Laura Sperber of Legend Numismatics -  HOT TOPICS

WHY CHEAP IS NOT CHEAP ENOUGH

Over the past several months Legend has either purchased or been consigned several million dollars worth of coins. ALL were either PCGS or NGC graded. Most were perceived to be solid for the grade (at least that is what they were sold as).

Sadly, if I had to estimate, LESS than 40% of the coins were accurately graded or did not have problems. Recently I got in a group that consisted of OVER $1 million dollars worth of rare GOLD. It was sickening what I saw. The collector had trolled around auctions by himself and bought what he thought had been cheap. Sadly, I am not sure I can ever sell several coins in the deal-they are that horrific (I will be sending them back to their grading service for that fun affair).

This collector was dead in the water since these purchases all came from auctions. If he put these coins back in auction, the chances of him profiting today are extremely slim or even none. Even if the coins had come from a dealer its wierd that collectors typically do not go back to the original seller for various reasons. Once we even heard of a well known company that simply refused to buy back what it had sold.

Dealers have a saying about buying bad coins: “Cheap is not cheap enough”. That is so true especially in this tightening market. I will repeat this many times because people do not believe it or just do not understand it.

In all these deals Legend got in, the majority of the “lesser” quality coins, we either did not want at all, or could only make offers that were cents on the dollar. Of course the collectors grumbled a little, but they now see why they bought them at cheap prices. Legend does not and never will retail inferior coins because in the end, NO ONE WINS. We ALWAYS WHOLESALE any “bad” coin we buy (or send it to the grading services to fix).

Because a dealer has a “slick” web site or smiles a lot, does not show anything about their abilities and overall competence. You’d be very surprised at some of the bigger names who either know NOTHING (yes, NOTHING) about coin grading or don’t even own their own inventory. Or, the worst issue: a dealer who is a price buyer. PRICE BUYERS NEVER get offered real quality. All these dealers want to do is sell to you for as much as possible-they do not care about the coins quality. Too many people have gotten hooked by a great story and end up with a marginal coin in the wrong holder. Today a coin like that is OFF by 50-70%!

If you are bidding in an auction and the bidding stops dirt cheap-there is a reason why. Do know that in EVERY MAJOR AUCTION there is a small group of long time sharp dealers who can and will buy anything that sells cheap. They do not miss a trick. Do not think you are making a “eureka” discovery. You won your coin cheap because you didn’t really pay cheap and/or there is something seriously unsaleable about it. In a sense if you bargain hunt in auction, you are very likely to be part of the “greater fool theory”.

Always remember: in any market: A BAD COIN IS A BAD COIN! If you buy say a CERTIFIED 1901S 25C IN MS65 and it has a bad cut across the face, know it will ALWAYS be a damaged coin. Even if you paid 50% of what a true MS65 sells for-you did NOT get any bargain. Down the road, this coin will ALWAYS have trouble with resale because it is a problem coin. Ditto for any expensive gold pieces say that have been recolored (of which there are many). Only in a super charged up market like we are coming out of could these bad coins sell for any decent money. Never think you are smarter than the market and you should NEVER bid blind. The 5% you pay a dealer to help you at auction WILL end up making you money. And sometimes, you’ll pay no fee at all because you won’t buy anything (which quite possibly WILL save you money).

Even if you disagree with the CAC concept, know one thing, there is no better group dedicated to saving the consumer from buying doctored coins. If you buy gold, you very much DO want all your coins to be CAC’d (especially Early Gold). You’d be amazed how good the docs are and how many dealers on average will miss the teenie gobs of putty.

WHY BUY COINS TODAY

What is cheap today, is the OVERALL marketplace. Sure this is self serving: BUY COINS NOW-its a great time to do so!

I dearly love gold bugs. Gold goes down, they scream: time to buy. Gold goes up: wahoo! It will be a zillion dollars by this next year. They NEVER stop being positive about gold. The past two years have been very good them. I mention them because they pretty much are contrarian thinkers. Coin buyers need to be also.

Some of the most famous collectors; Norweb, Elaisberg, Pittman, didn’t sit on their hands in slower markets. They bought during the peak cycles and and down cycles. They were never afraid because they had a vision/goal to complete. In building a great collection, the prices do average out in the end.

Today’s coin market is off at most 10-20% on nice rare coins. That’s nothing. Its not a time to be afraid to buy. Had you bought GE one month ago when it was around $7 and looked like it was doomed (the smart money knew it was too big and had too much cash) you have cashed out some where around $10.50 this month! That’s a 50%+ rise in 30 days! Sadly, very few people took the risk. Yeah, that’s a dramatic example, but you can buy plenty of solid value rare coins with out worrying if they will drop more in value. Nothing is guaranteed, but many coins do have strong fundamentals still. We do NOT see the coin market as still sliding down.

In today’s coin market, it is the best buying time in 5 years! April is historically a slow month and this one is proving so with power. That means it is a buyers market. Most dealers will deal and give the best prices possible if you ask (Legend included). Sure, there is always a chance of a coin falling in value, but the “right” coin WILL do well if put away-especially if purchased now and not in a booming bull market.

IN CLOSING

Again, the biggest thing, you can not do this by yourself! Pay a professional 5% to look at the coins and help you, it is more than worth it. If they are good and honest, they WILL find your “great deals” and make sure they are up to snuff with far less risk. You do not want to buy an inferior coin no matter how cheap it gets. And if they tell you “no” on a coin-be grateful!

Nothing drives me more batty then I get these collections or groups of coins to buy and they are all dreck. The services should be spanked, the dealers who sold them should be shot, and the buyers need some education about going it alone. This cycle has to be broken. Let all the crap languish. At some point the services will be forced to take this stuff off the market so collectors won’t get trapped. After all, we were promised accurate grading when the services started. I am tired of having to be the barer of bad news to collectors about the quality they do not have.

Again do not be afraid to buy coins, things are cheap and its a BUYERS MARKET! I predict, by this summer, you’ll be glad you did!

P.S. I must be getting old. I had several different articles written. They all would have gotten me thrown out of something. I still am not sure why I erased them. Do know I will NEVER give up on my fight against coin doctors and gradeflation.

Related posts:

1. Your Last Chance to Buy Cheap Gold
2. $1 000 Gold Still Very Cheap – Interview with Greg McCoach
3. Legend Market Report – AN OPPORTUNITY IN THE MARKET
4. Legend Market Report – EARLY OCTOBER
5. IF THE MARKET IS UP WHY AREN’T MY COINS?
6. PRE CSNS SHOW-THERE IS LIFE!
7. The Size and Scope of Today’s Rare Coin Market
8. Legend Market Report – THE CSNS SHOW 2009
9. YOU’D BE SURPRISED AT WHAT PAYING 5-15% MORE CAN DO!
10. THE BALTIMORE SUMMER SHOW – Legend Market Report