Excellent post by Bayard with a terrific response from RichU.
Bayard makes some good points, but the extent that these points are valid really depends on what you collect. One could make the argument that collecting the kind of coins that you can only get from dealers are most likely to be losers, but the coins that have netted me the most money over the years were indeed purchased from dealers.
From the collector standpoint, breaking even or (gasp) making money in coins requires some combination of luck, intuition, study, and access to coins. In the slab/sticker era, I do not value grading nearly as much as identifying coins that have "the look", though certainly value an be added with upgrades and stickers.
The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector. There are multiple layers and interpretations for this advice, but one way I interpret this is the following: when I buy a coin that REALLY excites me there is a pretty good chance that it is REALLY going to excite the next guy, and this has rarely disappointed me when it was time to sell. If I had more discipline, I would only buy coins that REALLY excited me.
Buy smart. Be patient. The good deals will come to you.
I'm just a collector who buys and sells to enhance my collection and my strategy is working well. I've managed to upgrade and sell profitably well over 90% of the time. The rest were break evens or small, insignificant losses. But the key is and always will be buying smart.
Buy from the big auction houses (Heritage, Stacks-Bowers, et. al.). Wait for an auction where there are several examples of the coin you covet. You should be able to snag one for a good price.
Buy here on the BST. It doesn't have quite the selection, but good deals for the collector are frequently found. Collector to collector deals are the best!
Buy on Ebay. Contrary to popular belief, there are great deals to be found to this day. You've got to know what you're doing, know the market for the coin and employ a good dose of "caveat emptor" to all deals, but believe me, it can be done successfully. It takes a lot of time, though, and can be tedious running your canned searches daily (or multi-times a day). There are occasionally good BIN deals (sometimes GREAT BIN deals!), but I've been able to snag some great deals on auctions that end during the middle of the day during the week. The competition is pretty low in the morning and early afternoon. Why sellers start and end their auctions at those times makes no sense, but I am happy to take advantage of their folly.
Sell smart. Sell to retail customers (i.e. other collectors). I sell on the BST some, but most of my sales are on Ebay. Make sure you CYA on Ebay - follow all of the necessary steps to qualify for Seller Protection. Use the info provided on the board to block abusive bidders. I've only had two cases where buyers tried to rip me off and Ebay ruled in my favor on both of them.
That's it. Buying smart and selling smart - sprinkled with a good bit of patience and you'll be profitable
"The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector."
Not entirely. Yes, buy coins with the right looks, etc. The flip side is that they must be sold. As a collector, I find selling really nice coins rather distasteful, and would only do this if I got sick of them. About 6 years ago, I bought a handful of beautiful matte proof Lincolns, all 65-66 RD in PCGS Rattler holders. I bought them because I thought they were too cheap, and had a good chance to move up (especially in 2009). I should have sold them in 2009, but the collector in me said NO and I did not need the money---they have since come down in price (but I am still 'up'). The point that I am trying to make is that there may be a short-term, optimal time to sell a coin if one wants to maximize one's ROI. Merely buying for a long-term hold (and having lots of time to enjoy one's coins) is not necessarily the best investment strategy. In order to really make money investing in coins, one has to treat the coins as commodities, and not become too emotionally attached to them.
Member: EAC, NBS, C4, CWTS, ANA
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
The problem is always going to be is who is going to buy your coin at what you believe the market to be? This week type gold in MS is strong. Check HA's current auction records when available, there is no substitute for what coins are selling for at auction and their buy indications for non-spotted or problem coins. If you called around to the industry's main buyers on rare or high grade gold coins, you are going to have a pretty tight group of "buy" prices.
On GS prices, you will find many somewhat better date gold that will not bring those prices. Some examples like slightly better date $20s in MS63 and above are not real market indications like MS65 $20s, 1901, 1907 and other dates that sheet much higher than the reality. See if Heritage would offer you the GS prices...
I had an 1899-s $10 MS63 where GS was well over $2000 for a long time but there were no buyers at those levels. An 1847 $2 1/2 AU58 would not bring sheet because of recent auction records and this is just scratching the surface.
As mentioned commemoratives even if they are CAC, and I have sold a few of those recently, will not bring GS bid, 10% behind if you are lucky, neither CAC nor Heritage are making strong bids on most of those.
If you are "working too hard" to find nice material at shops and shows, take a break. I have tried to find good material at shops and shows and you will find plenty of raw material that just will not grade and those dealers will make all kinds of excuses why they have not submitted coins for grading; you take the chance, and you spend the money and time, and guess what? You lose, pal! Then you have to call the dealer or see him at the next show, and say BTW, remember that coin I bought from you for $825 as an AU50? It graded XF details. Can I sell it back to you or exchange it for marketable coins? Not a fun process folks. But you know, the guy holds out for top, top dollar, he benefits from a system which protects his business activity where he has made big windfalls over the years. He has to play by the rules, he put his reputation behind that supposedly good AU coin and it was judged as "XF details" by the leading experts...
Certain areas of collecting have virtually limitless downsides as victims of coin scams have found. Even the fully educated consumer will find they take losses as others here have described in detail.
<< <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. >>
When a dealer is "collecting for you" he is likely adding value [at least to you] and all you are is a checkwriter. If a dealer buys a coin at a show cuz it's on your want list, I don't think he is adding much value. On some they add value on others they add cost. I wouldn't say that every coin you buy from a dealer buries you, but there are some that if you buy from them it will be very hard to resell at breakeven or a profit. I'm not bashing dealers, but IMO for many coins if you buy from them you will be hard pressed to recover your purchase price if your main venues are eBay or other auctions. We have the BST, but that is pretty limited.
<<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".>>
Let me clarify what I mean by calling coin dealing an unproductive activity, because I'm speaking in an economic sense and not trying to be gratuitously insulting. Unlike mining, manufacturing, or farming, there is no new wealth created by coin dealing. The coins already exist and have for decades. Coin dealers just shuffle that wealth (rare coins) around instead of creating new wealth. Auction representation or want list filling does not create any new wealth, although it certainly can save a collector the expense and opportunity cost of tracking down desired coins.
<<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!>>
This is a ridiculous and specious argument. When I bid at auction, I set a limit for how much I will pay and I stick to that limit. If a dealer happens to outbid me, I am not going to buy that same coin from him for more than my bid limit. He can keep the coin, sell it to someone else, or sell it to me at a loss. I particularly enjoy the third option, and it happens more often than some people might suspect.
<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.>>
A rising market can unbury retail buyers; however, the overall coin market hasn't been rising since 2008. The conventional "wisdom" about a five year or longer holding period is exactly about the hope that a rising market will overcome the difference between retail and wholesale.
<<From the collector standpoint, breaking even or (gasp) making money in coins requires some combination of luck, intuition, study, and access to coins.>>
If something can be done consistently and repeatably, it's a skill. The poster immediately after you has the skill, and I commend him.
<<The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector.>>
I understand the point your mentor is trying to make, buy what other collectors will eagerly want to repurchase from you someday. However, I think it's much more important to think like a businessman than a collector in the arena of financial returns. There's no doubt that you own some wonderful coins that are coveted by many board members. I don't know what you paid for them, and it is none of my business; however, it is possible to be buried in wonderful coins and pay too much for quality. Acquisition cost, more than any other factor, will determine the potential of your financial returns.
<< <i><<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".>>
A rising market can unbury retail buyers; however, the overall coin market hasn't been rising since 2008. The conventional "wisdom" about a five year or longer holding period is exactly about the hope that a rising market will overcome the difference between retail and wholesale. >>
That would be the other factor that needs to be considered.
<< <i>The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector that doesn't like to lose >>
I think the latter bit adds a little and helps a lot.
Excellent post by Bayard with a terrific response from RichU.
I second that. Good points made by each with a nice follow up by RevDrBlimber.
There's no fool proof way to avoid a loss, but most of the avenues to avoid it have been outlined. I recall one time bidding against a major dealer for a MS66 NGC CBH. I saw no reason to continue to run them up as we were the only bidders left and it was clear we'd both go higher. I tried to buy the coin from them after the auction but they wanted to try and cross it. Another time I did the same thing with a major retailer and they agreed to sell me the coin for just 10% more than they paid. Both of us were probably willing to bid that coin much higher than +10%. So in one case I got the coin much more cheaply than if I had continued bidding. In the other I didn't get it, but wouldn't have any ways if I had continued bidding to my limit. One of the best sources for "cheap" coins is at major auction. A lot of them fall through the cracks. If it wasn't so you wouldn't so many dealers looking the stuff over.
