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

Quoted for truth.

 

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Wow, that's not what the dealers I try to sell my AU58 coins tell me

Great post PennyLady, thanks :thumb:

I also agree with Mark Feld's assessment. I really wish I was more patient when I first started. I was definitely a deal shopper and I bought many thousands of dollars in certified coins based on the grades on the holders. I was new and I figured that all XF40s were equal and all MS65s were equal and so on... If I had taken my time and learned a bit first and/or worked with someone who knew what they were doing to assist me, I would have saved a bunch of "tuition" money and would have saved a lot of time and headaches that I had in selling off my rookie year purchases.

 

Well this thread has been helpful to an extent..

However, something in me still has hope that good deals exist it's just that they are very few and far between.

Let me define what I see as a "good deal"

A beautiful coin, lower in retail price, certified.

It's funny, even if I get a beautiful MS 65 1885cc at Heritage for $920, I'll see one on ebay go for less.. It's just the name of the game.

 

There's a lot of wisdom in your advice Penny Lady. I think Mark Feld added an important item to the discusson as well, that item is patience. I can remember an impatient 10 year old, and maybe he is still part of me.

I have often said that Numismatics is a hobby that will teach you patience, whether you wanted to learn it or not!

Patience is a necessary virtue to meet your coin collecting goals. I think a good buy, is the right coin, the coin that meets your expectations, at a price you can afford. Of course those criteria are different for each of us. So maybe it comes down to expectations. I don't expect to find a choice MS64 two cent piece for MS63 money, it just isn't going to happen.

 

I have a similar story. What you describe is "commodity thinking". I'm learning to think like a numismatist. It's a long road.

There are few absolutes in this game, and a lot of subtlety.

 

Coin collecting has many communities of interest and conflicts of interest. This is probably inherent in any exchange where some participants are trying to make money while others are trying to have fun -- the business vs. hobby issue. When we started out trading baseball cards in our youth ["I'll trade you two of X for your Y"], it was all a community of interest. Both sides probably walked away satisfied that they got the better of the deal.

Once you insert a dealer into the picture, there is naturally a conflict of interest with one side trying to extract money from the other person who is just trying to enjoy a hobby.

This whole arrangement moves to an entirely different level when the dealer is confronted by the investor bargain hunter who is probably more aggressive than he is. It doesn't feel good to have someone do to you what you've been doing to make a living.

I'm not saying any of this is wrong. But everyone has to make peace with their collection and decide how deep into the hobby they wish to become -- both in knowledge and money. One collector will not buy any coin that isn't slabbed MS70, another won't touch anything that doesn't make professionals drool, another will want a $100 coin for $50, and a fourth will be happy with a Whitman album going through bank rolls. The only important thing is to be satisfied with what you collect.

 

I have 2 things to say.

First, buy the best you can afford. A scarce classic head gold coin is better than say, a 1904 P double eagle liberty...the coin has more demand and if it has better eye appeal, all the better.

When I bought the classic head coin from mark feld, I knew I would be getting a coin with great eye appeal based on the photo's. It was priced right, and although I got a good deal on price, I feel I also got a great deal on quality. It seems that mark buys the coins at a lower price, so he can sell them at a lower price.

When I bought the coin, I really didn't have the money for it, so I did a trade. I traded in some of my common gold bullion (I traded in the 1904 double liberty, easily the most common double eagle) for a more scarce coin. The coin isn't rare by any means, but it has great eye appeal and is certainly a better buy than a common 1904 liberty. Trading common coins for a better, quality coin that is more scarce is always a win in my book.

Also, regarding you get what you pay for. You know those ads in Numismatic news and Coin magazines? Such as coast to coast coin. You will see coins for sale, classic US generic US gold coins such as 1908 N/M saints for incredible prices...frankly put very good prices. It seems too good to be true, and it is. Anyone can tell you who's bought from them, you will either get a whizzed, harshly cleaned, hairlines coin, or one that is counterfeit. Too many people have been lulled into buying these because it seems like a great deal; but the reality is you get what you pay for. I'm hoping to one day buy an XF40-AU early US gold coin..those are always in high demand and are truly scarce.

