Is it time to retire the notion that if you stretch for a coin you'll be fine if you hold onto it?
sparky64
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Used to be, that when purchasing, it was an advantage that collectors had over dealers.
You could overpay a little and just hold for a while and the market would eventually come to you. Sometimes quickly, sometimes a few years but it was fine because collectors have time on their side.
It was generally true for any price level.
Seems like now, I'm instantly buried indefinately no matter how carefully I pick and choose my purchases.
Maybe it's the price range I've gravitated to that is where this issue is most pronounced. The 2, 3 & rarely 4 figure slot.
I mean, I'm a collector and therefore NEED to purchase coins but instantly being 30% behind for seemingly forever with no end in sight wears me down. It would be nice to come out ahead once in a while, sell some and go for something extra special.
Maybe I'm doing something wrong.
"If I say something in the woods and my wife isn't there to hear it.....am I still wrong?"
My Washington Quarter Registry set...in progress
Comments
Everything is easier in a rising market.
However, if you stretch for the right coins, you’ll be fine even without the waiting.
Following is an interesting commentary, dated tomorrow, from Gerry Fortin that speaks to some aspects of your post:
Whitman Baltimore Pre-Show Commentary
Before sharing GFRC's new purchases, a few comments on the wholesale portion of the numismatic market are warranted. Dan and I spent about six hours visiting with our favorite dealers along with some new faces. We estimate reviewing nearly 1500 slabbed coins seeking to purchase eye appealing and strictly original silver and gold pieces. When the buying event was completed, we returned to the hotel room with ten new purchases. Here are a few observations from the buying session.
The wholesale market lacks Liberty Seated and Capped Bust coinage (other than Capped Bust half dollars). We saw few quality Liberty Seated coins across all denominations and very few Capped Bust half dimes, dimes and quarters. What we did see were either marginal or overgraded coins along with the usual higher end mint state and proof pieces that are difficult to place.
When we did manage to locate a piece with strong eye appeal, stricty originality, and CAC approval, the "wholesale" prices were well above PCGS Price Guide retail levels. Some of the premiums were at 30-50% above the retail guide level. Dan and I could not bring ourselves to buy at these levels since the resulting GFRC asking prices would appear too high. The last thing I want is for GFRC to gain a reputation for pricing coins at "moon money" levels. Therefore, we walk away from these expensive offerings.
We spoke with a few old time dealers who commented that the United States gold market is down and an excellent time to be buying. This is consistent with GFRC's observation. If one is diligent and digging hard, it is possible to locate superior coins with or without CAC approval at fair wholesale prices.
As I've mentioned on many occasions, the highest quality coins are in collector hands. Until collectors start to divest, the overall market will remain full of average offerings across the grade levels. When superior coins do surface, the premiums are substantial and well above CDN bid. I can't stress enough the importance of collectors returning duplicates to market to enable other collectors to gain access. If collectors believe that GFRC or other specialty dealers will locate a host of quality coins simply through pre-show buying, then that belief is mistaken. Above average coins are quickly absorbed by collectors leaving only average or below average "stuff" to trade among dealers.
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Works better if you are young or if your kids have an interest in the hobby. Hobby is the key word.
Thanks go to Dell Loy Hansen and others for returning duplicates to the market.
It's a fallacy for most Collectors, IMO.
I recall Classic Commems being red hot decades ago. They took a beating that they still haven't fully recovered from, but when that really special one gets posted here and gets 25 likes and lots of wows the owner gets a great deal of satisfaction. That is the joy of collecting to me. Expensive, indeed. Worth it, your decision.
Everyone is in the same boat IMO. Used to be a financial break even or some gain to collect. Now it is a financial loss to collect. For myself, it was Ebay that got me going and now Ebay that has me leaving the hobby. I can't find coins to collect at prices that are not insanely stupid.
Some would say the principal holds true, but the timeline is merely longer than the buyer cares to entertain. Perhaps even longer than the owner's lifetime in some instances.
Brings new meaning to the phrase "being buried" in a coin.
I collect coins... I use disposable funds to do so... I do not sell coins and have no plans to do so. It is a hobby and not a business for me. So I just do not care....
Cheers, RickO
if you stretch for a coin you'll be fine if you hold onto it?
Or in the same vein, 'buy the best you can afford'.....I've long thought this adage was bs.
The better advice has been 'buy the best you can understand'.
Dave Bowers has said for a long time to collect what piques your interest. The market does it's own thing, you should do yours.
I knew it would happen.