Great thread with a lot of great responses. The only real way for a collector to avoid possibly taking a loss is to collect coins from circulation only. Nothing is for certain. I have been told many times over the years that coins should not be considered an investment. I never collected coins to be an investment per se, but every other investment venture that I tried (stocks,baseball cards, etc) I lost most all of my investment.. Coins at least will never be totally worthless. The best idea for buying coins is diversement-some gold, some rareties, some silver. I agree with the buy what you like philosophy. If you are talking about losing money on a few individual coins- that will always be the case. If you are talking about selling all the coins overall and making a profit you could probably do so or come close to it. If you buy coins that were always unpopular, chances are that they will remain always unpopular. Shoot for low POP coins when possible. In this fiat currency world, a good bet is to purchase gold and silver coins that sell for just over bullion value.
get to know what you are buying, do not buy something because its "popular" the reality is that anything that is common today will be common in 50 years. do an ebay search for any coin you are considering buying. if there is ten pages, well, there will be ten pages (or more) next month and every month for the next forseeable future. if something is readily available, it will only be worth what it can sell for. it is very possible to make money in the current market if you invest in yourself. study, learn, and research what you are buying.
regardless of how many posts I have, I don't consider myself an "expert" at anything
<< <i><<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".>>
Let me clarify what I mean by calling coin dealing an unproductive activity, because I'm speaking in an economic sense and not trying to be gratuitously insulting. Unlike mining, manufacturing, or farming, there is no new wealth created by coin dealing. The coins already exist and have for decades. Coin dealers just shuffle that wealth (rare coins) around instead of creating new wealth. Auction representation or want list filling does not create any new wealth, although it certainly can save a collector the expense and opportunity cost of tracking down desired coins. >>
If you want to talk economics, this argument is not close to correct. A huge segment of the economy is "services." Of course "services" don't produce a tangible good like farming, mining, manufacturing, etc. How could they? Everyone can't build something, but that doesn't mean that what they do is "a completely unproductive activity."
The service industry is a key component to the economy because it frees up the intangible product of TIME. When some people perform services that free up other people to continue their "mining" or "farming" or whatever, that is a net economic benefit when the time freed up is worth more than the commission charged.
If a coin dealer has the contacts and skills to serve up coins that would take others much longer to find, AND when they use their years of experience in grading and evaluating coins to avoid costly mistakes, AND when the coin dealer serves up a higher quality item than would have been found otherwise, that's an economic benefit. And this includes a dealer who puts up their own money to buy a coin at auction because they have evaluated it, and put their seal of approval on it by re-selling it.
Of course, the economic value of a coin dealer depends on how good they are. Just like a McDonalds cook who burns all the burgers, a butcher who takes longer to cut up your meat than you would, or a newbie farmer whose crop yields are low, any economic benefit analysis assumes you're dealing with someone who has the knowledge to add value.
But a blanket statement saying an entire service provides no economic value is incredibly myopic. Services that provide no value, unless they are mandated into existence by a government, will not exist.
<< <i>The quick answer is not to sell outright to dealers. You can get fair retail from another collector quite easily via various websites if the coins are appealing and in demand. You've got a national audience of buyers online. Finding a new home for the problem free 1857 large cent you mention will take all of one day. If you bought coins that other collectors aren't interested in, and all you hear is cricket noises when you post them for sale, then you made your own bed when you bought them. Another option is to consign items to reputable dealers who take a small % fee, but do not sell outright to them if you want the highest price. Most "leave themselves a little room" when buying in case the item doesn't sell, and because they have money tied up in the item. That translates to paying you less than they could. >>
When eBay came along, it liberated me. All of a sudden I discovered that I didn't have to sell to dealers and lose money. I could sell to the rest of the world. (Literally, in my case, as I do more foreign than US coins). I feel your frustration over this age-old dilemma, but nowadays, with eBay (and hey, don't forget the BST, which is a sort of freebay that gets lots of exposure), you can leapfrog the middlemen.
Which is not to suggest that all dealers are evil or crooked or just out to rip you off, of course. Coin dealers have gotta pay the bills like anyone else. It's just that I've learned to be a little more realistic and temper my expectations when reselling to them.
<< <i>The quick answer is not to sell outright to dealers. You can get fair retail from another collector quite easily via various websites if the coins are appealing and in demand. You've got a national audience of buyers online. Finding a new home for the problem free 1857 large cent you mention will take all of one day. If you bought coins that other collectors aren't interested in, and all you hear is cricket noises when you post them for sale, then you made your own bed when you bought them. Another option is to consign items to reputable dealers who take a small % fee, but do not sell outright to them if you want the highest price. Most "leave themselves a little room" when buying in case the item doesn't sell, and because they have money tied up in the item. That translates to paying you less than they could. >>
When eBay came along, it liberated me. All of a sudden I discovered that I didn't have to sell to dealers and lose money. I could sell to the rest of the world AND LOSE MONEY. (Literally, in my case, as I do more foreign than US coins). I feel your frustration over this age-old dilemma, but nowadays, with eBay (and hey, don't forget the BST, which is a sort of freebay that gets lots of exposure), you can leapfrog the middlemen.
Which is not to suggest that all dealers are evil or crooked or just out to rip you off, of course. Coin dealers have gotta pay the bills like anyone else. It's just that I've learned to be a little more realistic and temper my expectations when reselling to them. >>
FIFY.
You sound like selling on eBay is a sure profit. Not so for me. IIRC most of what I sold there ended up losing money which is one BIG reason why I will rarely sell there again. As I indicated, the biggest issue is having a convenient low cost way to connect to a large audience of sellers.
When eBay came along, it liberated me. All of a sudden I discovered that I didn't have to sell to dealers and lose money. I could sell to the rest of the world.
I was always amazed that so often when I wanted to sell a coin to certain dealers and I tried to get the offer up some they would tell me to go sell on ebay. I always took that as more of an insult than advise because I thought why would they want me to use another service and cut them out of a trade? So after getting tired of hearing that I did do what they suggested. I think some businessmen can be their own worst enemies.
Gold and silver are valuable but wisdom is priceless.
<< <i>You sound like selling on eBay is a sure profit. Not so for me. IIRC most of what I sold there ended up losing money which is one BIG reason why I will rarely sell there again. As I indicated, the biggest issue is having a convenient low cost way to connect to a large audience of sellers. >>
No, there's no sure profit anywhere. No guarantees at all, of course.
But having that option is liberating and can sometimes be quite profitable indeed, on the right stuff.
On stuff one has paid close to retail for, of course, it's harder. BST is almost universally better for that in my experience. These forums have helped me more than eBay has over the last decade.
Ain't no Santa Claus anywhere, alas, alas.
But a collector can learn to buy low- perhaps not as low as a dealer who doesn't really "need" or want a coin. A little dose of cold, hard reality never hurts a collector in the long run. If it's taken up front while one is buying, one usually gets a smaller dose of it when reselling later.
I've taken plenty of cold, hard doses of reality, and yes, plenty of reselling haircuts in my time. We live and learn. I've tried not to let it poison my outlook too much.
<< <i>You sound like selling on eBay is a sure profit. Not so for me. IIRC most of what I sold there ended up losing money which is one BIG reason why I will rarely sell there again. As I indicated, the biggest issue is having a convenient low cost way to connect to a large audience of sellers. >>
No, there's no sure profit anywhere. No guarantees at all, of course.
But having that option is liberating and can sometimes be quite profitable indeed, on the right stuff.
On stuff one has paid close to retail for, of course, it's harder. BST is almost universally better for that in my experience. These forums have helped me more than eBay has over the last decade.
Ain't no Santa Claus anywhere, alas, alas.
But a collector can learn to buy low- perhaps not as low as a dealer who doesn't really "need" or want a coin. A little dose of cold, hard reality never hurts a collector in the long run. If it's taken up front while one is buying, one usually gets a smaller dose of it when reselling later.
I've taken plenty of cold, hard doses of reality, and yes, plenty of reselling haircuts in my time. We live and learn. I've tried not to let it poison my outlook too much. >>
A dealer is probably a better alternative to eBay for bullion, esp. gold. Considering the hassle and risk of fraud selling n eBay, if I had a one ounce AGE, I'd rather just sell it local depending on the offer of course. I've had decent luck on the BST, but probly less than 25% of my postings sell.
I'm not trying to get rich or even make money on my coins. I would just like advice on how to break even over time. I've spent thousands on coins. I would hate to think that even with all the research I've done and thought I've put into my purchases, those thousands of dollars are worth considerably less than what I paid. I am not ready to sell, but at some point, the coins will be sold. It may be twenty or thirty years from now, but the time will eventually come.
No one likes the idea of being ripped off. When you pay good money for something and then realize it can only be sold for a portion of what you paid, it is natural to feel ripped off, and most people aren't very happy with that feeling. I've been careful to buy authentic (graded, problem-free) coins certified by PCGS and NGC for a reason. If I was okay with the idea of losing money, I probably would have given less care to wheher a coin was certfied, properly graded, or even real. However, I prefer to know that the money I spent can eventually be recovered.
The difference between a collector and a dealer is that a collector can afford to hold 'inventory' for a number of years while a dealer has to flip it as soon as possible. This gives the collector the benefit of time. Granted, values are dependent on a number of factors that change over time and because of this, values will rise and fall over time.
Another factor that determines whether a collector will be able to recover the money spent on coins is a dealer's markup. For the purpose of this thread, that markup is based on liquid coins in high demand, not some rare esoteric world coin that is expected to sit in inventory for years before being sold. If most dealer's markup for liquid coins is 10 to 15%, a collector should expect to be able to recover what he spent considering luck is on his side and those variables that influence value over time have been in his favor (essentially those variables that contribute to supply and demand). If, however, the typical dealer markup is 50%, it raises two concerns. First, the collector will want to know what he cannot obtain coins as cheaply as a dealer, and secondly, he will ask if he is permanently sunk in his coins to cover dealer's excessively high required rate of return.
What sounds good in theory -- that you should be able to buy and sell without taking a loss by following a simple formula or a few simple principles -- is, in fact, impossible.
