Post by jeffolie on Sept 6, 2012 13:43:58 GMT -6
Sept. 6, 2012
How to follow the money in rare-coin collecting
Beware the pitfalls and pitches investors and hobbyists face
(MarketWatch) — Coin dealer James DiGeorgia saw it for just a moment — a rare Roman gold coin he found extremely desirable — but he hesitated before deciding to buy it.
“I heard the dealer say to another customer, ‘Sold,’ ” DiGeorgia recalled. “I snoozed for three minutes, and it cost me a wonderful coin.”
Click to Play
Foundation to sell Warhol estate
A quarter-century after Andy Warhol’s death, his foundation is planning to auction off his estate at Christie's this fall — including hundreds of the artist and impresario’s own works.
That’s the appeal and the frustration of collecting rare coins, which isn’t just for hobbyists anymore. About 7 million to 10 million people in the U.S. are serious coin collectors, experts estimate, and many regard their collections as investments in the same vein as antiques, fine art and wine.
Experts say classic U.S. gold coins and high-quality coins in silver and copper, authenticated and judged for quality by one of the leading services, are among the best buys nowadays in the field of numismatic coin collecting.
They caution, however, that buyers must be sharp enough to navigate a hobby fraught with pitfalls — including counterfeits, doctoring of coins, false claims of rarity, overpricing and theft.
One prerequisite: You should be truly fascinated by coins. The way they look, their history, the very way they shimmer in the light — because to be a successful collector-slash-investor, you have to spend many hours looking at coins and studying them, to be able to accurately assess their authenticity and value.
“The single best investment you can make in your collection is time,” said veteran collector Mike Nottelmann, co-host of the Internet radio series “The Coin Show.”
Coins of the realm
Casual collectors who know the basics of the hobby and want to build a serious collection should focus on a series of coins they find interesting, said Matt Dinger, proprietor of Lost Dutchman Rare Coins in Indianapolis, Ind., and Nottelmann’s co-host.
HOW TO DO IT: NUMISMATISM
• Follow the money in rare-coin collecting
• The $1 million penny and 7 more famous coins
• Rare gold coins belong to U.S. Mint: judge
“At that point it’s a matter of reading books, browsing the Web, looking at auction histories, seeing what the market actually is for the stuff you’re looking to collect,” Dinger said. Slide Show: The $7 million penny and 7 more famous coins.
One of the keys to getting a solid return on your coin investment is to choose U.S. coins that are perennially popular with collectors, such as the Morgan Dollar; the Lincoln Cent (minted since 1909); the Indian Head Cent (1859-1909); the Buffalo Nickel (minted from 1913-38); the Mercury Dime (1916-45); the Washington Quarter (given a big lift in recent years by the 50 States series); the Walking Liberty Half-Dollar (1916-47); the Barber, or Liberty Head, Half Dollar (1892-1916); the Indian Head $10 Eagle (1907-33) and the St. Gaudens $20 Double Eagle (1907-33).
“Coins that are hot tend to stay hot for a long time,” Dinger said. “There’s always a collector base for them, so there’s always a demand for them.”
That constant popularity also means bargains will rarely be found among these issues, Nottelmann pointed out. “So the margins won’t be as big, but they’ll be more consistent.”
Nottelmann identified three books he believes every collector should own:
• “A Guide Book of United States Coins” (66th edition, 2013), by R.S. Yeoman and edited by Kenneth Bressett, Whitman Publishing.
The guide includes a concise history of U.S. coinage, a glossary of numismatic terms and illustrated listings for all U.S. coin series issued since 1793, including denominations; descriptions of design, composition, diameter and weight; each year the coin was minted and how many pieces were struck in a given year by each of the mints that produced them; and approximate prices paid for the coin in various states of condition.
• “Photograde: Official Photographic Grading Guide for United States Coins” (19th edition, 2005), by James F. Ruddy, Zyrus Press.
The latter two books show readers how to assess coins for visual appeal and authenticity.
