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| Are you a
collector or an investor?
The first thing you should consider as a new buyer of coins is your goal. Collectors and investors tend to approach coins from divergent-even opposed-points of view, as the accompanying fanciful dialog suggests. If you are an investor, is your objective to save for retirement, send the kids to college (as I did through investments in coins), or create a safety net against downswings in the stock market? If you are a collector, what kinds of coins will you enjoy learning about and owning? The world contains innumerable types of coins, with more created all the time. Even if you restrict yourself to US coins, there are dozens and dozens of specialties. Saying "I'm a coin collector" and leaving it at that is like walking into a megabookstore and randomly approaching a section. You might find yourself in New Age or Computers when you really wanted Travel or Biography. Investors also need to determine what kinds of coins to buy, but it's more a function of their goal than of their interest. Investors and collectors have more in common than they sometimes believe. Virtually all coin buyers, with the exception of Bill Gates and a handful of others, have finite resources. So in addition to considering your goal, think about your budget. How much money do you want to commit to rare coins? Will it be a one-time investment, or will you purchase coins on an annual, quarterly, or monthly basis? Cabinet vs. portfolio A collector wants a coin because his collection needs it. An investor wants a coin because his portfolio needs it-he believes it will appreciate in value and fit in with his other rare coins. Collectors focus on acquiring a specific type, date or mint mark, and might sacrifice quality to fill a hole in their collection. Investors usually focus on the type of coin as opposed to the date and mint mark. Smart investors strive for the highest quality they can afford (because historically high quality coins appreciate in value more), as long as the coin has liquidity, so that it can be sold at a profit if prices rise. Collectors tend not to be concerned about liquidity because they think of their coins as personal property. When's the last time you thought about resale value when you were buying a camera or a dining table? Sometimes investors become interested in their coins and become collector investors. Sometimes collectors realize that their coins can be a source of profit as well as enjoyment and become investor collectors. Whether you are a collector, investor, or hybrid, focusing on a particular specialty will serve you well. An accumulation of odds and ends is ultimately not satisfying as a collection, and has far less value than a coherent collection or portfolio. New investors often wonder why a complete or almost complete set-say a 5-piece or 10-piece set of US gold coins-generally has a higher value than a random group of coins bought for the same total purchase price. The answer is that you are almost undoubtedly going to be selling to a dealer, because it would be too inconvenient and time-consuming to find an individual buyer for each coin. Coin dealers tend to specialize, so if your coins constitute a coherent category, it will be easy to find a dealer who is interested in all of them. And the dealer will be willing to pay fair market value or even a premium because you are making it easy for him to meet the needs of his customers. The dealer may have immediate buyers for half of your coins, and he knows he will ultimately have buyers for all of them, because his customers specialize in these coins. Certified coins Buying coins that are guaranteed authentic, graded, and encapsulated ("slabbed") in tamper-evident clear plastic has become popular since 1986, when PCGS was founded. PCGS, NGC, and ANACS are recognized as the major independent grading services. Beginners can buy coins in slabs and know that their coins are authentic and that the seller is not falsely grading them. A difference of one grade can double the price of some coins, so this is no small consideration. Work with a single professional Like specialists in the stock market, classic cars, or fine art, rare coin professionals have different opinions about particular coins and about market trends. Beginner collectors and investors often work with a number of dealers, and find themselves pulled in several directions at once. The beginner therefore ends up exhausting his resources to accumulate a hodgepodge, regardless of the merits of the advice offered by any one of the professionals. For that reason I advocate working with one rare coin dealer. Have one strategy, and one professional to help you implement it. Of course, you should put in the due diligence to make sure you get the right professional. Your dealer should be reputable, knowledgeable, experienced, and willing and able to answer questions to your satisfaction. Select at least three reputable dealers to interview on the phone or in person. Rare coin buyers sometimes feel that they will benefit by having a number of coin professionals all working to find a specific coin or series of coins they've decided to purchase. I differ with that approach. Once you develop a relationship with someone you trust, that professional will work more diligently for you when he knows that if he finds what you're looking for, he will make the sale. Nothing disheartens a coin professional more than spending weeks or even months searching for your coin, only to discover that you have purchased elsewhere. A wonderful place for a beginner to pick up knowledge about rare coins and to meet other people with an interest in rare coins is a coin club. There are clubs that meet locally, and clubs that meet online. Check with the American Numismatic Association (www.money.org or 719-632-2646) for a club in your area.
Barry Stuppler, the Publisher and Editor-in-Chief of Coin Connoisseur, has been a coin professional for 35 years. |
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If you have started collecting or investing in rare coins, or you're
thinking about starting, congratulations! Play your coins right and
a rewarding world of enjoyment, profit, and satisfaction awaits you.
Rare coins are beautiful objects of art, demonstrate fine craftsmanship,
and serve as windows to history. They have also tended to appreciate
in value, especially in the mid- to long-term. Some discerning collectors
(or their spouses and children!) have become wealthy as a by-product
of their coin collections. Unlike many mass-produced modern collectibles,
rare gold and silver coins have intrinsic value based on their precious
metal content as well as value based on collector/investor demand for
a limited supply.