Things you can do that may minimize loss and maximize gain include: - Making sure you are financially secure so that you're never in a "must sell" situation. - Be extremely patient. - Study recent market trends across many selling venues in your chosen specialty (auction results, online dealers, national shows, local shows, small brick and mortar dealers, the BST board on this forum, discussions with like minded collectors, etc.) - Recognize the non-monetary benefits of collecting and enjoy them. - Relax.
I'm wondering in how many "hobbies" people expect to make money or break even.
Model railroading, flying a Cessna 172, fishing, photography, astronomy, painting, RC cars/airplanes...Sure, extraordinarily skilled people could probably make a little money in any hobby, but most hobbies sink a little money in the name of "fun."
Are expectations that coins are different from other hobbies reasonable for the average collector? If everyone could expect to profit (or break even) in coins, wouldn't everyone do it?
stevepk, Some comments regarding your comments: 1. The dealer's markup is irrelevant. What matters is whether you paid a fair price for the quality. Knowing what the 'fair price' range for a coin is takes a bit of research, and I certainly would not rely on what any price guide indicates. 2. Buy coins that have eye appeal, and are nice for their grades. They won't come cheap, but they will be more liquid and tend to hold their values better than so-so coins. 3. If you don't fully understand something (fair price, quality, liquidity, rarity, etc.) about a coin that you propose to buy, keep your money in your wallet. 4. Learn something about the workings of the coin market during the last 40 years or so, and options that are available to you when you decide to sell a coin. It is entirely possible to buy nice coins, and lose money (or leave a lot of money on the table) because you sold them foolishly (I've been there, done that). 5. You noted that a long holding period gives the collector the benefit of time. Perhaps, but it depends on how you do the math (e.g., do you factor in inflation?) and what the health of the coin market (or relevant niche) is when you decide to sell. There are people who bought coins during prior market highs, and they have no realistic chance of getting even half of their money back. 6. I don't know what kinds of coins you have purchased, but suggest that you make a serious attempt to assess their liquidity. If you are holding coins that are more illiquid than you are comfortable with, then perhaps you should alter your collecting interests or lower your expectations concerning financial returns upon sales of the coins.
Member: EAC, NBS, C4, CWTS, ANA
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
<< <i>stevepk, Some comments regarding your comments: 1. The dealer's markup is irrelevant. What matters is whether you paid a fair price for the quality. Knowing what the 'fair price' range for a coin is takes a bit of research, and I certainly would not rely on what any price guide indicates. 2. Buy coins that have eye appeal, and are nice for their grades. They won't come cheap, but they will be more liquid and tend to hold their values better than so-so coins. 3. If you don't fully understand something (fair price, quality, liquidity, rarity, etc.) about a coin that you propose to buy, keep your money in your wallet. 4. Learn something about the workings of the coin market during the last 40 years or so, and options that are available to you when you decide to sell a coin. It is entirely possible to buy nice coins, and lose money (or leave a lot of money on the table) because you sold them foolishly (I've been there, done that). 5. You noted that a long holding period gives the collector the benefit of time. Perhaps, but it depends on how you do the math (e.g., do you factor in inflation?) and what the health of the coin market (or relevant niche) is when you decide to sell. There are people who bought coins during prior market highs, and they have no realistic chance of getting even half of their money back. 6. I don't know what kinds of coins you have purchased, but suggest that you make a serious attempt to assess their liquidity. If you are holding coins that are more illiquid than you are comfortable with, then perhaps you should alter your collecting interests or lower your expectations concerning financial returns upon sales of the coins. >>
Good advice. Buying close to market bottoms is critical. If you are collecting whenever something comes around regardless of market conditions, understand that there is more risk involved. As a collector I disappeared from the coin markets in mid-1979 to August 1982 and then again from around 1990-1991 and then 1995-2001. My big mistake was not disappearing from 1990-1995 when I continued to buy "great bargains" as prices fell year after year after without relief. If minimizing loss is part of your plan, you must be prepared to sell out when market conditions get frothy. About the only exceptions are the more esoteric or solidly based collector areas where speculators don't usually tread. Up until 2005 I would have placed key date circ coins in that category too. But even those got whipped up by dealer and speculator trading ensuring a subsquent price decline. If you're buying stuff that's out of favor, but has a decent support base under it, you needn't worry as much about the financial cycles that affect the rare coin market. A friend of mine has been collecting hobo nickels for years (ie not mainstream but a solid collector base and an area where you have to know your stuff to compete). He's done quite well with those and prices last I checked with him continued to slowly move up. But as soon as speculators see others making money, they eventually join into the act and become "experts." That's the time to exit until they've had their fill and crash the market. Buying coins in 1975, 1982, and 1995-1997 offered numerous true bargains. When's the next such period going to show up? This last bull market was starting to show mania signs in 2004. And from 2004-2006 a number of high powered collections kept hitting the market. Those were the early birds getting out who had accumulated stuff from 1993-2003. Those with better market timing sold off their collections in 2007 and into summer 2008. If you missed that summer 2008 peak by only 3-5 months, it was curtains.
<< <i><<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".>>
Let me clarify what I mean by calling coin dealing an unproductive activity, because I'm speaking in an economic sense and not trying to be gratuitously insulting. Unlike mining, manufacturing, or farming, there is no new wealth created by coin dealing. The coins already exist and have for decades. Coin dealers just shuffle that wealth (rare coins) around instead of creating new wealth. Auction representation or want list filling does not create any new wealth, although it certainly can save a collector the expense and opportunity cost of tracking down desired coins. >>
If you want to talk economics, this argument is not close to correct. A huge segment of the economy is "services." Of course "services" don't produce a tangible good like farming, mining, manufacturing, etc. How could they? Everyone can't build something, but that doesn't mean that what they do is "a completely unproductive activity."
The service industry is a key component to the economy because it frees up the intangible product of TIME. When some people perform services that free up other people to continue their "mining" or "farming" or whatever, that is a net economic benefit when the time freed up is worth more than the commission charged.
If a coin dealer has the contacts and skills to serve up coins that would take others much longer to find, AND when they use their years of experience in grading and evaluating coins to avoid costly mistakes, AND when the coin dealer serves up a higher quality item than would have been found otherwise, that's an economic benefit. And this includes a dealer who puts up their own money to buy a coin at auction because they have evaluated it, and put their seal of approval on it by re-selling it.
Of course, the economic value of a coin dealer depends on how good they are. Just like a McDonalds cook who burns all the burgers, a butcher who takes longer to cut up your meat than you would, or a newbie farmer whose crop yields are low, any economic benefit analysis assumes you're dealing with someone who has the knowledge to add value.
But a blanket statement saying an entire service provides no economic value is incredibly myopic. Services that provide no value, unless they are mandated into existence by a government, will not exist. >>
I am not persuaded by your arguments. Gambling creates no wealth, merely wealth transfer; however, casinos are popular. Furthermore, many services add incremental value to a product, and thereby create wealth. A clean house is more desirable than a dirty house. A broken engine or toilet is less valuable than a repaired one. A cooked steak is more palatable than a raw one. Thus maids, mechanics, plumbers, and cooks help preserve and increase society's wealth.
Coin dealing just transfers an existing item from one party to another. No new wealth is created in the process. I don't believe this point is even debatable.
<< <i>Coin dealing just transfers an existing item from one party to another. No new wealth is created in the process. I don't believe this point is even debatable. >>
A similar question would be whether coin doctoring creates wealth? Or does it create losses?
Generally it's very easy to buy coins cheap but very difficult to sell coins for fair value. New collectors are well advised to sell a coin from time to time so they know the true value and learn a little about selling.
Try to avoid buying coins that are "smoking hot" and when you own them consider selling. So long as you can learn to enjoy the parts of the hobby that aren't hot (that's the bulk of the hobby), you'll pro- bably do just fine.
The best way to "effectively buy and sell without taking a loss" is to emulate a dealer. Take your profit when you buy the coin and then sell it right away.
If you take your profit when you buy it, but hold it a long time, you run the risk that the market will slowdown or stagnate when you want to sell.
So regardless, take your profit when you buy. But then either sell right away, or keep close tabs on the selling prices of your stuff to make sure you're not left holding the bag.
Gotta say this. Yes, the demographics for coins are pretty bad. But we are in a recession and that is more than likely driving the bus right now. Even the hottest collectibles are down and the only way to make money is to dabble into the best...(flight to quality).
It is a rude awakening to find out your "investments" that you bought from local coin shows and dealers are usually worth only 50-70% of what you paid for them in a flat market.
A few methods to alleviate some of this:
1. Forget sheet prices and price guides. Use prices realized from auctions, and even ebay to determine market values.
2. Become an expert on the coins you want to collect. Learn to cherry pick, and look for fresh material. Avoid stale inventory.
3. Becoming an expert will allow you to buy the right coins at auction, from major auction firms and ebay. I know of one person who has made tens of thousands of dollars cherry picking rare varieties on ebay.
4. Dealers are not consistent in what they pay. Specialists are often wholesalers, beware of them. National dealers usually pay more for quality coins. Find out who pays the most, or go the auction route.
Buying and selling from local shops and shows will usually result in losses, unless you are fortunate to buy into a strong, rising market (which cannot be predicted).
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
Bumping a 10 year old thread made during a different market dynamic, yet nonetheless, the debate was and is compelling still. Hope you find it worth the resurrection.
