How to effectively buy and sell without taking a loss?
stevepk
Posts: 238 ✭✭✭
I've read that most collectors take a loss when they sell their coins. As a collector, how do I avoid taking a loss other than keeping my collection forever? First, it should be mentioned that I am a collector, not a dealer. As a collector, I have limited resources. I do not have the same amount of time to devote as a dealer, I do not have the social network of a dealer, and I am not always on top of the latest numismatic trends. I buy coins maybe two or three times per year, not year round.
My buying strategy has been to attend coin shows and do comparative shopping regardless of what the Greysheet lists. Sometimes the Greysheet values hold true. Other times, Greysheet seemed to be completely irrelevant (example: a problem-free 1857 large cent). Once I found a few examples on the bourse floor, I would make my selection based on several factors, price being only one. Some dealers would be willing to negotiate while others were extremely stubborn and would not budge. I have avoided Ebay as I prefer to see coins in hand. I bought most of my collection during the 2006-2011 period. Was this the wrong time period to buy coins?
I focused on building a United States Type Set from the draped bust to pre-clad era, mostly PCGS and NGC certified with nice eye-appealing examples. Sometimes my coins fell within the price guides, sometimes not.
It irks me when I consider selling a coin and a buyer immediately rushes to his Greysheet with no further questions and tells me I was ripped off. In addition, people always want to buy at a discount of Greysheet and expect to buy quality at 60-80% of posted values. I've been told some dealers will ONLY buy if a coin is available at a discount from Greysheet. This baffles me. They must be buying garbage.
I acknowledge the economy was a bit better off prior to 2009. More people had disposable income back then and quality coins typically sold for more as the competition was stronger.
How should a collector strategize for forming a collection if he prefers not to take a loss when selling? Should I keep my coins in hopes the economy will recover with more people with disposable income? Should I eliminate coin shows? Should I stick to only the PCGS BST forum?
This post is intended to address buying strategies more so than selling strategies. I have always collected what I liked and have always liked the coins I've bought. At the same time, they are expensive and I would like to know I am not putting away money I will never see again.
My buying strategy has been to attend coin shows and do comparative shopping regardless of what the Greysheet lists. Sometimes the Greysheet values hold true. Other times, Greysheet seemed to be completely irrelevant (example: a problem-free 1857 large cent). Once I found a few examples on the bourse floor, I would make my selection based on several factors, price being only one. Some dealers would be willing to negotiate while others were extremely stubborn and would not budge. I have avoided Ebay as I prefer to see coins in hand. I bought most of my collection during the 2006-2011 period. Was this the wrong time period to buy coins?
I focused on building a United States Type Set from the draped bust to pre-clad era, mostly PCGS and NGC certified with nice eye-appealing examples. Sometimes my coins fell within the price guides, sometimes not.
It irks me when I consider selling a coin and a buyer immediately rushes to his Greysheet with no further questions and tells me I was ripped off. In addition, people always want to buy at a discount of Greysheet and expect to buy quality at 60-80% of posted values. I've been told some dealers will ONLY buy if a coin is available at a discount from Greysheet. This baffles me. They must be buying garbage.
I acknowledge the economy was a bit better off prior to 2009. More people had disposable income back then and quality coins typically sold for more as the competition was stronger.
How should a collector strategize for forming a collection if he prefers not to take a loss when selling? Should I keep my coins in hopes the economy will recover with more people with disposable income? Should I eliminate coin shows? Should I stick to only the PCGS BST forum?
This post is intended to address buying strategies more so than selling strategies. I have always collected what I liked and have always liked the coins I've bought. At the same time, they are expensive and I would like to know I am not putting away money I will never see again.
1
Comments
You say you won't buy on ebay. There are good deals to be found there if you know what you're doing. True, you likely won't find many of the kinds of coins that have to be seen to be appreciated, but it can still happen. Also, have you considered sight-seen buying at other auctions? Since I've started hanging out with the paper money crowd, I've learned just how good it can be to buy at auction. Just have to keep a level head though and know what you're going to pay and be willing...9 times out of 10...to be outbid. But that 1 in 10 win will be a great win.
Second, it sounds like you're trying to sell to dealers. Some dealers will offer a very fair price for your coins, but they ALL buy them with the idea that they can sell them to collectors for more. Unless they have a collector in mind who they can flip it to quickly on a thin margin, they are going to have to buy it at a reasonable discount to justify their time, money and overhead. They buy wholesale and sell retail. With some exceptions, you may do better selling to fellow collectors (i.e., selling retail). The problem is that it can be hard to get your coins seen by a large audience. The BST is one way. Ebay is another. Still another is other live auctions. All have risks. So you have to choose...an immediate 20% haircut (at least), or a little selling risk.
