Wednesday, May 5, 2010

"Many-of-a-kind rare certificates"

In the Dutch language, the word “raar” has the following meanings : 1. unusual, 2. strange, and even 3. weird. For economists, goods are rare if these are low in numbers of abundance as opposed to common goods that are almost freely available like the air we breathe.

My first certificate, a plain coal-mining share found on a flea market, made a lot of impression on me and, needless to say, I regarded it as a rare item. And that was what I thought of the other many certificates obtained in this initial period. It was until my first visit at a specialised bourse, where I spotted a pile of certificates of that first share, that I realized that the concept of rarity was not that simple.
So, I started to think of certificates as rare items when auctioneers told these were rare in their catalogues, or when dealers asked much higher prices. Almost by instinct, I started to look for shares that were low-priced but regarded as rare, in order to get good value-for-money. In this second period I tried to learn as much as possible which pieces were tagged as rare. Afterwards, that behavior was actually not that satisfying, because certificates were sometimes labeled as rare to help increase sales volumes or reduce stockpiles. Needless to say, I occasionally ended up with nice pieces, a few of them not common, obtained at rather high end-user prices. During that same time, I noticed that some certificates seemed to become less rare after a while: what was rare 5 years ago, became common and frequently available.

I started looking for a new way to deal with the concept of rarity and after reading an article by Terry Cox, I knew how. Rare items are actually items that can not easily be replaced. You can spent years searching for a particular share or bond. An example is the Spanish bond of the Ferro-Carril del Astillero a Ontanedo (1901) shown here. Since its purchase, almost 15 years ago, I’ve never seen any other exemplars .
Finally, I made up the following rarity classification.
  • EXTREMELY RARE : it takes more than 5 years to find a replacement certificate
  • RARE : it takes between 1 and 5 years to find a replacement certificate
  • SCARCE : it takes between 6 and 12 months to find a replacement certificate
  • COMMON : it takes less than 6 months to find a replacement certificate
  • UNKNOWN : rarity classification unknown, it is not clear if a replacement certificate can be easily found or not
I agree this rarity definition is a subjective one, but it helps me in better judging a certificate.
So, here I am, armed and ready with an easy to apply rarity classification. Unfortunately, it’s not that easy. A lot of certificates that are rare can be bought for relatively low prices, but they don’t tend to rise much in price as well. These kind of certificates are part of what I call “many of a kind rare certificates”. Let me illustrate this with an example. During some decades many small mining companies started to appear in some regions of the world. Many of these companies left us with a handfull of certificates, in many cases only 1 certificate has been seen. These certificates, even though rare, do not reach high prices, because there are so many of these “many of a kind rare” certificates. Collectors looking for these kind of certificates have a large choice to pick from. Many different kind of economic activities knew such periods where many small business were set up. As a collector, when you make your homework, learning which periodes and which economic activities can yield both satisfaction and reward.


  1. Good points Franky. It would be helpful if these terms had some statistics to back them. By that I mean auction appearances. For example, your mining certificate showed up in the following ___ auctions over x period of time; or, even thought it has not appeared in auctions, it was last sold ___. Kind of like the data WHACO posts off of Smythe but with greater (global?) relevance.

  2. Thanks for sharing your comments! About statistics, you can query Google, which could give you an initial idea.