Saturday was Halloween. As we typically do, we took our son and his cousins trick or treating. Consistent with tradition, the kids would say “trick or treat” when people opened their doors. As we all know, they really didn’t want tricks. Rather, they were hoping for a treat; preferably a large-sized candy bar. In many ways, this is analogous to the coin industry. Individuals that purchase coins, whether they be numismatists, coin buyers or otherwise, are hoping that their purchase will end up being a treat as opposed to a trick. In this article, we’re going to highlight several tricks in the coin industry that you may or may not be aware of in hopes that you’ll be able to avoid some of these common pitfalls.
Below are five common tricks that we see in the coin industry. We recommend staying away from these coins and sets if your primary goal is to purchase coins as an investment.
- Impressive Packaging – When coins or sets are privately produced or hand assembled and are in impressive packaging, there’s a fairly good chance that the underlying coins are of little value, or are being sold to you at a large premium above the market value. There are companies that make a living at selling unsuspecting customers subpar items in high end packaging that have little to no upside. If an item that you’re considering is in handsome packaging that wasn’t issued by the U.S. Mint, we recommend that you do a bit more research before potentially making a scary purchase.
- Subpar Grading Companies – Another common trick in the industry involves companies selling professionally graded coins from second or third tier third party grading services (TPGS) at high end retail prices. The two leading TPGS are Professional Coin Grading Services (PCGS) and Numismatic Guaranty Company (NGC). Other respected and reputable TPGS are ANACS and ICG; although, the grades assessed by these companies are oftentimes a grade or two higher than comparable coins evaluated by PCGS or NGC. In other words, their grading criteria is more lenient than PCGS and NGC. While other coin dealers may disagree, we recommend that you avoid graded coins from any grading company that we didn’t highlight above, with the exception of coins that are heavily discounted.
- Theme Inspired Sets– While not always the case, in our experience, theme-inspired sets, whether in impressive packaging or not, are marketing gimmicks that aren’t likely to appreciate in value in the future. Examples of theme inspired sets include the first and last year of a coin that was produced – typically a type coin such as an Indian Head penny. Time inspired sets, such as coins from various decades or century sets also tend to be poor long term performers. Additionally, sets that are focused on historical figures, such as presidents and/or founding fathers, are typically worth a nominal amount. As mentioned above, please do your research before considering any of these coins or sets.
- Historical Events – While these coins and sets are technically theme inspired, we see a substantial number of government and privately produced coins, bars and rounds that commemorate historical events in our nation’s history so we thought it warranted a separate discussion. Nearly any and all significant historical events have been commemorated in the form of coins, bars and rounds, including the founding of our nation, the Civil War, World War I, Pearl Harbor, World War II, the Civil Rights movement and 9/11, just to name a few. While there is no questioning the importance of these events in our nation’s history, many of these coins, bars and rounds are of limited value. We recommend that you steer clear of any high priced coins and rounds that have little to no intrinsic value, such as nickel-copper, gold plated or silver plated coins. If you’re merely buying the coins as a remembrance of these significant events, that’s one thing, but don’t purchase these items with the expectation that they’ll increase in value.
- Cleaned or Polished Coins – While cleaned or polished coins shouldn’t necessarily be avoided, you shouldn’t expect to pay retail prices for these coins either. Unless you’re an expert in the coin industry, you may not be familiar with how to identify these coins, so we’re going to provide a couple of helpful hints. Uncirculated coins produced by the U.S. Mint should have a snowy or frost-like appearance. This is commonly referred to as mint luster. Over time, as the coins are circulated, the mint luster fades. However, at no point in time should a coin have a shiny appearance unless its been cleaned or polished. A 10x magnifier or loupe can help to identify these coins. If you see a pattern of striations on a coin that are consistent with respect to the length and direction, then the coin has likely been altered and should be purchased at a discount.
The above are just a few coins and sets that are more likely to be tricks than treats. There’s nothing inherently wrong with the coins that we highlighted above. You should just be aware that these coins are oftentimes sold at high premiums and aren’t likely to appreciate much in the future. However, if your intent is to simply remember and honor these individuals, dates or events of significance without regard to an anticipated profit, then we recommend that you just do your due diligence prior to making a purchase.