Liquidity question from a beginner

That was @bqcoins, who's still around (hooray!):

https://www.cointalk.com/threads/found-another-1942-41-merc.223140/

https://www.cointalk.com/threads/ladies-and-gents-shes-back-from-ngc-1942-41-d.223814/

So, yeah, 1942-D dimes are worth extra attention, especially if they were set aside a long time ago -- this variety circulated for quite a while, I think, before word got around.

 

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Everyone in this thread seems hung up on profit, and while making a profit is nice, it seemed that your question was not really about profit, but about liquidity in case your collecting habits change in the future.

If you are looking for liquidity, buy key date coins in PCGS plastic with CAC stickers and most importantly, pay more than price guide for your coins. Now I know that last part seems counterintuitive, but let me explain. If you have the opportunity to buy a coin below price guide, there is usually a reason for that, a reason that will severely impact your ability to sell that coin in the future for max value.

If you limit yourself to purchasing eye appealing coins for strong money, you will find no shortage of potential buyers for your coins when you sell. That doesn't mean your coins won't go down in value over time, that very well could happen, but no matter the price guide, eye appealing PCGS CAC coins always sell very quickly.

 

Simply put not reading the whole thread. Coins are always liquid - take them to any dealer and they will make you an offer. Looks like everyone else focused on investment - all I saw was are coins liquid. Always and easily.

Now if you decide to sell there are 3 methods I have used. Auctions - like heritage and getting it into a good one - not Tuesday/Wednesday type auction. Takes longer for these to sell and depending on what you have on what you might have to pay - mine was like 5%. Consign to a seller - depending on coin and values they charge anywhere from 5% to 15%. Can take longer than going to like a major auction house. Straight to a dealer - quick ,easy, but less return on money. I did pretty good with the first 2. The third option I did worse on - but it was quick and easy. I still made a mint because of all my modern stuff I bought when first came out (plantinum and gold were at around 2k then). I never really sold coins myself on like ebay and did not want the risk.

Enjoy the hobby.

 

Another thing to look at is the potential market for a coin. Though it is nice to have rarer things in higher grades, due to the price it may limit the number of people that can afford it. But something that is more common in a higher grade might have a broader market appeal and potential.

 

This is not limited to PCGS only, nor CAC.

 

Well I got my grandfather dimes out. I thought they were mercury but probably 600 of them are Roosevelt's and rest are Mercury. Prob have 20 from 1942 so far with about 300 more to go through. Have about 50 from 1916-1929,about 100 from 30's and close to 400 from 40's. No key dates but some are better shape than I thought. Will have to check out the 42's closer

 

I also found a 1803 large cent. Terrible condition so not worth anything but still neat being so old!

 

It seems to me that "liquidity" was meant as "the ability to get my money back out of the coins". That implies, if not profit, at least avoiding a big loss. Nearly anything is liquid if you're happy to sell for pennies on the dollar.

Hmm.

Okay, if you have the opportunity to buy a coin below price guide, there's usually a reason.

But if you have the opportunity to buy a coin above price guide, the reason is often "this price leaves me room to negotiate, and if someone comes along and pays the asking price, hey, free money!"

Once you know what you're doing, you'll be able to recognize coins worth a premium, and pay it to get them. Until then, if you always pay a premium, you may simply be overpaying.

"You won't find premium coins unless you pay a premium price" is generally good advice. Just make sure you don't misread it as "paying a premium price will ensure you get premium coins".

 

Agreed, and my advice was targeted to avoid big losses. Transaction fees are so high that actually making a profit as a collector is nearly impossible in the time frame given of less than 10 years.

This is an excellent clarification of my point. I certainly don’t want to discourage him from negotiating the best deal or getting a great coin for less than price guide. I just want him to know that often times getting a “good deal” below price guide is often not a “good deal!”

 

Maybe, maybe not, depends on what the die variety is. Most of them aren't worth a large premium, but there are a couple that are.

 

If you're thinking of liquidity (already) maybe you should get another hobby. Collectors of coins (Coin Collectors) throw caution to the wind with their endeavor.

 

Why is it wrong to think about liquidity? Does everyone always stick to every hobby they take up? Just thinking ahead.

 

Stop thinking........it clouds the judgement of collecting.

 

And ya know, young person, I picked up a whole lot of junk when I was younger, that ain't worth scratch what I paid for it in the day.

 

But I liked it.......

 

Liquidity is hard to gauge based on (i) what you are buying, (ii) how much you are paying and (iii) what timeline you are holding and (iv) what timeline you want to sell it in and (v) your definition of "Liquidity".

For instance, if I pay $400 for a 1800 US Dollar coin I could
(a) use it as a Dollar face value INSTANTANEOUSLY at any time ... highest liquidity though largest loss of acquisition costs (-$399)
(b) sell it to a pawn shop (open 24 hrs for availability) for say $125 .. pretty fast liquidity, lower loss of acquisition costs (-275)
(c) sell it to a coin shop for say $250 ... pretty fast liquidity though the number of coin shops in your area may be limited or not exist. (-150)
(d) sell it on a non-coin forum, coin forum, eBay, etc with varying prices etc that may take, say 5, 10, 30 or more days to sell depending up on what I want to sell it for. (varies greatly)
(e) and added on is the demand, economic conditions etc which may cause pressures (either positive or negative) on any of the above except (a)
(f) how do I value money, not just now, but in the future.

Of course this model changes if I have an ASE valued at say $16 but with a $1 face value all dependent upon my concept of "Liquidity" becz I have a less loss at (a) versus the above example.

But you are right about the hobby, you can get out of it at any time.

At the very least you can just use it as money as I stated before; or some valuation based on *your* acquisition costs above that which is the true unknown.

As stated previously you could have bought it above market value at which case when you go to sell if you to try to obtain "your concept of market value" you could lose money.

It's not about profit.
It's about your concept of liquidity;
acquisition cost based upon your concept of market valuation (think of the Mike guy on CoinTV and ppl way overpaying for stuff as an example and then finding out they were duped at sale time);
and your concept of fair selling price;
which is based upon your definition of "liquidity";
which may or may not impact an individual profit/loss of an acquisition if you even consider that at all (which we don't know).

 

Dang, I should have started collecting in the seventies, unfortunately that was a decade before I was born.

 

I did collect in the early 1970s. On 50 cents a week allowance.

Coin prices aren't the only things that have gone up!

 

Me too, only without the allowance which made it a lot tougher.