Deconstructing Ten Popular Coin Maxims
Copyright ęDoug 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
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
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