Even if you buy really nice/high quality coins and sell into a good/strong market, you are NOT assur
coinguy1
Posts: 13,484 ✭✭✭
In the midst of this good/strong market it is easy to believe/think that quality coins can only rise in value. I think it is important to keep in mind that it's not nearly that easy. You CAN pay too much for quality coins and you can LOSE money on them.
Here are some real life comparisons of cost vs. sales prices for some classic type coins from a collection which was just sold through public auction in Pittsburgh:
Coin A (PCGS PR66 Cameo) cost $4830 in May 2003; sales price $3900 hammer
Coin B (PCGS MS66) cost $4600 in April 2002; sales price $3600 hammer
Coin C (PCGS MS67) cost $5577 in February 2003; sales price $4500 hammer
Coin D (NGC PR67) cost $17250 in January 2002; sales price $10,000 hammer
Coin E (PCGS PR66) cost $9775 in February 2002; sales price $6500 hammer
Coin F (PCGS PR68 Deep Cameo) cost $16,100 in March 2003; sales price $13000 hammer
A few comments/disclaimers:
1) There were also many instances in which the collector made large profits.
2) I don't know what percentage of the hammer prices the seller received.
3) I am not criticizing the collector, the dealers he bought from, the grading services or the auction house in any way.
4) Remember, you can lose money on rare coins, no matter what type of coins you buy.
5) Remember to ENJOY your collecting, despite (or should I say because of?) #4 above.
Here are some real life comparisons of cost vs. sales prices for some classic type coins from a collection which was just sold through public auction in Pittsburgh:
Coin A (PCGS PR66 Cameo) cost $4830 in May 2003; sales price $3900 hammer
Coin B (PCGS MS66) cost $4600 in April 2002; sales price $3600 hammer
Coin C (PCGS MS67) cost $5577 in February 2003; sales price $4500 hammer
Coin D (NGC PR67) cost $17250 in January 2002; sales price $10,000 hammer
Coin E (PCGS PR66) cost $9775 in February 2002; sales price $6500 hammer
Coin F (PCGS PR68 Deep Cameo) cost $16,100 in March 2003; sales price $13000 hammer
A few comments/disclaimers:
1) There were also many instances in which the collector made large profits.
2) I don't know what percentage of the hammer prices the seller received.
3) I am not criticizing the collector, the dealers he bought from, the grading services or the auction house in any way.
4) Remember, you can lose money on rare coins, no matter what type of coins you buy.
5) Remember to ENJOY your collecting, despite (or should I say because of?) #4 above.
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Comments
It's one of the best ways to liquidate coins with the least amount of trouble. But.......
The spread will kill you. Buyers take the 15% into account and you usually only get a portion of the hammer.
Most auctions sell coins at like three per minute so it's easy for your coins to get lost.
Unless your coins are exceptional, they will probably sell for wholesale.
No putting reserves on your coins is one sure way to find out that being philosophical is sometimes your best option. ("Well, there's no sense in crying over spilled milk.")
adrian
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
al h.
Thus the danger of wanting something too much!
ESPECIALLY the "NO COLLECTION TOO LARGE" ads.
huh? no? why not?
<< <i>In the midst of this good/strong market it is easy to believe/think that quality coins can only rise in value. I think it is important to keep in mind that it's not nearly that easy. You CAN pay too much for quality coins and you can LOSE money on them. >>
i disagree. if a coin you buy loses value (& financial measurement is all you care about), then it was NOT a quality coin. you might say that the very def'n of a quality coin (in what i think is the context of your thread) is "a coin that rises in value".
ie. by def'n a quality coin is 1 that rises in value.
K S
<< <i>[
ie. by def'n a quality coin is 1 that rises in value.
K S >>
Your making an assumption that the price you paid was the "value". It's not if you over-payed. As he originally said "You CAN pay too much for quality coins and you can LOSE money on them"
<< <i>ie. by def'n a quality coin is 1 that rises in value. >>
Your definition discounts the vagaries of the marketplace and is therefore invalid. Intel is a quality company, and yet its stock price tanked right along with the rest of the market.