Seated Half Society member #38 "Got a flaming heart, can't get my fill"
Wow what a great thread from another time but not another place. I didn't notice the original posting date until I was well into reading the responses. The one thing that the original poster mentioned is that he did most of his buying from 2006 to 2011, and from my experience I have sold a few coins that I bought during that time period for either very little more than I paid, or at a loss. I have a few examples of which I purchased during that time frame that if I decided to sell, most likely could be sold at a higher price.
There are a couple ways to look at "buying and selling without taking a loss." If you envision doing it with a relatively short turnaround time, you are behaving like a dealer, whether you want to call it that or not. This involves a requirement for heightened market awareness, and likely requires abandonment of bias for coins/series that you "like" in favor of coins/series that are favored by the market. If your collection features mostly moderately valued pieces, say under four figures, you will have to come to grips with finding the selling venues that get them in front of the largest possible number of collectors. Be prepared to invest a great deal of time, and to deal with the cost and vagaries of online selling. Also, be ready to deal with the 1099-K you'll get from the payment processing outfit at tax time assuming you've had sales of $600 or more during a calendar year. If, on the other hand, you are thinking in terms of a much longer holding period; the problem becomes somewhat simpler. You are now more of an "investor". The best first step would likely be a decision to work only with somewhat higher-valued coins, say four figures or more. Don't get into it before developing a really good "eye" (there may be some tuition to be paid in that quest). Buy the best you can afford, certified by the TPGSs with the highest market acceptance. Unfortunately, you will inevitably be at the mercy of market cycles, so be sure to acquire only most solid specimens. For me, either of these approaches would greatly lessen the joy of collecting. Having the pure enjoyment and relaxation reduced by concentration on an eventual gain or loss would make collecting too much like a job.
If your buying coins your an investor not a collector. A collector imo is somebody who acquires coins at face value.
If you want make money in RCI you need to churn your inventory (investment). Not doing that you will most likely lose money. The market can be volatile, coins can go bad in the holder.
It’s your responsibility to investigate the various sell venues: eBay, auctions, taking a table at a show, vest pocket trading. Making money in RCI is tough, competition is brutal (many highly experienced well heeled), overhead expenses will drown you. At shows many out pick u off - lowball w their BS game. Don’t let them. You don’t owe them anything except give them the item they paid for or pay for the item u purchased from them. Like positive yardage on offense - develop strategy buy low /sell high. Nobody cares or is going to hold your hand or care if you lose your rear end. Do not finance it with debt. The only real rule: Buy low sell High. Being in a coin club can help. My first show shared a table with friend who was good mentor in the biz.
@Cougar1978 said:
If your buying coins your an investor not a collector. A collector imo is somebody who acquires coins at face value.
If you want make money in RCI you need to churn your inventory (investment). Not doing that you will most likely lose money. The market can be volatile, coins can go bad in the holder.
It’s your responsibility to investigate the various sell venues: eBay, auctions, taking a table at a show, vest pocket trading. Making money in RCI is tough, competition is brutal (many highly experienced well heeled), overhead expenses will drown you. At shows many out pick u off - lowball. Don’t let them. Like positive yardage on offense - develop strategy buy low /sell high. Nobody cares or is going to hold your hand or care if you lose your rear end. Do not finance it with debt. The only real rule: Buy low sell High. Being in a coin club can help. My first show shared a table with friend who was good mentor in the biz.
I don’t know where or how you got the idea that paying above face value disqualifies someone from being a collector.
noun: collector; plural noun: collectors
1.
a person who collects things of a specified type, professionally or as a hobby.
"an art collector"
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
This is correct even 10 years later, that most collectors take a loss when selling their coins. The same is true with most other hobbies. As a true hobbyist, to me the "enjoyment factor" needs to be added into the equation. What price do you put on that? If you're not adding any value for your enjoyment, then you are either not a true hobbyist/collector or you are not enjoying your coins. Money spent on a hobby is like money spent on a vacation. You don't come back from vacation expecting to recoup all or any of the money you spent on that vacation. Your enjoyment was what you paid for. A hobby for me is a year round vacation that I get to take anytime I want.
In short for me a hobby is not an investment. I know it can be if you really know what your doing and do enough work and research when you buy, but then it could cross the line and become a job. I have one of those already. This hobby of mine is a distraction from that. Once it turns into a job or I no longer find it fun, it's time to sell and get out.
@BryceM said:
When people loose money on a coin transaction, they often look at the process of the sale and try to figure out what went wrong. If the goal is to not to take a loss, I'd recommend putting much more effort and thought into the purchase than the sale. 80% of how well you will do at sale time depends on how well you did at purchase time.
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.
Love the above post by BryceM....
My favorite coin book is probably the Robert Shippee book Pleasure and Profit: 100 Lessons Building and Selling Coins.
There is riches in niches as EOC was espousing since 2012.
I don't think the world class collectors are building via Ebay, but In 2022, Ebay is the great equalizer for most collector/flipper types.
Key date Type set is the direction my collection is headed.
It will likely take years to achieve.
Took a look at the last Covid dip and saw where Silver Commens barely budged in the steep decline. Good p[lace to start IMHO
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
Wow I read this whole thread not knowing it was 10 years old until the new comment popped up. Seems all still relevant today.
The way I see it, everything I buy in an auction (assuming 'fair' auction, not shill bidders) was bought at market rate. You do need to know roughly what stuff goes for so you don't get in a bidding war, but I expect to sell all my stuff for roughly what I paid for it, minus fees, plus inflation, and maybe even a little bonus if I got lucky/good.
On the other hand buying BIN coins seems like overpaying by definition, because if the thing was really worth that much, someone would have bought it! (assuming it has been sitting out there for a while, not quickly snapping it up as soon as it hits the market)
@TimNH said:
The way I see it, everything I buy in an auction (assuming 'fair' auction, not shill bidders) was bought at market rate. You do need to know roughly what stuff goes for so you don't get in a bidding war, but I expect to sell all my stuff for roughly what I paid for it, minus fees, plus inflation, and maybe even a little bonus if I got lucky/good.
I prefer fixed price sales for evaluating "market rate". Who knows what bidders are thinking when they bid? With a fixed price sale, you know for a fact that the buyer thought "This is a fair price."
@TimNH said:
On the other hand buying BIN coins seems like overpaying by definition, because if the thing was really worth that much, someone would have bought it! (assuming it has been sitting out there for a while, not quickly snapping it up as soon as it hits the market)
Even assuming something has been sitting there for a while, how could anybody confidently know whether or not an interested buyer has seen it yet?
Geez Louise. After reading the posts on this thread, I am depressed. I am an old guy with coins purchased from long ago up to recently. Until the last ten years or so, I hated TPGs and the coins being in holders. I am old and loved filling Whitmans. Now as I decide what to do with them, I have no clue how to sell them. My grandkids just want money. If I sell them to dealers, are you telling me that they will discount their price to include having my raw coins graded? I know they operate on margins, I thought around 60% of retail. But I'm getting the feeling that may be a high number. I have no clue what I have in the vast majority of these coins. I will not sell on Ebay because of their rules and fees.. I also have a bunch of currency mainly fancy serial numbers and the like. My total value of everything is less than $50k. I also have bullion valued around $30k and will give it to the kids. So any suggestions on how to get the coins and currency sold at a fair price to me and the buyer? I will not sell off individually, so no cherry picking. This may be hard to undertake. Thanks AC
@stevepk said:
How to effectively buy and sell without taking a loss?
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 first thought is to "think like a dealer" or lock in your profit when you buy, like cherry picking.
@Lostintranslation said:
Geez Louise. After reading the posts on this thread, I am depressed. I am an old guy with coins purchased from long ago up to recently. Until the last ten years or so, I hated TPGs and the coins being in holders. I am old and loved filling Whitmans. Now as I decide what to do with them, I have no clue how to sell them. My grandkids just want money. If I sell them to dealers, are you telling me that they will discount their price to include having my raw coins graded? I know they operate on margins, I thought around 60% of retail. But I'm getting the feeling that may be a high number. I have no clue what I have in the vast majority of these coins. I will not sell on Ebay because of their rules and fees.. I also have a bunch of currency mainly fancy serial numbers and the like. My total value of everything is less than $50k. I also have bullion valued around $30k and will give it to the kids. So any suggestions on how to get the coins and currency sold at a fair price to me and the buyer? I will not sell off individually, so no cherry picking. This may be hard to undertake. Thanks AC
I would recommend you have any coins that are over a certain dollar amount graded ($200 maybe?)
You may be able to find an honest local dealer that’s willing to offer a fair amount on raw coins, but above a certain threshold the dealer is going to hedge his bets, and won’t be able to offer maximum value. You already own them, so it only makes sense that you absorb any risk (and reward) by having them slabbed.
"How to effectively buy and sell without taking a loss?"
Nobody has a guarantee of not taking a loss on their purchases. If you're buying and selling, there is always a risk that you'll pay more than you can get when you resell.
I only see two ways for collectors to avoid taking a loss in coins:
Buy and sell in a rising market.
Buy low and increase the coin's value.
(1) seems to have held up reliably only for very high end coins, so focusing on that area is one way to go if the trend continues.
(2) requires something special to occur. For example you can cherrypick, crackout, or CAC a coin to increase its value. Dealers can buy low from widows or from collectors who just want cash now, but collectors rarely have access to those opportunities.
