Thursday, June 12, 2008

On Rarity

June's The Celator includes an interesting article “Defining Rarity” by Arthur Houghton and David Hendin.

The authors propose five levels of rarity: Common, Scarce, Rare, Very Rare, and Extremely Rare.

The authors attempt to map each level onto it's frequency of appearance on the market. Unfortunately, their frequencies are similar but not identical for different series! Thus a Scarce Seleucid coin appears on the market ‘once every few months’ but a Scarce Ancient Jewish coin appears ‘on a fairly regular basis’. A Rare Seleucid coin appears ‘several times a year’, but a Rare Jewish coin ‘once or twice a year’.

If Houghton and Hendin could agree on the frequencies implied by their terms their scale would be much improved.

The authors give rough estimates for the number of examples for each sub-field, in both precious metals and bronze. For example a ‘rare’ Seleucid bronze should have 10-30 known specimens, while a rare Jewish silver coin has 25-75 examples. There is no contradiction here. A rarity scale useful for collectors should rank based on market appearances rather than surviving specimens.

Also missing in the article is an acknowledgment of overlap or fuzziness in the categories. A Very Rare type might appear three times in the same year because of a statistical fluke, and a merely Rare coin might not show up for five years.

Market availability has a lot to do with dealer optimism. Some scarce types appear common because a few dealers have G or VG condition specimens on their web sites at 5x market value.

Valuable coins also appear more common than they really are. Hendin acknowledges this in his frequency for Scarce, but market price seems to be an additional factor. A $15,000 coin with 10 known specimens seems to appear on the market more often than a $150 coin with 10 known specimens.

Because of such factors I'd prefer to see overlap in the estimates of known examples. For example, instead of Hendin's Extremely Rare=1-3 examples, Very Rare=4-25, and Rare=25-75 I'd like to see Extremely Rare=1-10 examples, Very Rare=5-50, and Rare=25-100.

Houghton and Hendin don't define the term 'market'. I tend to think of the term 'market' to mean the coins I see, online at VCoins/MA-Shops/SixBid/eBay, in glossy catalogs and walking the floor at NYINC. I don't know what fraction of the coin market I'm not seeing. I'm not seeing the uncleaneds, coins in shops, or in European coin shows. Because Houghton is known as the top Seleucid guy it's likely he gets offers of a lot of rare coins the rest of us don't see. His table suggests that “one or more“ examples appear on the market, over a few years, for types of Seleucid bronze with 2-10 extant specimens. Maybe that is what top collectors and dealers see. I'd expect a type with 2-10 specimens to appear in the markets I see less than once a decade.

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