By Dr. Steve Carr
Most people probably buy their first coin on a whim. I mean, you are paying more for it than the coin can buy in commerce. Why? Maybe it is the allure of an older coin. Maybe it is the thought of owning a genuine piece of American history. Maybe the coin just caught your attention. For some, that will be their only coin purchase. The coin will probably be placed in a desk or dresser drawer, waiting to be discovered by a future generation of coin collectors.
Of course, if you are reading this, you are beyond that stage. Something made you look at - and buy - more coins. Maybe you started a date set. Perhaps you got interested in collecting varieties or die states. You begin to accumulate coins. Soon, you have two (or more) examples of a date or variety. What are you to do?
Unless you care little about money, understanding how to buy and sell early coins is a skill you need. As a beginner, buying is probably more important than selling. You like coins (otherwise, you would not be here) and you want more. But even if you do not intend to sell your coins in the foreseeable future, someday you, or your heirs, may want or need to sell.
If you bought your coins "smart," you or your heirs will come away with a tidy profit from your collection. If you spent "stupid money" for your coins, you or your family may be rudely shocked at the low value of your collection ("stupid money" is a term I heard and liked. It refers to paying way too much money for a coin).
How do you buy and how do you sell? While I do not propose to tell you what coins to buy/sell or how to buy/sell them, I just want to share my "rules" for the successful buying and selling of coins. There are three buying rules and one selling rule.
Before getting to my rules, I want to define' a good coin deal. A good coin deal is one where both the buyer and the seller are happy. Make good deals.
The first buying "rule" is Dr. Sheldon's eleventh rule for calculating the numismatic value of a cent: "Do not invest more in any luxury, such as an old penny, than you feel you can good-humoredly afford to lose" (1). Someday, the value of coins could plummet and the coins sell for much less than you paid. Can you afford to lose that money? In more extreme cases, do you want to risk your home and lifestyle for a coin for your collection?
The second buying "rule" is to buy what you like. Realize, though, that your tastes in any coin may not be shared by many other collectors (and, conversely, your tastes may be the mainstream tastes of the hobby). Do you like coins with more detail that have problems? Do you like coins with nicer surfaces and less detail? Do you like lighter coins or darker ones? The answer is ultimately up to you.
What kinds of coins do you like best? Buy this type of coin and you will be happy (you are getting what you want). A statement by Bill Noyes, a copper expert, probably sums up this "rule" best: "I have rarely been pleased in the long run with a coin that I had to convince myself was a good buy." (2). Think about it. That butt-ugly 1830 N-9 (one of the rarest middle date large cent varieties) may fill a very vacant variety hole in your collection, but if you do not like how it looks.... Besides, another may come along someday. If you are a beginner and do not know what you like, consider buying cautiously.
Over time, your tastes in coins will probably change. The coins you desire may get too expensive. This leads to the third buying "rule", realizing that you have a monetary investment in your collection. For those of you who are rich, this will make no difference. You have enough money to indulge your collecting "habit" or your investment is so little that the value of your coins is insignificant. Most coin collectors soon reach that middle point as their collections grow - your fairly moderate collection is soon worth several thousand dollars. If you only spend $25 a month on coins, it takes less than 4 years before you have $1000 into your collection. This value may be useful later in life and you should consider this aspect when buying coins.
Of course, this value is not guaranteed. The coin market does fluctuate. Sometimes prices go up. Other times they go down. Certain varieties and dates get scarce over a period of time and then become available again. What happened, for example, to the 1793 Liberty cap cent when 52 were offered as separate lots in one auction? This actually happened and the market did not suffer. These coins are so in demand that a bunch of them has little impact on the market.
Knowing something about the coin market can help you maximize your money when buying and selling decisions are made. Every time you look at a coin - and see the price - you gather a small bit of information about the market. Knowing the market, you see, is just having knowledge about the supply and demand for coins. This means knowing what dates and varieties are available and at what price, what coins have sold and at what prices, and what dealers/collectors are willing pay for your coins. It can also include knowledge of the market in the past and possible trends in the future.
Whoa, you say, that's a lot of information. True. But this "huge" market need not be daunting. Every time you look at, buy, or sell a coin, think about how that coin compares to the others available. Soon, you will have learned something about the coin market. Consider other questions as well. What coins are available? What years and varieties are hard to find? Which ones are generally nicer? Which are never for sale? How long does a coin sit in a dealer's stock? Determine the condition, grade, and price of the coins you examine. Get a "feel" for prices asked and grading. The more you look, the more you will learn. Soon, you will know which coins sell for what prices. You will also know when the market gets stronger (prices will rise) or weaker (prices stay steady or drop).
