There are ways to identify the difference between a true market movement and manipulated price action in a collectible. In a true movement of prices, meaning when a collectible is in an up-trend, look for prices to move up across the board. All prices should move-up in value; not necessarily at the same rate though.
For a collectible to be considered in a strong market, all the pieces should move up in price: the low, middle, and high-condition pieces, whether they’re common or rare. The percentage gains in the different categories won’t be the same, but all prices should move forward.
What does a manipulated market look like?
To identify a manipulated collectible market, look for only one segment of the market to move forward. In the most common cases of collectible manipulation, only the quality pieces advance. Everything else remains stagnant.
The reason is most market manipulation comes from dealers moving the market. Quality pieces are generally the easiest to sell. When dealers are manipulating a market it’s important for them to have pieces that are highly liquid. This allows them to get in and out of the market quickly.
Since it’s dealers manipulating the market, they’re only able to move one segment. Generally, the segment that’s moved up is the quality pieces since there are fewer of them, which makes them easier to manipulate. Quality pieces are also the ones dealers are able to generate the most profits on.
The high-priced quality segment is generally manipulated since record prices bring front page news in collectible publications. This helps keep the market “hot.”
Occasionally, hobby publications will help with the manipulation by running articles to support the premise of a hot market. These articles are often based on a surface truth, such as a reporting of an important story where a correction doesn’t follow to set the facts straight.
What to watch out for
When only high-priced and quality pieces are moving forward, be careful; it’s generally a classic case of market manipulation. It’s often identifiable by a quick upward movement in prices followed by a quick severe price drop since there’s no true support.
Hobbies that use manipulation to move prices are increasingly coming under the scrutiny of the Federal government. Much like stocks and commodities, which are regulated and watched for artificial price movements, the Federal government is now keeping close track on the antique and collectible market looking for signs of manipulation. Indictments have already taken place in some of the manipulated areas of the antique field.
Artificial price movements hurt everyone. When the government comes into one area and places regulations to clean it up, often the new rules will apply to everyone, even those not involved with the fleecing of the public.
Hobbies that allow dealer manipulation of their markets, which is sometimes supported by hype in publications, are fooling no one. The government is watching and prepared to step-in. It’s time to stop before everyone is penalized by the amateurish manipulation antics of a few.
Copyright 1989 by Greg Tunks