"In the environment that exists right now, where the Dow is very high … most of the people buying rare coins … are people who are taking profits as a result of a semibull market … and want to reinvest some of that money into nondollar-based-type investments," said Terry Hanlon, president of the Professional Numismatists Guild.For my precious metals business, this is great news. We've recently come into some exceedingly rare coins which we've had certified and graded. These will bring, "a pretty penny" - pun intended - to our store.
It is a pretty cool thing to hold a coin in your hand that was minted during the Civil War, or before the Constitution was ratified. The "freaks" of coin collecting are pretty cool as well. A man just found a 1974 aluminum cent his father had left him. It's been authenticated, and will go up for auction. I've seen estimates ranging from $250,000 to $2 million!
But this trade is a mine field. Counterfeits - of both the coins AND the certified plastic containers - is running rampant. There is a guy that was recently arrested for selling over $100,000 worth of counterfeit coins - mostly to coin dealers. One dealer, in particular, got taken for over $30,000 in fakes!
So, how do you protect yourself? Here are some ideas:
>>Get educated, and know the unique traits of the coins you're buying. Understand what a coin which is cast looks like versus a traditionally stamped coin. As I've noted here before, many of the counterfeits that come into our store are clearly fakes. The certification will say it's mint state, but the coins has clearly been in circulation. You need to understand the differences. A great book for this is Grading Coins By Photograph. Another is The Official ANA Grading Standards. If you're going to get into collectible US coins, you've got to have these two books.
>>Only buy coins certified by NGC or PCGS. There are a lot of other certification services, but these are the only two that the resale market fully trusts. When we buy coins certified by other services, we ALWAYS discount the grade given to the coin. Always. If it's a valuable coin, we'll have the coin re-certified by NGC or PCGS before we sell it. And Yes, the person selling us the coin is ultimately paying for that re-certification by receiving a lower price for their coin.
>>Verify the certification number online. The links above to NGC and PCGS are to their certification pages. You key in the cert number, and it tells you what the coin is supposed to be. Yep, we've run certifications, and the information didn't match the coin in the case!
>>Buy from certified dealers. For instance, our store is certified by NGC. You only get on the list by meeting experience requirements, and you must obtain letters of recommendation from other certified dealers. It's obviously not a perfect guarantee, but it's significant.
>>Verify the Better Business Bureau rating of the dealer. Every business can have complaints, but how those complaints are addressed will tell you a lot about the dealer.
>>Get a receipt for your coin, with the certification number listed. It's also not a bad idea to take a picture of the coin and receipt together while you're still at the dealer.
>>If buying online, ONLY use trusted sites. These include eBay (when the seller has a 98%+ rating), Heritage Auctions, and Great Collections. There are other sites that also have auctions for ancient coins, but we don't deal in them, so I don't have any recommendations. Make sure you understand their shipping policies AND whether they charge a buyer's premium as well.
>>Trust your gut. If something doesn't look or seem right, it probably isn't. If the deal is too good to be true, it probably is. It is better to walk away from a purchase you feel a bit hinky about, than to later realize you've been taken.
A lot of money can be made with collectible coins. While I'm not personally a collector, I've seen the value of some customer collections climb quite nicely in value.
A lot can be lost as well. Becoming educated before jumping into this pool will save you a lot of grief and money.
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Copyright 2014 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates. www.BisonRMA.com