Making the grade
For decades, collectors have tried to come up with a universal system to describe the condition and beauty of coins. The American Numismatic Association established such a standard in 1977, and it has since been revised. Coins are graded on a scale from 1 to 70, from poor to perfect. The ideal — a 70 — is a coin entirely free of nicks, scratches, blemishes or imperfections of any kind.
Among business strikes — coins intended to be circulated for commerce — the most sought-after coins are so-called Mint State coins, in the range of MS 60-70. Some coins in the About Uncirculated range, AU 55-58, can also be quite desirable if they look like Mint State pieces. Proof coins, which are struck from special, highly polished dies at slow speeds with extra pressure, to produce a brilliant, mirrorlike surface, are sold separately to the public. Like business strikes, the ultimate proof is a 70.
“Buy some inexpensive coins first, because, if you’re going to get burned, you want to get burned on the cheap coins and not the expensive ones,” said Scott Travers, author of “The Coin Collector’s Survival Manual,” now in its seventh edition , and editor of the “PCGS Guide.”
“Start with large coins, because they’re the easiest to grade,” Travers suggested. “The Morgan Silver Dollar, which has a large portrait of Liberty on the obverse [front], is a good place to start, because they’re easy to grade.”
The Morgan $1 coin, at 38.1 millimeters in diameter, was minted from 1878 to 1904, and then for one final time in 1921. It is ubiquitous in television ads, with pitchmen implying that every specimen is “rare,” despite the fact that many millions exist. Some common-date Morgans in MS 63, for instance, can be purchased for less than $100.
PCGS CoinFacts
Examples of Morgan Dollar.
In addition, Travers does not recommend that novice buyers buy coins online, he said.
“When you are learning to grade, there’s no substitute for coins you can see in hand, under the proper lighting conditions,” he said. “Go to a local dealer. Go to coin shows. Develop a relationship with a trustworthy dealer.”
Travers advised consumers to check out a dealer from whom they plan to buy with the Better Business Bureau, and to review federal court records through Lexis Nexis or Pacer.gov to see if he or she has been sued, whether there are any pending judgments, and if the dealer has sued someone else.
“It’s a small community, and a lot of dealers support each other,” Travers said. “This is a field where ‘caveat emptor’ is an understatement.”
Respect a dealer’s time, but don’t be shy about asking questions.
“You’re going to find [jerks] who don’t want to take the time to explain to you, but you don’t want to talk to them,” DiGeorgia said. “They don’t know enough to make the difference.”
Wooden nickels
The coins in a series that are hardest to find, especially in high grades, are referred to as key-date coins, and they are usually the coins that command the greatest premiums.
‘This is a field where “caveat emptor” is an understatement.’
Scott Travers
Key-date Morgans, for example, include the 1895 (proof only), any of the coins made at Carson City, Nev. (designated CC); 1892-S (minted at San Francisco); 1886-O (minted at New Orleans); and the 1893-S.
Collectors must also study the marketplace. Travers recommended that buyers consult reliable price guides, such as the Coin Dealer Newsletter, known to the trade as the Greysheet — the No. 1 guide used by dealers.
“That’s where everyone starts their negotiations,” said Shane Downing, the newsletter’s publisher. “Greysheet allows new buyers to level the playing field. To say, well, if the dealer can buy this for coin for $1,000 from another dealer, what should I pay? $1,100? $1,200, so he makes $200 on it?”
An excellent online price guide is the PCGS Price Guide .
Buyers should also look at auction prices. The Heritage auction house website lets users search closed auction results to see how a coin has been valued over time. You can search by date, mint mark, grade, grading service and other parameters.
INVESTING STRATEGIES
• Is it too late to buy gun stocks?
• More bad news — this time from insiders
• ‘Fiscal cliff’ tax hike won’t kill dividend income
The two most trusted third-party coin grading services are the Professional Coin Grading Service, or PCGS, and the Numismatic Guaranty Corporation, or NGC. Experts recommend that serious investors only acquire coins graded by one of these services and encased in a hard plastic holder. The holder, referred to in numismatic circles as a “slab,” is designed to prevent scratches and keep out dust, moisture and other potential contaminants, though nothing can repel the elements entirely.