 

I guess my thing is with any investment type buyer beware.

If i am a coin dealer i am buying or trading for coins either from a distributor or from people walking in off the street.

I am going to auctions or coins sales and bidding on coins.

at a show i am having to put out money in order to try an compete with 100 other dealers trying to do the same thing. I have to make money on the coins that i buy or else i lose money which i can't do.

the buyer is always looking for bargain and the person trying to trade or sell me coins is always looking for the best price.

if you are a collector then buying coins that you like is your key priority. if you are in it for investment buying coins at a good price that will continue to go up and you are in it for the long haul.

as an investment it takes a bit more money since you are trying to get the best coins possible so later on you can get your money out of it and a little bit extra.

dealer are going to price their coins to get the best value out of them. it if a very competitive market and the people that are actually dealing in them are sharp shoppers.

 

As is in all things worth pursuing

As is in all things worth pursuing, many shades of grey.

 

"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."

This very contradictory... It makes me think is that the people -regarless of dealers or regular Joes- are speculators. They buy at high prices and sell without ethic, (no derrogatory intent). Just making an easy dollar.... Not nice!

I think that serious buying and selling should be based on reasons and knowledge. Lets say buying, a really good price below the highest Gray Sheet Price. And then selling without "over pricing" the Gray Sheet Price indexl But if dealers or Joes are buying at top prices then they have to sell at higher out of Gary Sheet "range" prices. So why in the first place did they buy when they know that there is no room to sell?

Just an opinion... Of course, offer and demand sets the pricetag. Everyone knows that!

 

I agree with you 100%... When buying they should not if there is room to sell...

"There's a reason for that - and that reason is because some are better than others. And to be able to tell the better ones from the not so good ones requires a good deal of experience."

Otherwise flip the coin!

 

I am not sure what in that post you find contradictory or unethical, but I think you are misunderstanding Jack's point. His point is that key dates are hard for dealers to locate sometimes and when they do, the dealers have to pay above grey sheet bid. His second point is that dealers are in business to make money. If they sell coins for no profit, they can't survive.

Consumers recognize and accept in every business that the retailer has the right to charge and acceptable mark-up level. In the coin industry, dealers have to mark up 10-20% in order to make a profit. Therefore, if you see a coin between grey sheet bid-120% grey sheet bid, the coin is probably priced fairly. When you see a coin at a significant premium, you should ask additional questions. Does the coin have exceptional eye appeal? Is it a rare variety? Does the coin in question hit the market infrequently? These are all valid reasons for the dealer to charge additional premiums.

I don't know why coin collectors expect that they should be able to purchase coins at the wholesale level. You can't do that in any other business unless you buy in bulk. The second part of the equation is that collectors should not expect to sell their coins for their buy price unless the market value of the coin increased. For example, you can't buy a coin for $100 with a grey sheet bid of $90 and expect to sell that coin for $100 6 months later if the grey sheet bid is still $90. The collector should expect to lose money in this situation. I buy every coin with the expectation that I will lose 20-25% of my money at time of sale and the hope that I will break even. This philosophy ensures that I am not disappointed.

 

I really appreciate this thread. Thanks, Charmy.

It's great how the idea of "patience" has worked its way through this thread. I've heard it phrased thus :

Never buy a "but" coin.
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You know the kind I'm talking about... "It's a nice coin, but..."

"...it has this spot on the reverse."
"... that scratch on the throat."
"...it lost all its luster in that last dip."

Or, as others put it, a coin has to be "all there". Know what "all there" means, and what one can reasonably expect for a given price.

 

Bump because this is a great thread and because it will not likely win a TOTW Award (and will fade away) since that feature isn't working these days.

 

Well said Mark :high5:

I was fortunate to have had a mentor early in my collecting experience that frequently gave me similar advice and shared his knowledge without taking advantage and as you said, though not easy, if you remember to follow this one paragraph of simple advice you can avoid many mistakes ..... right Doug?

 

I am confused on the concept of sub-standard collection. Can someone give me a definition?

 

Excellent thread. Even though I was out of town and missed this I think everyone needs to read this thread. A lot of good thoughts along the way.