Travels with the Naxos Masterpiece - Episode 4: Economics

Episode 4: Economics traces the remarkable financial journey of the Naxos Tetradrachm, using it as a lens to examine how the market for ancient coins has evolved over the past two centuries.

From its first recorded auction in 1824—when an example from the collection of Baron Thomas Dimsdale sold for £5.75—to a recent high-profile sale from the Prince Saud bin Al-Thani collection for almost half a million Swiss francs, the episode unpacks the dramatic rise in value. Along the way, we explore the forces, collectors, and market shifts that are behind its ascension. 

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Transcript

SPEAKER_02 0:05

Hello and welcome to episode four of the Ancient Coin Collection podcast. I can't believe we're at this point already, really. Um, but today is going to be all about economics, hence why I'm wearing my most serious economic outfit. Um now, despite working at an auction house uh that objectively deals with some very big numbers, I can't say economics is my strongest point. Um I'm more of a creative uh research my bag. So it's great to have a numbers guy like Tim here with me. Uh he loves a graph. So you will recall that in the first episode, Tim talked about his uh first encounter with the Nexus coin uh at an auction in Switzerland uh and how it sold for an extraordinary price. Um, several of you since have asked for more details. Uh so we'll reveal what these coins were sold for and how that's changed over time. So, Tim, perhaps you can start by telling us uh about the earliest known example of an Axos coin being sold.

SPEAKER_00 1:13

So we we talked in previous episodes about the fact that in the second half of the 18th century, there were at least three collectors who had an Axos coin. And so they must have bought it from somewhere. But unfortunately, we don't know where they bought it from. So there must have been some sort of sale associated with those earlier. But the first one that's actually recorded is in a Sotheby's auction in 1824, and this was um, this was an auction, uh, I think about 25 years after the death of uh Baron Thomas Dimsdale, uh, who was an interesting character, left a big collection. And on the fifth and final day of that auction, um, his uh his Naxos Tetradram uh sold for the princely sum of what would be £5.75. Uh it was shillings and pence at the time, um, in the fifth day of the sale. Um, Thomas Simsdale uh was a pretty interesting character. He was a doctor, uh, he was a banker, and he was a politician. Uh, but famously, and this is where he got his uh title Baron from, he um he was called over, he'd become a bit of a specialist in smallpox uh uh inoculation, and he had been asked to go to the court of Catherine the Great in Russia. And so he travelled over there and uh with with his son, I think, who is his assistant, and he inoculated the court uh of Catherine the Great. Um they were a bit worried that um it wouldn't go well, and so they'd arranged for him and his son to be transported out in case in case it went badly.

SPEAKER_02 2:58

But in cool shape.

SPEAKER_00 2:59

Well, yes, because they thought that that the court might turn on them if they killed the entire court. I don't know how the court could turn on them if they killed the court, but anyway, so it all went sewingly well. Um, very enlightened of Catherine the Great to do that, and uh he was made a baron. Anyway, I'm I'm I'm digressing. So his collection, he was a big collector of coins, um, and his collection was sold, and this is the earliest example that we we have. Now, how much is £5.75 for the current prices? So if you Bank of England has this inflation index, and you can you can put in a value, uh put in a date, and then you get the current equivalent. And if you do that with 1824 for £5.75, um, you get about £500, £570. So a sort of hundredfold increase. But that doesn't really reflect purchasing power parity. And actually, on a purchasing power parity basis, £5.75 in 1824 would be more like five or six thousand. So a reasonable amount of money.

SPEAKER_02 4:09

So interesting that even back in the day it started selling off quite well. Um it obviously had a reputation even then. So can you describe a little bit what the early auctions would have been like?

