Some thoughts about the coin market, at 3 a.m.

markglicker · December 10, 2005 7:12PM

While randomly looking at some coins online, it really hit home, how much money can be lost, if you do not know what you are doing. Not just with the basement third party graders, but with coins in top 3 holders. For example, a 1940 Washington Quarter, in a PCGS MS 67 holder, will auction for about $600. That date and grade, in an NGC or Anacs holder (both good, reputable companies, but perhaps with the bar a bit lower, in the top grades), may only bring $100-150 at auction. That fact may seem obvious to most of us on the forum, but to a relative newcomer, who sees, say a MS 65, common date Morgan trading for a similar price in all three holders, an opportunity to take a substatial hit, in a condition rarity grade, is quite easy to do. As they say, a little knowledge, is a dangerous thing.

Another example, is variety pricing premiums, particularly in earlier date coins. One may see a given coin priced at a certain level, and not know the added value of the attributed variety. Seeing a similar coin, but of a lesser rarity, the relative newcomer, and some veterans as well, may consider the coin to be a bargain. The loses in such cases, can be significant.

No criticism is being made, in regard to the top grading services, nor am I suggesting that the coin market as a whole is at fault. Just a reminder that the pitfalls of not making intelligent evaluations, can be substantial.

drwstr123 · December 10, 2005 8:43PM

There's a tuition to pay for any new field.

roadrunner · December 10, 2005 8:47PM

As "good" as slabs have evened the playing field, there are just as many traps. While it was possible to lose 90% or more on raw coins years back (today too), you can still lose 50-80% on top tiered slabs if you don't know what you are doing.

As far as tuition program, I don't think any newbie should have to lose their shirt to start collecting. I've never bought this line and never will. And we on the forum should look to guide them if they are willing to ask for help.

roadrunner

mercurydimeguy · December 10, 2005 10:07PM

I think your post is an interesting observation. Change the thread title so some of the "newbies" might pick up on it.

Having said that, the context of your post and similar posts that permeate these boards primarily refer to buying stuff sight unseen -- and probably on eBay.

The above addition seldom gets weaved in to these types of posts and then people don't get the context of the post.

At a coin show or in a sight seen environment, I am completely slab agnostics...and also buy just as many raw coins as slabbed.

The flavor of the slab, or no slab at all, is almost not a factor in my coin purchases in a sight seen environmnet.

RYK · December 10, 2005 10:36PM

As far as tuition program, I don't think any newbie should have to lose their shirt to start collecting. I've never bought this line and never will. And we on the forum should look to guide them if they are willing to ask for help.

I agree with your point, Mark, and I agree with Roadrunner 110%. I strongly feel that a new, serious collector should quickly find both dealer and collector mentors, people who know a chosen specialty well from both sides of the table. This has helped me immensely--in fact, the only mistakes I have made have been the times that I did not seek or ignored the advice of my mentors!

Using your example of Washington quarters, I would try to hook up with Manofcoins and Wondercoin (examples) if I decided to get serious about them. Saints...perhaps Saintguru and Todd Imhof/Pinnacle. Seated quarters...Roadrunner or Coinosaurus and Doug Winter/Pinnacle. Seated or Trade dollars...Tradedollarnut or EVP and Legend. You get the idea. I have always thought that one important role coin clubs should fulfill is matching new collectors with a mentor or two.

coinkat · December 10, 2005 10:43PM

The bigger problem is that we all often say, "Buy the coin, not the plastic". While I so happen to sincerely believe that, there are limitations in terms of what can be communicated by scans in this forum with respect to loftly MS grades in the 65- 67 range. With many coins, it is hard to see some of the slight differences in grades and even the differences in grades within the series. I still am of the the view that an 1880-s in 66 is held to a higher standard than an 1879-cc in the same grade. This is because the 1880-s is probably among the most common in 66 and the quality of this coin, in general, is outstanding as is the 79-s and 81-s. The story is different for the 79-cc.

One has to understand the differences in strikes, lustre and what is generally accepted from the mints that produced coins in the series desired. It can be, and often is, a significant challenge. However, if one is serious about collecting, it is well worth the money to have a decent library and do the research, attend some major coin shows and learn by experiencing what goes on first hand. Spending money for Breen's Book, the first book done by PCGS ABOUT 4 YEARS ago and even their update is a great place to start. Those three books should cost probably $150-175. These booksare well worth the money... seriously.

drwstr123 · December 10, 2005 10:49PM

Tuition is spent to acquire knowledge. Not a punitive.

Barry · December 10, 2005 10:51PM

The other way to avoid the rip is don't collect high grade MS coins with big price jumps for 1 point. We've all seen too numerous to count examples of variable grades/regrades of 1 and 2 points.
It amazes me how many otherwise smart people get sucked into this trap.

Barberman55 · December 11, 2005 12:02AM

The collector, has to learn how to grade coins for themself.......simple as that. I've seen many dogs in PCGS graded holders, and many coins that I feel are not worthy of the grade that PCGS has given them. Just look at some of the current auctions going on. I see a 1904, MS-67, red, Indian head cent, in a PCGS holder, that has more than it's fair share of fly specks. Granted the surfaces are pristene, but personally, I would want a PCGS, MS-67 red, Indian head cent, to be totally free of any carbon spots.

