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<p>[QUOTE=&quot;Valentinian, post: 7813731, member: 44316&quot;]Recently I was approached by a friend about trading a rare coin I have for a rare coin he has. I decided not to do it, but not because the dollar value was unfair. Here is a summary of my thoughts about trading. </p><p><br /></p><p>--------</p><p><br /></p><p>Trading coins. When is trading a good idea?</p><p><br /></p><p>A key point of this discussion is that to the collector who owns a coin it can be worth more than its dollar value. </p><p><br /></p><p><br /></p><p>Consider a trade of two coins, one for the other. I <b>stipulate</b> that each is special enough that it would be very difficult to simply buy an equivalent coin. </p><p><br /></p><p>For this discussion I distinguish two types of coins you have—coin those you want to own and coins you care little about and would be happy to not have.</p><p><br /></p><p><b>Case 1</b>: Suppose you are approached about a trade for <b>a coin you still want</b> and you are offered a different desirable coin for it. Should you make the trade?</p><p><br /></p><p>If the dollar values of the two coins are equal, what is the motivation for trading? Maybe you would like to do the other party a favor, since he proposed the trade and wants to make it. On the other hand, although you would get a coin of equal dollar value you would lose the mental associations you had from acquiring and owning your coin. A coin bought 20 years ago, each year for 20 years, accumulates good memories and is of member of the collection—it belongs to your family. No one else attributes THAT value to the coin. To you, a coin you want in your own collection is worth more than its dollar value. </p><p><br /></p><p>So, if you didn’t already want to trade away the coin, an exchange with equal dollar value actually lowers the total value of your collection to you. Don’t make the trade.</p><p><br /></p><p><b>Case 2</b>: Suppose you are approached about a trade for <b>a coin you don’t care about</b>. To you, it is essentially only its dollar value because it does does not fit your goals for your collection.</p><p><br /></p><p>If you sell it at auction or with a dealer you are unlikely to get more than 70% of its cost to the buyer. If you could, instead, trade it for a coin that you would prefer to the coin you have, the trade would be good. If you really want to get rid of the coin, you could accept a trade for coin worth only 80% of its dollar value and both of you would come out ahead. </p><p><br /></p><p><br /></p><p>However, it is rare that two collectors each have coins that the other would prefer to the coin they already have. A major function of money is to facilitate trade. It is more common that someone who wants to trade away a coin will need to convert it into money and then buy what he wants with the money.</p><p><br /></p><p>----------</p><p><br /></p><p>Have you ever traded coins?&nbsp; Did it turn out to be a good idea?&nbsp; Let us know what you think about trading.[/QUOTE]</p><p><br /></p>

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