Researchers investigating markets for collectible goods such as paintings [1; 2; 6; 12], antique furniture [7], Stradivarius violins [14], wine [8; 10] and postage stamps [15] often report rates of return to holding collectibles that are both low [2; 6; 7; 8; 12] and volatile [6; 7; 8; 12]. Baumol [2] argues that the market for paintings of noted, deceased artists has no long-run equilibrium price, because the market is characterized by infrequent trades of unique assets which are available in fixed supply. His empirical analysis supports the idea that paintings experience unpredictable price changes and highly dispersed rates of return with a mean near zero. In contrast Anderson [1] reports estimated equations explaining approximately 60 percent of the variation in (log) prices of paintings based on the size of painting, date of sale, and a constructed measure of repute of the artist. Other researchers have examined markets with more frequent transactions and greater substitutability among the goods traded. Schnitzel [15] finds that year-to-year changes in prices of postage stamps are predictable based on age of the stamp and quantity printed. Ross and Zondervan [14] report that variations in quality affect prices, but not rates of return, of Stradivarius violins, a result which is consistent with user benefits' being invariant with respect to quality. Among markets for collectibles, the market for rare U.S. coins is active and well organized, and faces the potential for increased federal regulation. Annual sales are estimated at $5 billion [16]. Two Wall Street brokerages recently have formed multimillion-dollar limited partnerships to invest in rare coins, and some coins now are traded on electronic exchanges [5]. These innovations have come amid calls for increased regulation to guard against fraudulent grading of coins [5; 16]. A major determinant of the price of a collectible coin is its grade, a measure of condition reflecting qualities such as sharpness of features. Regulators accuse coin dealers of defrauding collectors of millions of dollars annually by assigning higher-than-warranted grades to the coins dealers sell while downgrading coins they buy. For example, the Federal Trade Commission (FTC)