Coin Deal Shopping by Doug Winter – Raregoldcoins.com ……
CoinWeek Content Partner
I had an interesting experience at a recent show that I thought was worth sharing. A new-to-the-market collector/investor came up to my table and asked to see my “best coins”. I was happy to share them with him and pulled out a gorgeous 1802 quarter eagle in PCGS AU58 and a lovely 1798/7 eagle in PCGS AU55. After some back-and-forth negotiating, I could see this coin deal was not going to get done. The reasons why it didn’t are what I want to briefly discuss.
Now let me say in advance that the individual that I was dealing with is younger than I am, better looking than I am, smarter than I am, and without a doubt much, much richer than I am. He’s someone whose family has had tremendous success investing in other areas and he is a recent convert to the rare coin market. But I think he’s approaching coins from a totally wrong perspective.
This guy likes deals. And he likes sexy, interesting coins. In other words, he wants to buy the best coins that I (or other dealers) have but he wants to buy them at levels that are unqualified, unquestionable “coin deals.” Good market or bad market, I don’t see this happening.
One thing that I have learned as a dealer in the last few years is that really good coins are really hard to find. Most of the great old-time collections have been dispersed and you just don’t see many “old time Gems” any more. Any when you do, like in the instance of the recent Naftzger Collection of late date Large Cents, the pent-up demand for the fresh, superb coins is so strong that they sell for crazy prices.
The investor I mentioned comes from a real estate background and he is, no doubt, used to panic sellers who have a nice piece of property but who are in over their heads and have to bail. Quickly. This doesn’t really seem to happen much anymore in the coin market. The speculators who bought the “ coin deals ” in the last Bull Market are the guys who bought the overgraded, overrated “stuff” that, in retrospect, maybe wasn’t such a good coin deal after all. The guys who bought the great coins and paid up for them aren’t selling. They aren’t selling because they don’t have to and because they know that what they have can’t be easily replaced. The “stuff” is what you tend to see, over and over, in auctions.
In the coin market, price buyers invariably wind-up with the worst possible coins for the grade. As I have mentioned before, there are coins with huge variations of value within a specific grade. For example, there are MS65 1795 half eagles that I think are worth well over $500,000 And there are MS65 1795 half eagles that I wouldn’t pay $350,000 for. The guys who “like the deals” are always going to wind up with the substandard coin. No ands, ifs or buts. It always works out this way.
That’s not to say that there aren’t good values in the coin market. I can think of dozens and dozens of coins that are undervalued in relation to their rarity and level of demand. I think that’s what the deal-hunters don’t understand. The real deals in numismatics come with knowledge of coins, not buying something for 10% less than Greysheet Bid. The Greysheet is never going to teach you that, as an example, an 1864-S eagle is a sensational value at double current published levels.
I realize that this sounds like a self-serving dealer blog justifying the “need” to stick a high price tag on nice coins. It’s not meant to be that but I can understand that interpretation. I just was sorry to see a potentially great customer pass on two incredible coins for his collection because they weren’t “deals”.
* * *
About Doug Winter
Doug has spent much of his life in the field of numismatics; beginning collecting coins at the age of seven, and by the time he was 10 years old, buying and selling coins at conventions in the New York City area.
In 1989, he founded Douglas Winter Numismatics, and his firm specializes in buying and selling choice and rare US Gold coins, especially US gold coins and all branch mint material.
Recognized as one of the leading specialized numismatic firms, Doug is an award-winning author of over a dozen numismatic books and the recognized expert on US Gold. His knowledge and an exceptional eye for properly graded and original coins have made him one of the most respected figures in the numismatic community and a sought after dealer by collectors and investors looking for professional personalized service, a select inventory of impeccable quality and fair and honest pricing. Doug is also a major buyer of all US coins and is always looking to purchase collections both large and small. He can be reached at (214) 675-9897.
Doug has been a contributor to the Guidebook of United States Coins (also known as the “Redbook”) since 1983, Walter Breen’s Encyclopedia of United States and Colonial Coins, Q. David Bowers’ Encyclopedia of United States Silver Dollars and Andrew Pollock’s United States Pattern and Related Issues
In addition, he has authored 13 books on US Gold coins including:
- Gold Coins of the New Orleans Mint: 1839-1909
- Gold Coins of the Carson City Mint: 1870 – 1893
- Gold Coins of the Charlotte Mint: 1838-1861
- Gold Coins of the Dahlonega Mint 1838-1861
- The United States $3 Gold Pieces 1854-1889
- Carson City Gold Coinage 1870-1893: A Rarity and Condition Census Update
- An Insider’s Guide to Collecting Type One Double Eagles
- The Connoisseur’s Guide to United States Gold Coins
- A Collector’s Guide To Indian Head Quarter Eagles
- The Acadiana Collection of New Orleans Coinage
- Type Three Double Eagles, 1877-1907: A Numismatic History and Analysis
- Gold Coins of the Dahlonega Mint, 1838-1861: A Numismatic History and Analysis
- Type Two Double Eagles, 1866-1876: A Numismatic History and Analysis
Finally, Doug is a member of virtually every major numismatic organization, professional trade group and major coin association in the US.
I agree. The longer one collects, the more one discovers that there is no free lunch in rare coin buying. A deal often turns out to be a sub-par coin.
At least 95% of retail coin buyers will lose money when they sell their coins—it’s been this way for decades. A major reason is that far too many buyers place a premium on low price, rather than quality for the grade (which comes at a premium). In today’s market, this kind of mentality is exceptionally foolish. Third-party grading, CAC stickers, and high-profile sellers are not absolute guarantors of quality–buyers still need to learn to properly evaluate what they want to collect or invest in. Buyers also need to spend time learning the realities of the coin market (rarity, grading, pricing, venues for buying and selling, etc.). This is simply a matter of self-protection; doing otherwise means that you will put yourself at the tender mercy of a seller. Good luck with that.
