Posted by Jeff Garrett on the Numismatic Guaranty Corporation Weekly Market Report …..
As nearly everyone who buys rare coins knows these days, a larger percentage of the market is conducted at auction. The auction market has exploded in recent years. Twenty years ago, the total amount of rare coins sold at auction in the United States was probably less than $25,000,000. More recently, that number is closer to $750,000,000 or more. That does not even include the thousands of coins sold each day on eBay and other Internet websites. There are several explanations for this; the main reason is the tremendous rise in the prices for coins at the top end of the market. Years ago a million dollar sale made front page headlines, today these are a seemingly monthly occurrence, and barely mentioned. The size of rare coin and currency auctions has also increased tremendously. At this year’s FUN show, Heritage Auctions was simultaneously conducting separate auctions of world coins, currency, and US coinage. Thousands of coins and currency were sold during the week.
A typical rare coin auction will offer a wide range of coins and currency. Collectors looking for interesting and rare coins will be compelled at some point to consider participating in a rare coin auction. This is especially true when an old time collection of seldom, if ever seen, rare coins come to market. These type of sales sometimes offer a once in a generation opportunity to buy a numismatic rarity. The recently conducted sale of the Eric Newman collection graded by NGC is a great example. Many of those coins had been off the market for over 75 years. The prices realized for the great coins in the sale stunned most market observers.
This brings up the subject of this week’s article. For many collectors these auctions offer a great opportunity to purchase coins that are nearly impossible to find. The problem is that these auctions will also require a substantial financial commitment to be successful. Most collectors find the process of placing winning bids in an important sale to be nearly impossible. No matter how aggressive the bid, they lose out. This is where the advice of a seasoned professional can be invaluable. Having someone to look at lots, figure bids, and execute a bidding strategy is well worth the investment of a few percentage points. Without this help, collectors will often either miss the chance to buy a coin or pay substantially too much. Expert advice can be crucial in a pressure situation.
One of the greatest advantages of seeking an auction representative is to have someone screen coins for quality. As we all know, coins of the same grade are not always alike. Some collectors prefer nicely toned, original coins. Others, however, want coins with frosty white surfaces. An auction representative can also check coins for hidden marks, scratches, or rim problems. With quality being the biggest driver of rare coin prices, the advice of an expert is extremely important. The photography of most rare coin auction firms is excellent these days. With a few clicks, collectors can zoom in and examine the obverse and reverse with ease. Unfortunately, anyone with experience can tell you that seeing a coin in person is the only way to fully understand the quality of a rare coin. Most dealers know their customers, and have a good understanding of what kind of coin they are looking for. I tell my customers that my criteria is simple: I want to recommend coins that I will be happy to repurchase at some point in the future. Having someone on your side when it comes to quality is well worth the investment.
Once you and your advisor have decided to bid on a coin, the work really begins. You need someone who understands your priorities, budget, and quality desires. Your advisor should also be an expert in the series you are bidding on. There is a fine line between making sure you secure the coin of your dreams and vastly overpaying. An expert can help you decide how far to go when figuring bids. Most will have access to previous auction records, private sales, and years of experience. Many collectors get very excited when something they have been looking for shows up at auction. An expert can help you weigh the value of such opportunities and decide how aggressive to be. Years of experience is a valuable tool in the rare coin market, and for a few percentage points, it can be the best investment collectors can make.
Most collectors know the dealers who specialize in the field of collecting they have chosen. Nearly all of these dealers are willing to assist collectors at auction. The typical fee for auction representation is around 5%. The fees are obviously negotiable, but remember that a considerable amount of time is required to properly represent someone at auction. A great place to start when seeking auction help is to work with someone who you have established a relationship with. These relationships can be extremely valuable in the long term and well worth the investment.
The next time a coin sets a record at auction, make sure you have received some solid advice if you happen to be the winning bidder!
Questions about the rare coin market? Send them to [email protected].
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. He plans to run for ANA vice president in 2013.