Sometimes this market knowledge is gained through the help of more experienced collectors and dealers. Other times, you learn it at the school of hard knocks. It happens to us all. Learn from your mistakes and move on. You do not need to know about the whole coin market. The market has many facets and you only need to know what applies to the coins you like/want. Almost all of us have some collecting restraints (like money, which coins we like, what grades we want, etc). If we only like or can afford VG middle date large cents, this is the area of the market where we need to concentrate our attention. Our collecting habits change, though, and knowledge of other parts of the market may help you make the best transitions. Besides, learning more about coins is fun!
Coin collectors are also blessed with the large amount of research that has been done in the field. Read and use the literature available for area of your interest. See what is available about these coins on line. The Newman portal (www.newmannumismaticportal.org)/ is an excellent source for numismatic information.
Knowing about the coin market can make your collecting dollar go farther. It can also make your buying decisions more comforting. Knowing and buying are two different things, however. So, where can you buy coins? This depends, to some extent, on your geographic location, but not nearly so much so as in the past. If there is a coin shop in your town (or more than one) visit occasionally and see what is available. Talk to the dealer. Let them know what you are looking to buy. If there is a show in the area, go to it. Is there a local coin club? Go to a meeting and introduce yourself. Tell people what coins you are interested in. You never know who might have a coin you would love to own!
There are other ways you can add to your collection, especially if you do not live near a coin shop or a city with coin shows. Auctions are a popular venue. Several coin auction companies have fairly frequent (even weekly) auctions. They all sell marquis collections. Many times, you can find high grade and rare material in these sales. And there is always eBay.
As listed above, there are a number of different places to buy coins. Lets look at them a little closer.
Coin stores - Coin stores are an excellent place to look at and buy coins. The selection is usually manageable – not too many or too few coins to look at. However, and prices are generally full retail. Most local dealers have a fair amount of numismatic knowledge, but it is often somewhat shallow in some areas, as their knowledge tends to be very generalist. In fact, an experienced collector might know more about their favorite coins than the dealer. Coin stores are a great source for unattributed coins and some potentially great finds. It helps to establish a friendly relationship with the dealer. Let them know the types of coins you are interested in. Who knows what they may find for you!
Coin shows - A coin show is a gathering of many dealers at one location. This allows you to look at more coins than would be available in a store. The shows are usually held on weekends, which makes them more convenient for "working folks" to attend. Attending a coin show will require a larger commitment of time, both to get there and to look at all the coins. The big advantage of a show is that you are more likely to find a coin you like. There are, after all, more to choose from.
Auctions - Auctions are a great place to locate and buy coins. Auctions with a regional, nation wide, or worldwide exposure often offer higher grade and rarer coins. Lower grade and common coins are not usually sold in these auctions, as they are fairly easy to obtain elsewhere. These auctions are promoted using catalogs where coins are described and often pictured. These listings also appear on line. You can bid in these auctions in person (and if you do, you are probably not a beginner), by mailing in your bid, by arranging with someone to bid for you, or by bidding online or by phone. Make sure you include the buyer’s fee when calculating your bids. It is smart to set limits and stick to them.
Local auctions also provide a venue for coins. These auctions may be sponsored by coin clubs or be local auction companies. In local auctions, the coin expertise of the consigners, bidders, and auctioneers is often limited. Coins purchased here can be cherry picks or sell for "stupid money.".
On-line auctions - One advantage of on-line auctions is that most sellers post a picture (or pictures) of the coin. This gives you a better understanding of what the coin looks like. But beware, it is very easy to ””doctor” digital pictures. Keep this in mind while considering the coin. Be sure there is a return privilege for the coin, should you not like it when it arrives.
There are also a number of specialty clubs that have coin sales and are a wonderful source of information. Interested in half cents or large cents? Then the Early American Copper club, EAC, is a great organization to join. You will learn about the histories of these coins, meet some very interesting collectors, and discover another place to find the coins you want. There are clubs for almost every US series.
EAC also has an on-line presence through their “Region 8.” Members of Region 8 get a Sunday evening post every week. This post is a compilation of member emails for the week. Occasionally, coins are advertised on Region 8. Members can also post "wants."