Russ, NCNE
K S
I simply lost count viewing ANA auction lots which had assigned grades skewed well past 2 std. deviations on the 'normal' grade scale distribution......coffins galore!
The caveat is you had better know what you're doing (or your trusted dealer) or you will be skewered (pun intended)!!
P.S. That same money wisely invested in the markets would have gained over 40% in that period instead of a 30% loss.
Is your handle slide - rider, or slider - ider?
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
<< <i>"If you never sell you'll never lose money on your investment" >>
Mgoodm3, I disagree with that, in a sense. If the "value" of an asset you own has declined, you are sitting on a (paper) loss, even if you haven't sold. If the "value" later rises, you can recoup the loss. But, the fact that you haven't sold before the value rises doesn't mean you haven't "lost" money. Many collectors think they will never sell. Things often change however, and many of them do end up selling.
<< <i>"Your warning is solid .... but I have to say that this particular collector was known for pursuing auction coins at all cost - a 'statue of liberty' if you please. Very difficult to hold coins for a year or so and not lose money if you buy them like that. Overall, he did surprisingly well" >>
TDN, many collectors overpay for a variety of reasons. I started this thread to remind everyone that buying quality coins and selling them (even in a strong market) doesn't necessarily overcome having paid too much for those coins.
<< <i>"With regard to auctions
It's one of the best ways to liquidate coins with the least amount of trouble. But.......
The spread will kill you. Buyers take the 15% into account and you usually only get a portion of the hammer.
Most auctions sell coins at like three per minute so it's easy for your coins to get lost.
Unless your coins are exceptional, they will probably sell for wholesale.
No putting reserves on your coins is one sure way to find out that being philosophical is sometimes your best option. ("Well, there's no sense in crying over spilled milk.") >>
Adrian, even if the seller ends up paying 15% to the auction house via the "buyer's charge", if there is no additional "seller's commission", that isn't any more costly than selling through a dealer who would try to make 15% (or more). Also, I think many unexceptional coins sold through auction go to non-dealers these days.
<< <i>"the scenario you've laid out points to a seller who bought/sold from as an investor" >>
Keets, I don't know if that is correct or not but my caution applies to those who buy as collectors, as well.
<< <i>"i disagree. if a coin you buy loses value (& financial measurement is all you care about), then it was NOT a quality coin. you might say that the very def'n of a quality coin (in what i think is the context of your thread) is "a coin that rises in value"." >>
Karl, now it's my turn to "disagree" - I have never heard such a definition of "quality" before. And, while that might be your definition, I don't think it is most people's definition.
<< <i>My question would be; which of those coins might also have been entombed in plastic coffins? Did the "collector" know how to assess the quality of the coins in question versus the assigned grades? >>
MacCrimmon, some of the coins were extremely nice. People can lose money, even buying under-graded coins if they pay too much.
<< <i>"The lesson here should really be, don't trust the market to cover your costs, protect yourself by either setting a sufficiently high reserve, or selling at a fixed price." >>
Sliderider, welcome to the forums. As Kranky noted, those were not my coins. Setting a high reserve might cause a would-be seller to keep his coins rather than sell them. But, that in itself, doesn't ensure he wont lose money on them. Ditto for setting a fixed price in offering them through means other than public auction.
Thanks for all of your replies.
and it sets us apart from practitioners and consultants. Gregor
<< <i><< "i disagree. if a coin you buy loses value (& financial measurement is all you care about), then it was NOT a quality coin. you might say that the very def'n of a quality coin (in what i think is the context of your thread) is "a coin that rises in value"." >>
Karl, now it's my turn to "disagree" - I have never heard such a definition of "quality" before. And, while that might be your definition, I don't think it is most people's definition. >>
that may be why so many people make poor "quality" purchases.
