By Jeff Garrett for Numismatic Guaranty Corporation (NGC) ……
When deciding what to collect, market liquidity should be carefully considered.
Over the past several years I have discussed many ways to collect rare coins. Most collectors choose a series and make every effort to buy as many as possible. For decades the concept of coin boards was based on this method of collecting. Collectors would begin a set and become obsessed with finishing the project. This is how I became hooked on coins in the 1960s with my first Whitman Lincoln Cent coin board.
Today, collecting has become considerably more sophisticated. The hobby is much more than about filling coin books. As a matter of fact, the majority of serious collectors probably have never owned a coin album. Collectors now demand the security of third-party grading and store their collections in boxes. Some of these collectors still aim for completeness, but many are happy to own just a few great coins.
Regardless of what you collect, market liquidity is a factor that many fail to consider when collecting. Market liquidity is defined as how large the collector base is for the series you have chosen. When it’s time to sell, the number of potential buyers is a crucial factor. A set of Kentucky small size currency can be quite interesting, but other than myself, there are very few buyers. On the other hand, thousands of people are actively assembling Morgan Silver Dollar sets.
The advent of registry collecting has clearly redefined this concept. The number of registered sets for many series is astounding. Over 500 people have registered their sets of American Silver Eagles in the NGC Registry. There are similar numbers of collectors registered for many other series, including Lincoln Cents, Mercury Dimes, Walking Liberty Half Dollars and Morgan Silver Dollars. All of these series enjoy a depth of demand that is probably going to be sustained for many years to come. For anyone collecting these series, they have the comfort of knowing that there will be buyers when they decide to sell.
- Total NGC Registry Users: 10,711
- Total NGC Registry Sets: 99,151
- Total Coins in NGC Registry Sets: 921,170
- Total Silver Eagle Sets (All Types): 4,680
- Total Silver Eagle Sets (MS Bullion Only): 2,397
A more in-depth examination of market liquidity also includes deciding what grades to collect once you have chosen a series. Registry collecting is really all about trying to assemble the highest ranking set. This means incredible competition for the finest available coins. If you decide to play this game, and many do, you should be careful about competing with just a few collectors for the very finest. If one or two drop from the game, then your exit strategy has been greatly compromised.
The safest play is to choose a series with considerable market depth in the highest grades you can afford.
Some collectors understand the importance of market liquidity on the series they collect and make efforts to promote that series. In recent years I have been helping a collector assemble an extremely high grade set of two cent pieces. This collector created an incredible exhibit for his collection that has been displayed for several years at coin shows around the country. His goal was to win awards for the exhibit, and also raise awareness of the series. He recently auctioned his collection and his strategy was well rewarded when the coins sold for record prices.
Like stock, the best bargains are in neglected areas of the market. The trick is to select numismatic items that one day will have broad collector demand. This demand can be created when a series has renewal of interest. The new interest may come from the auction of a great collection, the publication of a new book on the series, restrikes of the series by the US Mint and many other ways. The expansion of many world economies has also created collectors in many previously ignored areas of the market—think China and Russia.
When starting a collection you should consider the above advice and also do your homework. Modern collectors are blessed with an incredible amount of collecting tools that previous generations lacked. Researching coins has never been easier and the amount of data available is staggering. The NGC website is a great place to start. The site has amazing resources for those wanting to research numismatics. You can also explore the NGC Registry.
Finally, another great way to ensure market liquidity is to support the ANA and other organizations that try to promote numismatic education and the hobby. In this case the term “paying it forward” will also pay off for you by making sure there will be collectors willing and able to buy when it comes time to sell your coins.
About Jeff Garrett
Jeff Garrett, founder of Mid-American Rare Coin Galleries, is considered one of the nation’s top experts in U.S. coinage — and knowledge lies at the foundation of Jeff’s numismatic career. With more than 35 years of experience, he is one of the top experts in numismatics. The “experts’ expert,” Jeff has personally bought and sold nearly every U.S. coin ever issued. Not a day goes by that someone doesn’t call on Jeff Garrett for numismatic advice. This includes many of the nation’s largest coin dealers, publishers, museums and institutions.
In addition to owning and operating Mid-American Rare Coin Galleries, Jeff Garrett is a major shareholder in Sarasota Rare Coin Galleries. His combined annual sales in rare coins and precious metals — between Mid-American in Kentucky and Sarasota Rare Coin Galleries in Florida — total more than $25 million.
Jeff Garrett has authored many of today’s most popular numismatic books, including Encyclopedia of U.S. Gold Coins 1795–1933: Circulating, Proof, Commemorative, and Pattern Issues; 100 Greatest U.S. Coins; and United States Coinage: A Study By Type. He is also the price editor for The Official Redbook: A Guide Book of United States Coins.
Jeff was also one of the original coin graders for the Professional Coin Grading Service (PCGS). He is today considered one of the country’s best coin graders and was the winner of the 2005 PCGS World Series of Grading. Today, he serves as a consultant to Numismatic Guaranty Corporation (NGC), the world’s largest coin grading company.
Jeff plays an important role at the Smithsonian Institution’s National Numismatic Department and serves as consultant to the museum on funding, exhibits, conservation and research. Thanks to the efforts of Jeff and many others, rare U.S. coins are once again on exhibit at the Smithsonian Institution’s Museum of American History. We urge everyone who visits Washington, D.C., to view this fabulous display.
Jeff has been a member of the prestigious Professional Numismatic Guild (PNG) since 1982 and has recently served as president of the organization. In 2009 and 2011, Jeff ran successfully for a seat on the Board of Governors for the American Numismatic Association (ANA), the leading numismatic club in the world. and he is currently the ANA President.