The Coin Collector's Guide

What I am about to post here is a compilation of what people need to know about coin collecting. This will be an ongoing project where I will continue to add more stuff as I think more information needs to be added.

Coin collecting has several benefits for all ages, and some of these benefits came from personal experience.  This is somewhat biased for me, but I think that these ideas may be helpful motivation for those who want to go into coin collecting:

1. Investment: If you take coin collecting seriously and know what coins to buy, there is definite, less risky growth potential.  A lot of old coins carry intrinsic value (or historical value), and even though the gold/silver market may significantly fluctuate, the prices of these coins do not vary as much, which also makes older coins more conservative investments.  Usually, when there is a significant upturn on a certain precious metal, then the value of the coin does go up as well if it contains a large composition of the precious metal.

2. Interesting: What sparked my interest in coin collecting is the variety of coins out there.  At first, I realized the plethora of designs from different countries, eras, types, and compositions.  Looking at a picture of a coin may be interesting, but when you have a special coin in your hands, it is a special moment...at least it was for me. 

3. Hobby: For the kids, having a coin collection is a great family hobby.  Although going to the coin store may mean ending up forking a few extra dollars for the coin store to pay for rent and upkeep, having your children see these interesting coins may be a great opportunity for them to start learning about investing while discovering new types of coins at an early age.

4. History: There is a history lesson behind some of the most famous coins in the numismatics (fancy word for the 'coin world') domain, such as the 1955 Double Die, the elusive 1933 St. Gaudens (at the NY Fed Museum), the 1909 S VDB Wheat, and many others.  Not only is coin collecting an investment, it is the proof of a history lesson.

There are several options where you can buy coins. Throughout this posting, I will have relevant eBay listings of coins as eBay is one of the most affordable places for coins. I will also provide a small list of places where you can find good coin deals outside of eBay.

1. Your local coin store- Although coin stores may have to increase the price of the coins because of their rent and maintenance of a physical store, it may not always be the most economical option, YET I can say there are a few steals. I have been fortunate enough to have some great deals at coin stores, from Engelhard silver rounds at $1 above spot, and gold coins with relatively small premiums. Also, coin stores provide a great way way to physically look at the different coins as opposed to seeing images online (to me, they're completely different experiences, even though I'm looking at the same type of coin).

2. eBay-eBay is signficantly cheaper than a lot of coin stores out there because of the auction process. I will go into a more in-depth discussion about eBay further down because there are many things you should consider before buying coins and a few general items on eBay; this once again comes from personal experience. Yet, I am happy to say I have made several great eBay coin purchases from really friendly sellers. As I have stated before, I will be posting eBay listings of coins that I have described.

3. KITCO-KITCO has a great selection and very reasonable prices for people who are looking to make a significant investment in precious metals (>$2,000). They do have minimum purchase requirements, and the shipping is around $30, so they seem to be targeting those who would like to have precious metals as a significant part of their investment portfolio.

Hi, there is a grading scale for coins that is the standard for all coin certifiers, but different certifiers may use different abbreviations at higher levels.

I have used: http://coins.about.com/od/coingrading/f/sheldon_scale.htm to clarify the descriptions.  

The scale is called the Sheldon Scale.

P-1 The worst condition a coin could be given.  Details may not and most likely will not be that visible.

F-2 (Fair) The type of coin can be found, but that is pretty much it.

AG-3 (About Good)- More details can be seen, but still heavily worn.

G-4,6 (Good)-Details are more visible, but wear is still very heavy

VG-8 (Very Good) Major details of the coin can be seen, but wear is apparent

F-12 (Fine) ....XF-up to 45) (Extra Fine)  You can see the progression

AU-50-58 (About Uncirculated)- There is very, very minor wear, and all major details should be shown with traces of more major details.

MS-60-70 (Mint State or Uncirculated)- At this point, the details should be intact, and most of the point differences should come from how many hairline scratches there are.  Some coins carry additional grading, such as FT (Full Torch) for Mercury Dimes that have full details of the torch.  Having such additional details command higher prices.  