Edit: Don't have thin skin about the offers you get. It's a game. Buyers want to pay as little as possible. You want as much as you can get. Embrace the game...it can be fun. Besides, you can always give a "take it or leave it" price with a reasonable amount of profit for the dealer and be prepared to walk away. If they are really good coins, that might work.
Lastly: This is a bad time to be selling coins. Lots of uncertainty due to the economy, bad time of the year, etc. Next year may be totally different. Barring an emergency sale, I'd still wait at least 6 to 18 months to see what happens.
See my signature line.
Steve
As for selling to dealers or selling on the BST good luck not taking a loss on almost everything.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
2) It gets worse from there. Just because you buy nice coins for the grade doesn't mean that you will get reasonable offers for them.
Some dealers are very specific re their niches. You can have the nicest PF 66 Barber Half in a major show, and Tom Reynolds wouldn't be interested in it. Other dealers - people you wouldn't want to deal with - will try to "talk down" your coin.
3) If you don't want to buy and sell without taking a loss, your best bet is not to buy anything in the first place. I recently sold five type coins I had for between eight and twelve years. They were nice for what they were, and on proceeds of $11,500, I lost $200. I did my homework before selling them, and sold them to people who were interested in these kind of coins.
"Seu cabra da peste,
"Sou Mangueira......."
1. Buy where the dealers buy and for what they typically pay...or approx 5% more.
2. Collect in those areas that have a compelling reason to not fall in value over the years you plan collecting (often means starting to buy near cyclical bottoms in the rare coin market).
Find those areas of the market that are grossly out of favor but have solid fundamentals behind them.
3. Ensure your grading and evalution skills are good enough to compete.
4. Buy the coins in the right holders with the right attributes....note that this seems to be a constantly changing function.
This is achievable. For some people it takes a few years of immersion in the market to make it happen. For others it might take 5-15 yrs or longer. For some it just won't ever
happen because they don't have the grading eye or other market skills to figure it all out. The simplest way for many is to employ the services of a top notch wholesale who can
buy for you at major auctions for a 5% fee....which assumes they bought a coin for current wholesale. When I first got into coins heavy in the early 1970's I focused on better
date circ Liberty Seated coinage. To me it seemed stupidly cheap for how few coins were around. Over the next 30 yrs they never went down in price. There are currently areas
of the market they may have already seen their peak prices for the next 5-10 yrs or longer. It's ok to collect those. But don't expect to get your money back. To get on the fast
track start making friends with some mentors that can help guide you. It might be advisable to hold back on buying anything until you put a solid 6-12 months into research and skill
improvement. 2013-2014 could be a potentially trying time for the coin market much like late 2008-2010 was. That could be a difficult period to try and not lose money.
Over 95% of what I've sold over 40 yrs has been to dealers, many of them wholesaler types. In the areas I was into I could almost always get more money from a dealer than I could a
collector. It worked for me. Buying on the local B&M's word is almost always a disaster unless you happen to find something undergraded in your specialty. I have some similar
experiences with ElContador on things I didn't unload prior to the 2008 market peak. I made the assumption that really nice coins in non-PCGS holders would hold up ok. Boy was I
wrong. Nice coins that I could have sold for a 100% profit in 2007-2008 I was lucky to break even on in 2009-2011.
You have to KNOW what you are doing tho
Don't become a coin dealer or collector!
Remember that buying the nicest 1881-s morgan dollar in ms63 is not the solution to ensure that you will not loose money. Fact is that there are 10's of thousands of generic ms63 morgans which chances are will never go up in value (unles you have a silver boom which is what happened).
On the other hand, as roadrunner said, finding much scarcer coins and buying the best quality in the grade you are looking for will help when it comes time to sell, you will have the largest chance of making money.
Ain't that the truth. My biggest losses were buying mistakes that were, in almost every case, quite predictable at the time of purchase. If you do not want to lose money, don't fall in love with the coin. If you are a true collector at heart, and do not mind taking it on the chin now and again (I fit this description), it's okay to fall for a coin.
A specialist is always the way to travel if you are focused in specific areas.
The consignment option possibility is right on. There are also some possibilities of a trade if within the same series or specialty.
And no matter what others may think, my advice is don't buy common commems without nice color and EVER expect a profit in the 64-65 range.
