Collecting coins or dealing in coins is a fun hobby. Here are some tricks to snagging coin deals to feed that hobby …
(This post was originally published on January 3rd, 2011.)
Some time ago, another blogger was talking up entrepreneurship to his oldest son and has found a stash of coins that could be ripe for reselling on eBay.
He asked his Twitter followers about starter investment books for kids because they were starting to get fairly sizable savings accounts. (I never addressed that question but I recall Peter Lynch's One Up on Wall Street specifically mentioned that he had elementary school kids pick out stocks, and some did quite well!)
I was guessing his sons were getting to the point where they can learn a bit about risk and reward.
Entrepreneur or investor?
Passive investing is fine and serves a purpose, but since his sons have a lot of time to try some fairly high-risk, high-reward financial activities, I asked this:
@fcn Re: your boys and their savings, are they entrepreneurs? Or are you looking for more traditional investments?
To which he responded over a couple of tweets:
@mbhunter funny you should ask. I was just talking to our oldest about selling stuff on eBay. We discovered some coins at a local antique store that I think he could buy and resell at a tidy profit. They had dozens (at least) on hand.
Three places to get coin deals
Antique stores happen to be excellent places to find deals on collectible coins.
Some antique dealers specialize in coins, but many don't, so they may set a price on the coins that will bring them a profit without realizing that coin prices can fluctuate a lot. That, and they may be merely renting a booth from an antique mall, so they're not in the store all the time to update prices even if they knew fair market value for the coins had changed.
Pawnshops are also a good place to hunt for deals, but for different reasons.
Many pawnbrokers don't specialize in coins either. Their primary business is as lenders of last resort. The money loaned on the collateral is usually a fraction of what the item is worth; if the pawnbroker buys the item outright for cash, it's even less. They sell coins alongside cordless drills, DVDs, computers, subwoofers, guns, etc. They don't deal with coins exclusively, so, for the most part, they know what they paid for the coins and what spot price is for the metal in the coin (if it's gold or silver). This is a start but it's far from the end.
Coin dealers (or antique dealers who specialize in coins) probably have their bases covered, so it's more of a challenge to find deals.
They know the intrinsic value of the metal in the coins, they know rare dates, and probably have a fair idea of condition, whether the coin was cleaned or not, etc. Reputable coin dealers will give you good coins at a fair price, but not at bargains. To quote a (very grumpy) coin dealer I go to on occasion: “I check [gold and silver] prices every day. I'd be a fool not to.”
Six tips for finding coin deals
Here are six recommendations for starting out on a coin hunt at antique stores and pawn shops. They're easy to do, and will help you to identify clear bargains that most people won't see:
Get a copy of a coin magazine
Get a copy of Coin Prices magazine (or subscribe). The articles are interesting but the main pieces of information in these magazines that are worth studying are the pictures of the coins (for visual recognition) and the populations of the coins (how many were minted, or possibly even how many are known to be floating around).
The coins with the low populations are the key dates and are typically more valuable than coins of the same type with large populations. Knowing that the 1921 Peace Dollar is a key date let me spot a nice bargain at one pawn shop. The pawnbroker sold me that coin for a common date price. It was easily worth five times that.
Check Coinflation.com
Coinflation.com updates the melt value of common American and Canadian coins every day.
Melt value is important because it sets a floor on the value of the coin. If an antique dealer hasn't monitored the price of silver recently, and if the price has gone up recently, then the coins in their booth might be underpriced. At one point I picked up several silver dimes priced at $1.50 when the melt value was at least $1.75.
When you find coins, check the dates
The dates of coins are very important.
The mint date indicates the composition of the coin (or should, anyway). US dimes, quarters, and half dollars minted 1964 and before are 90% silver. Dimes and quarters minted 1965 and after are not silver.
Some antique dealers will put, say, a bicentennial Washington quarter in a 2-by-2 card and put $1.00 on it. Or sell Sacagawea dollars for $1.50, or more. A business-strike 1976 Washington quarter is not silver. Unless it's in near-perfect condition (unlikely) then it's not worth more than 25 cents. (I've made similar mistakes like this.)
Sacagawea dollars, though they're not circulated widely yet (and won't be without a fair amount of kicking and screaming by the public!) aren't worth more than a buck unless they're in mint state. If you can't see the dates on the coins, find a way to see them, or pass them by.
And don't trust what's on the card! I've seen US State quarters marked with the date that the state entered the union rather than the mint date!
If you find an underpriced coin, shut up
Information is power.
I've made the mistake of tipping my hand during a negotiation. I found a coin that was way underpriced, and I asked them to check some things about the coin. This raised their suspicions and they raised the price of the coin.
You either know what you're doing, or you don't. The more you study coins, the more confident you'll be buying them, and the better the deals you can get. So just stay cool, buy the coin at the offered price, and ride off into the sunset.
Investigate coins discreetly
If you're not familiar enough with a coin to know its value, then go outside and look it up on eBay with your iPhone or something, or go home and learn about it.
The dealer will get suspicious if he sees you researching a coin right in front of him. Better not to tip your hand that you think might be underpriced.
Keep learning
Coins are fun. I enjoy them. The more you know, the more deals you'll find, and the more fun you'll have.
Happy hunting!
That’s an interesting idea to check melt value first. It makes sense that it would the be minimum worth of that coin. I’m just starting to get into coin collecting so I’ll keep this in mind. Thanks for the tip.
Yeah, sometimes the sellers don’t keep up with the current spot price. That’s where some bargains can be had!
Thank you for suggesting that you should check the date on the coins before buying them. My husband loves collecting coins and I think he needs some help to buy some new ones. I think we should look into hiring a coin dealer to help us get the best coins for his collection.