I can't think of many things I do for enjoyment that will return any money back. One of the reasons I collect US coins is that I know I will recoup something, so it's a less guilty pleasure perhaps.
Never overpay for coins or any other collectible. Period.
Timely and interesting thread. Virtually every collector has an eye on an eventual return even if it is at a moderate loss. I watched the market soar in 2004 and slide over the last 5 years.
Of the stuff I watch, MS64 common CC dollars have been extremely stable. Trading at a bit over $200 for the last dozen year.
Several coins are 50-75% of their peaks. Some real hurt unfortunately that will take lot of inflation to recover from.
I wish collectors would consider opportunity costs.
If you stretch on a coin and it takes 10 years for the market to get to you, you haven't broken even - you lost 50% of your money.
COINS ARE NOT AN INVESTMENT, THEY ARE A HOBBY. Please treat them as such or you will lose much of the enjoyment that comes from them.
With fidelity at $5 a trade if i cant churn / flip my coins and make money it’s time (1) sell out / liquidate the numismatic material (2) settle on a budget quantity ((ounces) gold and silver coins as investment play.
In regards to your question I don’t see coin collecting as buying big ticket coins (unless your wealthy) as a good choice in this south of steady market. Instead buy the coin which is nice and fills the hole which is compatable with your budget.
Coins are a retail hobby like my model rr trains. Coins as an investment: wake up and smell the coffee - aka PCGS 3000.
I've been collecting for about 40 years and in that time I've only sold a dozen or so coins.
More so recently.
It is an awesome and rewarding hobby for me and definitely not a business. I've never expected to profit. I'm not savy or sharp enough and I leave that to the professionals.
A long time ago I heard the theory mentioned in the thread title and it always was in the back of my mind and gave me some comfort.
I'm just coming to realize that I need to get rid of that baggage.
"If I say something in the woods and my wife isn't there to hear it.....am I still wrong?"
My Washington Quarter Registry set...in progress
None of us would own a single coin!
Buying the best you can afford when the price variance is (very) wide and the quality difference is marginal makes no financial sense. If the slightly lower quality coin is much cheaper, it should also usually be a better financial value.
At the very least, it has less room to fall...
And, I'll say it, take offense if you want: there is maybe one person on this board who can consistently and accurately differentiate an MS66 from an MS66+
When you buy a coin at auction with internet bidding, consider the seller’s premium, bidders’ premium, postage and handling, and any applicable sales tax are sunk costs. This can be 30% of the final price or more. It doesn’t matter which party is losing on the premiums at the time of auction, it will eventually become a cost to the buyer when the buyer becomes a seller.
So I would think if you plan to sell at auction immediately and the coin is generic enough to have a relatively stable price, then you should expect an immediate loss of ~20-30%. This isn’t really all that bad though it’s a bigger spread than say stocks or bullion.
Ah but you don’t buy at auction, you say. Doesn’t matter. The easy availability of internet auctions and widespread dissemination of auction prices impact all markets, even private transactions.
In the early period of internet auctions, this was a boon to collectors as exposure led to price increases. Now the exposure is expected and the difference between the regional price and national/global price is gone, so the auction becomes a cost.
We'ed all be rich if we knew the answer to your question.
Sounds like you are conflicted. Decide whether you are a collector or an investor. If you are an investor...good luck on quick profits. If you form a top collection for the enjoyment, any money you loose will have been worth it. Remember, most things in life are not free.
I've ALWAYS regretted over-paying for gem coins but things always worked out in the end. The coin business is probably different now but knowledge will always be what will virtually guarantee profits. One trick is to find something you like that has low interest at the moment (stuff is cyclical) and become an "expert." For example, Trade dollars is a series that is understudied.
PS I cannot feel anything for someone able to buy: 2, 3 & rarely 4 figure coins.
Then no one would ever get beyond the Whitman cent folder with the missing S-VDB. I agree that coins are not an investment in the classic sense, but who would buy a $10,000 coin with the expectation that it would be nearly as worthless as his set of ping golf clubs in a decade.
Best forum member to answer the question is TDN. He has put real dollars on the line.
When I first collected in the 1970's and frequented dealer shops, I was told that the dealer price was 60% of retail, the Red Book. Since most coins aren't that hard to buy, I don't see that an immediate "haircut" of 20% to 30% should be that unusual, even if not buying from a dealer now. 20% would be about in the middle. Comments on coin forums also indicate that liquidity wasn't what it used to be when selling on eBay was more favorable.
This is an example and doesn't apply to every coin.
Like Ricko, I usually don't sell my coins, but occasionally do. I do take price and resale into consideration.
