Silver coins, gold coins and bars, oh my! If you’ve been following our blog for a while, you know we’ve discussed why the value of your current coin collection may be less than you think.
However, if you are new to coin collecting or you’ve inherited a coin collection and you’re attempting to research the value of their items, this article is for you.
We often work with both new collectors and seasoned collectors who are seeking to know the value of their collections with the hope they will be worth selling.
So, before you add the next trending coin to your collection or before you decide you’re done with collecting and seeking to sell, there are some key factors we want you to consider.
For example, many individuals purchase coins because they catch their eye without thinking they may have to sell someday and so they don’t take the potential resale value into consideration. Remember, just because it’s pretty and shiny doesn’t mean it is a marketable item. We saw this happen firsthand after meeting with a recent customer looking to sell his collection.
The collection contained many beautiful pieces that he had purchased based on emotion versus investment. Unfortunately, we were unable to assist him as the overall value fell well short of his expectations due to overly inflated prices that he initially paid for the coins. His situation is like so many others that we’ve met with and spoken to over the years.
Learn more about what affects the value of your collection whether you’re building your collection or seeking to get the most value out of your collection when you decide it’s time to sell.
Let’s begin with certified coins. What is a slabbed or certified coin? These are coins that have been authenticated by a third-party grading company and have been hermetically (airtight) sealed in a hard acrylic holder noting their overall condition grade. But are they right for your collection? Certified coins aren’t necessarily the holy grail that many people believe they are, and you must pay close attention to details such as whether the coin has spots. Not only that, but the third-party grading service that certified the coin has a significant impact on the coin value as well. But don’t fret, even advanced collectors struggle with certified coin nuances.
For example, the customer we mentioned earlier brought in a rare 1873 Carson City $20 Liberty Head gold coin. The coin was certified and received a grade of AU58 by a third-tier grading company that is no longer in business. Note that an AU58 grade is the highest grade that a coin can receive short of it being uncirculated. Seems to be a pretty decent coin, right?
The customer paid $15,000 for the coin, which if graded correctly, would have been a heck of a deal! However, the coin had been cleaned and had fine details. Bet you can see where this is going.
This means the coin was incorrectly over graded by three grades. That is a considerable difference! In fact, at the time of this writing, a coin with fine details has a value of approximately $3,000. This means that our customer was overcharged by $12,000. Unfortunately, there was no way to close the gap between our offer price and his basis in the coin. That is a rather expensive learning opportunity.
To further drive home the importance of third-party grading companies (TPGC) is that eBay, possibly the world’s largest auction site, has banned the posting of coins certified by third-tier grading companies. That’s not to say certified coins are bad. In fact, as a collector myself, I have many certified coins.
So, if you are looking to add these to your collection, remember, that the only accepted grading companies include NGC, PCGS, ANACS and ICG. NGC and PCGS are considered first-tier grading companies, while ANACS and ICG are second-tier certification companies. All other companies aren’t recognized by eBay, or for that matter, most coin dealers.
Who You Purchased Your Coins From
Now that we’ve covered a bit about certified coins, where you purchased your coins or who you purchased them from will also have a substantial impact on your basis and the potential resale value in the future.
It’s not our intent to knock other coin dealers in the industry, but just like in every industry, dealer veterans know who is reputable and those with questionable business practices.
In general, coins sold by companies that advertise on the radio, T.V., and through circulars or magazines are companies that tend to charge higher rates for coins. Unfortunately, some of these companies use a bait and switch strategy and attempt to draw folks in with low premium bullion coins only to upsell them on high-value numismatic coins.
Our advertising comment isn’t a blanket statement, as most reputable coin dealers that advertise in industry-leading publications or websites, such as the Coin Dealer Newsletter or American Numismatic Association (ANA), operate with integrity.
This includes late-night coin shows/programs, home shopping shows, and infomercials. As a coin dealer that purchases hundreds of coin collections a year, we frequently see coins from these sources, many of which are low value or face value coins dressed up in impressive packaging; think of lipstick on a pig.
