Collectors

Rare American Coins Have Two Types of Collectors, Which One Are You?

Generally speaking, there are two types of coin collectors. There is the rare US coin collector who has either been collecting coins since childhood, or there is the relative latecomer who got introduced to coins through bullion coins or modern coins.

The first collects with little regard to selling the acquisitions and the other acquires in order to sell. Is one necessarily better than the other? I’m a little of both and I can’t say one is inherently better than the other. Each however can learn from the other.

Financial considerations should enter into every rare American coin purchase that you make. A real coin collector might not worry about paying an unreasonable amount for a long sought after coin, but long term implications should be considered for every rare or bullion coin purchase.

Dealer’s advice is almost always self-serving when it comes to what to buy or how much to pay. Check market values of the rare American coin you’re considering and don’t over pay for that long hunted coin. I’ve been surprised at how much dealers will come down in price sometimes, so don’t be afraid to make an offer coinmarketcap.

I got interested in coins from a telephone sales person when I was buying bullion type coins. She showed me how little more some common date “rare” American coins could cost over bullion and how much more valuable they were. From there, I started learning about silver and gold coins and was hooked.

I entered into the world of American rare coins from the investor background, but quickly became a numismatic. I’m now a little of both, collector and investor. A hybrid so-to-speak.

Coin collecting shouldn’t be thought of or approached strictly as an investment. That takes the joy out of finding that special coin. For me, the more silver and gold coins I’m familiar with, the more of them I want. It’s addicting.

Because of its nature, every hobby is usually pursued with passion. In the case of numismatics, this means learning about coins, learning about the market, and becoming familiar with the buying and selling process. More than likely, you’ll be selling coins that aren’t up to your new standards as you develop, and that becomes part of the hobby.

There is a lot of personal satisfaction in owning the coins that appeal to you. This makes investing in them fun and rewarding.

Today, there is a tremendous amount of information available online. Go read everything you can about rare coins to become a more confident buyer. I still love the feel of printed material and often buy books as my source of information.

How can the investor think more like a collector? Study coins in general to learn what appeals to you. Find a reputable dealer that you can trust and build a relationship with them. Become a niche specialist. I like silver and gold coins from America and around the world.

Study enough coins to learn what appeals to you and develop rare American coin grading skills. What appeals to you will probably appeal to others also.

Learn what “problem” coins are and avoid them for greatest appreciation in value. Or buy “problem” coins cheaply, and throw them in your bullion pile.

How can the collector think more like an investor? Learn not to make buying decisions based entirely on emotions. The coin market like other markets has its tops and bottoms. Tops and bottoms are often difficult to tell in the coin market, unless you’ve been watching it for several years. I think now is a good time to be buying though.

Don’t buy coins that are being heavily advertised. Sell those coins, if you have any. If you see ads for certain coins that dealers are buying, those are good ones to also buy, if they fit within your collection goals. Use your dealer relationship to buy the best coins at the most reasonable prices.

Ultimately, the pure collector should become more of a collector-investor and the pure investor should become more of an investor-collector. I started as an investor-collector, now I’m more of a collector-investor. My silver and gold coin collections give immeasurable joy and they are the most cherished investments I own.

Opportunity

New U.S. Mint Coins a Golden Opportunity

In April, the U.S. Mint revealed plans to strike in early 2006 new .9999 bullion coins to go after the growing world market for .9999 fine (24-karat) gold coins. Studies show that pure gold coins claim 60% of the world’s gold bullion coin market, which is some $2.4 billion annually. The Royal Canadian Mint’s Maple Leafs hold the number one spot for pure gold coins. However, problems with Maple Leafs have surfaced.

If the Mint avoids the problems that have developed with Gold Maple Leafs, it has a golden opportunity to grab an even bigger share of the gold bullion coin market. The U.S. Mint’s American Gold Eagles are the best selling 22-karat gold coins in the world Coinmarkets.