SPEAKER_00 4:22

Yeah. Well, the the very earliest auctions that we hear about, um, Samuel Peeps in his diaries, his famous diaries. Samuel Peeps um worked for the Royal Navy. I think he was some sort of senior official there, but he kept his diaries and that's what he's famous for. But he records um auction by candle of surplus or defunct Royal Navy ships. And they would have these auctions in pubs, uh, in taverns, uh, which must have been pretty exciting. Yeah. Um, and uh, and the idea was that you bid until the candle burnt out, and then whoever had done the highest bid by that point uh would get, in this case, uh the ship. Um, so auctions also developed in Sweden. Um, there was uh an auction house established in Sweden in the second half of the 17th century, um, and it still exists. It's the oldest So that's the earliest one. Earliest one and uh longest continuously operating one. There's one in Vienna as well. Um, but really auctions got going uh towards the um the end of the 17th century, beginning of the 18th century. And they started with books, and it may seem a little bit odd that books uh were the focus of auctions, but this was because um uh a library was one of the most valuable assets uh of a household. Obviously, the property and the land were the most valuable, but within that, their most valuable possessions were their library, and people spent a fortune building up libraries. Yeah. And if you think about it, at the time, a library was like the internet, it was like Google, it was it was the sort of center of learning. And so people spent a lot of money building their libraries, and they they didn't have Amazon to go order a book that was missing. Yeah, they would have to trawl through dealers and attended auctions. And so when someone died and their library was put up for sale, there was a lot of interest and demand, a lot of money involved, and that's how the first auction houses developed. Um, coins were part of uh these auctions, so it'd be the books, maybe some paintings, some manuscripts, and some coins. They were incidental. Yeah, alongside the books, alongside the books. So but but really the first recorded auction of coins specifically um is in 1710, so the early part of the 18th century. And you see them not very frequent. Um, you know, every few years you would get a coin auction. Um, towards the second half of the 18th century, things started to pick up, and there were uh there were two auctioneers who specialized in coins. There was uh Mr. Christopher Cock, um, and then really his successor, uh John Gerrard. And these were the sort of pioneers of auctions. But then quite quickly uh in the 18th century, you see the two auction houses that would come to dominate auctions generally, um, Sotherby's and Christie's. And there was rivalry and competition between the two of them. And for a period of time, they would they were doing a similar number of uh coin auctions. Obviously, they were doing other auctions as well. Um, and eventually, you know, Sotherby's got ahead. And and by the early part of the 19th century, uh Sotherby's was the dominant auction house for uh for coins, and um they stayed in in that business until uh Sotheby's got into some difficulties in the 1970s, 80s and they pulled out of that. Um, but that's why it's no coincidence that Dimsdale auction in 1824 was a Sotheby's auction.

SPEAKER_02 8:27

It's interesting. I actually didn't realise that Sotheby's or Chrissy's they weren't the earliest when it was in Sweden. Um but so obviously you mentioned Sweden, London, but where else dominated the numismatic world?

SPEAKER_00 8:42

London was the centre of coin auctions and probably auctions generally, yeah, uh, in the first part of the 19th century. Uh and it was actually it was an international market, as you as you say. Um, so you would have, you know, collections of coins from continental Europe, you know, the Pope's collection, or uh some of the collections from the royal houses that have fallen on hard times, or um, you know, quite a lot came out of France uh in the French Revolution with aristocrats um being a bit needy. Um so London was where all of those were sold because that's where people would get the best prices and where the auctions were most developed. Um, around the middle of the 19th century, you see the emergence of coin auctions uh elsewhere. And you see um Italy, not surprising given its proximity to uh the source of uh many of these coins. Um Paris became a very important market, um, and also Germany. And by the end of the 19th century, Germany really dominated. I think Germany accounted for more than a third of all coin ancient coin auctions uh by the end of the 19th century. And within Germany, you had um the Frankfurt IV. Um, and I'm gonna forget the names of them, but there's uh uh Adolf Hess and uh Sally uh Rosenberg and uh Kahn and and one other, his name escapes me. Um and of course Kahn, uh a descendant of that family, uh wrote the famous book on the Naxos coins. But the Frankfurt IV dominated the German industry, which dominated the European. And um, but then we had in the 20th century, we had the Nazi era in Germany, and uh these Jewish uh coin dealers were uh were persecuted, um, they were stopped from transacting business, um, and uh they most of them fled mainly to Switzerland, some fled to countries which were then occupied by uh the Nazis and they ended up in concentration camps. So, so I mean it's uh it's a tragic period of history, but it actually gave rise to the growth of Switzerland as the major market. Um and Switzerland's still a very important, as you as you know, Switzerland is a very important market. London's still important uh and and other parts of the world and obviously North America, but it it has changed quite gradually over time.

