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Deconstructing Ten Popular Coin Maxims
Copyright ©Doug Winter January 2002

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We've all heard them a thousand times: the numismatic maxims that have been repeated enough times that they have acquired near-mythic status. So are they true or not true?

1. "Size Matters"

True. Big coins are more popular than small coins and will continue to be. While there are some small coins that are popular (most noticeably branch mint gold dollars) most others are unpopular. Double eagles may seem high priced given their mintage figures and relative availability but the demand for choice and rare pieces is increasing. In the long run, it seems likely that new collectors will prefer the heft of larger-sized gold coins than their smaller counterparts.

2. "Sets Are Worth More Than Individual Coins"

True. One of the most significant developments in the coin market in the past few years has been the PCGS Registry Set. Collectors are now able to post the grades of their coins and compete against others. So far, this has most dramatically impacted modern issues. It is likely that "classic" 19th century issues will see more competitive set building in the coming years, especially as such sets are promoted by dealers and encouraged by PCGS and their collectorsuniverse.com website.

An exception to this maxim is a meaningless set. As an example, a set of 1850-O gold coins (gold dollar, quarter eagle, eagle, and double eagle) is not worth any premium over individual price levels for each piece. But, a complete set of New Orleans quarter eagles is worth more, as a set, than the individual coins.

3. "If It's Slabbed It's Properly Graded"

False. There is a definite hierarchy when it comes to third-party graded coins. Clearly, PCGS and NGC are the two best grading companies. The next tier is occupied by ICG and ANACS who are also good but whose product is not valued as highly in the marketplace as PCGS and NGC's. The bottom rung is occupied by such firms as SEGS, PCI and Accugrade. These services grade much more liberally and allow many "problem" coins into their holders. New collectors should be careful to realize that a 1907 High Relief in SEGS Mint State-64, as an example, is typically worth far less than the same issue in a PCGS or NGC MS-64 holder.

4. "Grade Is Better Than Rarity"

False. Back in the 1980's, there was a widely-held belief that if a coin was not a "gem" than it was essentially worthless. When coin prices came crashing down in the early 1990's, it was ultra-high grade common issues that suffered the most. As the market became more sophisticated, rarity became more appreciated and in recent years it has generally outperformed grade.

The ideal coin collection features "fundamentally rare" coins in comparatively high grades stressing eye appeal and originality. By fundamental rarity, I mean a coin whose rarity and desirability is not wholly a function of its grade. As an example, a 1795 eagle is a desirable coin whether it is a damaged Very Good or a superb Mint State-65. An 1895 eagle has very little value above its bullion content in low grades and really only attains numismatic value at the Mint State-64 to Mint State-65 level. For this reason, a coin like a 1795 eagle is "better" than an 1895 eagle.

5. "All Coins Sell Best At Auction"

False. For very rare or very high grade coins, auction is an excellent selling venue. But auction is not ideal for all coins or collections.

If you have a collection that primarily features generic coins or have a large amount of coins with tight buy sell spreads (like modern proofs sets and mint sets) then it makes sense to sell these to your local coin dealer. The 10-15% that you pay to the auction company will erode your entire profit margin.

High quality, "fresh" coins sell very well at auction. In some cases, however, private treaty sales can work every bit as well or better. As an example, a specialist dealer may be a better choice to handle the sale of a small to medium sized collection than an auction house. My firm has been chosen to sell some wonderful specialized collection of branch mint gold and has, in my opinion, done a better job of getting top dollar for the owners than if the coins had been placed in auction.

6. "Buy The Book Before The Coin"

True. This hoary old maxim has been repeated to the point of triteness but it remains one of the best pieces of advice a new collector can get. All collectors should assemble a good library of basic coin books and, once they have decided on an area of specialization, assemble a comprehensive specialized library.

Once the basic books have been purchased, it may take some work to find scarce, out-of-print specialty works. The collector should contact numismatic book dealers and specialist dealers to get their input as far which books are important and which are not. If you spend thousands (or ten of thousands) or dollars per year or coins and nothing on books, you are operating under flawed logic.

7. "Quality Is Better Than Quantity"

True. Many new collectors begin with the idea that it is good to have lots of average quality coins. The best collections focus on quality over quantity. In most instances, this means that an important specialized collection will not have more than a few hundred pieces. There are, of course, exceptions to this rule. The Harry Bass collection contained thousands of American gold coins. But many of these were duplicates or they represented lower grade die varieties. Plus, Bass had the good fortune to be buying gold coins when they were reasonably priced. Today, it is not practical to assemble a collection as large as the Bass holdings; both from the standpoint of cost and availability.

I purchase (or attempt to buy) collections all the time. The ones that impress me most are "lean and mean." They contain choice, attractive, interesting coins and often number fewer than one hundred individual pieces.

8. "Non-U.S. Coins Are Good Investments"

False. There are more serious coin collectors in the United States than in all other countries combined. Because of this, it remains unlikely that non-American coins will ever show considerable price appreciation. This doesn't mean that foreign or ancient coins are "bad deals" and should not be purchased. It just means that if you are concerned with the return on your numismatic investment dollars, you should stick with American coins. Look at foreign coins as a pleasant diversion that can fill in the down time between significant purchases of American issues.

9. "Don't Be Loyal To A Single Coin Dealer"

False. If you study the buying habits of the greatest collectors, you will note one particularly significant common factor. All of these individuals had close working relationships with one or two coin dealers. This meant that they were able to purchase the best coins from these dealers at fair prices.

The worst way to assemble a collection is to buy fifty coins from fifty different dealers. By doing this you will never earn "most favored nation" status with any one dealer. You may get to speak with a lot of different people (which may not be a good thing...) but you will never get the really good service that they give to their best clients.

10. "High Grade Modern Coins Are A Time Bomb"

True. Tick, tick, tick... The sound you hear is the modern coin market getting ready to self-destruct. In the past year, prices for low population ultra high grade modern coins have skyrocketed. I personally think they are due for a major correction. The most obvious reason for this is potential supply. When price levels for a modern issue are low, there is no motivation to send in examples to PCGS or NGC. But when price levels raise to the point that there is reason to send them in, the floodgates open. Most of these modern issues have mintage figures in the hundreds of millions (or even billions!) and were carefully manufactured. In addition, they are not graded as carefully as older coins. Thus, today's low population modern coin is tomorrow's pocket change in a fancy plastic holder. Proceed with caution!!

Article provided courtesy Douglas Winter Numismatics


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