K S
if you pay $100 for a coin & sell it for only $80, did you REALLY "lose"??? what if you got $500 worth of enjoyment from owning the coin for a couple years?
you seem to be asserting some mystical way of measuring "quality" strictly on what the price of something is, which is ridiculous to begin with, but if your gonna go down that road, then you would HAVE to admit that if you lose financial value on something, & financial value is your ONLY measure of somethings quality, then it's insanesly obvious that it was poor quality to begin with!!!
but again, the ignorance of this whole scenario is to claim that "quality" is based entirely on "financial value". you should not be in coins if that's how you think, PERIOD. "quality" should be something more than a simpleton way of measuring dollars & cents.
if you enjoyed the he11 out of driving your yugo, the "quality" of your experience is just as great as the "quality" of my experience driving a cadillac.
K S
sell at a wide range of prices depending on the buyer, seller, and their current cir-
cumstances. If one often buys coins at the high end of this range or even above it,
then he can easily lose money. This is doubly true if the particular coin isn't in a hot
area or if it is owned only briefly.
While some coins have a very narrow range of values, others can have a broad range.
Coins and collecting patterns evolve over time and can leave some coins with a thinner
market than they started with. If one must buy coins for investment or buy them with
great concern for their future value then one should learn to think like a collector.
ANYTHING can be overpriced, and that includes modern and classic coins. BUT everything I say that about ANY modern coin SOMEBODY jumps down my throat.
I cautioned some people yesterday that some of the SS Certral America coins could be dangerous buys at the wrong levels. I've yet to hear a complaint from anyone for saying that.
Many people spend a lot of money deriving pleasure from their hobbies; they do it because they enjoy it. People who go to the symphony, people who fly airplanes, people who go skiing, whatever...these people spend money on hobbies, derive enjoyment from it, and when the activity is done they're out the money and have nothing (but memories of enjoying the activity) remaining.
In a sense, we're luckier. Unlike someone spending $500 on a ski trip, we can spend $500 on some coins that we derive enjoyment from for a long, long time, and when we sell -- i.e. specific "activity" ends -- we'll end up with more than just the memory of enjoying the coin and the thrill of finding the right piece. We'll also get something for the sale -- maybe more than $500, maybe less.
Surely, we'd all rather buy low (all else being equal) and sell high (if we sell at all). But when I look at a coin, I rarely think about what it will be worth next month, next year, a decade from now or when I'll be on my death bed. I have to think about what it's worth *now*, because I don't want to overspend and I need to make sure I stay within discretionary spending limits...but I don't pass on a coin because I think the bubble will burst and I could have bought it for less later on. You've lost the time to enjoy the coin in the meantime, and you'd kick yourself with regrets if you passed on the RIGHT coin, if you'd ever see a comparable again.
Having said all that, I believe Mark is certainly correct that coins can and do lose value, no matter how coveted they are. For better or worse, the coin market is just that -- a market -- and that includes speculators, short-term coin flippers and longer-term investors who are interested first and foremost with financial performance. As a collector, while I don't turn a blind eye to the market, to price trends and "what's hot" (that might influence a decision about which coins to sell in order to finance the purchase of other coins)...but neither am I too wrapped up in it. If you view numismatics as something you're primarily doing for extra income, sure -- but if you're primarily a collector whose main interest is in enjoying their coins and enjoying the "hunt" in finding the right coins, then it's less of a concern.
<< <i>...look, every time a thread like this comes up, where you try & evaluate "quality" based entirely on "resale value", i keep bringing up the argument that "QUALITY " does not equate to "MONETARY GAIN". why is it that you measure everything about coin collecting in terms of "dollars"? or "value"? or "quality"??? it's the same old issue.........
you seem to be asserting some mystical way of measuring "quality" strictly on what the price of something is, which is ridiculous to begin with, but if your gonna go down that road, then you would HAVE to admit that if you lose financial value on something, & financial value is your ONLY measure of somethings quality, then it's insanesly obvious that it was poor quality to begin with!!!....
but again, the ignorance of this whole scenario is to claim that "quality" is based entirely on "financial value". >>
Karl I didn't notice anyone relating quality to "resale" or "financial value" in this thread. Nor did I intimate that just because someone lost money on coins, the coins weren't of high quality. In fact I said that they were "quality coins". I believe you're guilty of projecting and trying to argue with points that haven't even been made.
