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A Companion to Rare Coin Collecting - How to Buy Rare Coins
There are a variety of sources for high quality coins. Some are
better than others and each has unique advantages and disadvantages
which should be considered in light of your experience in buying coins
and your knowledge of the field. Additionally, it is important to
realize that in each category discussed there will be some firms or
dealers who do not share the typical assets and liabilities normally
found in that group. Remember that the points discussed are general
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They are more likely to be the case than not, but they are by no
means absolutes.
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Most cities with a population over 20,000 have at least one
coin shop. In smaller cities, they may also carry stamps,
guns or other antiques. Here, you can develop a face-to-face
relationship with the owner and examine coins without the
inconvenience and cost of using the mail. The owner will almost
always be willing to discuss rare coins with you, and offer
his opinions on a variety of numismatic topics.
Local shops have some drawbacks that make them generally
unsuitable for acquiring top quality coins. First, if the
owner is "tied down" to the shop, he cannot travel
to coin conventions, thereby limiting his familiarity with
the current market. Second, local shops are often "collector
oriented," and do not typically carry a large stock of
high quality coins. Due to financial constraints, the average
local dealer cannot afford to stock the type of material sought
by many of today's buyers. So, lack of contact with the wholesale
market, and a concentration on lower priced coins, often make
the local shop a marginal choice, at best, for building a
quality portfolio or collection.
In the larger metropolitan areas, some of the major national
dealers often operate a retail gallery, allowing viewing of
rare coins either by appointment or by walk-in. These cases
often allow the establishment of a face-to-face relationship
with a knowledgeable numismatist, and the opportunity to view
a large number of better quality coins at a leisurely pace.
Keep in mind, though, that security is tight in these larger
dealerships, so don't feel insulted if you are not immediately
given access to large quantities of material. As you become
a familiar visitor to the establishment, you'll find many
of the restrictions relaxed.
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A second alternative is the coin show or convention. These
break down into two types: the regional or national show and
the local show. Local shows typically involve about 25 to
50 dealers from approximately a 100 mile radius and, in metropolitan
areas, are fairly frequent. Most of the dealers who attend
own coin shops, or deal in coins only on the weekends. While
the supply of coins is naturally greater than you would find
in any one shop, the supply of high quality coins is apt to
be limited. Also, most of the dealers who have tables or booths
at these shows do not attend the major conventions. Consequently,
their trading experience is limited often to each other, giving
them a somewhat narrow or parochial view of the coin market.
National shows, on the other hand, are generally more hectic,
fast paced and oriented to the pros. Here, there will be a
large supply of quality material, and prices will be quite
competitive. However, the half hour you would like to spend
talking with a particular dealer, he would rather spend trading
with another dealer. Usually, that would be a vastly more
profitable use of his time. Wholesale transactions are the
predominant form of business conducted at national conventions,
and here the statement that "coin shows are for the dealers"
is generally true. Note also, that purchases made at shows
usually do not carry a return privilege, and there may be
some pressure to make a buying decision in the hurried atmosphere
typically found on the bourse floor.
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A third major source for investment quality coins is purchasing
through mail order. Due to their small size, coins are often
sent through the mail, and a majority of coin purchases today
are made in this manner. Mail order dealers come in an infinite
variety of sizes and types. For the sake of simplicity, dealers
may be broken down into a few major groups. Remember, however,
that wide differences may exist, even within a group.
The first group, we will call the "full service"
dealers. These are usually large organizations that employ
twenty or more people, and consist of several separate numismatic
divisions. Typically, full service dealers will have an auction
subsidiary, bullion and/or investment divisions, separate
wholesale and retail sales forces, and possibly even a publishing
concern. Such dealers are almost always prominent names in
the industry.
In their favor, major dealers offer a wide selection of high
quality coins and a variety of customer conveniences. These
include deferred payment plans, fast delivery, numismatic
catalogs and knowledgeable numismatists on the staff who are
equipped to answer questions on a variety of coin related
topics. While full service dealers are sometimes criticized
for having excessively high overhead, their large volume on
both the purchasing and selling side, may actually result
in these dealers having a lower overhead per coin than many
smaller dealers. In addition, these companies are generally
financially stable, and have been in the business for numerous
years.
A second group of dealers consists of smaller numismatic
concerns that offer choice U.S. coins. While lacking many
of the conveniences of the larger companies, these dealers
can also be an excellent source for coins. Some investigation
should be made, however, to determine the length of time that
dealership has been in business and their stability in the
industry. One warning is in order: some dealers in this category
advertise coins at prices well below those listed in the retail
or even the wholesale price guides. While the price guides
are not absolutes, they do have a link to reality, and offerings
of coins (at retail) priced at less than half of published
wholesale guidelines should be approached with great caution.
The old adage that "you get what you pay for" rings
true, and you may, indeed, get much less.
A third type of mail order seller is a fairly new entry and
the least safe to do business with. These are the telemarketing
firms that often entice customers with special "portfolio
packages" aimed exclusively at a particular market segment
(e.g., retirees, high income brackets). These dealers are
usually staffed by non-numismatic salespeople who aggressively
target a narrow group of coins, usually modern issues with
little or no track record for appreciation and sustainable
value. Sales techniques differ greatly, but most of them hinge
on some kind of announcement of a limited offer or special
purchase that's characterized as great opportunity for the
"wise" investor. The only wise thing to do with
these dealers and their announcements is to avoid them like
the plague. Few investment offerings that come unsolicited
over the mail or from the phone have any future value whatsoever.
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In recent years, financial planners have become involved with
the sale of rare coins. Like rare coin dealers, there are
some financial planners who are better than others. As a rule,
the use of a financial planner can be an asset, especially
to the novice who is totally unfamiliar with rare coins, and
has limited time for learning.
Planners provide a useful screening function, and can be
of assistance in determining whether or not the acquisition
of coins would be right for you. Also, reputable planners
conduct "due diligence" investigations of their
product sources. This would hopefully eliminate unscrupulous
dealers from consideration. You would also benefit from that
planner's experience with suppliers of rare coins, and perhaps
be spared any glaring mistakes.
On the downside, some planners may have minimal knowledge
of rare coins themselves and must rely on their supplier for
tips and information. Planners often receive a commission
from the supplier or dealer, which may be in addition to any
fees they might charge you. The above considerations, however,
should be weighed against the substantial benefits financial
planners are able to provide for some buyers.
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