Trading - An alternative to buying is trading. You can trade with dealers or other collectors. If you trade coins, you can usually get a slightly better deal. Each trader is getting a "better" coin (in their opinion), allowing each to compromise a little on value. Trades can be conducted in person, through the mail, or on-line.
Timing can also be important in buying and selling coppers. In general, it is best to buy when the market is slow (prices are lower) and to sell when it is brisk (prices higher). There will always be differing opinions on when the market is at its highest or lowest and when it is the best time to buy/sell. Sometimes the decision to buy/sell is dictated by non-copper market factors (a need for money, a death in the family, college expenses, new found wealth). In the end, the decision to buy is yours
Selling is a lot like buying, only in reverse. There is only one "rule" for selling, be happy with what you get for the coin - or don't sell. There is always the possibility that you could have gotten more money. Or your coin may be so esoteric that no one cares (hopefully you got that one for little cost!) and this is the only possible sale. Don't dwell your decision! Just make it and be happy.
One good reason for a beginner to sell an occasional coin is so you will get a better understanding of the selling side of the market. If you never sell a coin, how do you know how much your coins are really worth? You will also learn who to sell to. Selling doubles is a great way to free up some extra capital to buy new coins for your collection.
When selling, two factors need to be taken into account; 1) the quickness of the sale and 2) the amount you receive for your coins. Both of these factors may change depending on what is happening in the coin market at that time.
Some ways of selling can be very quick while others take longer and will require more effort on your part. Timing, of course, is also important in determining what you get for your coins. It is best, for example, to sell when the market is strong. But when is the market strongest? Will it get stronger? And why should you sell, when everyone else is buying?
Here are some ways to sell your coins. As with buying, I don't propose telling you what coins to sell or how to sell them. This information is general and there will be exceptions. Remember, too, that dealers and auctioneers need to make a profit on the coins they sell.
Direct sales - Sell your coins yourself. If selling coins by yourself, decide whether you want to sell all your coins at one time, sell them in lots, or sell them individually. Your choice will make a difference in the amount you receive and the amount of time you must spend selling your coins. You will usually make more for your coins if you sell them individually. If you price your coins at below greysheet "bid", you in effect offering them at a price most dealers will pay for them But this method is much more time consuming than selling your coins all at the same time.
The easiest and quickest way is to sell your coins as a single group. Selling your coins this way takes little time and energy, but the amount received will generally be lower than selling the coins individually. This is because many dealers are not really interested in some types of coins. If your coins are nice, consider selling to someone who specializes in your collecting specialty. If you are concerned about the price offered, get a second or third opinion. The prices offered by different dealers may vary considerably, depending on the ability of the dealer to re-sell the coins. Some dealers charge for evaluating a collection, especially if it is large. Often, if you sell to them, this charge is waived.
Auctions - You can consign your coins for auction. A national or regional auction is an excellent way to sell if you have better quality and rarer coins. If your collection is substantial, your name may be advertised with the auction. Otherwise, your coins will be offered along with coins consigned by others. If common/low grade coins are offered, it is often in bulk lots.
If your collection is not so substantial, you might consider consigning it to a local auction. Most coin clubs have auctions at their meetings. There is usually a limit on the number of lots that can be sold, so this process may take some time. Local auction companies are also a place to consider. Coins sometimes bring "stupid money" at auctions! Most auction houses will charge you a commission for selling your coins. This commission is sometimes negotiable.
Another way to sell coins individually is in on-line auctions, such as eBay. This will require the most work (taking pictures of the coins, describing them, and listing them). There are also the associated fees - to list, send, and give paypal their cut. EBay is a decent place to sell and, in the case of lower grade coins, is really the market standard.
Trade - If you are still interested in collecting coins, but are tired of your current holdings, a trade may be the answer. A trade will involve some negotiations, which take time. The big plus to trading is that you get to know another collector (or collectors) much better and you get to see some "new" coins. The big disadvantage is finding someone willing to trade.
Buy smart, sell smart, laugh at and learn from your mistakes, and enjoy your coins!
(1) Sheldon, William H., Penny Whimsy, NY: Durst Publications Ltd., 1990, p. 57.
(2) Noyes, William C., United States Large Cents, 1793-1814, Bloomington, MN: Litho Technical Services, 1991, quote from "My Criteria for Buying Large Cents," no page number.