<< <i>Many people spend a lot of money deriving pleasure from their hobbies; they do it because they enjoy it. People who go to the symphony, people who fly airplanes, people who go skiing, whatever...these people spend money on hobbies, derive enjoyment from it, and when the activity is done they're out the money and have nothing (but memories of enjoying the activity) remaining.
In a sense, we're luckier. Unlike someone spending $500 on a ski trip, we can spend $500 on some coins that we derive enjoyment from for a long, long time, and when we sell -- i.e. specific "activity" ends -- we'll end up with more than just the memory of enjoying the coin and the thrill of finding the right piece. We'll also get something for the sale -- maybe more than $500, maybe less.
Surely, we'd all rather buy low (all else being equal) and sell high (if we sell at all). But when I look at a coin, I rarely think about what it will be worth next month, next year, a decade from now or when I'll be on my death bed. I have to think about what it's worth *now*, because I don't want to overspend and I need to make sure I stay within discretionary spending limits...but I don't pass on a coin because I think the bubble will burst and I could have bought it for less later on. You've lost the time to enjoy the coin in the meantime, and you'd kick yourself with regrets if you passed on the RIGHT coin, if you'd ever see a comparable again. >>
for most of us collectors.
1.Quality coin
2. purchase at some reasonable price
3.the passage of a reasonable period of time. (5 years)
There are obviously coins that can be flipped for a profit that were undergraded, purchased at a very low advantagious cost
or the series turned hot just after you purchased the coin. Other then those circumstances, its still Quality, Price and Time.
Camelot
Created On Monday >>>
Ha! Ain't that the truth!
Example:
I bought two really nice MS66 common date Morgans from a high profile dealer (who posts here) about 2 1/2 - 3 yrs. ago. At the time, you could easily buy generic common 66's for about 180.00 - 210.00 or so. I paid $295.00 each because they were indeed nice and this dealer described them as both being just miss 67's and so forth.
I take these exact two pieces to a big show in Chicago a couple months back and show them to this same dealer and offer them for sale. This dealer looks at them, makes a face, and said they weren't really sure what the market price was currently for them, and didn't really seem interested. After I said they were purchased from this dealer, I was made an offer of 275.00 each (about Bluesheet bid I think), and was given the impression I was being done some big favor or something. To be brief, I ended up selling them both to this dealer for 275.00 for one, and 295.00 for the other, for no other reason then I just didn't want them anymore and I was ready to leave the show. I also vowed after leaving that show never to buy or sell another coin with that dealer.
dragon
What's "quality" to me could be "junk" to you, yesterday, today and tomorrow. At a different time and place with different "beholders of the quality" those coins that coinguy listed as having been sold at a loss well could have returned a profit for the owner or owners.
Great spirits have always encountered violent opposition from mediocre minds.-Albert Einstein
I wonder what his net gain/loss was on the entire collection.
One other point all sellers do not expect to make a profit. Many have just enjoyed ownig a particular coin.
<< <i>Many people spend a lot of money deriving pleasure from their hobbies; they do it because they enjoy it. People who go to the symphony, people who fly airplanes, people who go skiing, whatever... >>
I'd rather be skiing...
<<<<<<<Generally there are three componants to making money on a coin
for most of us collectors.
1.Quality coin
2. purchase at some reasonable price
3.the passage of a reasonable period of time. (5 years)
There are obviously coins that can be flipped for a profit that were undergraded, purchased at a very low advantagious cost
or the series turned hot just after you purchased the coin. Other then those circumstances, its still Quality, Price and Time. >>>>>>>>>>>>>>>>>>
In 1999, I was the underbidder on the 1880 Walter Childs $1 in PCGS MS-67 at the B&M Auction. The coin sold for $4140.00. One might argue that possibly the euphoria of the 1804 silver dollar that just preceeded this coin might have helped it along just a bit price wise? I do not think so as I stuck to my price limit.
