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Rare Coin Market Report – May 2012 – PICKY is Good

Dear Rare Coin Enthusiast,

The U.S. Rare Coin Market is vibrant and active.  Collectors, dealers, and investors continue to buy rare coins, bullion, and numismatic collectibles with enthusiasm.  We are constantly amazed at how actively our customers are searching for coins!  Yet, while we are experiencing strong demand on both our website and in our Ebay store the word ‘picky’ is often used when a customer or dealer describes his purchasing desires.

PICKY is good.  Being ‘choosey’ and particular when spending your hard earned dollars is right and proper.  You need to both ‘get what you pay for’ and be ‘happy with your purchase’.  While both Sherri and I would love to see you spend your money with Bozarth Numismatics, we won’t always have the coins you are looking for.  This month I am going to break down what you as a coin customer will have to ‘REALISTICALLY’ pay for a nice coin whether that purchase is through a known dealer or through auction.

Because of a large quantity of poor quality merchandise on the market we have recently seen some lower prices reported in several of the market’s pricing guides.  Nevertheless, the ‘picky’ customer knows when to pick his battles and ‘step up’ with that premium for really Choice numismatic material.  Unfortunately the vast majority of coins on the market are just average.  When you see record prices reported for certain coins you will almost always find that these coins were either potential upgrade coins or very scarce items that do not appear on the market often.

The foremost pricing authority in the rare coin market today is the Coin Dealer Newsletter.  The Coin Dealer Newsletter, who I admittedly have been a little hard on lately, has added some very neat and informative features to their publications recently.  With the addition of Mark Ferguson to their staff, I believe they are making great strides in the right direction.  Mark is not only a sharp guy, but he is an experienced numismatist and did a marvelous job of coordinating and reporting ever changing price levels while he was with Coin World.  Coin World’s loss is Coin Dealer Newsletter’s gain.  When it comes right down to value, almost ALL U.S. rare coin transactions start with the ‘Greysheet’ bid.

But what should I pay for this coin?  Most coin dealers have a little gambler in them.  Truth be told, even dealers don’t know what to pay for a lot of coins at any given time.  When you add in the fluctuations of the market, the fact that a dealer just can’t stock everything (although a lot of us would love to have the unlimited budget to do so), and the quality and liquidity factors you really have a problem determining what to pay.  Dealers weigh several factors when making an offer on a coin.

First, you check the price guides.  Second, you see what other similar items have sold for recently.  Third, you contemplate whether or not you will have a customer for the item or have to stock it for a period of time, and lastly you pull a ‘rabbit out of your hat’!  Seriously, you weigh all the information you have and make any offer.  Because of experience, most dealers do this very quickly.  A nice scarce coin that is priced ‘right’ will not be available for long.  Dealers KNOW they won’t make money on everything they buy.  Yet, they ante up and play the hand.

You, as a collector, have disadvantages and, believe it or not, advantages.  A collector has the luxury of buying what THEY personally want to collect.  The collector also has the luxury of time.  Buying nice rare coins and holding them for the long term will almost always be rewarding.  The two big disadvantages of being the collector are their budget and the lack of NICE material.  The rare coin market goes up and down.  The astute collector is always buying nice coins for their collection.

Taking advantage of timing can pay huge dividends in the future.  RIGHT now, for example, is a great time to buy rare coins.  Price levels for a lot of great rare coins are lower right now than they have been for over a decade.  When you find the ‘right’ coin don’t hesitate.  Odds are you will have to pay more in the future IF that particular coin is even available.  The big question is what to pay?

The vast majority of collectors don’t have the luxury of a good coin show in their area.  Because of the internet, you can shop for coins from the comfort and security of your home or office.  The collector can buy coins from dealer websites or price lists, coin publications, TV shows, and through a great number of online auctions without leaving their ‘seat’.   The premiums you will have to pay are actually pretty close among competitive and reputable dealers or auction houses.

In my opinion, you should NEVER buy coins from TV.  Frankly the ‘cost’ of offering items on TV makes buying from TV shows a horrible play.  In addition the sheer volume a TV promotion must sell makes the items they are selling ‘average’.  One of the first lessons I ever learned in the rare coin business goes something like this:  If you can buy a bucket full of them regardless of the price, they are not scarce let alone rare.  Remember the secret to a good promotion is a ready supply!

Let me breakdown how most dealers and auction houses make their money.

