Problem Coins don't have to be a Problem!

I know that I might infuriate the purists with this thread by challenging one of the widely accepted maxims of numismatics that there is no price to low to pay for a problem coin, but I am gonna do it anyway. It has been my experience over the years that problem coins are not the problem. The problem occurs when a collector buys a problem coin without knowing it is a problem coin. If you understand how to detect problem coins, and you select coins that still have eye appeal, you can successfully buy and sell problem coins while recouping most or all of your initial investment at sale time. The key is being able to spot the problem and properly evaluate what the problem coin is worth. I have provided some anecdotal examples below.

1897-S Barber Half Dollar AU Details Whizzed​

I purchased this coin on E-Bay in April 2007 based on some seller scans. I could not determine exactly what the problem was due to the poor quality of the scans which was typical back then, but I assumed the coin was a cleaned AU/MS Barber Half. It was only when I received the coin that I immediately discovered that it was whizzed. I had paid retail AU53 money for the coin and kept it because the eye appeal was very strong despite the whizzing. I paid $529 for this coin raw in 2007 and sold it for $533 in NGC Details plastic in 2013. My loss on the coin was E-Bay fees and the NGC grading fee which was about 10% of the initial purchase price. As many of you know, that is a pretty common loss, problem coin or not.

1897-O Barber Quarter AU Details Cleaned & Artificially Toned​

In 2007, I was working on an AU/MS Barber Quarter Dansco collection. If anybody has ever attempted this endeavor, you know that you run into many date/mm that are difficult to find for reasonable prices in these grades and don't hit the market very often. The 1897-O Barber quarter is one of those better dates that is hard to find. AU coins were at least $700 and MS wer over $1,000. When this coin popped up on E-Bay in April 2007, I knew exactly what it was and that I could fill my hole with a modestly attractive coin for a discount price. The coin had AU details, had been cleaned, and then been artificially toned in order to hide the cleaning. I used the term "modestly attractive" because the artificial toning did a very good job at hiding the cleaning for the most part. I decided to pay XF40 wholesale money for the coin, $433. I sold the coin earlier this month for $450 which means my loss was limited to E-Bay fees only.

1922 Peace Dollar ICG Artificially Toned​

The inclusion of this coin in this thread is simple. I have seen too many people pay premiums for artificially toned common date silver coins because they look pretty. And while they might look pretty, your only chance to recoup your monetary investment is to have another collector make the same mistake that you did. These coins are worth silver melt and should be bought and sold as bullion. If you are going to pay a premium for a toned coin, make sure it has a guarantee provided by NGC or PCGS plastic. You will thank me later. As for this example, I made money because the price of silver was up before I sold it.


The point of this thread is simply to show that problem coins still have value in the market place. If you can identify the problem and then assign a correct valuation to the coin based on past auction values, you don't have to completely exclude all problem coins from your collection. The real key is to limit your problem coin purchases to those coins that still exhibit a level of eye appeal. There is a big difference between a coin that has been cleaned with a brillo pad and an uncirculated coin that shows a small cleaning spot left by someone trying to remove a small toning spot in the fields.

I would like to close this little discussion by pointing out that the best way to learn how to detect problem coins is actually to view the problems in hand. Now I am certain that everyone has seen a cleaned coin in hand, but how many Cointalkers have seen a whizzed coin in hand? Purposefully buying a problem could be tuition cost for helping to avoid buying such a coin without knowing in the future. What say you?

 

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Great thread Lehigh... this is what makes CT such an excellent site. And as far as "whizzed" coins, I'm sure I've had a few in hand over the years, but probably didn't identify them as such. So I went back and found an older thread (linked below) that gives out some pretty good info on whizzing... and, of course, there's a bunch of info available on the web. To me, "problem" coins are a way to collect something I love without spending an "arm and a leg".

http://www.cointalk.com/threads/how-to-tell-a-coin-have-been-whizzed.60475/

 

Excellent thread Paul. I agree, in hand is the best way always to see what a coin is. However, if you see enough in hand, you can learn to spot most things from photographs.

I guess since I now mainly collect ancients, the idea of "problem" coins seems a little strange now. US collectors would label almost all ancients as "problem" coins, so I no longer have much aversion to them.

Great point about problem coins though. Where people get into trouble is overpaying for them. People pull out a redbook and assume their coin is what is listed there, not knowing these retail prices are only for problem free examples. However, its not the coin's fault. The coin did not choose to get whizzed, cleaned, or artificially toned. Therefor, every coin deserves a home, its only a matter at what PRICE do you give it a home.

