MEXICAN GOLD BOND EXPLOSION

We are reporting what must be a scripophily record for both eBay and Mexican scripophily.  On November 24, 2009 dealer Mario Boone sold on eBay for $60,100 a Mexican Government bond described as “Republica Mexicana, bono del tesoro del gobierno federal de los Estados Unidos Mexicanos, 6% oro 1913, gold bond of £100 = 2045 RM = $mex 975” (listing no. 130345442061; illustrated on the cover).  The sale was on commission for one of his clients.

The bond was printed by the American Banknote Co and bears serial no. 11937 and an imprinted British 1 Pound revenue stamp.  The bond had 18 original coupons attached.  It is dated in the text June 8, 1913 and is denominated in 5 currencies.  The bond is issued with unclear signatures (E Suarez? and AM Ureste?).  Boone has not researched the signatures, but there is no evidence they have any significance as collectible autographs.

According to Boone, “The Mexican bond I sold [November 24 2009] on eBay.com for a good $60,000 was a true sale – the buyer already paid. Clearly, speculation for these bonds is huge although most other types sell for $400-$2,500. I don't know much more except that the bidders and buyer are Mexicans. Whether it's a fraud or some guys make claims on the government, or whether the government has decided to refund, I have no idea (yet). What I do know is that the normal collector value for these pieces is way below what is being offered now, so it’s a great, possibly once-in-a-lifetime selling opportunity for the collectors of Mexican government bonds.”

An analysis of the bidding history for this incredible sale shows 55 total bids, divided among 8 individual bidders.  The lot started at $499 on the first day of the seven-day listing and gradually increased in several hundred dollar increments until reaching $5100 at 8 seconds before the end of the seven day listing period.  Then the sniper fiesta began.

“Sniping” is slang English for placing bids in the last few seconds of an eBay listing.  The theory behind this practice is that placing earlier bids might stir up the competition and reveal your bidding strength.  In the last few seconds of the listing the sniper zaps the other bidder(s) by placing last minute bid(s).  Sometimes, however, sniping programs fail and the bid does not go off – so you can risk losing a valued piece.

Sniping is generally done through automated programs that are not part of eBay, for example services offered by www.bidslammer.com.  Each of the five snipers on this lot may have expected that they were going to fool the competition, but they were going to be disappointed.  The competition already was buzzing like a hornets’ nest. 

16 bids were placed by five individual bidders in the final eight seconds of the listing, driving the price up by $55,000 to the final winning bid of $60,100.  How much of these increments were effected by someone actually pushing a button is unclear.  The bid sniping programs are completely automated, especially if multiple snipes are entered by the same person.  The danger for an over-enthusiastic sniper is that his “crazy” bid might be slightly underbid by one from another sniper, and he won’t know until he’s already bought the piece.  Boone received payment, so this was not a sniping fluke.

What can we tell about the buyer and underbidders?  The bidding process is comparatively transparent.  Using eBays anonymous bidder designations, the five bidders were 1***p (425), 1***7 (2), a***e (11), 2***5 (private), c***c (-1), and r***5 (7).  The numbers in parentheses are eBay’s report of the number of prior closed eBay transactions of any sort by each bidder.  However, eBay bidders have a history of registering under new names, so while a large number of transactions are instructive, small numbers may or may not mean the bidder is new to eBay.

Bid details on winning bidder 1***p reveal that this person has purchased only 3 items in the last month, and all were sniped. No other information is revealed by eBay. While this bidder had 425 prior eBay transactions, it is not possible to determine if those purchases were scripophily. Boone advises that “the buyer confirmed afterward he is happy with the price”.

The eBay 30-day histories for these bidders showed that only 3 were buying scripophily exclusively.  Bidder 2***5 was bidding on Mexican stamps and r***5 was seeking everything from cell phones to books, but mostly south and central American material.  However, it is common practice for experienced eBayers to register under new names, so we cannot conclude one way or the other that the underbidders were experienced scripophily collectors.

It is theoretically possible for manipulators to send false price signals on eBay.  A headline collusive sale between an “inside” consignor and “straw” buyers could make quite a splash and cost the consignor only the price of the consignment.  However, Boone reports that “the consigner most certainly didn't know anything about this Mexican speculation. I’ve known him for years and he is reliable”.  Accordingly, it appears that this was a bona fide sale.

Boone reports having seen about 5 of the bonds in question, but this was his first sale of this bond type.  The most recent appearance was in Spink sale of October 29, 2009 lot 1 where a mixture of Mexican pieces, including this bond, sold for £1200.