Type, VAM, or other series varieties? Right now the auction market seems as likely a place as any. They seem to be selling well.
And Ebay? From what I gather from here, one loss, one fake, one screwed-with, undelivered, misrepresented or unreturnable piece can set you way back. But not my area, so a grain of salt applicable to this last.
http://www.coinshop.com
<< <i>And Ebay? From what I gather from here, one loss, one fake, one screwed-with, undelivered, misrepresented or unreturnable piece can set you way back. But not my area, so a grain of salt applicable to this last.
You only hear the horror stories and those victims yell the loudest ......
You hardly ever hear about the 99.9 % of the awesome transactions that ebay has to offer. Plus you are out nothing if the item is NASD.
How to do that? I dunno. Stick around here for a few years and you'll probably get some good ideas. Knowledge, knowledge, knowledge and a lot of experience are the key factors.
Are you taking inflation into account when you assume that it will take 8 or 9 years to recoup a coin's purchase cost?
High-end, uncommon stuff is probably where you'll see the best rate of return - at least historically. If you want to play in those waters, you'd better read the book first.
Financially, most people would probably do better with 5 or 10 really special coins than they would with several hundred so-so peices. That's pretty hard to do if you enjoy the hunt.
The problem is defining 'really special' within the financial constraints of a typical collector. These days, $5,000 won't buy anything special in my opinion.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
<< <i>
<< <i>And Ebay? From what I gather from here, one loss, one fake, one screwed-with, undelivered, misrepresented or unreturnable piece can set you way back. But not my area, so a grain of salt applicable to this last.
You only hear the horror stories and those victims yell the loudest ......
You hardly ever hear about the 99.9 % of the awesome transactions that ebay has to offer. Plus you are out nothing if the item is NASD. >>
So, a little more frankly, I listen to a lot of those friends in low places brag about how well they do without ever breaking the rules. And, again, a grain (or three) of salt. But the OP, at 22 posts and with this query, I assume to be a newbie.
Lions and tigers and bears, oh my. Want him to jump into the pool, a minnow (no disrespect intended if I'm off on this) among the sharks?
An ounce of prevention is worth a pound of cure.
<< <i>If you don't want to buy and sell without taking a loss, your best bet is not to buy anything in the first place.
Ain't that the truth. My biggest losses were buying mistakes that were, in almost every case, quite predictable at the time of purchase. If you do not want to lose money, don't fall in love with the coin. If you are a true collector at heart, and do not mind taking it on the chin now and again (I fit this description), it's okay to fall for a coin. >>
If you want a good return, it's okay to fall in love with the coin if it has good prospects and / or the downside is limited. Just be careful falling for an expensive coin whose future is cloudy or stormy.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
70% of online PCGS / Numins price guides......and
sell no lower than the same.....its worked pretty well
so far, and if I had to liquidate, I think id make a few bucks
oh, and just buy PCGS or from ATS
<< <i>"Financially, most people would probably do better with 5 or 10 really special coins than they would with several hundred so-so pieces."
The problem is defining 'really special' within the financial constraints of a typical collector. These days, $5,000 won't buy anything special in my opinion. >>
I dont really agree. "special coin" will reguire "special placement" to resell and this may be difficult unless you have
good ties to the right dealer or auction house. (by special, i am thinking of patterns, high-end type coins, proof gold etc).
Dealing in generics (ms morgans, common type) can be very profitable IF you get lucky with market timing and are willing
to hold out until the market is right. I remember (a few years ago) thinking I would loses my azz for buying silver at 18, but
went ahead and bought anyway, only to watch the market climb to nearly 50. I dollar costed avereage out of the market and
mananged to net about 39, so everything worked great!
Some of my most "burried" buys were high-end type that i paid way to much for and (yes some have small problemos) , so if
i sell now or 10 years from now, i dont think it will make too much difference.
First, it should be mentioned that I am a collector, not a dealer. As a collector, I have limited resources. I do not have the same amount of time to devote as a dealer, I do not have the social network of a dealer, and I am not always on top of the latest numismatic trends. I buy coins maybe two or three times per year, not year round.