In 2004, I won the same coin 5 years later at $4,600.00 (hammer price $4000) at the ANR auction just last week. Considering that this was a quality coin and a strong market but in a weak segment (Gold $1 type III) the seller netted probably close to the $4000 or even slightly less? Hopefully, he enjoyed this coin as much as I hope to.
Furthermore, I hope to enjoy for as long as the Childs family did (119 more years!)
But even a 5 year holding period does not necessarily make one money. On the other hand, he didn 't lose much money either (think stock market!!!!)
It's Slide-rider. I made it up back when the TV show Sliders was on the Sci Fi channel, and used it in the forums there. It kinda carried over into other areas of my life, since then.
Mark,
If it was me, and I had spent that kind of money on a group of coins, I wouldn't take any chances on coming out a loser. That seller lost more money in one auction than some people make in a year. Even the wealthiest collectors can't keep up a losing pace like that for very long. I'd rather take my coins home with me at the end of the day, at least I'm still even then. Who knows? Maybe someone might even approach you after the auction with a reasonable offer, and you avoid the auction house fees.
This is a great post and particularly interesting coming from a dealer. We should have many more posts like this to keep us all in touch with reality.
Where as the investment part of the equation is an important part of collecting to most of us, excluding Karl of course, it is easy for us to live in an illusion of what the final dollar sales value of any coin and particularly any set might be.
Coin collecting as a hobby is a great mental investment, and much better than almost all other hobbies in persevering capital, but in reality most collectors will in the end be very lucky to break even on what they paid when they sell.
The dealer side of buying and selling stacks all the cards against the collector making any real profit in most cases.
If the Gray sheets were used exclusively to buy and sell most collectors would have a better chance at the profit wheel but this is not the case, and even if it were there would always be the grade equation.
It is easy to buy coins and look a couple of years later at the retail prices and think you are doing great on the investment side, but these are paper, mental, gains and not the reality of an actual sale.
There are good investor collectors among us that do grab the brass ring from time to time but most of us are not in that group. Even well healed set collectors may hit a high number on occasion on a particular coin, but most sets don’t sell as sets, and many coins in a set that were bought at high prices will bring the averages down.
It is human nature to tell stories of the winning experiences one has in ones life, and leave out the losing ones. How many people here post their body bags compared to their high grades? How many tell stories of how much they lost on coins they held for many years? How many threads like this do we see from dealers like yourself compared to the HOT market threads?
All things considered if all the truth, and numbers, were in plain view I think we would find that just as many investors lose money as make money, and most REAL collectors are very lucky to break even when they sell their sets.
<< <i>Karl I didn't notice anyone relating quality to "resale" or "financial value" in this thread. >>
HUH??? coinguy1, that's absurd, considering that's exactly what you implied.
excuse me, but isn't the TITLE of your thread "Even if you buy really nice/high quality coins and sell into a good/strong market, you are NOT assured of making money.."?
your association of "making money" w/ buying "quality" implies that you believe there is a relationship between the 2, otherwise there'd be no point in even starting such a thread.
didn't you basically start out saying "You CAN pay too much for quality coins and you can LOSE money on them."? & that to you doesn't express some sort of implied relationship???
ok, let's put it a different way. why wasn't the theme of this thread something like "even if you buy really nice/high grade coins & sell into a good/strong market, you are not assured of making money"
isn't that REALLY what your saying?
"grade" does not imply "quality". a pcgs ms-68 washington quarter can still be an ugly low-quality p-o-s.
but a coin in vf-20 can also very easily be "high quality" - just not necessarily in financial measures. sorry, but it seems to me that so many of your threads discuss coins & their value strictly in terms of dollars, but almost never in terms of aesthetic satisfaction.
the disservice you are performing w/ a thread like this is to equate GRADE (which is what you were really discussing, whether you admit it or not) & quality. i'm tired of seeing that old line repeated over & over, that if your coins are not mega-high grade, they're not "quality" coins. EVERY example you gave was at least pr/ms-66. just because a stupid piece of plastic says "ms-67" does not automatically mean the entombed coin is high "quality".