We do recommend that you purchase your coins from a reputable local or online dealer. Do some quick research to find reviews listed on Yelp, Google, or the Better Business Bureau. Pay close attention to their years in the industry, their transparency on their website, and their rates. This will help give you a better barometer of who will be the best fit for you.
The Type of Items You Purchased
Not only is the dealer you choose important, but also the type of coin or coins that you purchase as well since it will also have a significant impact on the resale value. We mention this because there are so many shiny options available these days that may showcase your favorite movie or football team. However, keep in mind that just because a coin is rare, low mintage, or is attractive to you doesn’t necessarily mean that there is a strong market for it when the time comes to sell.
For example, most low mintage or rare modern-issued foreign coins have a relatively small market of those seeking the same coin. This means, that just because you loved the coin doesn’t mean everyone else will too. So, if you’re in the market for low-mintage coins, we recommend that you keep it simple and stick with U.S. coins. We meet on a regular basis with customers who purchased obscure certified modern foreign coins at significant premiums.
Depending on who the items were purchased from, we’ve seen markups as high as five times the wholesale value of the items. That’s a hard pill to swallow when it comes time to sell.
A good example is a recent caller from California that is trying to sell his Canadian War of 1812 commemorative platinum coins. He first called a few weeks ago expecting a significant premium on the coins, as relatively few were produced. Apparently, he hasn’t had much luck receiving his target price, as he just recently called again with significantly different expectations.
Not only should you be wary when purchasing certified modern foreign coins, especially at a significant premium, but we recommend that you also pay attention to the market before purchasing U.S. commemorative coins.
For instance, the U.S. First Spouse ½ oz gold coins didn’t make the big splash the U.S. Mint was projecting. They were designed beautifully and can be very appealing, but they simply did not generate the demand many were hoping for.
Additionally, U.S. modern commemorative $5 and $10 gold coins have a relatively high issue price, but trade as bullion coins meaning that they don’t have collectible value in the secondary market.
If you’re not sure if you’re making a good investment, reach out to a trusted coin dealer for his or her opinion before making your purchase. If the dealer is honest and transparent, they will provide you with the insight needed depending on your overall coin collecting goals.
When You Purchased Your Coins
Timing is also critical when it comes to building or adding to your coin collection. When you purchased your coins, including the price you paid, will affect your sale price and ability to realize a profit. Let’s begin with bullion coins, whose value is determined by their underlying precious metals value.
If you purchased gold coins or bullion during one of the all-time highs set in the gold market in 1980, 2011, 2020, and earlier this year, there’s a chance that the current value of your items is less than your purchase price. The same applies to silver, which hit all-time highs in 1980 and 2011.
Public consensus assumes that anything purchased in the past is most likely more valuable today. But, as we noted above, when you purchased the items has much more of an impact on the value than how long you have had your items.
To use a stock market reference, if you purchased stocks at the peak of 1929 before the start of the Great Depression, it would have taken you decades to recoup your money.
When you purchased your coins doesn’t necessarily just apply to bullion coins. For example, prior to the launch of third-party grading services, it was believed that there were fewer uncirculated Morgan silver dollars than we have come to realize today.
In fact, some of the original invoices that we see from estate coin collections, in some cases decades ago, include prices that are significantly higher than they are today. That’s simply because millions of Morgan silver dollars have since received uncirculated grades by the leading third-party grading services (TPGS).
We know this from the population reports that the leading TPGS make available to the public. For those individuals who are interested, we’ve provided links to NGC’s census report and PCGS’ population report.
Fortunately, timing works both ways. The price you paid for items can also work to your advantage. For example, in the past, American silver eagles sold for a few dollars over the spot price of silver. At the time of this writing, the premium that coin dealers are willing to pay for silver eagles is equal to the premiums they charged only a few years ago.
The key thing to remember, as with any investment, you always want to buy low and sell high.
Holding Period of Your Coins
HGTV is famous for house-flipping “reality” tv shows resulting in unrealistic timelines. In 30 minutes or less they can show you months of work invested to prep a house to sell for a huge profit. Unfortunately, what we don’t see is the amount of time it takes behind the scenes to get the home renovated and put on the market to sell.
This same sense of instant gratification has only been fed further by instant shipping options, same-day delivery and more. However, physical gold/silver coins and bullion, collectible or numismatic coins, operate differently when it comes to realizing an instant profit.