>>
Someone buying a few coins a couple of times a year is unlikely to have the skills and connections to play the game at the top level. Dealers make most of the money. Some collectors do well financially, and most of those tend to have exceptional grading skills and/or exceptional contacts and/or the ability to find rare varieties that others miss. Most in this exceptional group tend to have a burning passion for the hobby and spend endless hours on it. It doesn't sound like the case for the op, so I suggest accepting losses as part of participating in the hobby. If that is unpalatable, maybe try and become a part-time dealer (selling coins at retail), but that involves a separate can of worms and often a considerable time and headache investment. Another way to insure at least break even is to collect at face value, though that doesn't count the considerable time it takes to find anything interesting at face value.
I believe that the average U.S. collector will tend to be about at break even after five years, and that is with a rising tide for most coin prices. If a person wants to be above average and make money, or break even sooner, they have to have some luck, or considerable skill. There are exceptions in recent years for those flipping U.S. mint products, but that well is no longer as wet. Take any stories with a grain of salt. Many saying that you can do it, tend to be in the exceptional group, with considerable skill far above the level of average collectors. Winners will proudly report, losers slink away, so any survey tends to over report any gains. If a person actually audited collections at random, the actual financial results would tend to be way behind surveys where people volunteer and self-report.
how to buy and sell and make a profit while you are at it
Sure, you might make out better in bullion, or with large volumes of collector-grade stuff. The crystal ball is always a bit murky from where I'm sitting. Historically, though, rare stuff stays rare and can command rare prices.
Do I follow my own advice? Nope. I love Peace Dollars and the thrill of the hunt too much, but I'm gaining an appreciation for slowing down, being picky, expanding my tastes, and really enjoying each new purchase for its merits.
Suppose, for example, you go to a large coin show in search for something. Say you are looking for a 1798 draped bust dollar in VG8 to F12. On a large bourse floor, you may find five examples. Of these five, three of them are just washed out and ugly and have uneven wear. The remaining two look decent. Of these five examples, you will notice a trend. What should you conclude if ALL FIVE examples are higher than the price guides with the better looking ones a bit more expensive? In addition to this, you can use Heritage auction archieves to conclude the five dealers, for the most part, are not trying to rip you off. At this point, can you safely conclude the price guides are not realistic? This was my strategy for selecting my NGC VG10 1798 draped bust silver dollar for $1300. Greysheet was only $1,000, but I did not see a decent example for $1,000.
Afterwards, I showed it to a dealer who told me I overpaid. I was left scratching my head thinking I had done my homework and made a reaonable purchase. He told me he would not have paid over 80% of Greysheet. No where could I find history of a sale for a problem-free 1798 draped bust dollar for 80% of Greysheet.
This is just one of many examples.
<< <i>That's a nice rule and all, but it's not very practical. I've also heard that as a buyer, you should also buy mid-way between Blue Book and Red Book. I've also heard that you should pay 80% of Greysheet.
Suppose, for example, you go to a large coin show in search for something. Say you are looking for a 1798 draped bust dollar in VG8 to F12. On a large bourse floor, you may find five examples. Of these five, three of them are just washed out and ugly and have uneven wear. The remaining two look decent. Of these five examples, you will notice a trend. What should you conclude if ALL FIVE examples are higher than the price guides with the better looking ones a bit more expensive? In addition to this, you can use Heritage auction archieves to conclude the five dealers, for the most part, are not trying to rip you off. At this point, can you safely conclude the price guides are not realistic? This was my strategy for selecting my NGC VG10 1798 draped bust silver dollar for $1300. Greysheet was only $1,000, but I did not see a decent example for $1,000.
Afterwards, I showed it to a dealer who told me I overpaid. I was left scratching my head thinking I had done my homework and made a reaonable purchase. He told me he would not have paid over 80% of Greysheet. No where could I find history of a sale for a problem-free 1798 draped bust dollar for 80% of Greysheet.
This is just one of many examples. >>
So you learned something. The spread on that coin was $1300 to buy at retail, $800 to sell at wholesale to the dealer that you talked to. If you were a favored customer you might have been able to negotiate a discount from the selling dealer or get a stronger offer from the dealer making an offer. As is, I think you did fine for a collector, but not so fine for a person trying to acquire dealer inventory or flip a coin for a profit or break even. For someone that wanted to buy that coin at that show, you did about as well as you could given the outline of the original post as a casual collector that buys a few coins a few times a year. There may have been other coins for sale with much tighter spreads, perhaps only available to the well connected, but you were interested in the coin you wanted and have the contacts that you have.
The idea about 5 to 10 exceptional pieces is full of holes. An average collector trying to play the high stakes game will get blown out of the water by the many experts sitting at the table. On average, I'd say it takes more skill to play at the high stakes table, not less. One mitigating factor is that some dealers will work for a smaller percentage profit when dealing with their very best customers on higher priced coins.
