How to pay too much for coins and lose money
TahoeDale
Posts: 1,785 ✭✭✭
We have all seen how properly graded original surface examples have been going through the roof, for the last several years.
We all know that we have to pay up for the special coins.
But is there a part of our buying euphoria that is misplaced? Or at least not justified, based on rarity, demand, and most of all, future demand ?
There may be different answers, depending on the buyer--a dealer who is looking to turn the coin in a reasonable period of time, and a collector, who should have a lot longer horizon.
1. As John Agar(Coin Rarities Online) recently noted, after sitting through a long auction, waiting for the one lot you really want, and having not bought anything for 5 hours, there is a tendency to go ahead and pay more than you budgeted, just to have made the time worthwhile. John didn't, and we should take note. Stay within the guidelines you made when researching the coin.
2. A MS Barber half in 67--tied for top pop, is up for auction. The other 67 brought 22,000 just last month. You haven't seen the previous coin, except by images on a web site. This one looks real nice, and you try to buy it in the same range. You succeed, and now have a coin costing about 24,000.
Only problem is that there was a war for the first one, and the underbidder is no longer interested in your coin, tho he was out to get the other one. All of a sudden, there is no new buyer for this one--it is probably worth only half what you paid.
3. Remember that in any series, other TPG's will grade several points higher thsn pcgs. And many sellers will still price the coin close to PCGS value. Surprise awaits the new owner when it doesn't cross at 3 grades lower.
4. Some series will fall out of favor, for perhaps as long as you are a collector. I have seen Proof Barbers in high grades fluctuate up to 100%, depending on the collector base for pricey proofs.
5. While I like and buy original toned Bust halves, there seems to be a mania today for AU 50 to 58 dates, that are to die for. Prices exceed MS 63 for the same variety. This may not always hold true.
6. Esoteric dates and grades need buyers when you are ready to sell and there are few at the high levels($50,000 and above). So even if the value is there for an early proof for $150,000, I would expect a longer time period to sell than normal.
7. A forced sale will always cause some losses. And we can all be there, when disaster falls. So buy right, knowing than a long term hold is not always possible.
We all know that we have to pay up for the special coins.
But is there a part of our buying euphoria that is misplaced? Or at least not justified, based on rarity, demand, and most of all, future demand ?
There may be different answers, depending on the buyer--a dealer who is looking to turn the coin in a reasonable period of time, and a collector, who should have a lot longer horizon.
1. As John Agar(Coin Rarities Online) recently noted, after sitting through a long auction, waiting for the one lot you really want, and having not bought anything for 5 hours, there is a tendency to go ahead and pay more than you budgeted, just to have made the time worthwhile. John didn't, and we should take note. Stay within the guidelines you made when researching the coin.
2. A MS Barber half in 67--tied for top pop, is up for auction. The other 67 brought 22,000 just last month. You haven't seen the previous coin, except by images on a web site. This one looks real nice, and you try to buy it in the same range. You succeed, and now have a coin costing about 24,000.
Only problem is that there was a war for the first one, and the underbidder is no longer interested in your coin, tho he was out to get the other one. All of a sudden, there is no new buyer for this one--it is probably worth only half what you paid.
3. Remember that in any series, other TPG's will grade several points higher thsn pcgs. And many sellers will still price the coin close to PCGS value. Surprise awaits the new owner when it doesn't cross at 3 grades lower.
4. Some series will fall out of favor, for perhaps as long as you are a collector. I have seen Proof Barbers in high grades fluctuate up to 100%, depending on the collector base for pricey proofs.
5. While I like and buy original toned Bust halves, there seems to be a mania today for AU 50 to 58 dates, that are to die for. Prices exceed MS 63 for the same variety. This may not always hold true.
6. Esoteric dates and grades need buyers when you are ready to sell and there are few at the high levels($50,000 and above). So even if the value is there for an early proof for $150,000, I would expect a longer time period to sell than normal.
7. A forced sale will always cause some losses. And we can all be there, when disaster falls. So buy right, knowing than a long term hold is not always possible.
TahoeDale
0
Comments
To date, the only coins I've really lost money on when I went to sell them were the ones I paid too much to acquire at auction. In many instances, I was offered an immediate profit to flip the coin to the underbidder, but later said person's interest evaporated.
I did just what you described in #1. I drove all the way from Minneapolis to Chicago to buy one Lincoln cent at auction. As the bid rose higher, I had Stewart sitting right next to me saying "No, No, No, Jack, No". Tom Bender was bidding in the front row and Alynne was bidding for Andy and Schweitz off to his side. I just kept my hand up, thinking "I'm not driving home empty handed"
In the end I probably paid too much, but I had a great coin and the good feeling that "the big boys don't get all the good coins"!!!!
Jack
Young Numismatist ............................ and growing!
By 1990 the price had increased by 2-1/2 to 3X what I paid, but I did not sell (bad move). Had I bought the coin right, it would have been
worth more like 4x to 5x what I had paid. There were many other coins at the time that would have been a far better use of my money.
Another way to lose money is to pay too much as the market gets long in the tooth. Once things start backing up, the coin becomes impossible to sell without a significant loss. This happens to even the best of coins.
roadrunner
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
roadrunner
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i> And may I add that we are on the precipice of some real changes. In my opinion. >>
Care to share???
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
In honor of the memory of Cpl. Michael E. Thompson