The coin market has drastically changed over the last few decades, if not the previous century. In 1986, third-party grading services leveled the playing field by verifying the authenticity and defining standard coin grades. Relying on third-party grading services does not replace the study of a particular coin series, but it does remove much of the risk involved in the purchase of rare coins. Additionally, the advent of the Internet brought with it easy access to a wide variety of coin collecting knowledge and the ability to purchase rare coins online. However, this does not replace the information that you can obtain through books, knowledgeable coin dealers, other coin club members, and coin shows. To truly become a great coin collector, it will take more than access to a variety of resources and people. A wise coin collector will seek out a mentor that will be able to guide him on his coin collecting journey. Much wisdom has already been learned by other people and they are willing to share it with the next generation of coin collectors. You may hear stories about people “flipping” coins for a quick profit. This is the rare exception and carries a high amount of risk. Looking for a quick profit is an investment mistake you want to avoid. The most successful investors in coins had an extremely long-term vision that took years, if not decades, to assemble. This time was spent learning about the coins they were purchasing and studying the market valuation of each and every coin they purchased. This enabled them to spot coins of truly exceptional value. Of course, every coin collector has purchased a “dog” of a coin. It’s the coin that you thought was a high-grade bargain, and it turned out to be cleaned or damaged. Don’t get frustrated by these situations that you will encounter. Use them as learning opportunities by sharing them with your mentor. There are enough books on coin collecting to fill an entire library and more are being published every month. Therefore, there is probably a book already written with the knowledge that is required to make an informed investment decision. From Sheldon varieties of large cents through VAM varieties of Morgan and Peace silver dollars, there is a book that you can study before you invest in a rare coin. Additionally, the Internet can provide a wealth of information on the rare coins that you are considering for investment. But remember, everything on the Internet is not necessarily true. However, it can be a great source for determining the market value of the coins you are researching for investment. There are pricing guides such as The Gray Sheet, the Redbook, and various auction results. Depending upon the rarity of the coin, auction results provide the most transparent measurement of value since the transaction was conducted in a public forum. When researching market value, don’t just compare the grade on the third-party encapsulated coin holder to the value reference guide you are using. Remember, the coin holder represents a guarantee of authenticity and an opinion on the grade. Look at the quality of the coin you are considering and judge for yourself if it meets your quality standards and you agree with the grade that is indicated on the holder. Conversely, sudden unforeseen demand for particular series can cause a sudden rise in price. When the fad has subsided, prices will retreat to their previous level. This is most evident with the advent of registry sets, which allow collectors to anonymously publish their coin collections and compete against other coin collectors for the best assembled set. Mostly this affects “condition rarities” that can demand high prices one day and lower prices the next. For example, in March of 2013, a 1995-W Proof Silver Eagle graded Proof-70 DCAM by PCGS was sold at auction for $86,654.70 (inclusive of the Great Collections 10% buyer’s fee). Over 1,600 coins have been graded Proof-69 DCAM by PCGS and these normally sell for about $4,000 each. Since this was the first one to be graded as a “perfect” coin, over 100 bids were received by coin collectors wishing to have this coin in their registry set. Since then, over 200 coins have received the “perfect” grade of Proof-70 DCAM by PCGS and now sell for about $20,000. This represents a loss of over $60,000 to the purchaser when this price bubble busted. Larger coin shows such as the Florida United Numismatists (FUN) and the American Numismatic Association (ANA) World’s Fair of Coins are great places to find investment quality rare coins. Additionally, not all rare coins are consistently advertised in a coin dealer’s price list. Working with a trusted coin dealer can help you find rare coins that match your investment goals. Recognize that coin dealers make the market move and they understand the coin market’s intricacies that you can use to your advantage. It was once said, “I am not sure how to describe quality, but I know it when I see it.” The same holds true for rare coins. You may look at two identical coins graded by the same grading service and they may even have the exact same grade, but one will look better to you than the other. This usually accounts for the coin with the better eye appeal having a higher price. If the coin dealer has them priced identically, and you agree with the grade assigned, you would definitely want to invest in the coin with the better eye appeal. Look for quality coins within your target grade. Recently, Certified Acceptance Corporation (CAC) started certifying already encapsulated coins. You can tell these coins by a CAC sticker affixed to the slab. A green CAC sticker indicates that the coin is “solid for the grade.” A gold CAC sticker indicates a “candidate for upgrade” and is clearly a premium quality coin for the assigned grade. Finally, beware of counterfeit and doctored coins. In 2010 The Professional Numismatic Guild (PNG) defined coin doctoring as “the action of a person or the enabling of another, to alter a coin’s surface or appearance, usually to diminish or conceal defects, and thereby representing the condition or value of a coin as being superior to its actual condition or value.” This includes manipulating the surface of a coin to hide hairlines, applying substances to the surface, lasering techniques, applying chemicals, re-engraving details or altering dates and mintmarks. The experts at the certification service almost always detect these alterations and will not certify coins that have been doctored.