<< <i>An average collector trying to play the high stakes game will get blown out of the water by the many experts sitting at the table. On average, I'd say it takes more skill to play at the high stakes table, not less. One mitigating factor is that some dealers will work for a smaller percentage profit when dealing with their very best customers on higher priced coins. >>
Oh, this I agree with. Absolutely it takes more skill, but if you have it, that's probably where you can do THE BEST (financially) as a collector.
<< <i> you can use Heritage auction archieves to conclude the five dealers, for the most part, are not trying to rip you off. At this point, can you safely conclude the price guides are not realistic? This was my strategy for selecting my NGC VG10 1798 draped bust silver dollar for $1300. Greysheet was only $1,000, but I did not see a decent example for $1,000.
Afterwards, I showed it to a dealer who told me I overpaid. I was left scratching my head thinking I had done my homework and made a reaonable purchase. He told me he would not have paid over 80% of Greysheet. No where could I find history of a sale for a problem-free 1798 draped bust dollar for 80% of Greysheet. >>
If you ask a dealer what it’s worth, if he’s thinking like a dealer he’s going to tell you what it’s worth to dealer. If dealers will only pay 20% back of bid, then that’s all its worth because that is all you can get for it on the bourse. A seller’s alternative is to consign it to auction. In the case of your $1,300 dollar let’s say it only sells for $1,200 with the juice. Backing out the 17.5% buyer’s fee, that’s hammer at about $1,020. Take off a 10% seller’s commission that will get charged for a small consignment and you’d be left with $918. Still nearly 15% better than selling on the bourse. Is it any wonder why (a) dealers moan about there being nothing new to buy on the bourse, and (b) it’s hard for the average collector to make any money selling their coins?
CG
<< <i>That's a nice rule and all, but it's not very practical. I've also heard that as a buyer, you should also buy mid-way between Blue Book and Red Book. I've also heard that you should pay 80% of Greysheet.
Suppose, for example, you go to a large coin show in search for something. Say you are looking for a 1798 draped bust dollar in VG8 to F12. On a large bourse floor, you may find five examples. Of these five, three of them are just washed out and ugly and have uneven wear. The remaining two look decent. Of these five examples, you will notice a trend. What should you conclude if ALL FIVE examples are higher than the price guides with the better looking ones a bit more expensive? In addition to this, you can use Heritage auction archieves to conclude the five dealers, for the most part, are not trying to rip you off. At this point, can you safely conclude the price guides are not realistic? This was my strategy for selecting my NGC VG10 1798 draped bust silver dollar for $1300. Greysheet was only $1,000, but I did not see a decent example for $1,000.
Afterwards, I showed it to a dealer who told me I overpaid. I was left scratching my head thinking I had done my homework and made a reaonable purchase. He told me he would not have paid over 80% of Greysheet. No where could I find history of a sale for a problem-free 1798 draped bust dollar for 80% of Greysheet.
This is just one of many examples. >>
Its quite possible that the dealer you spoke to was also discounting the coin due to the plastic and the market's bias in that regard. While I may think its bunk the fact is true that NGC holders often get less respect and lower offers/sales because of the perception. As a seller its imortant to know if the buyer is a player for that type of material, if this dealer you spoke to is not then that could also have led to his remarks on price.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
<< <i>
<< <i>If you don't want to buy and sell without taking a loss, your best bet is not to buy anything in the first place.
Ain't that the truth. My biggest losses were buying mistakes that were, in almost every case, quite predictable at the time of purchase. If you do not want to lose money, don't fall in love with the coin. If you are a true collector at heart, and do not mind taking it on the chin now and again (I fit this description), it's okay to fall for a coin. >>
If you want a good return, it's okay to fall in love with the coin if it has good prospects and / or the downside is limited. Just be careful falling for an expensive coin whose future is cloudy or stormy. >>
Which coins have good prospects and littl downside risk?
I give away money. I collect money.
I don’t love money . I do love the Lord God.
It's like stocks, even if you buy good ones but it's a market peak then it's hard to get out without a loss. If you buy some losers but do it when the market is at a low point you might still do ok.
K
My 1866 Philly Mint Set
How to effectively buy and sell without taking a loss?
- First, make sure you have an emergency fund (one or two months expenses or more, depending...) so that you can decide when you want to sell, instead of being forced to sell because you have to.
- Second, realize that, even with an emergency fund, sometimes things happen...some life event may come along that you think is more important than your coins.
