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Re: Meteorite Economics 101

In a message dated 9/14/98 8:17:20 AM Pacific Daylight Time,
dpitt@interport.net writes:

<< Very briefly, as it regards economics...
 
 Please note that Mr. Arnold conveniently left out a rather relevant detail
 in my acquisition of Portales Valley at $4/gram: it happened to be a 6.5 Kg
 mass...which required a substantial investment.
 
 Further, as Arnold is well aware, I made this acquisition to lower my
 average cost per gram: I had previously paid far more for several smaller
 masses.
 
 Several dealers expressed their displeasure by my having undercut their
 prices. The fact is that I attempted to find a balance between not
 compromising others by not offering Portales Valley too inexpensively---yet
 still maintain a competitive edge. That is solely why I have ATTEMPTED to
 sell smaller specimens at the same price level previously established by
 others...and this is precisely why my small $25/gram specimens have not
 created nearly as much excitement as the larger discounted specimens.
 
 Please also note that Arnold failed to mention that Haag's acquisition of
 the main mass of Esquel was for a six figure sum...nearly ten years ago.
 
 Only in Arnold's odd reality are such considerations not relevant.
  >>

Hello List and Mr. Pitt,

I want to apologize for offending Mr. Pitt.  My intentions were to use the
Portales Valley as an example since that is what much of this fuss is about
and that it served as a perfect example that field prices do not have any
bearing on retail prices.

However, this brings up a good point regarding the fact that RETAIL prices do
have an effect on field prices.  I am assuming that Mr. Pitt made a careful
calculation as to what the market would pay for it in slices, and figure
backwards.  He figured what saw losses, shipping, cutting cost would all be,
he probably tossed in some room for risk that it might turn out to not be so
killer looking, or that the other +80kg still in private hands might hit the
market.  After all that, he determined the maximum he was willing to pay.  

Now since his piece was bought at auction we have no idea what the MOST Pitt
was willing to pay.  He may have been willing to pay $14/g based on his
calculations of what his cost and the true market value would be.  The same is
true with Mr. Haag and the Esquel.  And the same is true with just about every
meteorite.  The bottom line is, it doesn't matter what Pitt paid or why he
paid what he did, the market still sets the value.

So as the market raises the retail prices, that allows for the field prices to
rise too.  Not the other way around.

I do want to point out that Pitt carefully uses the word "price" not "market
value" when talking about "the same price level previously established by
others" because dealers can't set the market value, they can only hope to
guess what it is and price accordingly.

Some dealers price at below market values in hopes of selling very quickly.
Others may set their prices higher being willing to sit on the inventory over
a much larger time.  And then there are those that will price things way over
market value in hopes of finding suckers to pay too much.  

Which brings up an interesting point:  If there are too many of what we would
think would be "suckers," then they can actually help establish a higher yet
genuine retail market value.  

Don't tell anyone but in my opinion, meteorites are REALLY worth is what you
can melt them down and sell the iron for scrap!  Or if one knows what the
"fair market value" is on paper weights and door stops then that is what they
should be worth!  But then again our species has this "collecting gene" in the
brain.  And that is why rational people are willing to pay higher than scrap
price for these things.  That is why we have collectors and beautiful museums
full of such collections, and that is why meteorites are desired for higher
prices.

Steve Arnold
www.meteoritebroker.com

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