 

I personally find it a good post. While most people would say avoid problem coins - there are times when problem coins can be a good buy at times. Why? Sometimes when you are trying to look for key dates - there can be times when you can't even buy any decent examples unless you are willing to spend moon money. At times when you might have many collectors avoiding them like plague, you may be able to obtain such coins at a bargain and resell them later at the right time.

But I must say that Lehigh's coins are actually not too bad looking. Thanks for sharing your story.

 

Good post. I think this is the key phrase - "you don't have to completely exclude all problem coins from your collection. The real key is to limit your problem coin purchases to those coins that still exhibit a level of eye appeal."

 

Ive felt the same way & have welcomed a few problem u.s. coins to my collection. But being a budget collector these were the best ways to get some types.

I have problems with coins that have holes or major scratches.

 

Great post, Paul. This is something anyone who has been collecting a while has probably learned the hard way. I know I've bought some pretty sorry problem coins in the past. But as I learned the things you brought up, my problem coin purchases have become less of a problem, if that makes sense.

 

"The problem occurs when a collector buys a problem coin without knowing it is a problem coin."


And that collector pays a premium (clean grade price) for such a coin. As always, a well thought out and presented argument (post) Paul.

 

I agree with you, Paul. It is a super thread. If someone wants the coin for its aesthetic appeal for their own pleasure, what is wrong with that? If the collector DOESN'T KNOW the coin is a problem, that is a whole different issue. Also, if one buys it to resell, that isn't the best idea, but for a personal collection? That is the collector's choice.

 

Thanks for all the kudos guys, but I really was trying to start an argument with somebody, other than Doug that is, LOL!

 

Okay, then! You don't know what you're talking about........stick to hold-em!

Have a great day, Paul!

Chris

 

Saw a whizzed dollar on ebay once, and it was clear and obvious. You could see the polish lines, and the curve in them. In spite of this, the bidding was very high for this Ultra high grade" coin.

 

How can a whizzed coin have an ultra high grade?

 

Nice post. I agree to a point. Right now I am putting together a problem coin US type set in a Dansco. It's a type set after all, so even if dates are unreadable it's fine by me. The more detail of the type, the better though. I'm all for collecting problem coins, and I agree with your premise that problem coins don't have to be problematic. Most coins, after all, have varying degrees of problems or blemishes. Now the point I disagree with is paying hundreds of dollars for a problem coin, like you did or your buyers. 400 or 500 for a whizzed barber half? That's insane to me. I have a problem paying a hundred dollars for a straight graded coin, so probably my reluctance is due to my lack of funds. But I still think paying a significant sum for a problem coin is not a good idea, even if it's a tough coin or not. Perhaps then the series you are collecting is beyond your means

 

I was sitting around looking for something to argue about.

While I agree with much of the posts; true enough, if you purchase problem coins at the right price you can do very well.

I know several dealers who buy virtually nothing but problem coins (slabbed and raw). They have them slabbed at basement prices - $10 a pop and flip them within a month. There is a large market of collectors who value cheap prices over "good" coins.

What I will question is this" I know you are no dummy. From the coins you purchased, you have some $$$ to play with. So why are you tying your money up for years in junk that you take so long to sell? It's like poring it down the pot. I know, I know, it's a free country. Nevertheless, IMHO, with your knowledge you could have rolled those purchases over (if you had access to large shows or coin clubs) and actually made money. This may be one of those cases where a small amount of interest in a bank out performed your coins, no?

like cheapI agree with much of the posts.

Easy! If I take an MS-70 SE and whiz it very lightly, I may not remove enough of its surface to drop it below an AU-58 "Details Whizzed" grade.

 

Agree with the sentiments of the OP. In my opinion, many "problem" coins look BETTER than their straight graded (eligible) counterparts.

 

Of course they do! Perhaps that's why people started repairing, cleaning, and whizzing coins in the first place.

 

True, a great many problem coins are high grade, but not pretty. Old copper gets crud on it, silver oxidizes. Make it pretty and flashy, and people will buy it.
Many do NOT see flashy cleaned coins as problem coins, but will turn their noses up at the same coin, pre-cleaned.
The obvious one I saw on ebay looked wire brushed, although you could easily see the semi circular scratches. It was not heavily worn, and it was blazing shiny. So, even with obvious harsh polishing, people were bidding it up.
Personally, I like my coins to look like they should. A chocolate old copper is Ok, if its not layered in crud,but I prefer silver to be...silver!

 

This isn't what I had in mind. In the series I collect which are presumably older than those collected by most US collectors, the "problem" coins are usually noted by NGC as "surface hairlines" or "excessive surface hairlines". Sometimes, these coins have strikes and color which are better than straight grade coins which are "blast white".