What happens when un-informed collectors sell their coins?

mr3holesinone

What's going to happen when Coin Vault purchased coins come back onto the market? I'd also include collections where the un-informed collectors purchased their coins from dealers whose grading standards were very loose. See the recent thread on John Paul Sarosi for an example of the type of dealer I'm referring to. The Franklin Mint and Littleton could be other examples.

My guess is that there are thousands of people collecting and/or investing in coins who keep very thorough records of their transactions. What happens when they realize they've paid triple market value for their entire collection and will never come close to breaking even?

What kind of reaction will the coin market see? Publicity of this type surely won't be good news. Do publishers, dealers, NGC/PCGS, the ANA or the FTC have an obligation to try to prevent these problems? What do you think?

nwcs

It's an inevitability and will have an impact. But the market will survive it. Might be a good time to buy, too.

Fairlaneman

People never like to talk about their losses. The coins will just return to the market for another trip through the never ending cycle.

Ken

kranky

Actually, I would expect that the type of collector who would accumulate poor-quality and overpriced coins won't ever realize what happened. Their heirs will sell it for whatever they can get, not knowing if the collector was astute or not.

BillJones

I tell you what happens.

They bring the stuff to a shop or show and find out no one will pay them a price that is within shouting distance of when they have paid. That prompts them to label all dealers as "crooks." If they had asked me BEFORE they bought the stuff I would have warned them. BUT then they would just say that I had ulterior motives. You just can't win with these people.

Myqqy

I think you will always see some people get turned off to the whole hobby, while others will just look at it as "paying their dues" and learning valuable lessons..... but people have been getting ripped off in coins for a LONG time...

ldhair

<< <i>I tell you what happens.

They bring the stuff to a shop or show and find out no one will pay them a price that is within shouting distance of when they have paid. That prompts them to label all dealers as "crooks." If they had asked me BEFORE they bought the stuff I would have warned them. BUT then they would just say that I had ulterior motives. You just can't win with these people. >>


So true. I have watched this happen so many times.
The dealer is always the bad guy in the uninformed collectors eyes.

DRUNNER

I know this won't be particularly popular with some members, but it's my first toe in the water of the "flame-pool" . . . . .

I would say that every 'numismatist', collector, dealer, or accumulator of coins who possesses some knowledge of this problem owes the hobby the effort of doing whatever you can to educate those around you. In my profession (teaching/coaching) I have dozens of people who ask me yearly whether or not these 'deals' they see on HSN, etc. are good buys. They uniformly are not, and after telling them a few times, they finally get the message. Most of us are trusted within the circle of friends or acquaintances who know we collect (perhaps not a large group however) . . . but knowledge spread like this will stop a substantial number of people from becoming victims.

Yes . . it would be tough being a dealer and having to drop the bomb on these people.

DRUNNER
ANA Sec. 25 Rep. (yup . . . try letting the people you DON'T KNOW down easy when the call to find the value of their HSN gold mine . . .)

ccex

I used to be much more outraged at those selling common coins to the un-informed at triple retail, whether through cable TV, eBay, print ads in general or coin-related publications, and other methods. My last five years of collecting U.S. Coins has made me much more informed of what I'm buying, and I don't see the hobby collapsing anytime soon due to lots of casual buyers simultaneously realizing they've been had by marketing.

Sure, the hobby loses lots of potential collectors when newbies first decide to sell some of their coins. Many honest dealers who know how to grade, armed with a graysheet, are thought of as crooks by the newbie with his receipts. If the newbie gets a consistent second, third, or fourth opinion, he may realize that he shouldn't shoot the messenger, but should direct his anger at the misrepresentation and marketing hype from the company that snared him into their trap. Some newbies will paint all coin sellers with the same brush used for notorious used car and aluminum siding salesmen. At least a few others may have enjoyed learning more about their purchases so that their initial curiosity grows and leads them to more knowlegdeable transactions.

I started collecting coins as a kid in the early '70s, returned in the mid '80s, and again five years ago. In each of these decades, there has been outrageous marketing of coins to the uninformed, but none of those scams has killed the collector base. Sure, there are new wrinkles to the old game, with slabbing and the internet, and coin dealers will never enjoy a stellar reputation among the public (if the public cares at all).

