Why are cleaned/scratched/graffiti coins a bad investment?

They still look nice (to me), and on my budget, they are quite tempting.

Yet *everyone* advises me to stay away and save up for a Problem-free coin. Is this because the problem coins:

1) will not appreciate in value as quickly
2) will not appreciate in value at all
3) will be harder to sell (and therefore have to be sold at a loss)

It seems to me that I should almost always be able to get back what I paid if I'm careful on Heritage and only pay what current "problem" coins are selling for. (unless the market for them drops significantly?)

Thanks.

 

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What makes you think that you will be able to get back what you pay for them? Have you tried selling any?

Chris

 

The correct answers are 2 and 3. They will not appreciate, and it will be hard to resell them. Very few people want problem coins. IMO, they are a waste of money.

 

I guess I'm just "new" and I see some have sold on Heritage, so I figured I would be able to do the same.

Maybe those buyers got extremely lucky, but I see examples of 1877-S in XF at Heritage that sold for under $100 (scratched, cleaned, graffiti, etc.) that didn't look all that bad to me (an untrained eye, of course).

I value all of your input... Don't get me wrong. And I don't want to make a huge mistake. It's just hard for me to grasp that I wouldn't be able to sell those types of Coins (mentioned above) for $100 or so.

But then again, as you pointed out, I haven't actually tried.

 

Common date cleaned or scratched coins I would avoid. Then again if you collect by variety you may not have a choice on some of them. I would not say all problem coins would not appreciate in value - but some of the really rare ones do and are always in great demand. But that is no guarantee you will break even or make money. You really need to be careful on them. I would avoid them if possible.

 

Most collectors, like myself, like eye appealing coins. Coins ya can look at and appreciate, the design, patina on "original" coins that have NOT been cleaned nor with graffiti or scratched....I will promise you the market for these types of coins are in the garbage like the coins should be. I don't like artificially toned coins, cleaned coins nor scratched or grafitied pieces. I have no place in my collection for these types of coins.

 

The answer in a single word is LIQUIDITY

 

Consider damaged coins the same way you'd consider a scratched and damaged car. Do you really want to buy a car with damage, when there are others that aren't damaged? Would you want a TV with a gouge in the middle of the LCD? Same goes for any coin--damaged goods are damaged goods.

 

Well, as a lover of those dinged and dented artworks myself, let me say this...

1) will not appreciate in value as quickly....
They appreciate at the exact same rate as the problem free coin, however still sell at the "lower value" as it is based on a percentage of the value of the undamaged coin

2) will not appreciate in value at all...
Completely untrue, see above.

3) will be harder to sell (and therefore have to be sold at a loss)
Yes they can be harder to sell but this is no cause to discount them beyond reason. Perfect coins sell faster and for a higher price, but there will always be collectors with limited budgets who will be happy to own a less then perfect coin so that they may own an example they could not otherwise afford. If you buy at a reasonable price there is no reason you should have to take at loss if you ever decide to sell. The exception being if you have to sell in a hurry, you may have to accept a monitary loss but you still get the enjoyment value for the time you possesed the coin itself.

4th and most important.
If you are a collector rather then an "investor" it does not matter in the end as long as you are happy with the coin and enjoy owning it. If you get enjoyment out of owning that damaged coin then it is money well spent in my book. If you just want an investment, buy bullion and leave the coins to those of us that love them for what they are dings and dents included.

 

Supply, meet Demand.

 

would you rather marry a woman that's worked in a brothel or a woman that has worked in a convent?

 

They should be avoided...for the reasons you stated above. Another problem is not only are they very hard to sell...their value can be very unstable. For example, lets say a problem free coin is worth $100. That same coin cleaned might be worth $50 to one person and $15 to the next, it might be worthless to me. They are very hard to price because there is no set scale to compare them to and the damage affects each person's opinion of the coin in different ways. So, not only are they hard to price, they are hard to sell...the actual value of a damaged coin can never be low enough.

I have a bunch of problem coins I am trying to unload right now. It's a huge pain, I would say avoid it at all costs.

The ONLY time I would say it's acceptable to buy a problem coin is if there simply aren't any examples available. I don't have a coin like this, but one of my paper notes is like this. I own a 1902 $10 PB National Bank Note issued from one of the Oregon banks...only 6 are known to exist. So, when I found one for sale...even though it has tape and tears, I jumped on it. Pieces like this IMHO are acceptable in problem conditions because other examples simply don't exist. I may never see another example of that note again.

 

Ain't gonna touch that one with a 39.5" pole...

 

GDJMSP, while I appreciate everyone's input, yours finally hit home. I like stories I guess ;-)

Gonna save my pennies and nickels 'til I can afford a Problem-free VG or better.

Thanks to everyone for your patience in helping a newbie with what is probably a *very* frequently asked question.

 

Does that really make a difference to you? Do you look down on someone who might make this decision. I like you, don't get me wrong, but please think before you push that send button!

 

This is part of the more general question of "What coins do I buy to resell and make a profit". Answers to this question are multitudinous, but the ones that make most sense are along the lines of "Buy what you want, coin collecting is a miserable investment." Sure you should buy the best coins you can afford. When I was a young numis..,.nusim...simnu...coin collector I REALLY wanted a 20-cent piece. The one I ended up buying actually had a scratch, but I could afford it. I have enjoyed that coin now for over 40 years and have never wanted to sell it. If I bought one now, I would undoubtably buy a much better example at a much higher price, but I don't want one. I got the coin I wanted when I wanted it and have not regretted it one second. Could I sell it for what I paid for it...you got me, I don't remember what I paid for it.

 

The only thing I would add is that if you are going to spend a fair amount of money, you should think about buying graded coins (NGC or PCGS). This may help you avoid unknowingly purchasing problem coins (cleaned for example) then having to try to re-sell them.

 

I don't mind getting problem coins, just depends what the "problem" is. Coins with holes don't bother me. These coins were usually used as necklaces, so to me, there is history behind that piece. Coins with counterstamps are interesting as well.

Now granted, not others see this in problem coins, so when I buy them, I plan on keeping such pieces and not reselling.