Friday, February 04, 2011

The Logistics of Provenance

A good deal has lately been said about acquisition and documentation of ancient artifacts, and I wanted to introduce some relevant information into this discussion.

Yesterday I visited the Long Beach show on a buying expedition. In the course of about two hours I examined several thousand ancient coins and acquired many hundreds of them, all individually displayed in “flips” or 2x2 coin holders. The examination process allocated perhaps two minutes for each coin, including discussing its value with the seller.

I expect to sell most of these coins for less than USD $100 each, in the process creating a high resolution digital image of each side of each coin and cataloguing it to a standard of detail similar to that prevailing in typical auction catalogues. These details are included in coin listings on the Classical Coins website. Creating these images and cataloguing and uploading listings takes perhaps 20 minutes per coin on average.

NGC (the most prominent grading/slabbing provider) had a booth at the show where they presented the services available and, I believe, had grading experts present who were actually carrying out “walk-through” certification of coins for exhibitors. NGC’s list of services and fees is presented online here:

Clearly NGC has mastered the process of describing and documenting coins to a standard that should be adequate for any reasonable provenance requirement, with traceability to a particular date of acquisition. Their fee for “walk-through” certification is typically $125 per coin at a show. Dealers can get “economy” certification of large numbers of coins for as little as $17 each in about three weeks.

Whilst “slabbing” is detested by most collectors of ancient coins, also by many dealers including myself, it is an accepted solution for modern coins, and the companies that do this have on the whole gained a great deal of acceptance in the numismatic market for such coins.

The point of presenting the above details is to illustrate what is feasible regarding the amount of time that can practically be spent evaluating a coin at a show, the cost of certification and its dependence on turnaround time.

Classical Coins ( ) offers a Certificate of Authenticity for coins we sell which I believe should satisfy any reasonable provenance documentation requirement, with traceability to a particular date of acquisition. The charge is $10.00 per coin and details are presented here:
(the certificate includes past provenance details and the weight of the coin)

In the past, critics of the numismatic market have alleged that collectors and dealers ought to be held to a Unidroit provenancing standard which they consider to be the ethical norm for “responsible” collecting. This is currently practiced by many museums. I have seen reports that up to 40 hours of curator time per acquisition is required to document provenance to that standard.

It would presently be technically and economically feasible to document acquisition of a coin at a cost of between $10.00 and $17.00 per coin in a manner which should satisfy any reasonable provenance requirement, with traceability to its particular date of acquisition. That documentation would add perhaps two to three weeks to the acquisition process.

Apart from the rather involved question of the acceptability of “slabbing,” it seems to me that the next issue to be discussed is cost. One must think of this prospective documentation process as a sort of “transaction tax” to be paid to governments or critics of collecting to secure their acquiescence in the licitness of a transaction. Currently that standard is set at about 17.5% for transactions in the EU, which charges VAT at that level. If we take $15 per transaction as an average documentation fee and work backward from that, the result is $86.00 per coin. This is also about the same percentage as a buyer’s fee at a typical auction. It reflects the work required in creating the documentation, which is similar to that required to catalogue a coin for auction.

The above, I believe, clearly delineates what is presently feasible in a manner independent of the exact details of how a documentation database would be managed and who would be responsible for it. Such details obviously must be discussed and resolved, however they won’t affect the economic conclusion.

The current value threshold at which the cost of provenance documentation would be accepted by large numbers of collectors is roughly $85.00 per coin.

Very large numbers of ancient coins are presently being traded at prices below $85.00 per coin. Classical Coins presently sells large numbers of coins at prices below $50.00 per coin, and I am not including “specials” (multiple coin lots) for which certification is not available. Clearly there is a “value threshold” that must be considered, and any demand that documentation be provided for a transaction to be licit becomes economically unreasonable below that threshold.


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