Think of the transaction as a tangible investment, such as fine art, wine, collectible cars, and numismatic coins. Rarely, are you able to purchase a physical asset one day, like gold, and sell it the next day for a profit. These are long-term hold investments that should pay off over time if you purchase them at the right time and you are patient.
When we meet with customers who have purchased overvalued numismatic coins from one of the types of companies we’ve described above, they’re inevitably told that they need to hold their investment for five years before they can expect to see a return on their investment. Unfortunately, as we’ve seen time and time again, even five years isn’t long enough for many people to be able to break even on their investment.
This is especially the case when they’ve made a poor investment choice and/or overpaid for their coins due to poor timing, the type of coins being too obscure, or purchased from the wrong type of dealer or seller. However, if you time it right and you purchase from a reputable seller or dealer, your timeline may be less than that.
Suffice it to say, there is an element of patience that needs to be exhibited when you’re dealing with physical assets, such as gold and silver. In other words, you shouldn’t view these investments like day trading or with the intent of flipping them like a home.
These short-term strategies rarely, if ever, pay off. That’s not to say that you might not hit it just right, but you should be patient and expect to hold your investment for a reasonable amount of time before realizing a gain.
Every few years, we see a nice runup in gold and silver prices, so do your best to keep emotion out of the equation and sell once you’ve hit your targeted return.
Who You Sell Your Coin Collection To
We’ve referred to the type of companies you should avoid purchasing coins from, but it’s just as important that you choose the right coin dealer to sell your collection to. We recommend that you look for a company that is trustworthy, operates with integrity, and is knowledgeable of the industry.
When you see a coin expert, you’re relying on their expertise and understanding of the market. A well-informed coin dealer can be a valuable resource and guide you through the process of selling your collection. If you’re new to the field of numismatics (the study of money, coins and medals), they should be able and willing to identify coins in your collection that are worthy of a premium and pay you accordingly.
If you’re a grizzled veteran and have been collecting for years, the coin dealer should be able to justify their offer price to you. In some cases, an initial offer price may be lower than your expectations, but if the coin dealer is using reliable and trusted resources and is able to share this information with you in arriving at an offer price, you should feel much more comfortable that you’re being treated fairly.
If, on the other hand, you have a collection of rare and certified coins and the buyer makes you an offer based on the weight of the coins, look for another option. The coin dealer that you ultimately choose can be the difference of thousands of dollars, so choose wisely.
Unfortunately, we’ve heard our share of horror stories in the past. One story that stands out is a conversation we had with a prospective customer who had sold a large portion of their U.S. coin collection to a mobile gold and silver investor. They found the buyer on a social media site or forum, such as Craigslist, and believe they were taken advantage of.
Make sure you do your research before settling on a coin dealer and avoid selling to individuals that don’t have a reputation to uphold.
These are just a few factors that will affect the value you receive for your coins or coin collection.
If purchasing certified coins, only purchase coins that have been graded by the most respected companies in the industry. Not only that but do some price shopping to make sure that the asking price appears to be in line with the market.
Who you purchase your coins from and the type of coins you select will also affect your resale value. We recommend that you stay away from buying coins off of tv, whether a general home shopping channel or a late-night show dedicated to coins. You increase the chances of purchasing less marketable items at a significantly higher premium over market value.
Also, don’t let a salesperson talk you into high-priced modern foreign or commemorative coins that might not have much of a market when the time comes to sell.
Be patient when it comes to your gold and silver investment strategy. When buying physical coins and bullion, you should expect to hold them for a while to realize a profit but stay away from dealers who tell you that you need to hold your items for five years before you may begin to see a return on your investment. They’re most likely trying to sell you a high premium collectible coin, which may or may not realize the price that they promise at some point in the future.
Lastly, choose a coin dealer that is trustworthy, operates with integrity, and truly knows the market so that you will receive a fair price. While a coin dealer can’t do anything about how, where, and how much you paid for an item in the past, they can at least help you to realize the most value for your items in the present.
Give us a call today at 678-922-4909!
Happy Treasure Hunting!