SPEAKER_02 11:16

Yeah, so I don't think I realised uh how much Switzerland had an influence, really. So I'm working for a Swiss auction house uh with uh run by two Italian brothers, so it truly is quite an international. You're in London. And I'm in London. Yeah, exactly. Um in the book, you've identified 78 examples of the Naxos Tetradram. How many times on average has a Naxos Tetradram been sold in its lifetime? Does it really vary?

SPEAKER_00 11:46

It it there are some averages, but it does vary enormously. So if you take those 78, uh of those around 30 are in museums. Now, there is some buying and selling uh around museums, but much less so now. Most museums are not allowed by law to sell uh uh coins in their in their collection, or indeed anything in their collection. But in earlier times they would sell duplicates. So you had a few coming out of museums where there were duplicates. There were some from Berlin and some from London and Paris that were sold examples of tetradrums. And then, of course, you've had the growth of museums, new museums, and they have gone into the market and bought coins or had them bequeathed, as we discussed previously. So out of that 78, maybe you know, 40 have been in the market. Uh, and there are there are around 100 um auctions uh of uh Naxos Tetradrams. So it's two to three times on average. But what you find is some have come to market once and others have come to market five or six times. Uh so it really it really varies by coin. Um, but what that means in terms of how many of these coins are coming to the market each year is they're pretty infrequent. Um, the early part of the 20th century and the earlier part of this century have seen on average one a year or one every two years. Um before that, it was really one every five years. So it's quite rare that one of these uh comes to market if you look at it over the entire lifespan of auctions.

SPEAKER_02 13:25

So you can understand why back in the day, like when it came up, everyone would want the chance to bid on it.

SPEAKER_00 13:30

Absolutely. And that obviously supply and demand means that it went for a high price.

SPEAKER_02 13:38

So I want to pose the question that everyone's been asking since episode one. What would a Naxos coin cost today?

SPEAKER_00 13:47

Okay. And uh the frustrating answer is it depends. Um, but I think I can talk about averages. Most times Naxos coin comes to auction, it is around the sort of half a million, whether it's euros, dollars, Swiss francs, or pounds. Um, so it's a lot of money. Um, you know, if we if we just take one example, 200 years after the Dimsdale, and then compare the two. Um, you know, your auction house uh sold the collection of um a man in love with art. And I don't think it's a secret, it's pretty well known that that a man in love with art uh was actually uh Prince Altani, who we mentioned in the previous uh episode on collectors, um, a Katari uh prince. Um he had he had acquired quite a few uh coins in auctions. He he died tragically quite quite early, quite young, uh, and his collection was sold in a series of of sales, including the Naxos coin. When that came to market, I think that sold for about 400,000 Swiss francs, maybe a little bit more. Um so what you what you see um is is almost uh you know from five pounds to to let's say um half a million dollars. What what what you see is is uh quite a considerable increase over a period of time. And as we said, in inflation doesn't really cover it because that doesn't explain the purchasing power of parity. But I think I'm right in saying that uh the Dimsdale coin was about maybe maybe a tenth of an average uh annual wage for somebody. So that £5.75 at the time was about a tenth of of what an average skilled workman in 1824 uh would have got. Um if you take the the coin now, um you know that 500,000 is many multiples of the average wage. Average wage varies by country, but let's let's say it's it's a $30,000 at the most, um, you're you're talking about you know uh 18 times um average wage. So so there's something really quite dramatic has taken place. If you look at houses, um, you know, that's equivalent of of you know two houses. Um and and this is a 17 grams of silver ancient coin, beautiful though it is, um, people are paying almost what you pay for two properties in the UK.

