Wednesday, February 17, 2016

Coin collecting tips - buy coins like an insider

Being a smart coin shopper is simply a matter of growing your knowledge and being observant.

It is an oft lamented occurrence in the life of a numismatist to see a coin graded MS-65 with poor details. Using the grading system to describe a state of preservation vs. the overall quality of a coin is something that ruffles my collector feathers.

When it comes to grading, I think MS-62 is a good cutoff for poorly struck coins, even the otherwise pristine ones. It allows for three mint state grades (60, 61, 62), almost a good, better, best situation. MS-63 and up should be reserved for coins with full details.
Quality of strike is a topic that brings up conflicting emotions in me. On one hand, I would love to see strike taken into account more when determining a coin's grade. On the other hand, if I can buy a fully struck MS-64 Walking Liberty Half for the price of a poorly struck MS-64 Walking Liberty Half, I appreciate the bargain.
An extension of this topic is coins being bought and sold like commodities. There is a mindset among many collectors of, "An MS-63 is an MS-63 is an MS-63. All coins of the same type, year, and grade are created equal and have equal value." Again, I feel the same inner conflict. A well struck, fully lustrous, rainbow toned MS-63 Morgan being sold for $60 makes my heart do a backflip. Great deals are possible when coins are traded like commodities. However, great disappointments abound as well. Imagine buying the same MS-63 Morgan sight unseen, for example, from an online retailer who does not offer individual images, and you get a faded, yellowed coin with little detail in the hair or on the eagle's feathers. Major let-down, right?
I've made it a practice to not buy coins sight unseen. I've done it in the past and I have never been blown away by what I've received. I urge you to do the same. Look at the coins you are thinking of acquiring. Examine them like James Cameron checking the interior sets while filming Titanic.
Here are the steps I follow when thinking of purchasing a specific coin.
1. Research - Know the details of the coin in question ahead of time. Learn of the coin's problem areas, such as the bands on the reverse of Roosevelt dimes. Part of your research should be to find high-quality photos of the coin, as many as possible, to get a good feel of how it looks in different grades and to get an idea of the difference between a strong strike and a weak strike.
2. Time - Make sure you have ample time to spend examining coins. The last thing you need is to drop a ton of money on a coin only to get buyer's remorse when you have the chance to really look at it.
3. Luster - Ideally, all of the coins we buy would have full mint luster. When looking a coin over, prior to pulling out the magnifier, I like to turn it under a light source to get an idea of the surface condition.
4. Magnify - Use whatever type of magnifier works for you. I prefer a simple magnifying glass with two levels of magnification. First, pick a side to inspect. Examine the rim* of the coin all the way around and then check it again. Second, examine the field.* After that, have a look at the relief.* Make a special effort to scrutinize the problem areas you researched in Step 1. Now, flip the coin over and do the same on the other side. If the coin happens to be in visible from the side, examine the edge* as well.
5. Emotional Connection - Image the coin as a part of your collection. How does it make you feel? If you are not 100% giddy at the idea of purchasing the coin while still holding it in your hands, you stand a much better chance of questioning your purchase once you get it home. Try not to buy on a whim, but, rather, buy to enhance your collection with only pieces you will enjoy.
This systematic approach to collecting is how I assimilated Q. David Bowers advice from The Expert's Guide to Collecting & Investing in Rare Coins.
This post kind of got away from me. I didn't plan on writing about how I select coins. I hope you find something useful in my approach. I try to make it a logic first, emotion second process. Of course, this isn't always the case. Perhaps you've noticed in this post, or some others, that I have a strong emotional connection to numismatics. I hope you do, too. For me, the emotional connection is the difference between being a hoarder and a numismatist.
*For more info on the anatomy of a coin click here.

No comments: