The "Deal Shopping" Mentality - Helpful Insights for the New Collectors

Recently, on another thread here about how the Long Beach show went, a relatively new collector BNB Analytics was expressing his dismay at feeling that some dealers were "ripping" people off because their asking prices were over Grey sheet bid. http://www.cointalk.com/t69529/

As background, here is what BNB posted:

BNB Analytics: "I really am losing faith in coin dealers as a whole. This is a becoming a big problem. Some dealers are plain rip offs and don't deserve to even be dealing in my opinion. I know that is harsh of me to say, but come on.. Do they think we're stupid?

$1800 for an Ms64 1908 No Motto.. Give me a break.

The days of finding a dealer that will sell to you at bid is hard. Sure dealers have to make a living, but what KIND of living do some of these people make? I wouldn't be surprised if they have yachts with the prices they charge on some of their coins. Give me a break...

For a buyer, Heritage is the only place I'll go now.. I don't even know if going to shows is good for me anymore after seeing the prices being thrown around here. It's just disgraceful in my opinion."

This was my reply to BNB:

The Penny Lady: "BNB, please take these following comments in the spirit I intend them - purely to help offer some advice to someone who is new and a bit naive to the coin industry. So please keep an open mind and know that I say these things to try and help, not to criticize.

Keep in mind, you came as a newbie to coins in a down market and may be getting some good deals right now, but seriously you might want to quiet that ego of yours a bit and listen to your coin "elders" and not be so quick to judge. Yes you can get some good deals right now, even at Heritage, but that won't always be the case, no matter how hard you look. And it's certainly not a good idea to limit your options so quickly by saying you'll only buy from Heritage - that is, to be honest, pretty silly. There are many good quality dealers out there, you just need to find a few in your series that "fit" well with your style, values, morals, personality - and wallet.

For the most part, you will need to pay higher prices to get quality. Remember, dealers generally buy from Grey sheet, so how can anyone expect them to sell at Grey sheet? Especially key dates, high quality, and just plain hard to find coins will usually be higher than Grey sheet, so yes shop around, but be sure you are getting the best quality for the price you are paying. Look very very closely at those coins you are buying. You still have a lot to learn, and there is so much more you don't know than what you do know right now.

I enjoy your enthusiasm and eagerness to get the best deal, that is what we all try to do - but you also need to build some solid relationships with some good dealers, so don't start out bashing them just because their prices seem too high for you. I don't know any dealers that have yachts or live high on the hog, especially right now. Sure it's ok to be a bargain hunter, but remember, in the end you really really do get what you pay for."

I also found this recent article by Doug Winter of Douglas Winter Numismatics (raregoldcoins.com) on why "deal shopping" may not best serve those who are trying to put together a good quality coin collection. http://www.coinlink.com/News/us-coins/the-deal-shopping-mentality-and-rare-coin-prices/

The following statements basically sum up what many of the more experienced coin collectors already know:

"In the coin market, price buyers invariably wind-up with the worst possible coins for the grade.... That’s not to say that there aren’t good values in the coin market. I can think of dozens and dozens of coins that are undervalued in relation to their rarity and level of demand. I think that’s what the deal-hunters don’t understand. The real deals in numismatics come with knowledge of coins, not buying something for 10% less than Greysheet Bid. The Greysheet is never going to teach you that..."

This article is a good read, and may help some of you have a better understanding that, for the most part, "you get what you pay for."

So what are your thoughts on this subject?

 

Log in or Sign up to hide this ad.

I agree with what you've written.

I think that many collectors view coin dealers similar to used car dealers.....not to be trusted and enter a potential transaction assuming that they will be taken advantage of.

Knowledge is power and, for a satisfying transaction, being armed with previous sales data on that particular type and grade is helpful. However, in the car business, I suspect that a Chevy is pretty much always a Chevy and a Mercedes is always a Mercedes unless there is a car repair history that says otherwise. However, in the coin biz, not every 1877 Indian Cent is the same in terms of eye appeal. To expect to apply rigidly prior sales transaction info to acquiring a coin with great eye appeal is naive at best.

Anyway, one can't blame collectors for not wanting to be ripped off and there are stories we all hear of this happening. So, to me, it isn't just about the price versus eye appeal issue, it is also who one is dealing with. Buying from the right dealer is also a factor in having confidence in what one is getting and having recourse if the deal backfires.

Those are my two cents!

 

I agree as well. Besides, if the majority, or even half of the coin collectors felt that dealers were ripping them off, I don't think it would be a stretch to say there wouldn't be any coin dealers doing business anymore. Seeing as there are many, I'd say their business practices are fair and just.
Guy~

 

This is interesting but remember,

This is interesting but remember if the reputable dealer has a coin that is rare, is perfectly graded, is key or semi-key date, that is hard to find and in every way desirable plus one you really want badly and one he is not eager to sell, the price should become less and less of an issure - there are very few bargins in the coin buisness when it come to price - you get what you pay for but for the coin I desribed above if you pass you may live to regret it and if the dealer knows this also you'll be lucky indeed just to be able to aquire it for whatever he wants - you gotta know when those coins come along.

Heres another more simple way to understand what I am trying to say:
One of my dealers, a big dealer bought a 1922-NO "D" Lincoln at FUN one years in a perfect AU-50 - a fabulous coin, the best one I had ever seen. He always sets up at my show and showed it to me one day. I said what will you have to ask for it? He said, "it doesn't matter I have three men who won't even ask how much they will just take it at whatever I ask.
You see on many coins it's just "if you get the chance" and not at about "how much".
This is one of 1000 finer points of coin collecting/dealing that one only learns through time and work.

The bargin may just be having a shot at buying instead of the final costs!

 

Everything said here is true. However, we can only buy the best that our budget allows. I think it helps to set a limit on what one can afford for a particular coin, then go out and try to get the best value your budget allows. Sometimes it means a little more has to be saved to do this and/or have a good story for the spouse memorized by the time you get home.

 

Allow me to add something here along this line. I haven't in a couple of weeks, but I occasionally go to "The Penny Lady" web site to look at the coins she has posted.
Always they are beautiful, and I enjoy looking at them. Looking is all, too high in price for my budget. There may be some at really good prices, I don't know if they are or not because too expensive/"high end" for my budget to even consider.

 

You're right Doug. Now about that interest free loan I need................

I'm adding something else to this after seriously thinking about what you said Doug. You know I collect Buffalo Nickels, by the way I only have one to go.

As a set I personally don't think it is a run of the mill set. On a seperate coin by coin evaluation would some be run of the mill? Yes, I know that and I think it is okay because they were obtained one-by-one to be part of a set.

 

I'd like to add to this thread and help define "eye appeal" since that is an important element when spending one's money.

Bowers wrote:

"In an earlier column, in the Feb. 5 issue, Bowers provides some questions to ask about a coin to determine its eye appeal. “Is the coin richly lustrous, or is it grainy or ‘greasy’ in appearance? Are there stains or spots? Is it dull gray, brown or even black? In a word, is it beautiful? Does it beckon, saying to you, ‘Buy me!’ ”" http://tinyurl.com/mwr3ah

Back to Doug Winter, he says eye appeal is an "all encompassing" combination of key factors (being strong in one area and perhaps good in another) used in grading - Strike, Surface Preservation, Luster, and Coloration. I found his article to be very complete and informative.
http://www.coinresource.com/articles/coin_grading_criteria.htm

Having quoted all of the above, I do not pretend to have achieved these concepts in all the coins I own. It is, however, what I am striving to achieve as I gain more experience in the hobby.

 

This hobby can be extremely tough, even for experienced collectors, and obviously, much more so for inexperienced ones. Most buyers of just about anything want to get a good deal, if not a fair deal. And they certainly want to avoid getting a bad one.

Since they aren't able to discern subtle differences in quality and attributes between various coins, it's to be expected that they will focus on price, instead. And in so doing, they are increasing the odds that they will end up with mediocre or sub-par quality material. Of course, even if they don't focus too heavily on price, if they don't know what they're doing (and/or not receiving helpful guidance from someone who does), they can still end up with inferior coins, just at higher prices.

So, the solution is for the collector to either gain the requisite knowledge before he/she spends his/her money, or to work with someone who has the knowledge and is willing to help, without taking advantage. Each of those alternatives is possible, but far easier said than done. Patience is a key ingredient here, as well as for collecting in general.