You may see PF or PR for proof coins, and for the most part, proof coins range in the upper 60s or 70 grade.  Yet, older coins may have grades in the 50s because there probably was more damage.

In the proof category, there are two more designations called Cameo and Deep/Ultra Cameo (Deep and Ultra Cameo are the same, but PCGS uses DCAM and NGC uses UCAM).  The Deep/Ultra Cameo has a frost on the mirror background of the proof coin that is much stronger than the normal cameo.  Usually older coins will have only a cameo or non-special designation, and for the ones that do have a designation, those are quite special.

Even though two coins may be identically the same, there may be a significant price difference between the two. Why? Certification.

Even though two coins may be identically the same with the same grade from their respective grading services, there may be a significant price difference between the two. Why? Type of certification.

One site claims a certified coin is worth $2,000, and they said they are cutting the price down to $500!! I am going to get it! STOP and check. Why? Price guides may have over-inflated prices.

1. There are a lot of coins out there that are not certified, yet if they were, they may command significant premiums just because they have a grade and is in a sonic-protected capsule. Yet, at the same time, people can claim guestimates on the coin, and on eBay, the difference between the actual grade and the stated grade may be significant! Yet, there are sellers who try to give an honest apprasial of the coins they are trying to sell. That is why picture scruitinizing may be important when the value of the difference of grades may be significant. Also, with more expensive coins, unless you buy them from a reputable coin dealer, you should buy them certified because there may be the slight chance that you receive a fake. So in a way, certified coins is almost an insurance against some potential problems with uncertified coins. BUT, uncertified coins do not all carry these problems.

2. If you are buying certified, then you should only purchase from PCGS, NGC, ANACS and ICG. Usually, PCGS commands the highest premium, followed by NGC. The other certifiers provide more discount according to the grade than do the other certifiers.

3. First off, if the coin is graded by a grading service that is not reputable or not one of the aforementioned graders, then the grader can over-grade the coin and even one point when considering really high grade levels can be a difference of hundreds of dollars.  For example, a perfect MS70 coin may command a book value of a few hundred dollars, and if a non-reputable grader decides to grade it MS70, chances are the more reputable graders might grade the coin MS69 or 68, which would bring the value down significantly, possibly even around 90%.  Yet at the same time, I was able to buy an NGC certified dime that was valued at a few hundred dollars for about twenty dollars on eBay.  The values that you see on PCGS or any other sites/magazines are usually the market retail value, and coin stores will usually charge this price for older coins, as the old coins' intrinsic values seem to be much more stable.  Yet, for more modern coins, usually the price is lower, if not significantly lower than the retail price.  So, before buying coins on a whim, do your research on eBay, as see what the 'best price' is.

BU Silver Morgan Dollars are a good investment because they carry a significant intrinsic value that should go up regardless of the price of silver. Having said that, there might be slight price decreases but not as significant of a decrease (percentage wise) as purer silver bullion, such as American Silver Eagles. If you hold on to these coins for a while, the intrinsic value should make these coins profitable, whereas circulated Morgans are pretty common and does not have a price that is very different from the spot silver price. The same logic applies for Peace Dollars. Yet, when purchasing these coins, be very prudent, and make sure you are not always buying at the book value. If you plan to keep these coins as a long term investment, it is important that you buy them certified or certify them because there might be oxidation issues, causing discoloration, if they are not certified or encapsulated well. Depending on the size of your investment, I would think having around 20% of your numismatic investment in this category would be appropriate and possibly higher if you cannot diversify too much. Yet, this is only my opinion; it depends on the taste of the individual investor.

Also, you might discover that certain Morgan Dollars that might only be one or two years apart might command very different prices.  If you look at a coin guide, there are certain dates WITH certain mint marks that have much higher prices because there might have been a low circulation.  If you find any Morgan with a CC mintmark (Carson City), chances are you will have to pay a few hundred for an uncirculated Morgan.  But again, make sure that when you are looking at prices, you are looking at BOTH the mintmark and the year, not just the year as that might be misleading.