I’ll start this out by saying that I’m a minor-league collector ($10-$100 level coins) although I’ve been collecting for 10+ years. I tend to collect long date runs of small silver coins. My three main collections are UK threepence 1834-1944, US Dimes 1820-1899 (date run) 1900-present (date & mm), and Canadian 10 cents 1858-present (w/ commemorates & special strikes).
My situation leads me to collect coins that are both in the widget/”stuff” market and “better” coins (although in no way rarities like you are discussing). When I’m looking for coins that can be found really easily throughout the bourse and ebay with decent eye appeal, I tend to focus more on price. If a 2009 proof dime slips through my fingers with a last-minute snipe because I put in a lowball bid, I don’t worry too much since there will be 4 more auctions like it ending in the next day or so.
If I see an item with great eye appeal, good rarity, and a price that is over the price guide by say 25%, (like a 1940 Maundy threepence) I will jump all over it and celebrate the rest of the day on the great deal I’ve gotten.
When I started pruning my collection a few years ago and selling all of the problem coins I got in by first year of collecting on eBay, I learned that “junk” is incredibly tough to sell. It’s a pretty bad feeling when you realize that the holed AG-3 1834 bust dime you got a great deal on for $15 doesn’t get any bidders at a starting bid of $10.
I’ve learned that there are a subset of coins that nearly everyone thinks is nice (and will be either bid up or priced accordingly). If you want to buy coins that are part of that “nice” subset, you have to pay up for them (or someone else will beat you to the punch). “Deals” come when you are picking from coins that only a small sliver of the market may want to purchase at any given time – and there is usually a good reason for that.
In talking with other coin collectors over many years, invariably the rationale for price-conscious buying is that this strategy allows one to buy more coins, and build a larger collection.As long as a collector who espouses this tactic fully understands the financial implications, I see no problem. But this rarely happens—usually, there is great disappointment with offers from dealers or auction results when the coins are put up for sale. In forming ANY kind of collection, quality always trumps quantity, from both financial and aesthetic points of view. It’s unfortunate that most collectors don’t understand this.
Well, I think that there are as many different ways to collect as there are items to collect. So I disagree that with ANY kind of collection, quality always trumps quantity. I don’t believe in such absolutes.
I see nothing wrong with someone wanting to have more specimens of slightly lower grade than to have one great example. After all, one coin is not a “collection”. Personally, I collect coins like I collect guns: I like to have a lot of good, representative samples of all of the different types as opposed to just a few high end items. I want one of everything, not one of something.
This is a perfectly acceptable collection strategy as long as one understands that buying lesser grade examples now means selling those lesser grade examples at a lower price later.
Nice article/thought of someone “new” in the numismatic hobby/business. My thoughts are for the young person is first “Buy the Book(s) and do some studying of the interesting history of the numismatic field. And not “flash” his pocket or check if he is serious of the deals he is making. I have learn from the collectors and dealers that deal take time to become good/great acquisition.
I am new to the field so I have to ask; Why do you feel both graded MS65 1795 half eagles have such a difference in price/cost? My presumption of course is that all 65 ratings are the same. No? If not, why not?
Daniel,
Grading is not an exact science, despite the appearance of being such because of the assignment of numerical grades. If you submit a classic coin to a third-party grading service 10x, it is not likely that the same grade will be given each time. Why? Grading is done by people, not machines. You can pick just about any grade, like 65, and discover that there is a spread in quality—some coins look like very nice 64’s, others look like low end 66’s, some look like very nice 65’s, some look like not so nice 65’s, and others look solid for the 65 grade. The notion that professional grading is dead-on accurate doesn’t work in practice. In some cases the price difference between coins in the high 64-low 66 spread is negligible. For many classic coins, even the spread between low- and high-end 65 means a lot of money. This is why every collector needs to learn to evaluate coins, and not simply rely on third-party grading or what a dealer says. To do otherwise invites a rude surprise when you attempt to sell your coins later on. Coins that are not nice for their grades, or are deemed overgraded by prospective buyers, are difficult to sell in today’s coin market.
This is a great article and stands to say if your coin is graded to be in great condition it is automatically more desirable, and thus more valuable. Network marketing has even took hold of this large market and being able to sell MS70 and PR70 coins at competitive prices, why collect something if its not perfect and in this case numismatically perfect
Thadeus,
Most modern U. S. coins graded MS70 or PR70 aren’t really rare or even scarce. There are plenty of sellers of such coins, but few buyers willing to give you anything but pennies on the dollar. Buy these coins if you like them, but do not expect them to be good investments. And don’t presume that a 70 grade on a slab insert means that the coin is ‘perfect’—I have seen many such coins that realistically are no better than 69 in grade. Typically, a coin in 69 has a retail value that is a tiny fraction of the 70 value, which is why many experienced collectors and dealers view coins graded 70 with skepticism.
interesting comment Thadeus. I would say MS70 and PR70 “coins” such as the ones you are referring to are typically minted at either MS69 or MS70. If your firm sold 1955 Franklin Half Dollars in MS70 then you’d have something.
I think the writer needs to define what a “deal” is. Just because a buyer didn’t agree with his asking price doesn’t mean he’s a know-nothing cheapskate. It just means they couldn’t agree on price. Happens in all sectors of the economy all the time. I’m also sure the writer thinks his coins, like his children, are the best-looking and brightest in the universe.