SPEAKER_02 16:29

Yeah, it is extraordinary because it kind of just begs the question of why? What's so special about this? Um, but I mean that being said, I do know that you know, high status ancient coins they do command eye-watering prices. Yeah. I recently made an Instagram post uh recapping Harlan Burke's hundred uh greatest list, uh, with an Axos came fourth. Yeah. Uh and this will test your knowledge. Okay. What are these and how much they sell for?

SPEAKER_00 16:58

Oh my god. Okay. Okay, so I think number one actually wasn't a Greek coin, it was a Roman coin. It's the famous Brutus Edmar. An easy one. The Ides of March. Um, I don't know what the average price those sell for, but they they it depends. There, there are silver and there are gold, they're quite rare. There's this hit amazing historic backstory. You know, it's got the two daggers on it. Um, it's about the assassination of Hitler. And the pelius. I said of Hitler. Uh Julius Caesar. Kind of different, but I don't know. Julius Caesar was pretty genocidal as well. Um, and you know, so there's this historic story, and and those have gone for as much as three, four million dollars. Yeah. Uh so crazy, crazy money. Uh, the averages would be less. Um, the second, I think, was the Athenian decodram, um, which is very highly prized, um, those can go for very high prices, but on average would probably go similar to the Naxos coin. Um, and then probably followed by um the uh Winnatos uh or Kimon uh decodrams from Syracuse, which are also very highly, highly um prized. And and then would come the Naxos coin. And and so all of them are average around about the same, uh, the same level, uh, but there's quite a lot of variation.

SPEAKER_02 18:27

Yeah, at the end of the day, people love a ranking. Umbe it makes it easier for them. But objectively and purely economically, then, how does the price of an Axos coin compare?

SPEAKER_00 18:41

I uh it is I think if you take the ranking from Harlem Burke, um, and you compare that with the ranking by price realized, they are remarkably close. Now, that there's a famous Oscar Wilde quote, which is which defines a cynic as someone who knows the price of everything and the value of nothing. Um, and and I think he goes on to say, um, and and and a fool or a naive fool knows the value of everything and the price of nothing. So um, you know, there is for reasons we will discuss, and uh there is some concern about focusing too much on the price paid for coins rather than their importance. And yeah. Harlan Burke, when he did his survey, you'll remember, he he asked academics, uh dealers, uh collectors, curators at museums to say what do they think are the most important coins numismatically? And they were looking at a variety of criteria, uh, it was still quite subjective, but it was you know artistic importance, historic importance, numismatic importance. Yeah, it was the whole thing. The whole thing, yeah. And and you had that ranking that we just talked about. If you then come up with a ranking that is based purely on the price that they were sold, it's remarkably similar. So that, you know, does that mean that it prices be all and end all? I think that the market is quite efficient and the market values the same things that those people valued. And so there is a broad correlation. Um, but you know, we'll we'll talk later about uh motivations for collecting, and and it's not really about you know the the va the price of the coin, it's about the value of the coin.

SPEAKER_02 20:35

Yeah. As we said before, like generally people who work in the business they're they're all passionate about the subject. Yeah. When we meet collectors, they're not trading ancient coins like commodities, but they are engaging with them as as works of art. Yeah. Earlier, you compared the difference in price of Dimsdale's 1824 sale to the Shake's sale. Do you know what's behind this increase?

