The 5 Principles of Coin Collecting October 25 2014
All too often, eager new collectors dive into the market, buying and selling coins before they have a grasp of the fundamentals of the hobby. In this short article, we'll go over the 5 basic principles of coin collecting that every collector needs to know. These 5 tenets should serve as a guiding rubric for collecting decisions - how to buy, how to sell, and how to ensure you don't get ripped off.
1. Buy the book before you buy the coin.
This rule has been espoused by Q. David Bowers and many other celebrated numismatic authors over the years, but it is more than just calculated self-promotion. Now that we're living in the digital age, I think we can safely expand this principle—do the research first, whether it's within books or online resources, before buying the coin. In the coin industry, knowledge is the great equalizer. A massive coin dealer like Littleton can have the largest advertising and marketing budget in the world, but as long as collectors possess a working knowledge of coin value and worth, they'll stay away from that dealer's overpriced offerings.
2. If a deal sounds too good to be true, it is.
An Indian Head quarter eagle on eBay with a Buy-It-Now price less than the gold value? $10 Morgan Dollars at a flea market stall? Keep on moving—it's hardly worth your time to even take a look. While good deals can still be occasionally cherrypicked, most coin sellers know the value of what they're selling. This is especially true online - don't expect that you're buying from some little old widow getting rid of her late husband's collection. Instead, there's a good chance you're buying straight from a Chinese counterfeiter. And if you are looking to take advantage of others, become a lawyer. We don't want you in this hobby.
3. Buy the coin you want, not the coin others want.
What this means is that you should buy the coins that you personally find appealing—you don't always have to follow the crowd. If a complete proof set of Sacagawea golden dollars sounds like an exciting thing to collect, then more power to you. And just because everybody else is buying Baseball Hall of Fame dollars doesn't mean you have to too.
4. Coins are not an investment.
If you want to make money, buy a stock. For 99% of collectors, collectible coins should not be considered part of an investment strategy. While coins tend to hold their value better than most other hobbies (I'm looking at you, Beanie Babies), they are consistently outperformed by the stock market. Many coins even lose value over the years. The coin market is very volatile and prone to bubbles. During the 1980s In the eyes of many numismatists, the recent surge in popularity (and marketing) of modern date MS-70 coins is another bubble waiting to be popped.
5. Always buy the best coin you can afford.
Don't buy a coin with problems just to fill a hole in your set. You will only end up regretting your purchase, and replacing it later on. You may even have to sell the inferior-quality coin at a loss. For a practical example, let's say you're working on a complete date set of Wheat pennies. Your local coin shop has a 1909-S VDB on sale, but the coin shows obvious signs of a past cleaning. Don't feel like you have to buy the coin just because it's available. Coin collecting is a patient man's game. When considering a coin purchase, always ask yourself the question - "is this the best I can do?" If not, put away your wallet and keep looking.