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All Posts Tagged With: "Coin Buying"

Coin Collecting – Set Premiums: Fact or Fiction?

By Doug Winter –

One of the things that new collectors are often told is that if they build a set, the collective value of the coins will be greater than the individual value when it is time to sell. Is this correct or is it just clever marketing hype?

I believe that the answer to this question is yes, no and maybe. Let’s take a random example of a set–Charlotte quarter eagles–and look at instances where there would or would not be a premium factor established upon completion.

There is, in theory, a clear-cut instance of when a set of Charlotte quarter eagles would gain value if it were complete. This would occur if all the coins were very high high grade and the set would be almost impossible to duplicate at any price. But what if the coins themselves are not as impressive as the plastic they reside in? I have seen sets of Charlotte quarter eagles in which all the coins were accorded very high grades by PCGS and NGC but the coins themselves were unimpressive; some were recolored while others were puttied. Among well-informed collectors of Charlotte quarter eagles there are high grade sets that are famous for having great coins and there are sets that are (in)famous for having coins that are “maxed out” and unappealing despite impressive grades.

A set of Charlotte quarter eagles might not have to be high grade to be impressive and to gain value on a completed basis. I have seen sets where all of the coins were “only” in the EF to AU range but the individual coins were gorgeous with matched natural color, nice surfaces and strikes and strong overall eye appeal. In this instance, I think a set could gain as much as 10-15% premium. The reason it would gain value is that a potential buyer would realize that in today’s market–where most Charlotte quarter eagles are stripped-n-dipped–the opportunity to acquire high quality coins is rare; and the opportunity to acquire a complete set of them is even more rare.

An instance where a “maybe” answer might have to be given is with a clearly mixed quality set. I know of a few sets of Charlotte quarter eagles where the quality is wildly uneven. There might be a common date in EF45 which isn’t very nice alongside a rare date in MS63 that is spectacular. This lends itself to a sort of numismatic version of “which came first, the chicken or the egg?” Would you pay a premium for a set that had some great coins but which you knew that you would be forced to do significant upgrades on others? I think the answer has to be made on a case-by-case basis. If the highlights off the set were enough to offset the low-lights than I think a premium factor would be in order; just maybe not the 10-15% that I mentioned above.

There are other instances where I think that a set premium would be in order. I would pay a healthy premium for a set that all the coins had good pedigrees (not necessarily famous pedigrees but they may have come from good retail dealers or not-so-famous auctions that have a high regard among specialists). I would pay a premium for a set of coins that were original. And I would probably pay a premium for a set of early gold coins in which each piece was better produced than usual. (more…)

Smart Coin Collecting 101: Is It Ever Right to Buy the Wrong Coin?

By Doug Winter –

In the first installment of Smart Collecting 101 I discussed the “coin churn” and how to avoid it. One reader made a great suggestion for the second topic and I’m going to discuss it at length here. The topic involves buying the “wrong” coin and if there is ever a right time to buy a coin that you clearly know is not optimal for your collection.

The brief answer is yes. It depends on what sort of coins that you collect and what your ultimate goals as a coin collector are. Let’s look at a few scenarios.

If you are a die variety collector there will probably be a number of instances that you’ll be offered a coin that is a major rarity but which is either ugly or damaged or harshly cleaned or maybe even a combination of all three. But you may still have to buy the coin. Let’s say you collect die varieties of early quarter eagles. There are a few varieties that are exceedingly rare and might literally be available once per decade; even once in a generation. In this case, if you aspire to have a truly complete collection, you’ll buy whatever becomes available for the extreme rarities; even if the coin is damaged. And you’ll probably be thrilled just to have the chance.

Let’s say that you are a date collector and you are focusing on a series with major rarities in it. If the series that you are pursuing has some incredibly rare issues (say Fat Head half eagles) it certainly wouldn’t be “wrong” to purchase a decent looking but cleaned example of a coin that you know might not be available again for years or which may exist in decent condition but which might be ungodly expensive if ever offered. My feeling here is that if you are someone who likes high grade coins you should avoid specializing in a series that has certain issues that almost never come in high grades.

This leads me to another scenario. Let’s say you are a person who hates flatly struck coins. You have waited many years to fill a hole in your set and the date in question finally becomes available. The only problem with the coin, and let’s say it’s fairly decent in terms of overall quality, is that it is flat as a pancake at the centers. What should you do?

I’d suggest that you research the series and learn what percentage of the issue in question comes with this sort of strike. If every known example is weakly struck, then you just need to buy it. If some examples do exist with decent strikes, I’d say that you pass and wait for a sharper example.

There are some issues that are just so rare or so popular that I will compromise my standards and purchase problem coins now and then. As an example, if I saw a decent looking but cleaned 1870-CC eagle for sale I think I’d buy it; as long as it were priced fairly. It’s rare, its in demand and its a cool first-year-of-issue. Plus I think its undervalued in comparison to other high profile Carson City issues. But I wouldn’t buy most of the other CC eagles with problems. The reasons for this are simple: they would be hard to sell, they aren’t in great demand and nice examples are available with enough frequency that the wrong coin makes no sense. I would take this even further with scarce but not overly rare issues. I’d be patient and wait for the exact coin I wanted.

My high degree of standards would also slacken on great rarities (notice I didn’t say “expensive coins.” I said “great rarities.”) I would have no interest in a damaged ex-jewelry Stella but I would consider an 1864-S half eagle or an 1875 eagle if it were cleaned, very well worn or heavily abraded. In fact, these two issues are rare AND undervalued so I would probably not only buy one “wrong” example, I’d buy as many as I could find. (more…)

The Numismatic Double Play: Revisiting A Buying Strategy for US Gold Coins.

By Doug Winter –

Say the words “double play” and most people think of Jeter to Cano to Texeira. But in the world of gold coins, the concept of the double play has another meaning altogether.

Back in the 1980’s and the 1990’s it was common to see large-sized U.S. gold coins marketed with the “double play” strategy. What this meant was that these coins had two inherent factors that contributed to their price structure: their intrinsic gold value and their numismatic value.

The double play concept became stale over the course of time and marketers moved on to find other way to peddle their product. But I believe that this is an idea with merit and one that should be revisited in today’s value-conscious market.

People who buy U.S. gold coins typically fall into two camps: those who are investors and those who are collectors. What if a third category became a factor in the market; an investor-collector hybrid who focused on semi-scarce to scarce issues that sold for relatively small premiums above their basal value(s)?

There are basically two denominations that are perfect for the investor-collector hybrid: the ten dollar gold piece (or “eagle”) and the twenty dollar gold piece (or “double eagle”). If you’re with me so far, I’m going to suggest that we narrow our focus to two specific issues: the With Motto Liberty Head eagle (produced from 1866 through 1907) and the Type Two Liberty Head double eagle (produced from 1866 through 1876).

Here are some basic facts about these issues. The With Motto Liberty Head eagle weighs 16.718 grams and it contains 90% gold. As I write this article (in mid-April 2010) gold is trading for a touch above $1156 per ounce. The trading levels for eagles are as follows:

MS60: $700
MS62: $740
MS63: $1,210

It doesn’t take a numismatic genius to immediately note that MS62 appears to be the best value grade for this type. At just a $40 premium above MS60 coins, you are talking around a 5% increase for what is generally going to be a much nicer coin. So for the sake of convenience, let’s stick with the MS62 grade for this denomination.

The “base line” date for Liberty Head with motto eagles is the 1894 as it has the highest PCGS population in Uncirculated and in MS62. There have been 18,116 examples graded by PCGS or which 6,013 are in MS62. These numbers are, of course, swollen by resubmissions but the ratio of around one-third of all 1894’s graded being in MS62 seems correct based on my experience. (more…)