Low-grade rarities

pruebas · June 17, 2009 5:13AM

I have been told by several old-time dealers that low-grade rarities don't sell well in the US (presumably because of lack of interest on the part of collectors who buy rarities). For example, a heavily-circulated or sea-salvage 1732Mo pillar 8R. Or a circulated pattern coin. Auctions seem to back up that (supposed) fact.

But lets say only a handful of specimens of a given coin are known and a low-grade piece is offered to you at an attractive price. You are interested in the coin, but are trying to decide whether or not to buy that particular specimen.

Given that:

1) It may be many years before another one is offered
2) You may not know that another is offered in time to bid on or buy it
3) There may be new competition at that time and the price will be bid up beyond affordability
4) You may not be in a position to buy the coin at the time it is available

and that:

5) You can sell/trade/auction the lower-grade piece if/when you acquire a higher-grade one
6) Other specimens of the coin are definitely more attractive/desirable

what would you do?

I have always been of the opinion to buy the low-grade specimen and dispose of it if I upgraded.
But I have spoken with other collectors who completely disagree and would rather wait for the perfect specimen the first time.
I realize waiting is the best course of action for "common" coins, but for rarities or ultra-rarities?

Comments???

ajaan · June 17, 2009 5:15AM

The perfect specimen is usually WAY out of my price range.

covers · June 17, 2009 5:23AM

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coinpictures · June 17, 2009 5:28AM

It all depends on (1) the eye appeal of the piece, and (2) the price.

Different hobby, but I have several U.S. revenue stamps that catalog upwards of $8,000 each, that were I to wait for fault-free specimens, I'd either wait forever or would never be able to afford them. The catalog values increase at a greater rate than I can save towards them.

Using the $8,000 figure as an example, if I know that a sound specimen will cost me $6,000, I know that's beyond my means, but if I can obtain a tattered example for less than $500, or better yet a VF/XF appearing example with faults for less than $2,000 (think PCGS Genuine slab), then I will likely pursue the latter alternatives.

I have an R77a (see sig) that catalogs $6,500. It has an XF appearance with incredible cancel, color, and margins, but has a repaired corner tear. With my budget constraints, my options were (1) a marginal- or subpar-appearing sound example for $3,000-4,000 or (2) an example with XF appearance (and that dovetails with my specialization of handstamped cancels) for $1,600. It was not a tough decision.

Of course YMMV.

Back to coins though, I find that anything will sell if the price is right. I don't deal in rarities, but I have sold some incredibly beat-up, ugly POS coins, and some for surprisingly decent money. If you describe it accurately and picture it well, *somebody* will want to fill that hole in their collection.

lordmarcovan · June 17, 2009 5:35AM

<< The key is to structure your collection so that you do not NEED anything that is beyond your current means >>

That's a good point.

The problem with low-grade rarities is that they stick out like a sore thumb when set against the pristine, more common examples of the same type or series in a collection. However, if the collection is of an eclectic nature to begin with, or is based more on historical interest or something else besides being well-matched in terms of grade, then who cares if the rarity is low grade? Buy it, if it's the best you can afford, or the only one you are likely to see for years. That's my take on it.

If you're collecting a lot of similar looking items- Mercury dimes, for example- and your set is all AU to Mint State, let's say, then a AG or even VG 1916-D dime is gonna look strange stuck in there. But if your collection is a type set or some other mixed format, the sore thumb effect is not nearly so bad.

Back along the lines of what covers said: it's a good idea to map out your parameters before starting a collection, so you know which ones will be easy, which will be a moderate challenge, and which you'll likely have to really stretch for, and whether or not you'll be willing to make compromises in quality to obtain a certain item.

pruebas · June 17, 2009 5:43AM

<< The key is to structure your collection so that you do not NEED anything that is beyond your current means (or anticipated means if you are younger). >>

But Richard, I did not say the current (imperfect) coin is beyond my means. However, as Dan said, sometimes prices go up faster than one's means (especially if new collectors or investors come into the field). So, its hard to predict future affordability....

koincollect · June 17, 2009 6:07AM

I am okay with a low grade rarity and used to buy decent problem free examples, but when the time came to sell, nobody was willing to touch it even though they admit it is a rarity. The market has thus dictated my actions, but don't the actions of individuals constitute the market behavior?

covers · June 17, 2009 6:15AM

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FilthyBroke · June 17, 2009 6:16AM

There's always a better one out there than the one I can attain. After I have come to terms with that - if it's the right coin at the right price and the right look, I'd seriously consider the purchase.

