Cornering the market

[scyther]

I was just thinking... you could probably corner the market on some coins pretty easily if you have just a few million dollars to work with. Or if several people of lesser means all get in on it. Could this work? Also, would it be illegal? I think it's illegal to try to hoard up all the commodities, but probably not for a coin... right?

Like date and mint mark.

[barrytrot]

First of all, there isn't just a walmart with every copy of 1955-D in it. You would have to take a long time and pay TONS to advertise that you were buying all the 1955-D (just an example for clarity).

And, naturally you would have to pay a MAJOR premium or people wouldn't bother.

Then when it's all said and done you have paid 3 times as much as the coins are worth and no one other than you really cares.

Cornering the market is only financially beneficial on things where they are TRUE commodities and you can buy them quickly and without an artificial premium. Coins do not fit that category.

[Treetop]

I think you might be able to pull this off to a degree with silver commemorative dollars. Several of them have very low mintages and dont sell for that high of premiums. Although their premiums seem to have picked up a bit from a few years ago when I really was into buying them. which leads to another point, the commem dollar market seems to be growing. I have 1 out of 1000 of one particular coin, and one in 2-4k of several others. I dont even have a bunch of them, and if I had stayed interested could have had a much larger portion of those all with paying pretty low premiums. I stopped being able to get the dollars just over spot so I stopped buying them but premiums are still lower then many pay for many modern forms of silver.

Could you buy up enough of them to force a price rise? I dont know, but if you could with any coin Id bet on one of several commem dollars.

[Elcid69]

Tried that with the 1861 Confederate Half - 500 minted only got "5", where are the rest? From the Dark Corner of S>C>

[TXSTARFIRE]

Still working on this project? You had 1 percent of the total 8 years ago.

[Recyclersteve]

You would need lots of people interested in buying coins for the sake of collecting them as opposed to those stacking silver, copper and gold who don't really care much about specific dates. On the other hand, it never ceases to amaze me that the Home Shopping Network sells so many coins (like statehood quarters, for instance) that really aren't worth investing in. Of course, they couldn't offer anything truly rare. It wouldn't be worth it to them.

A fairly recent vintage rarity that I thought might do well was the 2004 Wisconsin extra leaf (up and down versions) quarters. They got attention in early-mid 2005, but have been pretty dead since that as far as I can tell. I have seen dealers that have a number of them for sale that have just sat for years. Although you don't have a good way to know the exact mintage, you could still hoard quite a few of these if you were willing to pay, say, $50-150 each for them.

Also, any talk of cornering the market on something needs to include a reference to what the Hunt Bros. of Texas tried to do with silver in the late 70's/early 80's. There is lots of information available on that topic courtesy of Google, however the big mistake they made IMHO is that they were using margin (borrowing) to inflate their holdings. They should have been smart enough to realize that when the banks cut them off from borrowing to buy silver that the end would be near for their investment. Another factor was something very controversial- the COMEX (exchange that allows people to buy/sell silver futures) came out and said they would only allow people to SELL (no buys orders allowed) for a short period of time in 1980. It doesn't take a genius IQ to recognize that this would likely cause a collapse in prices, which is exactly what happened on Silver Thursday (March 27, 1980).

There are a number of people now who have the money to corner the silver market if they really wanted to (Warren Buffett, etc.). The problem is that the U.S. government could come out with some type of legislation saying that you can't own a controlling amount of a "strategic" metal like silver and give some rather convoluted explanation why it is in our country's best interests that no one party have control over the market. They could then use that as a reason to seize the holdings from that person or put them in jail. What would be interesting is if that person was super rich and didn't live in the U.S. (i.e., Carlos Slim or Mexico or a number of Russian oligarchs). That would create a very interesting situation.

Another manipulation that didn't get nearly the attention of the Hunt Bros. was the Japanese man to tried to control the price of copper. Look up the story Mr. Yasuo Hamanaka, who worked for corporate giant Sumitomo Corp. and did some very interesting trades in 1995.