But whose job is it to monitor misrepresentation of coin ads? Perhaps the ANA, wh could be doing more for consumer protection Grading services such as PCGS and NGC exist just to sell their opinion of a coin's grade and authenticity, and should not be expected to police asking prices of coins with their names attached (although the PCGS online price guide is often quoted/misrepresented to the benefit of the seller). Thankfully the worst of the grading services are exposed here and in other forums available for free reading by any collector. There are no longer many rubes out there who believe that just because a coin is slabbed it is worth as much as a sight-seen PCGS coin bearing the same number.
Publishers rely too heavily on revenue from their most profitable advertisers to enforce a strict code of ethics. Ocassionally a scam is so outrageous that the FTC must intervene. I feel most of the blame lies with the gullible public. Which agency should protect us against our own igmorance?

Bothuwui

It has gotten people interested in coins also though. People that learn they got scammed, will sometimes educate themselves so it wil not happen again. My best friend saw the run of proof sets that HSN was selling, and it interested him. He knew I collected, so called me up. I of course referred him to several places where he could by them much cheaper. THis spurred him to learn more, and collect other coins as well. He now has a collection almost as big as mine. So, I guess the sheer advertising potential can help the hobby.

wayneherndon

The practice you describe is much older than HSN. I suspect it has been around as long as coins were collected. While certainly some people are turned off because of this many other are not.

It may very well be that many of these people collected for fun with no profit motive. I have a CD collection. I have them because I like to listen to music. I don't expect to get zip for them when I'm done. I have a friend who likes to watch movies. He has a nice DVD collection. Another collects Coca Cola memorbilia. That stuff will probably be worth more than our CDs or DVDs but still not likely what the person paid for it. Two others collects ex wives and unemployment (but that's another story). I don't think any of these people have a profit motive. They simply enjoy the act of collecting and/or having the items while in their possession for display, etc.

Many casual collectors seem to have a knack for buying at the top of the market. Most of the large lots of 90% silver coins I'm offered were put together when silver was $25-$40 per ounce. People often know what they (or their relative) paid for it and think dealers are now trying to steal it from them. It takes a little extra time to explain that it's value fluctuates with the price of silver.

Unfortunately, if it is said on the TV, radio or newspaper it is taken as the gospel truth. People blinding accord those sources more credibility than an individual dealer in a one-on-one basis. Sad but true. Take a $5 item, put it on TV and say it worth $50 but we're selling it for $25 and people will fall all over themselves to pay 5X what the item is worth. Especially, if they say the deal is only good for a limited time, a limited number of customers, or a limited number of total items.

WH

dpoole

The cycle exists in any collectible.

Some couple wanders into an antique store. The wife sees a table she likes. The dealer says it's an 18th century Louis the such-and-such, great investment, etc. Years later when you move and downsize or die, off it goes to auction (where the heck do you go to sell it?); the dealers show up at the auction, buy it for peanuts, and back it goes to the store, for the next guy and his wife. The antique business is alive and well.

As for the overt scams and ads, though, I think there is a great deal the ANA can do.

As is true in many, many businesses, the ANA can set standards of business practices, have sellers apply and demonstrate the meeting of such standards (including having ANA serve as a complaint clearing-house), and issue "ANA Seals of Approval" to the seller for display and inclusion in their ads. A low-grade version of this exists now, in dealers' advertisements that they have been ANA members for X years.

OnlyBuffalos

I find many of the multi-page ads in Coin World a greater blight on the coin collecting hobby.

The purchases from Coin Vault offer coins that may be and often are over-priced and over-hyped but at least they are what they are stated to be. The coins may occassionally not be in a big three holder but there is no misreprentation of the grade on the holder. One may not agree with the grade but it is the grade on the plastic.

On the other hand, week after week, some of the multi-page advertisers IMO misrepresent the grades on coins they offer. The people who purchase Coin World likely "trust" these dealers because Coin World allows them to advertise in their publication and isn't Coin World the leading numismatic publication?

I think the Coin Vault purchasers are likely not serious coin collectors but rather typically impulsive buyers who are gullible. Coin World purchasers are more likely serious collectors who are too trusting. They reason that here is a dealer who runs expensive multi-page ads week after week so people must be buying from him and are satisfied with what get and Coin World approves of them and they are members of the ANA, etc.

In my opinion, Coin World does more harm than Coin Vault. I also think collectors lose more money on some of the multi-page Coin World ads than they do on Coin Vault ads.