Even when buying “slabbed” coins, one should beware — there are counterfeit holders as well as phony coins. “The coin has to stand on its own merits, in or out of the holder,” Travers said.
PCGS coins tend to garner higher prices than NGC coins, as the perception seems to hold that PCGS has tougher grading standards.
Coin grading remains highly subjective, even among professional graders. The difference between one grade and the next highest can be a matter of thousands of dollars.
DiGeorgia, the coin dealer, is a big advocate of buying coins minted through the 1930s that have not only certified by PCGS or NGC but also have been certified by the Certified Acceptance Corporation, or CAC.
CAC was founded in 2007 by John Albanese, who had a hand in the creation of PCGS and established NGC. Albanese noticed that many coins certified by one of the services were either overgraded or undergraded. CAC examines coins already assigned a grade by one of the services to determine if that grade was accurate. The company either assigns a green sticker, indicating that it agrees with the assigned grade, or a gold sticker, denoting a coin that may actually be one or more grades higher.
Finding values
DiGeorgia noted that while CAC’s gold label adds hefty premiums to a coin’s price, such pieces are “hard to come by,” so most buyers are better off sticking with the green label.
The premiums on CAC green-labeled coins can be significant. In May 2009, a 1921-D Mercury Dime graded MS-66 by PCGS sold at Heritage for $3,737.50. In March 2010, a ’21-D given the same PCGS grade, but with the added value of a green CAC sticker went for $5,031.25, representing a 34% premium.
Once you’ve located a coin with a CAC sticker on it, DiGeorgia advised checking to see how many coins of that date, mint mark and condition have been certified by the company. The fewer, the better.
“If you want to follow people who are very successful, you look for coins with low populations,” he explained.
Travers agreed that CAC’s imprimatur can be useful, but he warned that buyers must still know enough about grading to judge for themselves.
more ...
www.marketwatch.com/story/how-to-follow-the-money-in-rare-coin-collecting-2012-09-06?dist=countdown
How to follow the money in rare-coin collecting
Beware the pitfalls and pitches investors and hobbyists face
(MarketWatch) — Coin dealer James DiGeorgia saw it for just a moment — a rare Roman gold coin he found extremely desirable — but he hesitated before deciding to buy it.
“I heard the dealer say to another customer, ‘Sold,’ ” DiGeorgia recalled. “I snoozed for three minutes, and it cost me a wonderful coin.”
Click to Play
Foundation to sell Warhol estate
A quarter-century after Andy Warhol’s death, his foundation is planning to auction off his estate at Christie's this fall — including hundreds of the artist and impresario’s own works.
That’s the appeal and the frustration of collecting rare coins, which isn’t just for hobbyists anymore. About 7 million to 10 million people in the U.S. are serious coin collectors, experts estimate, and many regard their collections as investments in the same vein as antiques, fine art and wine.
Experts say classic U.S. gold coins and high-quality coins in silver and copper, authenticated and judged for quality by one of the leading services, are among the best buys nowadays in the field of numismatic coin collecting.
They caution, however, that buyers must be sharp enough to navigate a hobby fraught with pitfalls — including counterfeits, doctoring of coins, false claims of rarity, overpricing and theft.
One prerequisite: You should be truly fascinated by coins. The way they look, their history, the very way they shimmer in the light — because to be a successful collector-slash-investor, you have to spend many hours looking at coins and studying them, to be able to accurately assess their authenticity and value.
“The single best investment you can make in your collection is time,” said veteran collector Mike Nottelmann, co-host of the Internet radio series “The Coin Show.”
Coins of the realm
Casual collectors who know the basics of the hobby and want to build a serious collection should focus on a series of coins they find interesting, said Matt Dinger, proprietor of Lost Dutchman Rare Coins in Indianapolis, Ind., and Nottelmann’s co-host.
