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A counterintuitive observation about coins and profitability
rhedden
Posts: 6,650 ✭✭✭✭✭
Over the years, the coins that have treated me the best in terms of capital gains are.... RAW PROBLEM COINS.
Doesn't that seem a little odd?
There's a good reason for it. I'm not willing to pay much for them in the first place. When I sell them, they sell to collectors who value "details" over all other things, often in a venue like eBay. Generally, I would not own a raw problem coin unless it was something really rare, so we're not talking about cleaned AU Morgans here.
Looking at PCGS/CAC coins in MS and PR grades, I typically do no better than anyone else. I buy them for retail in venues like Heritage. They're usually losers or +-10 % break-even propositions when I sell them. Go figure.
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Interesting observation, and in your case fact.
Thanks for sharing.
Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe, softparade, derryb, Ricko
Bad transactions with : nobody to date
i don't think it's odd, but definitely counter intuitive.
some people have knowledge and experience. others are able to take knowledge and experience and analyze it to gain further insight.
you found a niche market, and a supply. well done!
Maybe it's just me but this sounds exactly like what Great Southern Coins does on eBay. Nice.
Successful transactions with: wondercoin, Tetromibi, PerryHall, PlatinumDuck, JohnMaben/Pegasus Coin & Jewelry, CoinFlip, coinlieutenant, bigjpst, and joebb21.
In this market (declining in enormous amounts, but I would never confront that publically), those who wish to add key dates might be VERY much inclined to add a 'details' coin if it means completing a set, filling a hole, or otherwise achieving a collecting goal.
I think you are right on . . . . not every one of us can afford "+", CAC, and high end for the grade supertoners. In many cases, we will need to keep every single collector going . . . to keep the hobby going.
That may mean some 'details' coins sell well . . . here and there!
Drunner
I disagree about buying problem coins, I advice not to buy them as they are problems.
I Agree we always here stories of people buying super nice coins from super prestigious auction auction house that give you the opportunity to pay up to a 20% buyers fee only to find find themselves underwater a few years later. Yes of course there are exceptions.
I do advise buying super eye appealing coins at a discount and yes that means ebay.
I think ErrorsOnCoins misunderstood my intentions. I'm not advocating buying problem coins at all. It just so happens that over the years, as I have bought out old collections from various sources, I paid very little for the problem material because I knew it can be hard to sell. I've been pleasantly surprised as I sold off some of the less-than-perfect acquisitions.
There is another subtle implication from my post. Chasing the absolute best of the best, and stretching to pay for it, is often a prelude to losing money. How easy it is to forget about the "buy low" part of the old axiom, "buy low, sell high." Thus, when paying retail and beyond to acquire that monster, plus-graded, CAC beaned, premium quality, Registry-boosting toner, ask yourself whether or not you care if you lose money on it at some future point. If the answer is, "no, I am buying this coin for the enjoyment of owning the best," then go ahead with the purchase. But please do not tell yourself that overpaying for the best is likely to result in a good investment. It can, but more often than not, it won't.
I'm actually not surprised by this. If bought low problem coins have the potential for very big margins if overly enthusiastic and unselective buyers can be found. This can often be seen on this board on guess the grade posts. Many posters simply do not deduct enough for the problems. If they are actually buying such coins they are probably burying themselves in them.
Could it be possible that the buyers of problem coins like these are paying tuition?
I've had mixed results myself but I certainly understand where you are coming from.
RE:
They're usually losers or +-10 % break-even propositions when I sell them. Go figure.
What is your holding period?
it has been my experience that a coin in an ANACS/PCGS/NGC holder with noted problems very seldom gets looked at, yet the same coin out of the holder will be inspected and bought. this seems to apply to coins noted as "cleaned" and not to things such as engraved, tooled, plugged and other similar attempts to enhance a coin.
As someone else mentioned, the person who buys the resold problem coins could be paying tuition.
The people who make out like bandits are those who get some of these problem coins into holders. Ie., where do you draw the line between a Draped Bust Dollar which has been bagged for cleaning or funky color, and one which is net graded because of it, or another which is deemed to be market acceptable?
I don't know, but I avoid these coins, and yes, I usually know them when I see them.
"Seu cabra da peste,
"Sou Mangueira......."
The only coins that I have ever done well with were high grade key dates like the 18/17D Buffalo and the three legged buffalo. Paid $525 for the over date (XF) and $50 for the other, also a nice XF. I feel quality and time will prevail over the long haul, meaning 99.9% of the U.S. coins are dead money.
Sure, if you only pay cents on the dollar on a coin that is already under valued in price guides you can double your money. I'll use a coin like this 1851 quarter that I think I paid $25. I'm sure someone will pay $50 to fill a hole.
