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Wild West Economics? Mineral Buying and Mineral Pricing
Posted by: Raymond McDougall on 12.08.2013 | Filed under: Collectors

Wild WestThe world of mineral collecting and mineral dealing can seem like Wild West economics. When we go to a mineral show or spend time looking at specimens online, we can find an astonishing range of prices for mineral specimens. Many prices are excellent or fair prices, even the very high. Many prices are not good prices, even outrageously exorbitant.

If you are going to buy mineral specimens for your collection, the best thing you can do for yourself is to learn to tell the difference.

Do Not Simply Give In to the Power of Suggestive Pricing

There is a natural tendency to assume that price reflects an item’s true value. We’ve all been guilty of making this assumption, for example many of us have done this when we have gone to buy wine. If we aren’t sure of the choice, we allow price to help to guide our decision. The psychology of purchasers’ decision-making is fascinating. Using prices as a guide is incredibly seductive and easy. But it’s dangerous, and especially so when you are buying expensive things such as mineral specimens, in a wide-open market where anything seems possible.

The simple fact is sometimes price and value do line up, and very often they do not. We all owe it to ourselves to be knowledgeable enough to know when they do and when they don’t. So, don’t fall into the trap of seeing a specimen with a large pricetag and assuming it’s great.

Know your stuff. Apply the criteria (discussed in Seven Keys to Building a Great Mineral Collection), apply your own taste, and decide what you think.

On the other hand, don’t fall into the trap of seeing a low price and assuming that there is something lesser or wrong about the specimen! Get to know what you are looking at and get to know the dealers. Some dealers who offer specimens at reasonable prices are actually simply passing along excellent minerals to you at good prices. I am working hard to do that for you, and others are too.

Think Critically About the Wide Price Range for High Quality Specimens

Even when price and value do correlate with one another to some general degree, fine mineral prices still vary widely from one specimen to the next and one dealer to the next.

Why?

Because mineral pricing is both objective and subjective, and it can be based on many factors.

On the objective side, the seller’s actual cost of acquisition is a factor – if a mineral specimen is offered for a price that you consider high, it is very possible that the seller paid a lot for it in the first place, and may have had significant expenses associated with the acquisition. It has become very difficult to purchase mineral specimens at source and in many different contexts – people have seen some staggering prices on the internet, believe that they should therefore be able to obtain a high price even at the supplier- or wholesale-level, and in many times they have no idea why their specimens may not be comparable to whatever they saw online.

Sourcing specimens at good prices really has become very challenging!

On the costs side, it can also be very expensive to run expeditions for excavating specimens – some expeditions can turn up very few fine specimens relative to the costs incurred, so if a dealer has run a project and it has not gone well, this will be apparent in the specimen costs.

On the other hand, a bonanza find can result in excellent prices. Ultimately, from an objective standpoint, what you are looking at is the seller’s success in making good acquisitions for you and transforming those into good specimens for you, together with the business model of the seller. All dealers have their own business model, depending on usual factors like their own business costs, margins, and other requirements.

Of course there are then various more subjective approaches to pricing, including the psychology of using higher prices to make specimens seem more valuable and desirable.

The best thing you can do is educate yourself on minerals and the mineral market, and the factors that are considered when considering the value of a specimen (specifically, discussed in Seven Keys to Building a Great Mineral Collection and particularly in the articles cited at the end of that post). You will then be confident when you are looking at a specimen that you can make an assessment of its value and the price being asked. Think critically, and become knowledgeable enough to be confident. Look beyond the price.

If you compare a number and variety of dealers in the market over a decent period of time, you will have a sense of how each one does business, and you’ll find the ones from whom you feel most comfortable buying. The risks for a dealer in pricing too high or too low are pretty clear – either course can potentially ruin the dealer – so it’s a balance for everyone.

What Are You Paying For?

When you buy a mineral specimen, you are often paying for a lot more than the rock itself.

There are substantial costs that go into the finding, collecting, procuring and travelling of a mineral specimen before it ever reaches a collector. And among other things, you are often acquiring something that has involved a lot of work to look the way it does. Some mineral specimens look great when they are first extracted, but most involve some amount of preparation work before they are worthy of adding to a display case. In some cases this work may involve complex chemical treatments to remove unwanted mineral material, and in other cases it may involve significant physical work with any number of tools – anything from trimming to scribing to variations on sand-blasting. The mineral specimen you are buying will usually be the result of many, many hours of careful work, and in fact this may often be the reason for the final price asked.

Another thing we often pay for is the ability to buy from someone we trust. For example, when I am at Tucson and have the opportunity to buy from a trusted contact or someone I really don’t know about, there is real value to me in buying from the person I trust.

Particularly when I am buying from far away places, some of which are infamous for all sorts of tricks when it comes to mineral selling (see Beware the Hand of Man: Fakes, Treatments, Repairs and Other Alterations), it is worth it to me to buy from someone I know has been careful in acquiring. Of course we can absolutely all be fooled, but reducing the chance of that happening has some major value.

Three Key Thoughts on “High” Mineral Prices

In recent years, many have expressed frustration about “high” mineral prices. We’ve all seen mineral prices that in our opinion are too high. Sometimes it’s clear that a completely comparable specimen could be obtained by an informed collector at a much lower price.

Other times, that frustration will be simply the fact that we wish we could buy a specimen we can’t afford at its asking price. In any event:

1. You Can Build An Awesome Collection Regardless. An informed, careful and thoughtful collector can assemble an excellent quality collection of fine mineral specimens within a budget. Just be that informed, careful and thoughtful person. The mineral world is a realm in which caveat emptor applies – and that’s true for everyone including dealers. But if you become knowledgeable and discerning, and you are patient, you will absolutely have a collection of beautiful fine minerals you acquired at good prices.

2. It’s Nothing New. Seriously. Virtually all of us in the mineral world will wish we could acquire mineral specimens that we cannot afford or reasonably justify acquiring. In a forum discussion about mineral prices, well-known collector, author and dealer Alfredo Petrov once made the point that this is truly nothing new: once upon a time, when mineral collecting was in its infancy, the best mineral specimens were acquired by members of royal families and other nobility. Collecting at the very top has always been the domain of the few. That doesn’t stop the rest of us from acquiring awesome mineral specimens, and now, unlike the past, there are far more excellent specimens available to all of us who are not at the very top.

If you find high mineral prices very personally frustrating, it doesn’t have to be that way.

We do all shake our heads about some pricing of course. However high mineral prices don’t have to belong to anyone other than the person asking the price. While it’s very important to understand what the top specimens are and what the top criteria are (and of course fun to admire and appreciate them) it’s just not necessary to torture ourselves, always comparing and competing with others, to enjoy minerals. If you enjoy comparing and competing, then by all means have fun and knock yourself right out. But there is no one way to collect minerals – so we might as well set our own rules thoughtfully, and set ourselves up to do it in a way that it is purely enjoyable and not frustrating.

3. High Mineral Prices Paid By Others Help All Collectors. The very high prices paid by the wealthy collectors at the top of the market help us all. When more money is injected into the mineral specimen market, more money is spent on producing more specimens for all of us.

We are fortunate and privileged to be collecting at a time in history when so many people are investing significant money in the pursuit of mineral collecting and preservation of fine mineral specimens. Without this dynamic, we would all have a harder time building great collections.

High mineral prices are a permanent part of the landscape. There is nothing wrong with paying a high price for a top specimen (if you are lucky enough to be able to do that), and there are many good things about high mineral prices. However, you don’t have to pay crazy prices to build yourself a wonderful collection of fine minerals.