BUT only time will tell, lol.