K S
<< <i>That seller lost more money in one auction than some people make in a year >>
Sliderider, I'm not sure about that. In order to illustrate my point, I listed examples of coins that the seller lost money on. He also made good money on a number of pieces. I do not claim to know how he did overall.
<< <i>I'm really curious what coin number "D" was. Did the buyer at the recent auction get a bargain or was this simply an overpriced coin when it was purchased? >>
Northcoin, coin D (with a cost of $17,250 and a sales price of $10,000 hammer) was an NGC PR67 1861 Seated Liberty Quarter. I did not make notes on the coin, but my guess is that it was not necessarily a bargain at the new, lower price.
Goldsaint, I think you make some excellent points, among others, about people being more likely to think about and relay the good news and not the bad.
By the way, you apparently either didn't see or didn't read comments I have made in other threads suggesting that collectors enjoy the hobby itself and not be so concerned with all the other stuff.
In fact, the market price of coins have factored in some assumptions of future value.
Now, it seems that the market is neither totally liquid and efficient, so coins will sell above and below a mean value. The variance can be large if a coin is either highly sought by a given person or is not noticed by any serious bidders. The mark-up on coins is large ( not necessarily unfair), resulting in a time factor requirement for inflation to take a purchase even in a 100% efficient market back to net zero. What Mark did not say (today) is that many losses are the result of purchasing coins that are flawed in a way that was not recognized by the purchaser. There are few collectors or dealers that haven't made a purchase that they regret and have a coin with flaws that will likely reduce value. Great collectors and astute dealers have good eyes and sharp sense of value. Some will argue that coin collecting is an art form and one can not equate satisfaction and joy of possession to astuteness of purchase based of future resale value. I have no arguement about this position if you really mean it; I for one would rather purchase a pleasing coin at a price that allows for future profit than one that is priced above projected future market value. I believe that this holds true for most collectors and presumably true for all dealers.
Finally, he is warning us to beware of headlines about great profits and certain upward valuations. This is an unusal message from a merchant whose living is dependent on selling his product. This is what make Mr Feld special.
question, do you ever flat-out tell a potential customer,
"hey, your gonna lose money if you decide to sell this coin in a couple of years, but the amount of pleasure you will gain from owning it will easily exceed your financial loss"?
K S
<< <i>question, do you ever flat-out tell a potential customer, "hey, your gonna lose money if you decide to sell this coin in a couple of years, but the amount of pleasure you will gain from owning it will easily exceed your financial loss"?
>>
No karl, I don't. And if I did I'd be lying, becuse I wouldn't know in advance that such would be the case.
Some additional personal thoughts on coin levels:
1. Dealers buy at a level(any coin) that they think will turn at a profit(10 to 20%) in a relatively short period of time, usually less than 3 to 6 months.
2. Some dealers will buy a high priced and rare coin, and put it away. Into their own collection, for the enjoyment and future(more than 3 years) profit. They know it will not immediately turn at the price paid but is so nice and rare, it will be desired by another high-end collector some day.
3. A collector putting together a registry set will pay extra for that coin that fills the last one or 2 holes. Such feeling of accomplishment justifies the extra price.
4. A knowledgeable collector will diversify holdings of coins, as a fund manager will with stocks, if the collector has an investment goal. There will be blue chips, growth, and specualtive coins.
5. I have found the best way not to lose money on coins is to buy the coin that is pq for grade. We all know the ranges a MS 65 Barber half, or MS 66 Lib nickel have. And to not buy a coin in a grade that will never increase in value, no matter what. This varies for each series, as an AU 50 is great for an 1801 half, but a bad choice for a common Walker.
6. But I have lost money or value on many coins. The more I learn, the less it happens, but it still happens occassionally. Overall, as in the example Mark gave, the collector came out okay on all the coins,and I hope I and you do also.
<< <i> 3. A collector putting together a registry set will pay extra for that coin that fills the last one or 2 holes. Such feeling of accomplishment justifies the extra price. >>
I've never thought about it, but this makes perfect sense.
michael