TPG services are great for authenticating coins, and I feel they should be used when buying key date, and expensive coins. Still, the collector has to know how to price, grade the series that they specialize in, and also, how to distinguish between original and messed with coins, in that particular series. Without this knowledge, how can you possibly build a nice set that's, strong for the grade, has nice eye appeal, and was purchased at competitive prices.

DHeath · December 11, 2005 12:42AM

Attend the ANA grading seminar. It costs about $300, and you have the opportunity to grade a full spectrum of coins (1000+) from different periods and of different metals in a classroom environment under the guidance of industry professionals. Attend shows and look at lots of material. Have a friend cover the labels on a box of slabs, and grade them yourself. Buy the PCGS grading guide and read it. Submit some coins. Pay the grading fee, and think of it as a final exam. If you develop a feel for what the TPG you prefer will do with a particular coin, profit will follow. All that stuff pays dividends forever.

MORGANHUNTER2 · December 11, 2005 1:00AM

Some thoughts about the coin market, at 3 a.m.
Created On Sunday 11, December, 2005 2:12 AM by markglicker

You were bored this morning - admit it- that desert is getting old..

Coxe · December 11, 2005 1:11AM

Collectors, espcially new collectors, need to educate themselves well before laying out significant cash. We all know the "buy the book before the coin" mantra. Need to be careful of the book though. Even a good one like Breen's encyclopedia can mislead. One needs a few books and today internet research. Then a collection should be planned. Whether someone is doing a type set or a full date/mm series, each selection should be made with careful deliberation and understanding to choose a specimen that fits their set and distinguishes itself from others in the grade as a nice representative for the slot, and for the right price.

One trap a lot of collectors fall into is jumping in and buying generic crap while missing opportunities. I have a decent Morgan DMPL set. What is interesting about it is just as much about what is not there yet as what is. I got my 01-P, 04-P and 03-S but don't have a single 81-S or 84-CC. The former might come up a coupletimes in a collecting lifetime while the latter are as common as sand. When the tough date is available, why buy a dozen of the common ones that are available every day of the year?

I agree about the coins with enormous spreads between adjacent grades. Two points on that though. (1) The astute collector will use that to get PQ specimens graded at the lower technical grade. The valuation should be continuous over the spread and has some intermediate overlap for many coins. Some of my favorites are the 80-O and 81-O Morgans in MS64DMPL. There are some frosty, well-struck cameos out there. You might pay 10%-20% over the regular price for them instead of 1000% to get an MS65DMPL which might not have as much ultimate eye appeal. (2) That stated, the higher grade of those high spread issues often are stellar performers and among the better investment instruments in numismatics. The caution is however very valid. There's a lot of $$$$ involved and a lot of risk still. Don't bat in the majors until you've worked the minors when it comes to that material.

Another trap that collectors often find themselves in is following a fad. In collectibles, it is all supply and demand. That is why I am very cautious in general on moderns. Very few people are going to get rich off of their state quarter sets. Enjoy them, but don't invest your nest egg in them. I, myself, might be in such a trap if VAMs go bust, though I don't think they will. Underdiversification focused in a niche can ultimately prove disasterous. Overdiversification can also be a problem as it is just too hard to be good in a lot of areas and follow them with reasonable dilligence.

MFH · December 11, 2005 1:31AM

<< <i>The collector, has to learn how to grade coins for themself.......simple as that. I've seen many dogs in PCGS graded holders, and many coins that I feel are not worthy of the grade that PCGS has given them. Just look at some of the current auctions going on. I see a 1904, MS-67, red, Indian head cent, in a PCGS holder, that has more than it's fair share of fly specks. Granted the surfaces are pristene, but personally, I would want a PCGS, MS-67 red, Indian head cent, to be totally free of any carbon spots.

TPG services are great for authenticating coins, and I feel they should be used when buying key date, and expensive coins. Still, the collector has to know how to price, grade the series that they specialize in, and also, how to distinguish between original and messed with coins, in that particular series. Without this knowledge, how can you possibly build a nice set that's, strong for the grade, has nice eye appeal, and was purchased at competitive prices. >>

I see a 1904, MS-67, red, Indian head cent, in a PCGS holder, that has more than it's fair share of fly specs. ...that's why I con't collect MS IHC's !!!

jdimmick · December 11, 2005 2:05AM

In the past 6 months, I myself had become increasingly nervous about the pricing level of coins and where the market was headed. I began to see early signs of an impending crash, or a least a significant correction. I even elected to move some of my holdings that may not have faired so well in that event, and only kept the best of the best. However, after attending Baltimore I have renewed optimisim for the coin market of the future. But IMO as others have stated, we have grown into a more selective market and it pays to do your homework on current purchases. There is a tremendous amount of garbage on the bourse floor from all the years of upgrading/doctoring and holdering of swill, and it takes adequte knowledge and a good eye (either your own or an expereinced representative ) to filter thru all of that and grab the nice coins when they are available. I still feel thier are several coins that even stepping up a bit too purchase will be rewarding in the future both financially and just the pleasure of owning them.

jim

Some thoughts about the coin market, at 3 a.m.

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