There is also the collect-ealer model. I have seen cases where someone acquires an assemblage of coins they really like, often higher-end eye-appealing coins. They list them for sale at dramatic prices. Their "inventory" is really their personal museum/collection, but if someone does bite, they sell for profit.
@Lostintranslation said:
Geez Louise. After reading the posts on this thread, I am depressed. I am an old guy with coins purchased from long ago up to recently. Until the last ten years or so, I hated TPGs and the coins being in holders. I am old and loved filling Whitmans. Now as I decide what to do with them, I have no clue how to sell them. My grandkids just want money. If I sell them to dealers, are you telling me that they will discount their price to include having my raw coins graded? I know they operate on margins, I thought around 60% of retail. But I'm getting the feeling that may be a high number. I have no clue what I have in the vast majority of these coins. I will not sell on Ebay because of their rules and fees.. I also have a bunch of currency mainly fancy serial numbers and the like. My total value of everything is less than $50k. I also have bullion valued around $30k and will give it to the kids. So any suggestions on how to get the coins and currency sold at a fair price to me and the buyer? I will not sell off individually, so no cherry picking. This may be hard to undertake. Thanks AC
I would recommend you have any coins that are over a certain dollar amount graded ($200 maybe?)
You may be able to find an honest local dealer that’s willing to offer a fair amount on raw coins, but above a certain threshold the dealer is going to hedge his bets, and won’t be able to offer maximum value. You already own them, so it only makes sense that you absorb any risk (and reward) by having them slabbed.
Deplorable Dan's advice is good.
I would NOT take everything said on this thread as being gospel. There are a lot of factors, including exactly what coins you possess. What a dealer would pay very much depends on what it is.
For example, if you have AU pre-1933 common date gold, you'll get 95-98% of value. If you have AU common date Morgan $s, you should get around 80%. If you have AU post 1934 Lincoln cents, you will be lucky to get 20%.
A slabbed MS65 Morgan $, common date, would be purchased by dealers at 90% or so. A raw MS65 Morgan $ would probably be purchased at 70-80% of MS64 price as they need protection if it only comes back as a 64 or has a problem. So, to Dan's point, if you consider the cost of slabbing, $200 is probably a good number.
And, kindly, eBay fees including shipping are 15% or so. If you think that 60% is the right "dealer number", you were willing to tolerate a 40% vig from dealers but not 15% from eBay? Granted, the dealer does all the work in that scenario, but my eBay fees with store and top-rated seller are under 8%. Incredible bargain, if you are willing to do the work yourself.
Comments
Bayard makes some good points, but the extent that these points are valid really depends on what you collect. One could make the argument that collecting the kind of coins that you can only get from dealers are most likely to be losers, but the coins that have netted me the most money over the years were indeed purchased from dealers.
From the collector standpoint, breaking even or (gasp) making money in coins requires some combination of luck, intuition, study, and access to coins. In the slab/sticker era, I do not value grading nearly as much as identifying coins that have "the look", though certainly value an be added with upgrades and stickers.
The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector. There are multiple layers and interpretations for this advice, but one way I interpret this is the following: when I buy a coin that REALLY excites me there is a pretty good chance that it is REALLY going to excite the next guy, and this has rarely disappointed me when it was time to sell. If I had more discipline, I would only buy coins that REALLY excited me.
I'm just a collector who buys and sells to enhance my collection and my strategy is working well. I've managed to upgrade and sell profitably well over 90% of the time. The rest were break evens or small, insignificant losses. But the key is and always will be buying smart.
Buy from the big auction houses (Heritage, Stacks-Bowers, et. al.). Wait for an auction where there are several examples of the coin you covet. You should be able to snag one for a good price.
Buy here on the BST. It doesn't have quite the selection, but good deals for the collector are frequently found. Collector to collector deals are the best!
Buy on Ebay. Contrary to popular belief, there are great deals to be found to this day. You've got to know what you're doing, know the market for the coin and employ a good dose of "caveat emptor" to all deals, but believe me, it can be done successfully. It takes a lot of time, though, and can be tedious running your canned searches daily (or multi-times a day). There are occasionally good BIN deals (sometimes GREAT BIN deals!), but I've been able to snag some great deals on auctions that end during the middle of the day during the week. The competition is pretty low in the morning and early afternoon. Why sellers start and end their auctions at those times makes no sense, but I am happy to take advantage of their folly.
Sell smart. Sell to retail customers (i.e. other collectors). I sell on the BST some, but most of my sales are on Ebay. Make sure you CYA on Ebay - follow all of the necessary steps to qualify for Seller Protection. Use the info provided on the board to block abusive bidders. I've only had two cases where buyers tried to rip me off and Ebay ruled in my favor on both of them.
That's it. Buying smart and selling smart - sprinkled with a good bit of patience and you'll be profitable
mbogoman
https://pcgs.com/setregistry/collectors-showcase/classic-issues-colonials-through-1964/zambezi-collection-trade-dollars/7345Asesabi Lutho
Not entirely. Yes, buy coins with the right looks, etc. The flip side is that they must be sold. As a collector, I find selling really nice coins rather distasteful, and would only do this if I got sick of them. About 6 years ago, I bought a handful of beautiful matte proof Lincolns, all 65-66 RD in PCGS Rattler holders. I bought them because I thought they were too cheap, and had a good chance to move up (especially in 2009). I should have sold them in 2009, but the collector in me said NO and I did not need the money---they have since come down in price (but I am still 'up'). The point that I am trying to make is that there may be a short-term, optimal time to sell a coin if one wants to maximize one's ROI. Merely buying for a long-term hold (and having lots of time to enjoy one's coins) is not necessarily the best investment strategy. In order to really make money investing in coins, one has to treat the coins as commodities, and not become too emotionally attached to them.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
On GS prices, you will find many somewhat better date gold that will not bring those prices. Some examples like slightly better date $20s in MS63 and above are not real market indications like MS65 $20s, 1901, 1907 and other dates that sheet much higher than the reality. See if Heritage would offer you the GS prices...
I had an 1899-s $10 MS63 where GS was well over $2000 for a long time but there were no buyers at those levels. An 1847 $2 1/2 AU58 would not bring sheet because of recent auction records and this is just scratching the surface.
As mentioned commemoratives even if they are CAC, and I have sold a few of those recently, will not bring GS bid, 10% behind if you are lucky, neither CAC nor Heritage are making strong bids on most of those.
If you are "working too hard" to find nice material at shops and shows, take a break. I have tried to find good material at shops and shows and you will find plenty of raw material that just will not grade and those dealers will make all kinds of excuses why they have not submitted coins for grading; you take the chance, and you spend the money and time, and guess what? You lose, pal! Then you have to call the dealer or see him at the next show, and say BTW, remember that coin I bought from you for $825 as an AU50? It graded XF details. Can I sell it back to you or exchange it for marketable coins? Not a fun process folks. But you know, the guy holds out for top, top dollar, he benefits from a system which protects his business activity where he has made big windfalls over the years. He has to play by the rules, he put his reputation behind that supposedly good AU coin and it was judged as "XF details" by the leading experts...
Certain areas of collecting have virtually limitless downsides as victims of coin scams have found. Even the fully educated consumer will find they take losses as others here have described in detail.
<< <i>
<< <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. >>
When a dealer is "collecting for you" he is likely adding value [at least to you] and all you are is a checkwriter. If a dealer buys a coin at a show cuz it's on your want list, I don't think he is adding much value. On some they add value on others they add cost. I wouldn't say that every coin you buy from a dealer buries you, but there are some that if you buy from them it will be very hard to resell at breakeven or a profit. I'm not bashing dealers, but IMO for many coins if you buy from them you will be hard pressed to recover your purchase price if your main venues are eBay or other auctions. We have the BST, but that is pretty limited.
Let me clarify what I mean by calling coin dealing an unproductive activity, because I'm speaking in an economic sense and not trying to be gratuitously insulting. Unlike mining, manufacturing, or farming, there is no new wealth created by coin dealing. The coins already exist and have for decades. Coin dealers just shuffle that wealth (rare coins) around instead of creating new wealth. Auction representation or want list filling does not create any new wealth, although it certainly can save a collector the expense and opportunity cost of tracking down desired coins.
<<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!>>
This is a ridiculous and specious argument. When I bid at auction, I set a limit for how much I will pay and I stick to that limit. If a dealer happens to outbid me, I am not going to buy that same coin from him for more than my bid limit. He can keep the coin, sell it to someone else, or sell it to me at a loss. I particularly enjoy the third option, and it happens more often than some people might suspect.
<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.>>
A rising market can unbury retail buyers; however, the overall coin market hasn't been rising since 2008. The conventional "wisdom" about a five year or longer holding period is exactly about the hope that a rising market will overcome the difference between retail and wholesale.
If something can be done consistently and repeatably, it's a skill. The poster immediately after you has the skill, and I commend him.
<<The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector.>>
I understand the point your mentor is trying to make, buy what other collectors will eagerly want to repurchase from you someday. However, I think it's much more important to think like a businessman than a collector in the arena of financial returns. There's no doubt that you own some wonderful coins that are coveted by many board members. I don't know what you paid for them, and it is none of my business; however, it is possible to be buried in wonderful coins and pay too much for quality. Acquisition cost, more than any other factor, will determine the potential of your financial returns.
<< <i><<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".>>
A rising market can unbury retail buyers; however, the overall coin market hasn't been rising since 2008. The conventional "wisdom" about a five year or longer holding period is exactly about the hope that a rising market will overcome the difference between retail and wholesale. >>
That would be the other factor that needs to be considered.