- Decide how much your enjoyment of the hobby and pride in ownership is worth and count that in your assessment of your gains/losses. (I really like ColonelJessup's quote of Stack's "psychic income" - the joy of the hunt, the pleasure of ownership. I think this represents real value.)
- Focus your collecting efforts so that you become an expert in one specialty area.
- Avoid popular trends. Be a contrarian collector. Find a specialty area that you like but that is flying under the radar.
- Buy coins already graded by PCGS. Get them stickered by CAC.
- Never spend more than $X for a coin as cash out-of-pocket. Decide what X is and stick to it.
- Trade up whenever you can. This may mean trading one or even several mediocre coins for one really nice one. Do this without adding cash out-of-pocket to the deal if you can. It's much easier to accept a loss on paper for one of your trade coins if the end result is you being able to acquire a coin you wouldn't be able to otherwise.
- Realize that even if you do everything "right", you still might lose money. Sometimes reality just bites.
<< <i>That's a nice rule and all, but it's not very practical. I've also heard that as a buyer, you should also buy mid-way between Blue Book and Red Book. I've also heard that you should pay 80% of Greysheet.
Suppose, for example, you go to a large coin show in search for something. Say you are looking for a 1798 draped bust dollar in VG8 to F12. On a large bourse floor, you may find five examples. Of these five, three of them are just washed out and ugly and have uneven wear. The remaining two look decent. Of these five examples, you will notice a trend. What should you conclude if ALL FIVE examples are higher than the price guides with the better looking ones a bit more expensive? In addition to this, you can use Heritage auction archieves to conclude the five dealers, for the most part, are not trying to rip you off. At this point, can you safely conclude the price guides are not realistic? This was my strategy for selecting my NGC VG10 1798 draped bust silver dollar for $1300. Greysheet was only $1,000, but I did not see a decent example for $1,000.
Afterwards, I showed it to a dealer who told me I overpaid. I was left scratching my head thinking I had done my homework and made a reaonable purchase. He told me he would not have paid over 80% of Greysheet. No where could I find history of a sale for a problem-free 1798 draped bust dollar for 80% of Greysheet.
This is just one of many examples. >>
Don't rely on price guides as they are never accurate in a market or specialty area that in undervalued to begin with. It's up to you to know the market, then use the low price guide numbers to your advantage when buying. I paid 20% over greysheet for an XF45 1858-s quarter. Good thing for me greysheet was off by a factor of 2X to 3X vs. market. If you're buying coins where the greysheet is really accurate, odds are you'll lose money in the long run because the coins are nothing special. One exception might be bullion related coins like MS64 Morgans if you can ride the coat tails of the next silver move. Never consider any local dealer offers as accurate. Most only want to resell to other local dealers so no one pays strong at all. Most everything I've ever bought has been sold to major dealers or at major shows (FUN, ANA, Baltimore, Long Beach, etc.). There's no way the local dealers can pay what the national buyers can afford. You're talking about 100X to 1000X the collector/dealer base. Any coin I buy locally I realize the odds of getting offered more for it locally approach 0%. But that doesn't mean I can't flip to a national dealer for a 10-30% gain. What the local guys pay (other than bullion) for rare coins is irrelevant to me as I can't afford to take the hit to sell to them. There are always exceptions but generally, buy locally/nationally and sell nationally.
The national market for buying your VG 1798 $ may have been 20-30% higher than your local shops. Always know what the national market is doing in your specialty. I recall showing my local guy a very nice MS63 1839 no drapery half and he told me it was AU to him. Obviously, he's not a strong buyer. Doesn't mean I was foolish to pay CDN "ask" for that coin. I ended up flipping that for a 15% profit...not realizing the true national market was actually around 40-50% over CDN "ask." My mistake...my loss. Know your market (and your coin) before you buy. I knew on both of these coins that I soon as I bought them I was in a profit position with <1% chance of downside. If you're going to buy locally and sell locally, then you have to beat the bushes and get there first to the local deals. Remember that buying "right" in a downtrending market can still get you killed (ie 1991-1995). We're sort of still in that scenario today. Caution advised. It was much easier to be right in 1997-2004. I stopped buying anything of significance last time around in 2004 when the good deals were gone. At that point it's a matter of when do you sell or how greedy are you going to get...unless you're holding for life.
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<< <i>
<< <i>
<< <i>If you don't want to buy and sell without taking a loss, your best bet is not to buy anything in the first place.