Dealers with websites or price lists mark up their coins depending on the market at that time, their cost, and how much overhead they have to ‘cover’ before their profit margin.  Depending on the price level for a particular item the mark up can range from as little as 5% to 50% in most cases.  A dealer selling items priced at under a $100 each will generally have to mark up their items AT LEAST 25% to 50% to cover their overhead and make a profit.   On more expensive item dealers are able to work ‘closer’.  On items over four figures a dealer will often work on 10% AFTER credit card charges and shipping and insurance costs.  On bullion items this mark up can run as low as 3%, but you often have to pay ‘UP FRONT’ because of the volatility of the market.

Most auction houses charge a ‘buyers’ premium.  This buyer’s premium varies but most often the bigger U.S. auction houses charge a 15% buyer’s fee.  Recently Stacks/Bowers raised their buyer’s fee to 17.5%.  In the last couple of years, I have encountered several auction houses that charge as much as a 20% buyers fee.  The buyer’s fee covers the cost of selling the item and a profit margin for the auction house.  There is NOTHING wrong with a buyer’s fee but….as little as fifteen years ago a 10% buyers fee was normal and going back two decades auction houses actually charged a commission to the seller.

The biggest problem with auctions for example lies in the way they work.  First you view the auction lots and determine what you want to bid.  Second you bid against an unknown number of other bidders.  What is the problem?  In my experience, if I pick out ten coins I really want and bid on them, I end up with the two or three (out of the ten) I least wanted.  If I ‘stretch’ to buy a great item the quality has to ‘be there’ or I have buried myself price wise.

Ebay operates differently and represents an incredibly huge global market.  Ebay charges the seller (just like coin auctions in the old days).  When you bid on an item you are bidding what you are paying.  In fact, not only are you getting what you bid on for the amount you bid, but most often there are NO shipping and insurance charges.  The seller pays the freight.  Yes, the fees the seller pays are still part of the cost, but….you know where you stand at ALL times.

The larger coin auction houses have changed their fee structures over the last couple of decades to hide the numbers so to speak.  For example, when you pay a 15% buyers fee often times the seller gets part of that 15%.  The hammer price (what you bid before the 15%) in addition to a portion of the 15% buyer’s fee go to the seller.  Why is that?

The auction houses are competing against one another for the ‘juiciest’ and ‘freshest’ consignments.  Depending on the consignment quality they might offer 7% of the 15% buyer’s fee to the consignor.  Recently Stacks/Bowers raised their buyer’s fees to 17.5%.  Once again, they are playing with the numbers.  Now because they are charging a 17.5% buyer’s fee they can offer up to 110% of the ‘hammer price’ to the best consignors.  What is the difference?  The difference is that they believe they will get more consignments and bidders will not notice they are paying more?  In addition, if you are a big buyer who spends more than 50K in their auction you only have to pay a 15% buyer’s fee.  What a great deal-except for the collector.

In my opinion, you can buy great coins at a reasonable price from ALL of these venues (except TV).  BUT….and here is the rub…make sure you know how the system works.  Frankly, knowing what your ‘bottom line’ is going to be ahead of time can make ALL the difference.  Remember ‘PICKY’ is good.

Our Show Schedule for May and June include the following shows:

ANA Spring Show                     Denver, CO                   May 9-12                        TABLE

Texas Numismatic Assoc.       Ft. Worth, TX                May 17-19                     TABLE

Long Beach Coin Show           Long Beach, CA             May30-June 1               Attending

NGC Trade & Grade                Las Vegas, NV                June 12-14                     TABLE

Greater Chicago Show            Tinley Park, IL                June 20-22                     TABLE

Whitman Coin Expo                Baltimore, MD               June 28-30                     TABLE


Vic Bozarth
Vic Bozarth
Vic Bozarth is a member of the Professional Numismatics Guild (PNG), the ANA, the CSNS, FUN, and many other regional and state coin clubs and organizations. Vic has extensive experience buying and selling coins into the mid-six-figure range. Both Vic and his wife Sherri attend all major U.S. coin shows as well as most of the larger regional shows.

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  1. As far as buying/saving on eBay goes:

    If you see an item that you want listed in auction format, send the seller a message asking if they will accept $x to end the auction early and sell the item to you. If that doesn’t work, use a sniping service such as Bidball.com to bid for you. It’ll bid in the last few seconds, helping to save $ and avoid shill bidding.

    If there is a particular item that you want that is relatively rare on eBay or goes fast when one is listed, use ebuyersedge.com to set up a saved eBay search for it. You’d get an e-mail whenever a match is listed. You can use the price, category, exclude word, etc. filters to narrow down the results that you get in the e-mails. Excellent for “Buy It Now”s priced right.

    If the item that you’re looking for is difficult to spell, try a misspelling search site like Typojoe.com to find some deals with items that have main keywords misspelled in the title. Other interested buyers may never see them.


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