Despite being the world’s best-selling 24-karat gold coins, 1-oz Maple Leafs’ design and packaging leave them susceptible to damage. As a result, Gold Maple Leafs have fallen in disfavor among U.S. gold bullion coin investors. Indications are that gold bullion coin investors worldwide have the same frustrations with 1-oz Gold Maple Leaf coins.

It is nearly impossible to remove, inspect, and put 1-oz Gold Maple Leafs back in their tubes without scratching them, no matter how carefully done. Gold Maple Leafs have smooth, clear fields around Queen Elizabeth’s likeness and sharp milled edges. As the coins are put back in their tubes, the edges scratch the fields–and sometimes the Queen’s raised image.

And, Heaven forbid that a 1-oz Gold Maple Leaf is dropped on a floor or even a hard tabletop. But, most of the damage is done when investors handle the coins. If Gold Maple Leafs are handled roughly, as investors are used to handling Krugerrands and Gold Eagles, Gold Maple Leafs are easily damaged. Consequently, many badly damaged Gold Maple Leafs have come back into the secondary market.

Until a few years ago, Gold Eagles and Maple Leafs sold at the same markups over spot. But, as Maple Leafs, which investors have bought since 1979, started coming into the secondary market, problems surfaced. Now, to keep investors in the U.S. market buying Maple Leafs, the Royal Canadian Mint has to offer new (current year) Gold Maple Leafs at a half-a-percent below Gold Eagle prices.

Damaged 1-oz Gold Maple Leafs are such a problem that one important secondary market maker stopped dealing in the coins for a while. The head trader said he did not have time to discuss with buyers and sellers the conditions of the coins. Further, he said his staff did not have time to inspect each coin and classify it as to the amount of damage. It is commonplace for sellers to say the coins are in “perfect condition.” Yet when Gold Maple Leafs arrive, they often are badly scratched or rim nicked.

Another major bullion dealer (perhaps the nation’s largest) currently buys back “perfect” Gold Maple leafs from established dealers at a little over spot, which means investors receive less than spot if their dealers unload to this firm. For scratched or damaged coins, this firm pays less than spot, which enables the firm to send the coins to a refinery at a profit if the firm has no buyers for Gold Maple Leafs.

The secondary dealer returned to trading Gold Maple Leafs but buys all them only at prices that enable him to profitably melt the coins if they are really beat up. As noted, because of the problem with secondary market Gold Maple Leafs, the Royal Canadian Mint has to price Gold Maple Leafs below Gold Eagles to entice investors to take Gold Maple Leafs in the U.S. market.

Luckily–the free market being what it is–there are dealers who will take the time to evaluate Gold Maple Leafs and pay more for the ones in better condition. Still, the spread (the difference between what an investor can buy and sell for at any moment) on “perfect” Gold Maple Leafs is about $4 wider than on Gold Eagles. However, the U.S. Mint’s new 24-karat gold coins need not be problem coins.

For example, the 1-oz Austrian Philharmonics and The Perth Mint’s 1-oz coins are .9999 fine. Yet, these coins are not easily damaged during normal handling because of their designs and/or their packaging.

Philharmonics come ten to a tube and can be taken out and put back in their tubes without scratching. The Perth Mint coins come individually encapsulated in hard plastic capsules. As long as Perth Mint coins remain in their capsules, they maintain their perfect conditions.

Hopefully, the U.S. Mint knows of the problems with Gold Maple Leafs and will design its new .9999 fine coins and their packaging so that the coins are not easily scratched or damaged. If the Mint opts to go with packaging its new coins in tubes, as it does Gold Eagles and as Philharmonics are packaged, then the Mint needs to avoid milled edges.

Although Gold Eagles have milled edges, old U.S. gold coins ($20 Libs and St. Gaudens) were minted with lettering on the edges. So, lettering is not new to the U.S. Mint. With lettering, the edges can be smooth, making the coins less likely to scratch other coins in handling. Philharmonics, which are not prone to damage, have lettering on their edges.