One way to build a collection
MidLifeCrisis
Posts: 10,553 ✭✭✭✭✭
Let's say you spend about $500 per month on coins = $6K per year. So in 3 years you have a collection in which you've "invested" $18K.
If you trade all of your coins for one coin worth $18K, this would allow you to obtain a coin you normally would not be able to.
Now you've reduced your collection to only 1 coin, but that coin becomes your centerpiece as you start to rebuild your collection.
The cycle begins again and about 3 years later you trade everything but your centerpiece for another high priced coin.
Now you have two centerpiece coins and you begin to rebuild again. And so on...
Substitute any amount of money and any time frame ($1K per month and trade for 1 coin after two years, etc.)
I'm sure this method of collecting does not appeal to many. Some will never sell/trade any coin. Some do not like to "put all their eggs in one basket".
But it is one way to build a collection that would allow you to obtain coins that would normally be out of reach.
Just thinking out loud...
If you trade all of your coins for one coin worth $18K, this would allow you to obtain a coin you normally would not be able to.
Now you've reduced your collection to only 1 coin, but that coin becomes your centerpiece as you start to rebuild your collection.
The cycle begins again and about 3 years later you trade everything but your centerpiece for another high priced coin.
Now you have two centerpiece coins and you begin to rebuild again. And so on...
Substitute any amount of money and any time frame ($1K per month and trade for 1 coin after two years, etc.)
I'm sure this method of collecting does not appeal to many. Some will never sell/trade any coin. Some do not like to "put all their eggs in one basket".
But it is one way to build a collection that would allow you to obtain coins that would normally be out of reach.
Just thinking out loud...
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Comments
I've never had success in doing that, especially in the short term.
RedTiger will explain this better later.
<< <i>The frictional cost of doing such would be limiting. You are generally not buying and selling in the same market. Unless you get significant price appreciation, you will likely end up paying $18k for a $14-15k coin. If you make a bad purchase or two or the market goes against you, you might end up paying $18 for a $10k (or less) coin. >>
When building a collection of a specific series, patience is required, and also mistakes are common. As a colonial coin collector (at least at heart!) I know that I have made many mistakes over the years, but they even out with some of the great coins I have been able to purchase. To comment on the OPs statement, you could build a great collection with this concept, if you did not make any major mistakes while building the collection. With response to the quote above, it is true that you might end up paying to much for a great (high end, expensive) coin, but you may have paid below market value for some of the coins that you traded in for that great 1 coin that you replaced those pieces with. Dollar averaging is a very important part of building a top notch collection in one series.
A very well known collector once told me (when I was around 12-13 years old), "In order to build a GREAT collection, you steal some, you overpay for some, but in the end, everything will even out".
<< <i>The frictional cost of doing such would be limiting. You are generally not buying and selling in the same market. Unless you get significant price appreciation, you will likely end up paying $18k for a $14-15k coin. If you make a bad purchase or two or the market goes against you, you might end up paying $18 for a $10k (or less) coin.
RedTiger will explain this better later. >>
Ok Boss, I'm on it. The plan in the original post might work if a person is a part-time dealer or similarly well connected person and can buy at low retail or high wholesale and sell at a similarly favorable price. The average collector that is paying retail and selling at wholesale is going to incur significant costs for each trade. For $500 value collector coins that might mean 15% is eaten up in the transaction costs. So as RYK put it, that $15,000 value coin costs $17k or $18k in trade, because the first batch of coins typically can't be traded in at their original price paid. For lower value collector coins, the percentage loss is usually higher. For lower value raw collector coins it might be like a 50% hit for the person buying at retail, selling or trading at wholesale, so the trade in could cost $30k.
Even for a person just buying and selling on Ebay, 7% to 15% goes to the fee bucket and postage. That money is gone and doesn't come back after three years when it is trade in time.
<< <i>
<< <i>The frictional cost of doing such would be limiting. You are generally not buying and selling in the same market. Unless you get significant price appreciation, you will likely end up paying $18k for a $14-15k coin. If you make a bad purchase or two or the market goes against you, you might end up paying $18 for a $10k (or less) coin.
RedTiger will explain this better later. >>
Ok Boss, I'm on it. The plan in the original post might work if a person is a part-time dealer or similarly well connected person and can buy at low retail or high wholesale and sell at a similarly favorable price. The average collector that is paying retail and selling at wholesale is going to incur significant costs for each trade. For $500 value collector coins that might mean 15% is eaten up in the transaction costs. So as RYK put it, that $15,000 value coin costs $17k or $18k in trade, because the first batch of coins typically can't be traded in at their original price paid. For lower value collector coins, the percentage loss is usually higher. For lower value raw collector coins it might be like a 50% hit for the person buying at retail, selling or trading at wholesale, so the trade in could cost $30k.
Even for a person just buying and selling on Ebay, 7% to 15% goes to the fee bucket and postage. That money is gone and doesn't come back after three years when it is trade in time. >>
I knew you would do it better than I could.
I also think that the typical collector would have a BIG problem staying connected to the hobby if his entire collection consisted of 1 coin for a while. That's a recipe for becoming an ex-collector.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
Buy your coins however you like, even via auctions but try to be careful with spending much more than retail including juice. Then when you sell, sell them in person to dealers that NEED that inventory at shows.
The novice/careless/uneducated/stupid would lose their arse! But others could survive the plan if very careful.
Looking for Top Pop Mercury Dime Varieties & High Grade Mercury Dime Toners.