Ain't that the truth. My biggest losses were buying mistakes that were, in almost every case, quite predictable at the time of purchase. If you do not want to lose money, don't fall in love with the coin. If you are a true collector at heart, and do not mind taking it on the chin now and again (I fit this description), it's okay to fall for a coin. >>
If you want a good return, it's okay to fall in love with the coin if it has good prospects and / or the downside is limited. Just be careful falling for an expensive coin whose future is cloudy or stormy. >>
Which coins have good prospects and littl downside risk? >>
Generally, the ones I'm focused on are coins with non-linear returns. It's not really like an option, but you can visualize the payout like a long call option.
As for specific coins, I'm not prepared to offer coin investing advice just yet
<< <i>Good advice, Zoins. It also works for prospective spouses. >>
So true Sonorandesertrat
<< <i>You will make gains and losses on coins. Just make it all about collecting vs investing >>
I like this statement....
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>Just make it all about collecting vs investing >>
I have a few collections. In some, the fun is in the collecting, while in others the fun is in both the collecting and the investing.
Nothing gives me greater pleasure than looking through some cents and finding a wheat or copper worth 2-4 times purchase price.
Your question should be: Have my gains been more than my losses?
...and gains can come in many forms.
You can't.
bob
For common coins you need 1 key element to get a profit or close:
-- Patience when selling
Patience almost always means do NOT sell to a dealer that you don't have a REALLY good relationship with.
Patience almost always means putting the coin on eBay as a BIN with "make an offer"
Patience almost always means putting the coin in the BST here.
Do all 3 of those and you will get a VERY fair value for your coins.
Heck, I bought a common bust dollar a year or so ago right here for roughly that amount FROM A COLLECTOR. There are always other collectors that need nice coins, common ones too
I will also say that the majority of collectors consistently losing money on their coins is not a coincidence. Those losses represent the source of profit for dealers and the 5% of collectors who know how to play the game. When you read threads about dealers flying around the country for shows, staying at high end hotels, and eating at expensive restaurants, it is collectors who are ultimately paying the bill for that extravagant activity.
The coins I collect existed before my parents were born. Dealers don't add any value to those coins; they only add costs. I think it's somewhat absurd that anyone can make a full time living from dealing in coins, a completely nonproductive endeavor. As the information power of the internet eliminates more and more needless middlemen, I believe we're moving toward a world of collector to collector sales without much need for dealers to exist. If eBay did not exist, as an avenue for me to liquidate duplicates from my collection, I would have little interest in collecting at anywhere near the financial level I do currently.
As for coin shows, I consider them to be a legacy distribution channel. I live in Chicago, but haven't bothered to attend Central States since 2008. At the 2008 Central States show, the best price I could find on a PR63 Motto Seated Quarter was $900. The dealer who quoted me $900 acted like he was doing me a favor and claimed to have a "floor bid." I didn't bother to tell him that I purchased a more attractive PR63 coin the day before, in the Heritage auction, for $636. When I walk past a dealer's display case and see Heritage lot number stickers on his coins, I think, "If I had wanted that coin, I would have bought it in the Heritage auction, instead of paying this clown 40% more money for the privilege of owning it."
P.S. Just in case anyone interprets this post as dealer bashing, let it be known that I have sold coins at a profit to dealers who post on this forum and found every transaction to be pleasant. I just feel sorry for the ultimate buyer, who bought the coins after they were marked up by both me and the dealer, and is now likely buried.
<< <i>Roadrunner and RedTiger are my favorite posters on topics such as this. The advice from other posters to sell on eBay, instead of to dealers, was also excellent.
P.S. Just in case anyone interprets this post as dealer bashing, let it be known that I have sold coins at a profit to dealers who post on this forum and found every transaction to be pleasant. I just feel sorry for the ultimate buyer, who bought the coins after they were marked up by both me and the dealer, and is now likely buried. >>
I have sold at a profit to dealers here as well, but it's more the exception than the rule. It's mostly either because I was able to buy right or the coins appreciated in value. Then again there are some dealers who if you buy a decent collectible coin from [say a 91-o Morgan PCGS ms64] that you are immediately and hopelessly under water on the coin.
<< <i>Roadrunner and RedTiger are my favorite posters on topics such as this. The advice from other posters to sell on eBay, instead of to dealers, was also excellent.
I will also say that the majority of collectors consistently losing money on their coins is not a coincidence. Those losses represent the source of profit for dealers and the 5% of collectors who know how to play the game. When you read threads about dealers flying around the country for shows, staying at high end hotels, and eating at expensive restaurants, it is collectors who are ultimately paying the bill for that extravagant activity.