DUIGUY

Recently had an older employee bring me some coins that his wife, who had passed on, had bought.
The expression on his face said it all when he learned the real value.

jorth

I started to collect after my daughter received a Mint coin at birth. I realized after a while, that these are real artisan works and I got interested. Rather than research for months, as is my MO, I went to a pawn shop and bought $300 worth of Mercury Dimes, Buffalo Nickels and Morgan Dollars. I held my breath, especially on the $80 coin and under bid the prices and we haggled and I bought.

Then I investigated on the net, books, magazines and thought, there is no sanity to this stuff. How can a MS65 not be the sam price as a MS65. Same coin, same grade, sometimes huge difference in price. So I dove in eagerly and started buying.

Sitting on the sidelines is not much fun and now I am a collector of Proof Mercury Dime and Barber Quarters. In the process I bought a few I just thought were pretty cool, and some gold as it is always cool. Now I need to decide what to do with my future in this hobby. I know some of my buys are good, some really bad, but it was a start and i am taking the knocks.

I wish I new how to find a dealer to trust, I do not, so I buy most everthing in Heritage Auctions as they give good files to reference and view.

The buys are my risks, I can not blame others for my leaps of faith!

endzone

Some of the buyers actually made good purchases.

I can remember a show about 5 years ago on the Coin Vault,
where they were pitching hte 1998 Kennedy 2 coin set.
They were asking an unheard of $100-125 per set as I recall.

Previously to this, they were selling common GSA Carson City Dollars,
with the box, coa, etc, for somewhere in the 150.00 range.

They are just plain greedy now!

By the way, does anyone remember an outfit called Panda America?
They were based out of California and did a lot of US & foreign coins.
I particularly liked their auctions that they held, live on the air...

Sam

MICHAELDIXON

I have visited many older people's houses and looked at their collections, which were purchased through the mail. The worst company I have seen is one associated with an ex-senator's son. People pay astronomical prices for BU (1 example) rolls of Morgan and Peace dollars and the coins are XF cleaned. When I tell them what the coins are really worth, they are irritated at me. I try to educate them, but they think I'm only out to beat them. I made an offer of $2200. on a bunch of Peace, Morgans and Reales which were bought from this aforementioned company and was turned down. Another local dealer was called to the person's house several months later and bought the collection for $1400. Unfortunately, they sell to somebody else for less because they are ashamed to call me back after they have shopped the coins around and found out the truth.
.
The one that hurt the most was when my Aunt died and my Uncle called me to purchase her collection. She had bought everything mail order, through her credit card company's junk mail, etc. and had been burned badly. The lowest price she had paid for a sterling one ounce silver round was $27.50. I explained what the items were worth and why. He was upset with me and willed everything, including the coins to another family member.
.
The person, besides the original buyer to get hurt, is the first dealer to make an offer. He gives the initial shock and gets badmouthed because of it. He not only loses that collection, but collections belonging to anybody who the person has badmouthed him to.

mercurydimeguy

All the things said here are very interesting, but what's even more interesting is some people don't want to get it. For example, I make tons of trips to the post office and both postal workers are avid coin collectors (see them at shows, they always read Coin magazines -- lying around the post office). So I ask them where they get their coins, they say Coin Vault. In fact one gentleman just changed his cable to sattelite (or vice versa) just to get Coin Vault.

He keeps telling me what he pays for things, and the qualit of the things he gets, and I keep showing him high end Merc's, Peace, Walkers and semi-modern proofs and the guy just says, "Gees, I should hang out with you...yada, yada, yada" -- he's been saying this for over a year now!

So this morning was the best -- he asks me if I'd send in a raw coin he bought for $21 (I could've gotten him a slan for $19) to get slabbed. I told him that the slab would cost more than the coin and he was like -- "Really??". He has bought a number of these NGC slabbed coins on Coin Vault for $60 or so a piece...when anyone with any wits about them can buy one anywhere for around $20...yet he loves his Coin Vault and will probably spend another $2k or so there this year.

So the moral (at least to me) is that I don't feel bad -- most of these people never "accidentally" buy the coins off of Coin Vault -- and when they tell someone they usually advise them not to buy from Coin Vault, etc., yet they still continue to do so.

The old saying....screw me once -- shame on you / screw me twice -- shame on me...these people (for the most part know) yet they continue to do it -- so, this might sound cold, but I don't feel bad now that I know.