SPEAKER_00 20:59

I I'm despite what you said in the introduction, I'm not an economist. So I d but I do like a chart. Um and and you when you look at when you look at the chart, it it is extraordinary how uh the prices have increased for for most highly prized coins, but for the Naxos coin in particular. Um and but that's coincided, it's really over the last um 25 to 40 years that prices have really spiked. And that's part of a general trend. Um, so I did a bit of research on this for the book, not being the economist. And um, people say that the reason for asset inflation, which is what we're talking about, which is increase in the price of stocks, stocks and shares, increase in the in the price of property, yeah, um, of art. You know, Sotheby's uh produces this art index that shows a similar pattern, uh, the ones that we put together for for coins. The things that Have driven that are quite similar. So, first of all, a sustained period of low interest rates has increased asset prices. It's cheaper to borrow money to buy assets. Yeah. And that has driven up prices. Globalization, a much maligned word, but essentially capital moves around the world without borders. And that means that you can mobilize more demand for particular assets than maybe was the case in the past. So think about people investing in the stock markets of different countries, but also in our business, you know how international the coin market is. It's a global, a global market. I think, you know, we know that wealth disparities have changed. There's more concentration of wealth among billionaires. You have billionaire collectors in the coin world and they drive up the prices at the higher end. So those are the sorts of factors that economists would attribute to this massive increase in the value of assets generally, but also collectibles, including coins.

SPEAKER_02 23:12

Yes, I know that like wealthy collectors, they they do drive up the market. And I've heard that people used to quite enjoy bidding against the sheik, knowing he was going to outbid them, but they just you need to drive up the price. Um it's a dangerous game though. Yeah. There's another aspect of this that really interests me, and that's knowing how the price for a particular coin type varies. Um and so far we've been talking about averages, but do you see coins of the same type going for very different amounts at auction and what factors influence this?

SPEAKER_00 23:48

Absolutely. I mean, this is the there's massive variation uh in the in the price for the same uh coin type. So uh what you pay for a coin is driven principally by the coin type. So there are certain types of coins that for all the reasons we've discussed are more sought after than others. But then for that type, um, the variation is explained by a number of factors. First one is condition. So in in the same way that if you were looking at two properties on the same street and one was run down and one was in pristine condition and just been renovated, you would pay more for the second. Uh, unless of course you're a bit perverse and you wanted to renovate it in your own way. But some like that. Yeah, some people are. But um so that that's and you see, obviously, these coins are two and a half thousand years old. And so there's going to be quite a lot of wear and tear. Yeah. And so so there are obvious different you have broken coins um and you have pr almost pristine coins, almost mint coins, and then you have everything in between. And you know, we've discussed previously um you you in addition to wear and tear, you get die breaks. So a coin that is produced towards the end of the life of a die may have those imperfections uh that makes them less less valuable. So that's the primary driver of the difference. The second is probably provenance. You know, we talked about that in uh episode three, um, you know, the kings, the gentlemen, and the women collectors. Um there is a concern, as we'll talk about in the next episode, about provenance, almost an obsession uh with provenance, because people are worried about, you know, um, whether uh the coin has been sourced illegally and whether it is uh a real genuine coin. Um and so the provenance is very important, particularly uh getting pre-1970 provenance, as we'll talk about. Um, that has a growing importance in the price. Um, and there are other factors uh like the the reputation of the auction house. Um, you know, like it or not, some auction houses have fantastic reputations like yours. Um, and other auction houses, let's say, let's just say that they don't have the same reputation. And so so that will also maybe the the the better auction houses mobilize more people for for the auction. But the the last factor, which is probably most important, is who's in the room on the day. I mean, it's said that an auction only needs two fools uh to drive the price up. And if you only have one fool in the room, they get they get the uh the lot uh for quite a good price. That's why you have reserves. Uh, but if you if you have multiple people, so if you have some of the big collectors with deep pockets who want a coin that drives up the price.

SPEAKER_02 26:46

Yeah.

SPEAKER_00 26:46

And you can get a like-for-like coin or even the same coin going for much more in an auction that just happens to have that competitive dynamic in it.

SPEAKER_02 26:55

Yeah, it really depends on the day.

SPEAKER_00 26:57

Yeah, it does. Yeah.

SPEAKER_02 26:58

So yeah, in our next episode, we're going to explore the economic value of the Naxos coin and how demand from collectors has tempted some to bend or even break the law. So until then, goodbye from me, Annabelle Schooling.

SPEAKER_00 27:18

Goodbye from me, Tim Ryan.