The coins I collect existed before my parents were born. Dealers don't add any value to those coins; they only add costs. I think it's somewhat absurd that anyone can make a full time living from dealing in coins, a completely nonproductive endeavor. As the information power of the internet eliminates more and more needless middlemen, I believe we're moving toward a world of collector to collector sales without much need for dealers to exist. If eBay did not exist, as an avenue for me to liquidate duplicates from my collection, I would have little interest in collecting at anywhere near the financial level I do currently.
As for coin shows, I consider them to be a legacy distribution channel. I live in Chicago, but haven't bothered to attend Central States since 2008. At the 2008 Central States show, the best price I could find on a PR63 Motto Seated Quarter was $900. The dealer who quoted me $900 acted like he was doing me a favor and claimed to have a "floor bid." I didn't bother to tell him that I purchased a more attractive PR63 coin the day before, in the Heritage auction, for $636. When I walk past a dealer's display case and see Heritage lot number stickers on his coins, I think, "If I had wanted that coin, I would have bought it in the Heritage auction, instead of paying this clown 40% more money for the privilege of owning it."
P.S. Just in case anyone interprets this post as dealer bashing, let it be known that I have sold coins at a profit to dealers who post on this forum and found every transaction to be pleasant. I just feel sorry for the ultimate buyer, who bought the coins after they were marked up by both me and the dealer, and is now likely buried. >>
Well, as a dealer, it's kind of difficult to know where to begin. But I will try to explain from the dealer's perspective.
First, selling on eBay is not for everyone. The vast majority of transactions there go smoothly, but if you are a seller, you need to recognize that occasionally a buyer will rip you off, and since the rules are now stacked against sellers, you will probably lose your case, and also your coin or money.
Second, I specialize in coins that existed before my parents were born, also. To say that dealers do not add value, only costs, to those coins is short-sighted. I have many customers who are too busy with their work and their family life to search for coins the way I do. These customers understand the value in having someone find the coin they are looking for. If a customer buys a coin from me for, say, $1,000, most of the time, that customer appreciates not having to spend the time, money, and effort to find that coin, even if I have guessed correctly on the coin, and I make a profit. If that customer has been searching for that coin for a few years (which is not unusual), most of the time I believe he/she is happy to find the coin, and doesn't consider my dealing in coins to be "a completely unproductive activity".
Third, coin shows might possibly be a "legacy distribution channel", but I set up tables there not because I enjoy traveling and spending a lot of money on it, but because I sell (and buy) a lot of coins there. About 25 years ago, when I was a collector, I wasn't able to find enough of the coins I was looking for, so I decided to attend more and bigger shows. I found a lot of the coins there I was looking for. Also, I found dealers who were willing to help search for those coins I couldn't find on my own. Although the Internet has made coins more available to the collector, shows are still valuable for those and many other reasons.
Fourth, yes, dealers do buy coins in auctions. And we try to sell them for more than we pay for them. That doesn't mean that someone else could have purchased that same coin for one bid above what it sold for. If a coin sells for $1,000 hammer in an auction, that doesn't mean you would have bought it for $1,100 had you bid that amount, because the person who bid $1,000 might have continued to bid. Maybe that person is a dealer who was willing to bid up to $2,000 for it. So to buy it at the auction, you would have had to bid $2,200. So, in this example, you would be better off paying the dealer $2,000 for the coin rather than chasing it up to $2,200 plus the juice. Even though the dealer has made a profit!
Fifth, using a dealer to buy a coin for you in an auction is not necessarily a waste of money. One of the best coins I had in my collection was bought by a dealer representing me at an auction. He bought the coin and sold it to me for way less than I would have paid if I had been bidding on my own, because he would have been bidding for it for his inventory. In addition, dealer representation includes examining the coin in person, and if the coin is not acceptable, keeping you from buying the wrong coin is a huge benefit to you.
Sixth, buying a coin from a dealer doesn't mean that the buyer "is now likely buried". A few years ago, I bought a nice raw 1860-S quarter from a knowledgeable dealer for $450. I sold it to a customer for $600 I believe. Ask that customer now whether he believes he did well, or is "buried" by my $150 profit. In fact, every 1860-S quarter, 1849-O quarter, and 1853 No Arrows quarter I have sold, could now be sold at a profit. This applies to many, many other coins as well.
An authorized PCGS dealer, and a contributor to the Red Book.