But that's just me.

pruebas · June 17, 2009 7:01AM

<< If you're collecting a lot of similar looking items- Mercury dimes, for example- and your set is all AU to Mint State, let's say, then a AG or even VG 1916-D dime is gonna look strange stuck in there. But if your collection is a type set or some other mixed format, the sore thumb effect is not nearly so bad. >>

Agreed, but I'm not sure I would consider the 1916-D dime a good example in this case. With a mintage of 264,000 (even given a 1% survival rate), I could still probably go to a large show and, with enough money, buy 10 of them. Try that with, say a 1732Mo pillar in any grade.

I guess I should have made the point that I am talking about R-7, R-8 coins. Say no more than 10 known in all grades.

lordmarcovan · June 17, 2009 7:40AM

<< I guess I should have made the point that I am talking about R-7, R-8 coins. Say no more than 10 known in all grades. >>

Good point. When you're talking something that rare, though, I think it is worthwhile in any grade. No "sore thumb" factor there at all.

7Jaguars · June 17, 2009 7:59AM

I have and to struggle with this issue myself, and sometimes the coin just is not enough to fit the bill even if a couple year extra wait is involved. I did get one excessively rare coin and it was less than what I am usually accustomed to as it was most likely 3rd best extant with all of the other dozen or so much worse. The first two: impounded in collections not likely to see the light of day at either auction or private venue sale.

I have a couple of "waitlisted" coins that I am waiting (if ever) for a better specimen to show at a manageable price.

coinpictures · June 17, 2009 8:48AM

<< Pruebas - I was trying to say that you should wait and buy better grade in the future, or live without entirely.

A collection is usually valued by the WORST quality example in the collection. On stamps, which is my field, I can accurately value a collection by looking at the quality of the keys and backward determining the quality of everything else (and the value). I imagine coin dealers do the same.

PS - As a dealer I consider all of the keys in poor quality for zero dollars. I value the high quality better items (over $250) accurately at market as cost and everything else is profit. >>

So I guess by your reasoning above, you consider the Icehouse cover to be worthless, right? And by extension, since a collection is valued by the WORST quality example in it, whomever owns that cover, their entire collection is worthless.

By your logic above, if someone had a VF MNH set of Columbians in their collection, but also had a ratty #1, you would discount the value of the Columbians because of the #1. I couldn't disagree more.

covers · June 17, 2009 9:20AM

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coinpictures · June 17, 2009 9:41AM

<< None of my clients bid on the "icehouse" cover (although Dr. Woo, the buyer, has been a client of mine in times past). It wasn't of a quality that added to their collections. Investors often buy the "sizzle" rather than the steak. That cover has been faked by the addition of a stamp that didn't originate - does nothing for me and I wouldn't add it as a collector.

If somebody has a very fine mnh set of Columbians - they will have a very nice #1. If somebody has nice Columbians to the dollar and then there is drop off in quality, I can peg thier "paid" level and know exactly what to expect in the rest of the collection. You can disagree all you want, noproblem, would love to hear your thoughts after you have purchased your 500th collection. >>

You're making assumptions and trying to pigeonhole everyone. What if assembling a "perfect" set of Columbians was a goal or joy of theirs, yet the #1 was simply an acquisition along the way? Not everyone has the same level of quality throughout all the series/collectibles they collect, whether by design or by chance. What if they devoted the majority of their resources to one area, fully intending to devote additional resources to other areas, but for whatever reason decided not to or circumstances dictated that they could not? That lowers the value of their collection?

Not everyone has the same resources as the high and mighty in the elite circles you travel in. Sometimes compromises have to be made amongst working folk. It's easy for you to pontificate on how one should only fill a hole if it meets a certain threshold otherwise do without. The point you're missing is that for the vast majority of collectors, they don't have unlimited means.

How many times have I seen UNC sets of morgan dollars with the 1893-S in VG or VF? UNC Indian cent sets with the 1877 in Fine. Lincoln sets with the 09 S-VDB, 14-D and 22 Plain in low grade. Why? Because that's what most people can afford in order to complete the set. You're saying they shouldn't complete the set if the key(s) don't match. Most people don't have that luxury, yet they want to complete the series. You're saying they shouldn't, and if they do, their collection is somehow "less worthy".

That's lame, and we'll just have to agree to disagree.

MrEureka · June 17, 2009 11:21AM

I'd only buy the low grade piece if I like it and if I don't think it's likely that I can improve on it in the next 20 years or so. As for filling a hole until a better one comes along, I have no interest. I'd rather save the money for something else. And there will be something else!

lordmarcovan · June 17, 2009 11:34AM

Oh, I dunno. Me, I'm a hole-filler. Especially if I am using an actual album with an actual, visible hole in it.

I get impatient and fill the hole with the "right now" coin instead of waiting patiently for the "right" coin to fill it with.

I guess the psychology varies, from collector to collector.

And man, if it is something so rare that I am not likely to see another for a decade or more, then you bet I'll pounce on it, regardless of its problems or low grade.