 

That is absolutely right Doug. Furthermore, I agree wholeheartedly with the author in Charmy's OP. I have held that same collecting motto for years and told Jared (BNB Analytics) this in one of his recent threads, post #26 I think.

http://www.cointalk.com/t68081-2/

I really think that anyone who subsribes to the philosophy would also have to recognize that the CAC plays in this area of the game. The CAC is designed to separate the A & B coins from the C coins for a specific grade. It is these grades within the grades along with overall eye appeal that take the bargain out of "bargain coins". More often then not, the coins selling at bid are the C coins. The A & B coins with great eye appeal are the coins that will sell for a well deserved premium. However, the premium price may very well end up being a bargain price when you sell the coin.

This is a great thread and one that every new collector should read. You have my nomination Charmy! Great Job!

Paul

 

A lot of these scenarios play out as if coin collecting is a job instead of a hobby. Granted, for some it is a job, and more than likely they already follow these basics, as would be expected. But, it seems the fun of just collecting is being sidebared by facets of the hobby that, quite frankly, most could care less about. Try to remember when you were a kid filling up your cent albums. Did we care about all this? No, because it was fun just to fill it up. It's kind of sad that aspect of collecting is often forgotten.
Guy~

 

Paul - I agree that CAC has value, but I want to clarify what you stated above. CAC states that they apply their sticker for grade accuracy, not eye appeal. I know you know this, but just wanted to help uninformed collectors who do not understand the difference. I've seen some CAC stickered coins that do not have eye appeal and I've seen dealers wrongly state what the sticker means.

 

Thanks Paul. I'd like to add, or remind people, that Grey sheet prices are the LOWEST designation of any given circulated grade. For instance, VF on the Grey sheet is for VF20 coins, not VF35; XF is for XF40 not XF45; AU is for AU50 not AU58, and so on.

 

I cede your point Guy, but I'm not a kid anymore. That said, I'm still having a lot of fun. I just like to think I'm more selective now and I need to be since I'm also spending more than when I was a kid.

 

Guy, we're certainly not trying to take the fun out of coin collecting, by no means. But what we're mostly talking about would apply to higher end coins, not necessarily the ones you are looking for as a kid to fill holes.

However, once you graduate to a higher level of collecting, you or that kid may want to learn or have a better understanding when they go to upgrade to a higher quality coin. If they don't learn some of these other "facets" to the coin hobby, they may end up with a sub-standard collection that they probably overpaid for. There's nothing wrong with learning as much as possible about coins before you begin to spend the bigger bucks.

 

I agree. In fact, I spend much of my hobby time reading about coins, versus buying them. I suppose what I meant was eye appeal is important, but what I may find appealing in that sense may not be appealing to others based on a set of requirements they feel they need to meet to satisfy others. Who's collection is it really, if you spend your time building a world-class collection based on other people's criteria? I guess for people who collect to sell it makes sense. For those that don't, a world-class collection is what they always have, regardless, because it's what they like. I'm not saying I don't agree with all the technical aspects that make this hobby interesting....I practice quite a few myself. But, I think people who are professionals and those who are hobbyists need to distinguish the gap between the two. I see too many newcomers get lost in all the jargin that doesn't apply to them, and the expectations drive them out of the hobby alltogether.
Guy~

 

I think there is a great deal of wisdom that may be mistaken for self interest.

Had you asked me in my numismatic infancy if I believed it, I would have scoffed.

Now I (think I ) know better, and find the comments very insightful and correct.

However, that's not to say that a "bargain" shopper cannot get enjoyment from their collection -- because the more common the coin, the more likely one is to find "bargains", and not all of us can afford to purchase rarer coins where a "bargain" usually means a low-end coin. Said another way, I see nothing at all wrong with a collection of pocket change, and this is truly the best bargain in all numismatics. A second example would be a dedicated cherrypicker -- they make an art of finding bargains. However, very very rarely do you find a "good" collection in the hand of a cherrypicker, just one that was bought at a discount -- but if that's how that collector defines numismatic happiness, who am I to disagree?

But that doesn't change, IMO, the fundamental rule of numismatics (i.e. you get what you pay for) as described by the OP and Mr. Winters.

 

p.s. I also think that the point that Penny Lady and Mr. Winters was making is more applicable as the price of coins goes up (i.e. more important for the "top half" rather than the "bottom half" of the coin market). Said another way, you are are more likely to find a bargain on a $10 coin than a $1000 coin.