EAC 6024
If you looked at coins with minor problems that had been tried once by a collector, and just needed a little conservation or a year or two in a Wayte Raymond style holder, or sold way below even what a real problem coin should, you could do alright in some situations in the long run if the coin later earned numerical grade. But then you have a softening market even for much of the good stuff, so time may not be on your side.
Good points by everyone. Just between you and me (and hello to the 97 lurkers reading this
), I've been selling most of the problem material and (usually high quality) duplicates I've accumulated. If the market continues to slide, I don't mind losing some money on monster-toned and cameo PR65-PR67 Seated and Barber material. It will bounce back at some point. I do mind losing money on duplicates or less-desirable material that I've been too lazy to sell.
For more valuable pieces with problems, like my scratched up 1870-CC, 1871-CC, and 1878-s quarter duplicates, I put them on consignment with a dealer who has become a good friend. Lots of people would consider purchasing those because they will never be willing to devote enough money to buying a problem-free coin in a PCGS holder. I made money on these because I didn't pay much for them. I never would have bought them for my own sets, except that I was buying out a collection, and the owner wanted to sell the whole thing.
Besides rare date problem pieces, there is the true problem material. It might be Seated, Bust and Early copper, but it's under $100 retail, it's not that rare, and it's fugly in some cases. I have some of it around due to buying collections. These will be going up on eBay as bulk lots, and if they sell for low prices, that's fine. I'm not doing the work of selling them and shipping them individually, nor am I going to fight with the crazy guy who makes $8 eBay purchases, leaves negative feedback, and files a SNAD with eBay so he can keep the item for free. You know how that goes: it's often the "under $10" items that ruin your feedback. $300-500 bulk "flea market" lots keep these people out of the game and get shipped in one box with one trip to the post office.
I'd not buy a damaged common coin, no matter how cheap, but am actively seeking R6 and late die state pre 1829 US quarters, with severe problems, at the right net prices. Please offer.
Liberty: Parent of Science & Industry
Great post. Any coin is a great coin at the right price.
Most coins have a market..at some level... and many collectors cannot afford slabbed, high end coins... That is why we see people going through the junk boxes - and they do find treasures.. sometimes treasures just to them and sometimes, overlooked rarities. Numismatics is not a business for everyone... there are collectors out there... Cheers, RickO
Unless you can afford the best extant example of a coin, you're always forced to accept some compromises. 'tis no sin to do so, all the way down to bent, holed, corroded, worn, tooled, and doctored pieces. The only sin is overpaying and you can do that with a coin in any condition.
There is home for everything. One man's junk is another man's treasure. Etc. etc. etc.
I agree, since I have a quasi-similar business model, buying the junk, selling it as treasure.
I play with old 1965 - 1968 Mustangs. An example from this week, is the stupid steering column bracket, upper and lower, that fit a 1965 1966, different in 1967, different again in 1968, a simple loop and plate of steel, about the size of a plum.
Knowing the details means being able to visually separate them from a pile of junk out at the junk yard or swap meet.
But who needs a steering column bracket, after all, every car had one, they never wear out, and literally hundreds of thousands were scraped "back in the day"
But I noticed a few years ago, people looking for them, and when I listed them on ebay, they sold quickly at $5, then $10, then going and going, now selling at $45 a pair, for something I pick up from $1 - $2, if not free, after all, who cares, who even sees this as a market, as they are just in the junk box, or throw them in with other stuff.
This week, a shop bought $490 in steering column brackets, as they have bought a bunch of old shell cars to fix, and none of them have the brackets in them.
My cost on all of it was less than $25. A great ROI.
Instead of chasing the treasure, I chase the stuff no one else "sees" but I see a market.
Interesting experiences. I guess if you can buy the problem coin low enough, reselling might offer some gains. In my experience, diptard sellers think their problem coins are worth maybe a 5-10% discount off of full retail so you never really can buy a problem coin low enough. In my experiences, problem coins are the worst sort of investment in numismatics. I don't buy a problem coin no matter what now. Well, I do buy love tokens, counterstruck and coins with "problems" that came that way from the mint, but that is something different.
Good to know that someone has found an angle with problem coins.
I do mind losing money on duplicates or less-desirable material that I've been too lazy to sell.
..........................
The SECOND a coin ceases to be in favor and you even THINK you might not want to keep it is the second that you IMMEDIATELY begin trying to sell it. For WHATEVER "the market" is at that time.
It's very unlikely that anything even remotely out of favor will "bounce back."
At least in my opinion.
Cut losses FAST! Even a good stock market strategy.
And the corollary:
Never underestimate the power of cheap.