<< <i>The other piece advice that I have heard from one of my mentors, time and again, is that in order to make money investing in coins one should think like a collector that doesn't like to lose >>
I think the latter bit adds a little and helps a lot.
I second that. Good points made by each with a nice follow up by RevDrBlimber.
There's no fool proof way to avoid a loss, but most of the avenues to avoid it have been outlined. I recall one time bidding against a major
dealer for a MS66 NGC CBH. I saw no reason to continue to run them up as we were the only bidders left and it was clear we'd both go higher.
I tried to buy the coin from them after the auction but they wanted to try and cross it. Another time I did the same thing with a major retailer and they agreed to
sell me the coin for just 10% more than they paid. Both of us were probably willing to bid that coin much higher than +10%. So in one case I got the
coin much more cheaply than if I had continued bidding. In the other I didn't get it, but wouldn't have any ways if I had continued bidding to my limit.
One of the best sources for "cheap" coins is at major auction. A lot of them fall through the cracks. If it wasn't so you wouldn't so many dealers looking the stuff over.
I agree with the buy what you like philosophy. If you are talking about losing money on a few individual coins- that will always be the case. If you are talking about selling all the coins overall and making a profit you could probably do so or come close to it. If you buy coins that were always unpopular, chances are that they will remain always unpopular. Shoot for low POP coins when possible.
In this fiat currency world, a good bet is to purchase gold and silver coins that sell for just over bullion value.
<< <i><<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".>>
Let me clarify what I mean by calling coin dealing an unproductive activity, because I'm speaking in an economic sense and not trying to be gratuitously insulting. Unlike mining, manufacturing, or farming, there is no new wealth created by coin dealing. The coins already exist and have for decades. Coin dealers just shuffle that wealth (rare coins) around instead of creating new wealth. Auction representation or want list filling does not create any new wealth, although it certainly can save a collector the expense and opportunity cost of tracking down desired coins. >>
If you want to talk economics, this argument is not close to correct. A huge segment of the economy is "services." Of course "services" don't produce a tangible good like farming, mining, manufacturing, etc. How could they? Everyone can't build something, but that doesn't mean that what they do is "a completely unproductive activity."
The service industry is a key component to the economy because it frees up the intangible product of TIME. When some people perform services that free up other people to continue their "mining" or "farming" or whatever, that is a net economic benefit when the time freed up is worth more than the commission charged.
If a coin dealer has the contacts and skills to serve up coins that would take others much longer to find, AND when they use their years of experience in grading and evaluating coins to avoid costly mistakes, AND when the coin dealer serves up a higher quality item than would have been found otherwise, that's an economic benefit. And this includes a dealer who puts up their own money to buy a coin at auction because they have evaluated it, and put their seal of approval on it by re-selling it.
Of course, the economic value of a coin dealer depends on how good they are. Just like a McDonalds cook who burns all the burgers, a butcher who takes longer to cut up your meat than you would, or a newbie farmer whose crop yields are low, any economic benefit analysis assumes you're dealing with someone who has the knowledge to add value.
But a blanket statement saying an entire service provides no economic value is incredibly myopic. Services that provide no value, unless they are mandated into existence by a government, will not exist.
<< <i>The quick answer is not to sell outright to dealers. You can get fair retail from another collector quite easily via various websites if the coins are appealing and in demand. You've got a national audience of buyers online. Finding a new home for the problem free 1857 large cent you mention will take all of one day. If you bought coins that other collectors aren't interested in, and all you hear is cricket noises when you post them for sale, then you made your own bed when you bought them. Another option is to consign items to reputable dealers who take a small % fee, but do not sell outright to them if you want the highest price. Most "leave themselves a little room" when buying in case the item doesn't sell, and because they have money tied up in the item. That translates to paying you less than they could. >>
When eBay came along, it liberated me. All of a sudden I discovered that I didn't have to sell to dealers and lose money. I could sell to the rest of the world. (Literally, in my case, as I do more foreign than US coins). I feel your frustration over this age-old dilemma, but nowadays, with eBay (and hey, don't forget the BST, which is a sort of freebay that gets lots of exposure), you can leapfrog the middlemen.
Which is not to suggest that all dealers are evil or crooked or just out to rip you off, of course. Coin dealers have gotta pay the bills like anyone else. It's just that I've learned to be a little more realistic and temper my expectations when reselling to them.
<< <i>I agree with rhedden on this point:
<< <i>The quick answer is not to sell outright to dealers. You can get fair retail from another collector quite easily via various websites if the coins are appealing and in demand. You've got a national audience of buyers online. Finding a new home for the problem free 1857 large cent you mention will take all of one day. If you bought coins that other collectors aren't interested in, and all you hear is cricket noises when you post them for sale, then you made your own bed when you bought them. Another option is to consign items to reputable dealers who take a small % fee, but do not sell outright to them if you want the highest price. Most "leave themselves a little room" when buying in case the item doesn't sell, and because they have money tied up in the item. That translates to paying you less than they could. >>
When eBay came along, it liberated me. All of a sudden I discovered that I didn't have to sell to dealers and lose money. I could sell to the rest of the world AND LOSE MONEY. (Literally, in my case, as I do more foreign than US coins). I feel your frustration over this age-old dilemma, but nowadays, with eBay (and hey, don't forget the BST, which is a sort of freebay that gets lots of exposure), you can leapfrog the middlemen.
Which is not to suggest that all dealers are evil or crooked or just out to rip you off, of course. Coin dealers have gotta pay the bills like anyone else. It's just that I've learned to be a little more realistic and temper my expectations when reselling to them. >>
FIFY.
You sound like selling on eBay is a sure profit. Not so for me. IIRC most of what I sold there ended up losing money which is one BIG reason why I will rarely sell there again. As I indicated, the biggest issue is having a convenient low cost way to connect to a large audience of sellers.
I was always amazed that so often when I wanted to sell a coin to certain dealers and I tried to get the offer up some they would tell me to go sell on ebay. I always took that as more of an insult than advise because I thought why would they want me to use another service and cut them out of a trade? So after getting tired of hearing that I did do what they suggested. I think some businessmen can be their own worst enemies.
<< <i>You sound like selling on eBay is a sure profit. Not so for me. IIRC most of what I sold there ended up losing money which is one BIG reason why I will rarely sell there again. As I indicated, the biggest issue is having a convenient low cost way to connect to a large audience of sellers. >>
No, there's no sure profit anywhere. No guarantees at all, of course.
But having that option is liberating and can sometimes be quite profitable indeed, on the right stuff.
On stuff one has paid close to retail for, of course, it's harder. BST is almost universally better for that in my experience. These forums have helped me more than eBay has over the last decade.
Ain't no Santa Claus anywhere, alas, alas.
But a collector can learn to buy low- perhaps not as low as a dealer who doesn't really "need" or want a coin. A little dose of cold, hard reality never hurts a collector in the long run. If it's taken up front while one is buying, one usually gets a smaller dose of it when reselling later.
I've taken plenty of cold, hard doses of reality, and yes, plenty of reselling haircuts in my time. We live and learn. I've tried not to let it poison my outlook too much.
<< <i>
<< <i>You sound like selling on eBay is a sure profit. Not so for me. IIRC most of what I sold there ended up losing money which is one BIG reason why I will rarely sell there again. As I indicated, the biggest issue is having a convenient low cost way to connect to a large audience of sellers. >>
No, there's no sure profit anywhere. No guarantees at all, of course.
But having that option is liberating and can sometimes be quite profitable indeed, on the right stuff.
On stuff one has paid close to retail for, of course, it's harder. BST is almost universally better for that in my experience. These forums have helped me more than eBay has over the last decade.
Ain't no Santa Claus anywhere, alas, alas.
But a collector can learn to buy low- perhaps not as low as a dealer who doesn't really "need" or want a coin. A little dose of cold, hard reality never hurts a collector in the long run. If it's taken up front while one is buying, one usually gets a smaller dose of it when reselling later.
I've taken plenty of cold, hard doses of reality, and yes, plenty of reselling haircuts in my time. We live and learn. I've tried not to let it poison my outlook too much. >>
A dealer is probably a better alternative to eBay for bullion, esp. gold. Considering the hassle and risk of fraud selling n eBay, if I had a one ounce AGE, I'd rather just sell it local depending on the offer of course. I've had decent luck on the BST, but probly less than 25% of my postings sell.
No one likes the idea of being ripped off. When you pay good money for something and then realize it can only be sold for a portion of what you paid, it is natural to feel ripped off, and most people aren't very happy with that feeling. I've been careful to buy authentic (graded, problem-free) coins certified by PCGS and NGC for a reason. If I was okay with the idea of losing money, I probably would have given less care to wheher a coin was certfied, properly graded, or even real. However, I prefer to know that the money I spent can eventually be recovered.
The difference between a collector and a dealer is that a collector can afford to hold 'inventory' for a number of years while a dealer has to flip it as soon as possible. This gives the collector the benefit of time. Granted, values are dependent on a number of factors that change over time and because of this, values will rise and fall over time.