HOW TO DO IT: NUMISMATISM
• Follow the money in rare-coin collecting
• The $1 million penny and 7 more famous coins
• Rare gold coins belong to U.S. Mint: judge
“At that point it’s a matter of reading books, browsing the Web, looking at auction histories, seeing what the market actually is for the stuff you’re looking to collect,” Dinger said. Slide Show: The $7 million penny and 7 more famous coins.
One of the keys to getting a solid return on your coin investment is to choose U.S. coins that are perennially popular with collectors, such as the Morgan Dollar; the Lincoln Cent (minted since 1909); the Indian Head Cent (1859-1909); the Buffalo Nickel (minted from 1913-38); the Mercury Dime (1916-45); the Washington Quarter (given a big lift in recent years by the 50 States series); the Walking Liberty Half-Dollar (1916-47); the Barber, or Liberty Head, Half Dollar (1892-1916); the Indian Head $10 Eagle (1907-33) and the St. Gaudens $20 Double Eagle (1907-33).
“Coins that are hot tend to stay hot for a long time,” Dinger said. “There’s always a collector base for them, so there’s always a demand for them.”
That constant popularity also means bargains will rarely be found among these issues, Nottelmann pointed out. “So the margins won’t be as big, but they’ll be more consistent.”
Nottelmann identified three books he believes every collector should own:
• “A Guide Book of United States Coins” (66th edition, 2013), by R.S. Yeoman and edited by Kenneth Bressett, Whitman Publishing.
The guide includes a concise history of U.S. coinage, a glossary of numismatic terms and illustrated listings for all U.S. coin series issued since 1793, including denominations; descriptions of design, composition, diameter and weight; each year the coin was minted and how many pieces were struck in a given year by each of the mints that produced them; and approximate prices paid for the coin in various states of condition.
• “Photograde: Official Photographic Grading Guide for United States Coins” (19th edition, 2005), by James F. Ruddy, Zyrus Press.
The latter two books show readers how to assess coins for visual appeal and authenticity.
Making the grade
For decades, collectors have tried to come up with a universal system to describe the condition and beauty of coins. The American Numismatic Association established such a standard in 1977, and it has since been revised. Coins are graded on a scale from 1 to 70, from poor to perfect. The ideal — a 70 — is a coin entirely free of nicks, scratches, blemishes or imperfections of any kind.
Among business strikes — coins intended to be circulated for commerce — the most sought-after coins are so-called Mint State coins, in the range of MS 60-70. Some coins in the About Uncirculated range, AU 55-58, can also be quite desirable if they look like Mint State pieces. Proof coins, which are struck from special, highly polished dies at slow speeds with extra pressure, to produce a brilliant, mirrorlike surface, are sold separately to the public. Like business strikes, the ultimate proof is a 70.
“Buy some inexpensive coins first, because, if you’re going to get burned, you want to get burned on the cheap coins and not the expensive ones,” said Scott Travers, author of “The Coin Collector’s Survival Manual,” now in its seventh edition , and editor of the “PCGS Guide.”
“Start with large coins, because they’re the easiest to grade,” Travers suggested. “The Morgan Silver Dollar, which has a large portrait of Liberty on the obverse [front], is a good place to start, because they’re easy to grade.”
The Morgan $1 coin, at 38.1 millimeters in diameter, was minted from 1878 to 1904, and then for one final time in 1921. It is ubiquitous in television ads, with pitchmen implying that every specimen is “rare,” despite the fact that many millions exist. Some common-date Morgans in MS 63, for instance, can be purchased for less than $100.
PCGS CoinFacts
Examples of Morgan Dollar.
In addition, Travers does not recommend that novice buyers buy coins online, he said.
“When you are learning to grade, there’s no substitute for coins you can see in hand, under the proper lighting conditions,” he said. “Go to a local dealer. Go to coin shows. Develop a relationship with a trustworthy dealer.”
Travers advised consumers to check out a dealer from whom they plan to buy with the Better Business Bureau, and to review federal court records through Lexis Nexis or Pacer.gov to see if he or she has been sued, whether there are any pending judgments, and if the dealer has sued someone else.