PuddlePirate

I'm going to jump in here and probably end up with smelly feet...

Back at the end of the 70's there was a company called Intercontinental Coin Exchange, main office out of Miami FLA. My father bought into that franchise with no true knowledge of coins. ICCE started off with a booming Morgan Silver Dollar Market - the two founders worked hard to create. For three years 78-81 my father made money hand over fist selling MS63 Morgan Dollars in 20 coin rolls at investment prices averaging $1,200 a roll and he couldn't keep coins in stock the demand was so high. I started working with him in 80 and despite what happened in the long run, I fell in love with Morgans.
What no one expected was that "the source" would run out. Instead of buying back sold stock from our clientele and paying a premium "the source" started giving us sliders and cleaned goods. "Our" office suddenly stopped selling the "quantities" we had previously because we actually cared about the people we had as clientele. We sent more and more coins back to the source because they were not the true grades we were advertised as selling. When the media flash finally happened and our "home office" got burned a massive panic in our office's clientele occurred. Some trusted us and some didn't. My father and I bought back every coin at cost that the clientele returned. We paid for it hard. But not one client from our Kendall Office got burned. When all was said and done between my father and I we bought back almost eight hundred rolls of MS63+ Morgans. We sold a chunk of them to other dealers, stayed afloat and in business for a few more years. What we did not sell we set aside for personal use.

Over the years many people have told me that what my father and I did, nearly bankrupting ourselves to honor our commitment to our clients was foolish. To this day I think we were honorable men. The cost to my father and to myself was worth it in our opinion for my father and I talk of those days at times.

Over the twenty years since my love of coins has not decreased. I see the same advertisements in Numismatic News and Coin World that I have seen for years. What I am though is cautious, I have a few dealers I trust and a few I'd love to be in a room with for just a few minutes all alone

Unfortunately not all dealers are reputable, but the same can be said for just about any other type of sales business. It is the Dealers that are reputable that really make this fun.

mr3holesinone

Thanks for all the replies and welcome Jorth. His first post and he's been here a year.

I can imagine the shock some heirs receive when told how much their inheritance isn't worth. I feel for the first dealer to appraise these collections. Not only do you lose the opportunity to purchase these coins you also probably lose future business once the heirs tell several people what happened.

I don't know if my view of Coin Vault customers is accurate or not. I always imagine one of two things. The first is grandparents buying for junior's college fund or his inheritance. The second view I have is a collector who lives hundreds of miles from the nearest dealer and far away from any show. Other than these two instances I don't understand how someone could purchase from them.

dorkkarl

<< <i>What's going to happen when Coin Vault purchased coins come back onto the market? >>

what makes you so sure the people who bought them CARE about the $$$ value of the coins??? maybe they don't plan to sell them.

MANY MANY collectors will die before their coins ever get sold.

K S

BAJJERFAN

<< What's going to happen when Coin Vault purchased coins come back onto the market? >>

Not much because most of it is junk or common stuff that may never have been "in the market" when it was bought and as far as serious collectors go won't be "in the market" when it gets sold. A monster box of silver eagles bought by HSN from a wholesaler, slabbed by whomever and sold for $25 a head likely was never "in the market" to begin with. The worst that can happen is that the "collectors" who buy them will be turned off or pissed off or both.

SMS

Personally, I don't care. I collect coins for my personal enjoyment and growth. I'm part of a community, NOT a market. If thousands of uninformed investors start investing into penny stocks and loose their legs...too damned bad. That won't stop me from investing in a startup that I feel has good potential and an admirable cause. In the same, if I make money on my collection, all the better! If not, oh well, because that's not why I'm "in the game". I grade my own coins and I value my own coins...period.

I'm seeing more and more of "the market this, the market that". Well, here's news for everyone...YOU ARE YOUR OWN MARKET! YOU decide what you want to pay for a coin. YOU decide whether to keep something in your collection or not. YOU decide how much you are willing to let a coin go out of your hands for. YOU decide whether you made a good choice/decision or not.

Yeah, you will always want advice from others and a little guidance here and there, but when it comes to your collection, YOU are THE expert and ABSOLUTE authority. And if you're "in the game" to make a fast buck, then perhaps you deserve what you got. You would have to be a fool to start throwing your money into something you know nothing or little about.