Another factor that determines whether a collector will be able to recover the money spent on coins is a dealer's markup. For the purpose of this thread, that markup is based on liquid coins in high demand, not some rare esoteric world coin that is expected to sit in inventory for years before being sold. If most dealer's markup for liquid coins is 10 to 15%, a collector should expect to be able to recover what he spent considering luck is on his side and those variables that influence value over time have been in his favor (essentially those variables that contribute to supply and demand). If, however, the typical dealer markup is 50%, it raises two concerns. First, the collector will want to know what he cannot obtain coins as cheaply as a dealer, and secondly, he will ask if he is permanently sunk in his coins to cover dealer's excessively high required rate of return.
Am I being irrational?
Things you can do that may minimize loss and maximize gain include:
- Making sure you are financially secure so that you're never in a "must sell" situation.
- Be extremely patient.
- Study recent market trends across many selling venues in your chosen specialty (auction results, online dealers, national shows, local shows, small brick and mortar dealers, the BST board on this forum, discussions with like minded collectors, etc.)
- Recognize the non-monetary benefits of collecting and enjoy them.
- Relax.
<< <i>Am I being irrational? >>
I'm wondering in how many "hobbies" people expect to make money or break even.
Model railroading, flying a Cessna 172, fishing, photography, astronomy, painting, RC cars/airplanes...Sure, extraordinarily skilled people could probably make a little money in any hobby, but most hobbies sink a little money in the name of "fun."
Are expectations that coins are different from other hobbies reasonable for the average collector? If everyone could expect to profit (or break even) in coins, wouldn't everyone do it?
Some comments regarding your comments:
1. The dealer's markup is irrelevant. What matters is whether you paid a fair price for the quality. Knowing what the 'fair price' range for a coin is takes a bit of research, and I certainly would not rely on what any price guide indicates.
2. Buy coins that have eye appeal, and are nice for their grades. They won't come cheap, but they will be more liquid and tend to hold their values better than so-so coins.
3. If you don't fully understand something (fair price, quality, liquidity, rarity, etc.) about a coin that you propose to buy, keep your money in your wallet.
4. Learn something about the workings of the coin market during the last 40 years or so, and options that are available to you when you decide to sell a coin. It is entirely possible to buy nice coins, and lose money (or leave a lot of money on the table) because you sold them foolishly (I've been there, done that).
5. You noted that a long holding period gives the collector the benefit of time. Perhaps, but it depends on how you do the math (e.g., do you factor in inflation?) and what the health of the coin market (or relevant niche) is when you decide to sell. There are people who bought coins during prior market highs, and they have no realistic chance of getting even half of their money back.
6. I don't know what kinds of coins you have purchased, but suggest that you make a serious attempt to assess their liquidity. If you are holding coins that are more illiquid than you are comfortable with, then perhaps you should alter your collecting interests or lower your expectations concerning financial returns upon sales of the coins.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
<< <i>stevepk,
Some comments regarding your comments:
1. The dealer's markup is irrelevant. What matters is whether you paid a fair price for the quality. Knowing what the 'fair price' range for a coin is takes a bit of research, and I certainly would not rely on what any price guide indicates.
2. Buy coins that have eye appeal, and are nice for their grades. They won't come cheap, but they will be more liquid and tend to hold their values better than so-so coins.
3. If you don't fully understand something (fair price, quality, liquidity, rarity, etc.) about a coin that you propose to buy, keep your money in your wallet.
4. Learn something about the workings of the coin market during the last 40 years or so, and options that are available to you when you decide to sell a coin. It is entirely possible to buy nice coins, and lose money (or leave a lot of money on the table) because you sold them foolishly (I've been there, done that).
5. You noted that a long holding period gives the collector the benefit of time. Perhaps, but it depends on how you do the math (e.g., do you factor in inflation?) and what the health of the coin market (or relevant niche) is when you decide to sell. There are people who bought coins during prior market highs, and they have no realistic chance of getting even half of their money back.
6. I don't know what kinds of coins you have purchased, but suggest that you make a serious attempt to assess their liquidity. If you are holding coins that are more illiquid than you are comfortable with, then perhaps you should alter your collecting interests or lower your expectations concerning financial returns upon sales of the coins. >>
Good advice. Buying close to market bottoms is critical. If you are collecting whenever something comes around regardless of market conditions, understand that there is more risk involved. As a collector I disappeared from the coin markets in mid-1979 to August 1982 and then again from around 1990-1991 and then 1995-2001. My big mistake was not disappearing from 1990-1995 when I continued to buy "great bargains" as prices fell year after year after without relief. If minimizing loss is part of your plan, you must be prepared to sell out when market conditions get frothy. About the only exceptions are the more esoteric or solidly based collector areas where speculators don't usually tread. Up until 2005 I would have placed key date circ coins in that category too. But even those got whipped up by dealer and speculator trading ensuring a subsquent price decline. If you're buying stuff that's out of favor, but has a decent support base under it, you needn't worry as much about the financial cycles that affect the rare coin market. A friend of mine has been collecting hobo nickels for years (ie not mainstream but a solid collector base and an area where you have to know your stuff to compete). He's done quite well with those and prices last I checked with him continued to slowly move up. But as soon as speculators see others making money, they eventually join into the act and become "experts." That's the time to exit until they've had their fill and crash the market. Buying coins in 1975, 1982, and 1995-1997 offered numerous true bargains. When's the next such period going to show up? This last bull market was starting to show mania signs in 2004. And from 2004-2006 a number of high powered collections kept hitting the market. Those were the early birds getting out who had accumulated stuff from 1993-2003. Those with better market timing sold off their collections in 2007 and into summer 2008. If you missed that summer 2008 peak by only 3-5 months, it was curtains.
<< <i>
<< <i><<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".>>
Let me clarify what I mean by calling coin dealing an unproductive activity, because I'm speaking in an economic sense and not trying to be gratuitously insulting. Unlike mining, manufacturing, or farming, there is no new wealth created by coin dealing. The coins already exist and have for decades. Coin dealers just shuffle that wealth (rare coins) around instead of creating new wealth. Auction representation or want list filling does not create any new wealth, although it certainly can save a collector the expense and opportunity cost of tracking down desired coins. >>
If you want to talk economics, this argument is not close to correct. A huge segment of the economy is "services." Of course "services" don't produce a tangible good like farming, mining, manufacturing, etc. How could they? Everyone can't build something, but that doesn't mean that what they do is "a completely unproductive activity."
The service industry is a key component to the economy because it frees up the intangible product of TIME. When some people perform services that free up other people to continue their "mining" or "farming" or whatever, that is a net economic benefit when the time freed up is worth more than the commission charged.
If a coin dealer has the contacts and skills to serve up coins that would take others much longer to find, AND when they use their years of experience in grading and evaluating coins to avoid costly mistakes, AND when the coin dealer serves up a higher quality item than would have been found otherwise, that's an economic benefit. And this includes a dealer who puts up their own money to buy a coin at auction because they have evaluated it, and put their seal of approval on it by re-selling it.
Of course, the economic value of a coin dealer depends on how good they are. Just like a McDonalds cook who burns all the burgers, a butcher who takes longer to cut up your meat than you would, or a newbie farmer whose crop yields are low, any economic benefit analysis assumes you're dealing with someone who has the knowledge to add value.
But a blanket statement saying an entire service provides no economic value is incredibly myopic. Services that provide no value, unless they are mandated into existence by a government, will not exist. >>
I am not persuaded by your arguments. Gambling creates no wealth, merely wealth transfer; however, casinos are popular. Furthermore, many services add incremental value to a product, and thereby create wealth. A clean house is more desirable than a dirty house. A broken engine or toilet is less valuable than a repaired one. A cooked steak is more palatable than a raw one. Thus maids, mechanics, plumbers, and cooks help preserve and increase society's wealth.
Coin dealing just transfers an existing item from one party to another. No new wealth is created in the process. I don't believe this point is even debatable.
<< <i>Coin dealing just transfers an existing item from one party to another. No new wealth is created in the process. I don't believe this point is even debatable. >>
A similar question would be whether coin doctoring creates wealth? Or does it create losses?
are well advised to sell a coin from time to time so they know the true value and learn a little about
selling.
Try to avoid buying coins that are "smoking hot" and when you own them consider selling. So long as
you can learn to enjoy the parts of the hobby that aren't hot (that's the bulk of the hobby), you'll pro-
bably do just fine.
The best way to "effectively buy and sell without taking a loss" is to emulate a dealer. Take your profit when you buy the coin and then sell it right away.
If you take your profit when you buy it, but hold it a long time, you run the risk that the market will slowdown or stagnate when you want to sell.
So regardless, take your profit when you buy. But then either sell right away, or keep close tabs on the selling prices of your stuff to make sure you're not left holding the bag.
Gotta say this. Yes, the demographics for coins are pretty bad. But we are in a recession and that is more than likely driving the bus right now. Even the hottest collectibles are down and the only way to make money is to dabble into the best...(flight to quality).
Steve
A few methods to alleviate some of this:
1. Forget sheet prices and price guides. Use prices realized from auctions, and even ebay to determine market values.
2. Become an expert on the coins you want to collect. Learn to cherry pick, and look for fresh material. Avoid stale inventory.
3. Becoming an expert will allow you to buy the right coins at auction, from major auction firms and ebay. I know of one person who has made tens of thousands of dollars cherry picking rare varieties on ebay.
4. Dealers are not consistent in what they pay. Specialists are often wholesalers, beware of them. National dealers usually pay more for quality coins. Find out who pays the most, or go the auction route.