“It’s a small community, and a lot of dealers support each other,” Travers said. “This is a field where ‘caveat emptor’ is an understatement.”
Respect a dealer’s time, but don’t be shy about asking questions.
“You’re going to find [jerks] who don’t want to take the time to explain to you, but you don’t want to talk to them,” DiGeorgia said. “They don’t know enough to make the difference.”
Wooden nickels
The coins in a series that are hardest to find, especially in high grades, are referred to as key-date coins, and they are usually the coins that command the greatest premiums.
‘This is a field where “caveat emptor” is an understatement.’
Scott Travers
Key-date Morgans, for example, include the 1895 (proof only), any of the coins made at Carson City, Nev. (designated CC); 1892-S (minted at San Francisco); 1886-O (minted at New Orleans); and the 1893-S.
Collectors must also study the marketplace. Travers recommended that buyers consult reliable price guides, such as the Coin Dealer Newsletter, known to the trade as the Greysheet — the No. 1 guide used by dealers.
“That’s where everyone starts their negotiations,” said Shane Downing, the newsletter’s publisher. “Greysheet allows new buyers to level the playing field. To say, well, if the dealer can buy this for coin for $1,000 from another dealer, what should I pay? $1,100? $1,200, so he makes $200 on it?”
An excellent online price guide is the PCGS Price Guide .
Buyers should also look at auction prices. The Heritage auction house website lets users search closed auction results to see how a coin has been valued over time. You can search by date, mint mark, grade, grading service and other parameters.
INVESTING STRATEGIES
• Is it too late to buy gun stocks?
• More bad news — this time from insiders
• ‘Fiscal cliff’ tax hike won’t kill dividend income
The two most trusted third-party coin grading services are the Professional Coin Grading Service, or PCGS, and the Numismatic Guaranty Corporation, or NGC. Experts recommend that serious investors only acquire coins graded by one of these services and encased in a hard plastic holder. The holder, referred to in numismatic circles as a “slab,” is designed to prevent scratches and keep out dust, moisture and other potential contaminants, though nothing can repel the elements entirely.
Even when buying “slabbed” coins, one should beware — there are counterfeit holders as well as phony coins. “The coin has to stand on its own merits, in or out of the holder,” Travers said.
PCGS coins tend to garner higher prices than NGC coins, as the perception seems to hold that PCGS has tougher grading standards.
Coin grading remains highly subjective, even among professional graders. The difference between one grade and the next highest can be a matter of thousands of dollars.
DiGeorgia, the coin dealer, is a big advocate of buying coins minted through the 1930s that have not only certified by PCGS or NGC but also have been certified by the Certified Acceptance Corporation, or CAC.
CAC was founded in 2007 by John Albanese, who had a hand in the creation of PCGS and established NGC. Albanese noticed that many coins certified by one of the services were either overgraded or undergraded. CAC examines coins already assigned a grade by one of the services to determine if that grade was accurate. The company either assigns a green sticker, indicating that it agrees with the assigned grade, or a gold sticker, denoting a coin that may actually be one or more grades higher.
Finding values
DiGeorgia noted that while CAC’s gold label adds hefty premiums to a coin’s price, such pieces are “hard to come by,” so most buyers are better off sticking with the green label.
The premiums on CAC green-labeled coins can be significant. In May 2009, a 1921-D Mercury Dime graded MS-66 by PCGS sold at Heritage for $3,737.50. In March 2010, a ’21-D given the same PCGS grade, but with the added value of a green CAC sticker went for $5,031.25, representing a 34% premium.
Once you’ve located a coin with a CAC sticker on it, DiGeorgia advised checking to see how many coins of that date, mint mark and condition have been certified by the company. The fewer, the better.
“If you want to follow people who are very successful, you look for coins with low populations,” he explained.
Travers agreed that CAC’s imprimatur can be useful, but he warned that buyers must still know enough about grading to judge for themselves.
more ...
www.marketwatch.com/story/how-to-follow-the-money-in-rare-coin-collecting-2012-09-06?dist=countdown