And I don't even think there really is such a thing as an "un-informed collector". I think it's more of an "un-informed investor". If a person is TRULLY a collector, then they'll know what pleases them and that's what they'll go after. Sure, you're gonna get screwed by some unscrupulous dealer, but that's part of the growth. If you didn't like it to begin with, then why did you even purchase it? And if you suddenly find that you created yourself a gold mine years on down the road, all the more to you!

Again, as a collector, collect what pleases you. If you like it, buy it for what YOU think it's worth. If the "trends" are too pricey for you and you are not willing to pay for it, then don't! Plain economics....supply and demand. Consumer willingness and unwillingness. Eventually, you'll find something you like at the price you are willing to pay. That's what collecting is all about!

Outhaul

<< <i>As for the overt scams and ads, though, I think there is a great deal the ANA can do. >>





You MUST be JOKING!

CAN do...yes

WILL do...

BAJJERFAN

Unfortunately unless you collect from pocket change [and I don't get many Morgans there] you pretty much have to "go out into the market" to get what you want.

morgannut2

I think DorkKarl is half right as usual. I would say that of the estate auctions I attend weekly, virtually always one of the estates includes has a pile of dipped out and cleaned coins that the owner didn't much care about. They are recyled back into the system. Unfortunately there is the occasional rarity, that if the owner had bothered to have certified and properly listed in his will, would have realised substancially more money. Of course the decedent may not give a damn about the hiers anyway!

cladking

This is really a very complicated question. One thing that is being overlooked is that there
are very few "advanced collectors" buying coins on TV. Most of the sales are, no doubt, to
first time buyers or short time buyers. Most of the population lives within a few miles of a
coin shop or have the internet and will quickly learn that there are cheaper means of acquir-
ing coins. This is also a mass market (in limited form) and the coins are often going to spur
of the moment decisions. These coins may spur further interest in coins or they may be sold
the first time the purchaser is laid off or has a minor financial setback. Many of these coins
will be mishandled or will be removed from the various packaging and placed in albums and
folders.

Many of the buyers are probably aware that the prices are not good so won't be surprised
if they get low offers in the future.

blackwood

Doesn't almost everyone begin their collecting life with at least one "bad deal"? If you know nothing about a hobby, then there are incredible odds against you that your first few purchases will be in your favor. Whether it's a few Buffs and Mercs that catch your eye at a flea market table (that turn out to be overgraded and cleaned), or whether you get sucked into a 4-pay for a roll of overpriced Morgans on Coin Vault. If the coins themselves interest you, you will have incentive to learn more about the hobby, grading, pricing etc. - and eventually you move the odds in your favor. If the coins don't interest you, then you never really get into the hobby, probably blaming it on the bad deal rather than your lack of interest in coins.

Now, that logic assumes that your first few purchases are fairly modest. I have seen some deals on Coin Vault, like an MS-70 full series of Silver Eagles, that have huge price tags in the $10k++ range. I think these "deals" are only shown for effect to make the MS-69's appear like a bargain, but if a coin newbie actually bites on them, then I would say CV has entered the realm of unethical business practices, and the consumer is not particularly intelligent (probably also in the practice of buying too much life insurance, vinyl siding, driveway sealing services, and strings of bad investments) - the capitalistic Darwinistic society we've created eats those types of people up anyway, for better or for worse.

dorkkarl

the point is, WAY TOO MANY OF YOU ASSUME that if you can't get your $$$ back on what you buy, you got ripped off. that's just plain stupid thinking. many things get bought w/ no plans to ever resell it, or resell it at a profit, whatever. so i paid $25 for a colorized quarter, & could never get even $1 if i tried to resell it, WHO CARES??? it's MY $$$ & MY DECISION!

it doesn't make me an "un-informed collector", maybe my information is just fine, & i couldn't give a rat's a55 what my coins are worth to somebody else.

K S

morgannut2

The real problem isn't the "consumer coins" that end up as group lots in estate depositions or coin shops. The simple fact is that for years, a large part of a dealer's profits were made buying coins from heirs that were un-informed. A coin shop often existed to buy, not sell coins!! A proper will should include some reasonale options that an executer can use to properly liquidate a top collection.

pf70collector

jorth

Thanks for the welcome! Glad to be noticed. Hard to believe I joined a year ago, consider it my graduation to a commitment in coins.