I will over pay if the coin or whatever it is makes me say WOW. Otherwise, I'm sticking to wholesale.
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Maybe the same people that buy and upgrade Ferraris every few years, expecting to lose $200,000 each time?
Using that logic, one would never have anything amounting to a great collection. Only a stockpile of "bargains."
Did they not laugh at John J. Pitmann when he mortgaged his house, bought a plane ticket to Cairo, and "overpaid" for treasures in the Farouk Collection?
Who had the last laugh?
I'm not saying money is no object and to go out and pay whatever it takes at the first table on the bourse. But when that "once in a lifetime" opportunity comes along, you better be ready to stand up or sit down.
Dead Cat Waltz Exonumia
"Coin collecting for outcasts..."
For example, Trade dollars is a series that is understudied.
I am not picking on this series but it's as good an illustration as any. I have seen numerous posts stating or implying that a series (presumably the one they like or collect) is "underappreciated". Then asking or implying if it should or will be more valuable.
The answer generically is an almost certain "no". By "generically", I am excluding the low number of highest quality coins and specialization such as some die varieties or toning. Substantial price increases in these niche areas don't impact what is available and affordable to the general collector population.
If one series appreciates substantially across the board out of line with the historical perception especially when it is common, it won't be competitive with the alternatives because almost no one collects in a vacuum. The majority will just buy something else.
In an advancing market, multiple series or most can appreciate concurrently, but there needs to be enough available at affordable prices that collectors both want and can afford. Without this, it isn't collecting anymore but commodity trading.
Pittman was operating in an era when there was still tremendous growth potential in the numismatic market. Today the numismatic market is fully mature and growth potential is questionable at best.
Sparky -
I wonder if some of us collectors just entered a unique moment in coin collecting history - the dawn of the internet / Ebay / holdering era and now are comparing all of collecting history with this decade in time?
When Ebay started, a collector now became their own middleman and the selling fees were almost nil. The arbitrage was the ability to buy a raw coin, get it graded and have a holdered coin that had more collector demand and grading security. Secondly, with Ebay, the marketing of coins was not very sophisticated. A seller would post awful pics, small pics or basically represent their coin in its worst light. A buyer could pick up a coin like this, create much better images (marketing) and relist it on Ebay and create bidding frenzies. I did this all the time.
Maybe now, the arbitrage opportunities have now been mostly captured and we are back to more of a norm of how the collecting market functions?
What would help the collector more than anything would be to have the auction platforms available like the earlier Ebay days when selling fees were lower. However, with taxing, compliance and other regulations, these low-sell fee platforms will probably not arise again.
It was great while it lasted.
And, to be fair, was Pittman smart or lucky? [I think a little of both.]
If coins had slid in value after he mortgaged the house, he'd be a homeless guy that you never heard about. There is a certain confirmation bias in citing this result because you only know it was a good idea because it worked out. That doesn't prove that it was a good idea at the time.
I could liquidate my 401k and put it all on black on the roulette wheel If I actually won, would you claim that was a brilliant strategy? I mean, it WORKED!
Pittman was a smart man. He was undoubtedly a passionate coin enthusiast. But he was also lucky that his passionate mortgaging of his house managed to work out. One of the local club members [he was in my local club, the RNA] has always said that his children looked homeless but he walked around with $100k coins in his pockets to show people at the club.
Fun Pittman story told by a club member last night: In the 1980s, Pittman brought his 1844 proof gold set to the club to show. Afterwards, he put it in his briefcase and went out to the parking lot. He talked for a little bit to the club member who was telling the story while he got into his car. He put his brief case, WITH THE 1844 PROOF GOLD, on the roof of his car as he opened the door. They talked a bit more and then Pittman drove off with the briefcase on his car roof!!!
The club member had to chase him down the street to the 1st stoplight to get him to recover the briefcase. LOL.
I think your comments are dead on @sparky64 there was a time when stretching was viable at all levels of collecting. But this market and the foreseeable future are different from the past and most of the time reaching for moon money coins will not be a good idea.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
@Insider2 ""Sounds like you are conflicted. Decide whether you are a collector or an investor.""
Always enjoy your insight. No conflict here, however. Collector straight down the line.
""PS I cannot feel anything for someone able to buy: 2, 3 & rarely 4 figure coins.
""
Full disclosure....I haven't yet purchased a 4 figure coin but I can see it eventually happening for one or two coins before it's all said and done.
"If I say something in the woods and my wife isn't there to hear it.....am I still wrong?"
My Washington Quarter Registry set...in progress
That's a great story, @jmlanzaf !