Buying and selling from local shops and shows will usually result in losses, unless you are fortunate to buy into a strong, rising market (which cannot be predicted).
Bumping a 10 year old thread made during a different market dynamic, yet nonetheless, the debate was and is compelling still. Hope you find it worth the resurrection.
"Got a flaming heart, can't get my fill"
Wow what a great thread from another time but not another place. I didn't notice the original posting date until I was well into reading the responses. The one thing that the original poster mentioned is that he did most of his buying from 2006 to 2011, and from my experience I have sold a few coins that I bought during that time period for either very little more than I paid, or at a loss. I have a few examples of which I purchased during that time frame that if I decided to sell, most likely could be sold at a higher price.
There are a couple ways to look at "buying and selling without taking a loss." If you envision doing it with a relatively short turnaround time, you are behaving like a dealer, whether you want to call it that or not. This involves a requirement for heightened market awareness, and likely requires abandonment of bias for coins/series that you "like" in favor of coins/series that are favored by the market. If your collection features mostly moderately valued pieces, say under four figures, you will have to come to grips with finding the selling venues that get them in front of the largest possible number of collectors. Be prepared to invest a great deal of time, and to deal with the cost and vagaries of online selling. Also, be ready to deal with the 1099-K you'll get from the payment processing outfit at tax time assuming you've had sales of $600 or more during a calendar year. If, on the other hand, you are thinking in terms of a much longer holding period; the problem becomes somewhat simpler. You are now more of an "investor". The best first step would likely be a decision to work only with somewhat higher-valued coins, say four figures or more. Don't get into it before developing a really good "eye" (there may be some tuition to be paid in that quest). Buy the best you can afford, certified by the TPGSs with the highest market acceptance. Unfortunately, you will inevitably be at the mercy of market cycles, so be sure to acquire only most solid specimens. For me, either of these approaches would greatly lessen the joy of collecting. Having the pure enjoyment and relaxation reduced by concentration on an eventual gain or loss would make collecting too much like a job.
Coinlearner, Ahrensdad, Nolawyer, RG, coinlieutenant, Yorkshireman, lordmarcovan, Soldi, masscrew, JimTyler, Relaxn, jclovescoins
Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't no optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
The little old fashion emojis are the give away... too bad none showed up until I read 10 or more super long replies 🤓
If your buying coins your an investor not a collector. A collector imo is somebody who acquires coins at face value.
If you want make money in RCI you need to churn your inventory (investment). Not doing that you will most likely lose money. The market can be volatile, coins can go bad in the holder.
It’s your responsibility to investigate the various sell venues: eBay, auctions, taking a table at a show, vest pocket trading. Making money in RCI is tough, competition is brutal (many highly experienced well heeled), overhead expenses will drown you. At shows many out pick u off - lowball w their BS game. Don’t let them. You don’t owe them anything except give them the item they paid for or pay for the item u purchased from them. Like positive yardage on offense - develop strategy buy low /sell high. Nobody cares or is going to hold your hand or care if you lose your rear end. Do not finance it with debt. The only real rule: Buy low sell High. Being in a coin club can help. My first show shared a table with friend who was good mentor in the biz.
I don’t know where or how you got the idea that paying above face value disqualifies someone from being a collector.
noun: collector; plural noun: collectors
1.
a person who collects things of a specified type, professionally or as a hobby.
"an art collector"
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Plus this “go bad in the holder” canard. It happens occasionally, but not often enough to support the market volatility warning.
"Got a flaming heart, can't get my fill"
Take the loss (up to $3,000 annually) to offset your other income.
Buy ungraded and work the price at shows you go to. Proceed to have them graded.
More room to negotiate an ungraded coin.
And do your homework on prices, history and grading
Be able to grade coins you’re interested in confidently
No risk without reward. You will lose at times but remember experience is just mistakes you’ve made
When I started collecting I bough an 09 s vdb.
I was very happy with it for a fair price. I later came to the conclusion it was artificially toned
Trust me when I say I’ll never mistakenly buy an artificially toned coin again
This is correct even 10 years later, that most collectors take a loss when selling their coins. The same is true with most other hobbies. As a true hobbyist, to me the "enjoyment factor" needs to be added into the equation. What price do you put on that? If you're not adding any value for your enjoyment, then you are either not a true hobbyist/collector or you are not enjoying your coins. Money spent on a hobby is like money spent on a vacation. You don't come back from vacation expecting to recoup all or any of the money you spent on that vacation. Your enjoyment was what you paid for. A hobby for me is a year round vacation that I get to take anytime I want.
In short for me a hobby is not an investment. I know it can be if you really know what your doing and do enough work and research when you buy, but then it could cross the line and become a job. I have one of those already. This hobby of mine is a distraction from that. Once it turns into a job or I no longer find it fun, it's time to sell and get out.
Enjoy your hobby. Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
Successful transactions: Shrub68 (Jim), MWallace (Mike)
Love the above post by BryceM....
My favorite coin book is probably the Robert Shippee book Pleasure and Profit: 100 Lessons Building and Selling Coins.
There is riches in niches as EOC was espousing since 2012.
I don't think the world class collectors are building via Ebay, but In 2022, Ebay is the great equalizer for most collector/flipper types.
Key date Type set is the direction my collection is headed.
It will likely take years to achieve.
Took a look at the last Covid dip and saw where Silver Commens barely budged in the steep decline. Good p[lace to start IMHO
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
Wow I read this whole thread not knowing it was 10 years old until the new comment popped up. Seems all still relevant today.
The way I see it, everything I buy in an auction (assuming 'fair' auction, not shill bidders) was bought at market rate. You do need to know roughly what stuff goes for so you don't get in a bidding war, but I expect to sell all my stuff for roughly what I paid for it, minus fees, plus inflation, and maybe even a little bonus if I got lucky/good.
On the other hand buying BIN coins seems like overpaying by definition, because if the thing was really worth that much, someone would have bought it! (assuming it has been sitting out there for a while, not quickly snapping it up as soon as it hits the market)
I prefer fixed price sales for evaluating "market rate". Who knows what bidders are thinking when they bid? With a fixed price sale, you know for a fact that the buyer thought "This is a fair price."
Even assuming something has been sitting there for a while, how could anybody confidently know whether or not an interested buyer has seen it yet?
Geez Louise. After reading the posts on this thread, I am depressed. I am an old guy with coins purchased from long ago up to recently. Until the last ten years or so, I hated TPGs and the coins being in holders. I am old and loved filling Whitmans. Now as I decide what to do with them, I have no clue how to sell them. My grandkids just want money. If I sell them to dealers, are you telling me that they will discount their price to include having my raw coins graded? I know they operate on margins, I thought around 60% of retail. But I'm getting the feeling that may be a high number. I have no clue what I have in the vast majority of these coins. I will not sell on Ebay because of their rules and fees.. I also have a bunch of currency mainly fancy serial numbers and the like. My total value of everything is less than $50k. I also have bullion valued around $30k and will give it to the kids. So any suggestions on how to get the coins and currency sold at a fair price to me and the buyer? I will not sell off individually, so no cherry picking. This may be hard to undertake. Thanks AC
My first thought is to "think like a dealer" or lock in your profit when you buy, like cherry picking.
I would recommend you have any coins that are over a certain dollar amount graded ($200 maybe?)
You may be able to find an honest local dealer that’s willing to offer a fair amount on raw coins, but above a certain threshold the dealer is going to hedge his bets, and won’t be able to offer maximum value. You already own them, so it only makes sense that you absorb any risk (and reward) by having them slabbed.
Founder- Peak Rarities
Website
Instagram
Facebook
"How to effectively buy and sell without taking a loss?"
Nobody has a guarantee of not taking a loss on their purchases. If you're buying and selling, there is always a risk that you'll pay more than you can get when you resell.
I only see two ways for collectors to avoid taking a loss in coins:
(1) seems to have held up reliably only for very high end coins, so focusing on that area is one way to go if the trend continues.
(2) requires something special to occur. For example you can cherrypick, crackout, or CAC a coin to increase its value. Dealers can buy low from widows or from collectors who just want cash now, but collectors rarely have access to those opportunities.
There is also the collect-ealer model. I have seen cases where someone acquires an assemblage of coins they really like, often higher-end eye-appealing coins. They list them for sale at dramatic prices. Their "inventory" is really their personal museum/collection, but if someone does bite, they sell for profit.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
Deplorable Dan's advice is good.
I would NOT take everything said on this thread as being gospel. There are a lot of factors, including exactly what coins you possess. What a dealer would pay very much depends on what it is.
For example, if you have AU pre-1933 common date gold, you'll get 95-98% of value. If you have AU common date Morgan $s, you should get around 80%. If you have AU post 1934 Lincoln cents, you will be lucky to get 20%.
A slabbed MS65 Morgan $, common date, would be purchased by dealers at 90% or so. A raw MS65 Morgan $ would probably be purchased at 70-80% of MS64 price as they need protection if it only comes back as a 64 or has a problem. So, to Dan's point, if you consider the cost of slabbing, $200 is probably a good number.
And, kindly, eBay fees including shipping are 15% or so. If you think that 60% is the right "dealer number", you were willing to tolerate a 40% vig from dealers but not 15% from eBay? Granted, the dealer does all the work in that scenario, but my eBay fees with store and top-rated seller are under 8%. Incredible bargain, if you are willing to do the work yourself.