Dead Cat Waltz Exonumia
"Coin collecting for outcasts..."
I picked traded dollars because the are an "orphan series." Therefore possibly more new discoveries to be found. Also, their is a reference being worked on. Hopefully it will be as GREAT as the recent one on Seated dollars. Since both these series are expensive to collect. Try Liberty nickels. Still lots to be found.
While it definitely was a great time in numismatics, ALL of the market is not "fully mature." There are areas, even today, to buy and sell for a profit. If buying US Coins unnerve you, take a look at exonumia or even World coins. Opportunity abounds
Dead Cat Waltz Exonumia
"Coin collecting for outcasts..."
The ONLY way I was ever able to buy an expensive coin was on layaway. My 1894 gem P/L $21/2 cost an entire month's rent on a two bedroom apt overlooking the Pentagon and DC! Had to sell it later to pay the rent.
Just looked up the price. Only around $10K today. I should have thought much more after over thirty years.
I agree that the area of world coins still has potential but even that is likely to disappear fairly quickly. Information spreads much too quickly today to keep many secrets. In the case of exonumia there is still potential but there is also the danger associated with very thin markets. Extreme selectivity will be necessary regardless of what is being bought. "Ordinary stuff" has a very dim future.
I think you have to differentiate between coins that inherently retain value; i.e. "key" coins for a set, or coins that are universally recognized by collectors as being "key" or well known. These coins may go down in value in the market but consistently have collectors looking for them. These are generally coins that a wide swath of collectors are informed about and will go out of there way to own even if they are not a focal point of their collection.
Examples of these in my opinion would be 3-legged buffalo nickel, 1955 DDO cent, 1889 CC Morgan, etc.
Then you have coins with large number figures attached to them that only attract a small portion of the collectors out there; high value VAMs for instance. These have a larger swing in the market. I bought a terminal state "Scarface" in 2010 when the VAM market was stronger. It has gone down in value, and does not really command the attention of collectors who either don't collect Morgans or are not Morgan adjacent in their collections.
Stretching to purchase a high value VAM will carry more "risk" when trying to resell. If the market goes down you don't know when it will return. So purchasing these coins should only be done if you are interested in them as a specimen and not as an investment.
Stretching to purchase a "key" or well known coin carries smaller risk and the cross section of collectors that would buy it is larger and the market swings tend to be smaller.
And nobody knows what to do about toned coins. That is a toss up. Though I would refrain from buying a toned coin for any premium. If I was looking to sell it in the near future. What ends up going for moon money one day will go for gray sheet a week later.
Most US "key" coins are heavily hoarded. Many/most are not rare at all. When the estates of the hoarders come to market ... watch out.
Some already have...1844 Dimes and 1794 Half's.
I don't believe that world coinage has the potential many believe either. So many different exist that most will be lost in permanent obscurity. Few have enough distinction where more than a minimal number will want it at noticeable materially higher prices. A low proportion (such as those I collect) are probably too difficult to buy where it discourages more than a minimal number to even bother to try. It's a cheaper version of attempting to complete any liberty seated series or liberty type gold.
This!
One of the things that made SVDB cents, 55 DDO,16-D dimes popular was that they were NOT rare. Lack of availability=diminished interest.
See what happened to the price of the much scarcer Zeppelins or Columbians in the stamp market collapse. "Keys" are not immune to collapse. They just have farther to fall
Agree. Many seem to think that buying these coins first is the way to go because of prior price increases. If set collecting decreases noticeably, most of the (semi) keys in the most widely collected US series will lose substantial value, even without any other negative developments. The Morgan and classic gold is somewhat different due to outsized financial buying.
One of the hurtles you have to face when first starting out collecting is that rarity can be artificial, and rare doesn't equal money.
I like Doug Winter’s opinions on coins with multiple levels of demand. For example, an 1861-D $5 appeals to Dahlonega collectors, civil war collectors, last year of issue collectors, etc. Very broad spectrum of demand that helps insulate it from various shifts in demand.
"POPULAR" has trumped "rare" for doggone near forever.
Well, one reason for this is that if "rarity" defined narrowly enough, "rare" becomes a lot more common. There are also a lot of rare coins (actual and imagined) that no one or hardly anyone cares about and likely never will.
I never knew there were last year of issue collectors, but I did know about first item collectors. Learn something new everyday!
In US coinage, this also applies across the grade distribution.
Example: By my definition, practically every silver 1794-1807 sells for at least a respectable price and most sell for "strong" money, even in low quality or level of preservation. The primary series I collect which I consider comparable as a collectible, definitely not.