Before You Buy or Sell

Posted on July 30, 2010 by

I just bought a new flat screen TV for my daughter. Before I bought it I spent a couple hours on the Internet researching different models and comparing prices from different Retailers. Good thing I did because I didn’t know that 120 Hz screens have the best performance for video games!

It’s the same thing with coins. I only spent $900 on the TV but I know I spent more time learning about my options then some coin buyers do before spending far greater amounts on a coin. So what should you do before you buy a coin? (By the way the exact same information applies when you are selling.) I have always thought there are three basic pieces of information that are essential to know before buying: population; APR (auction prices realized) and pricing. Let’s dig into each a little more.

A population report can tell you a lot. Not only do you want to know how many coins have been graded in the grade you are considering but you want to know how many are graded higher and lower and how the distribution of grades looks. Let’s say you are looking at an AU58 coin. There may be 6 coins in AU58 with another 14 coins in AU50-55 and 80 or so below that. But in Mint State there are only 2 coins in MS61, 1 in MS62 and 1 in MS63. Well your AU58 is a Condition Census (top 5) grade! You can surmise that this coin in AU58 or better probably doesn’t trade too often and price guides are always going to be a little out of date. Sometimes it’s also very helpful to know how many coins have been graded for the entire series in the grade you are considering. For example if you are considering a deep cameo proof (DCAM) you definitely want to know how many DCAMs are found in that series. And so on. Don’t just look at the population for the specific grade of a specific coin. Look at similar coins and similar grades throughout the series and you’ll get a much better perspective of the scarcity of your coin.

Auction Prices Realized is a powerful tool because that’s where you learn what other people have actually paid for your coin (sometimes you can even find the coin you are considering in the auction archives!). Not only can you see the prices paid but you’ll get a quick lesson on how often this coin appears in the market. In our example if you see a single AU58 selling in the past 2 years and no mint state coins that tells you a lot. What do you think you should do if you don’t see either selling for the past 5 years? If you really need the coin you better run out and pay the seller what ever he wants because you probably won’t get the chance to buy the coin again for a long time! Photographs included in auction prices realized are very helpful because you can compare your coin with the coins that have sold and compare quality. Often times you have to resort to extrapolations when trying to figure value because you can’t find the exact information you need. In some cases where there is very little information you can find a similar coin (same series, similar mintage, same strike – proof vs. mint state) and make some guesstimates based on APRs for that coin. This does work. When looking at older auction records try to keep in mind market cycles. How does the market at the time of that sale compare to today’s market? Also, don’t forget that “auction fever” is very real and just because one bidder got carried away doesn’t mean that’s the right value for the coin. The bottom line is that you want to have all the information you can find. Hopefully it turns out that you know more than your counterpart in the transaction!

Price guides can also be very useful. Prices guides are typically very accurate for coins that trade regularly. Watching the guides and knowing when coin values are going up or down is good information to have. Pay attention to pricing trends. Understand that the less a coin trades (you’ll know this from the previous two information sources) the less current the price guide will be. Also knowing where the price guides get their raw data is very helpful. You want something that is updated frequently and reflects what is happening in today’s market. It’s possible that you could realize that the price guide information is a little out of date for your coin but your counterpart may not know that. Advantage – you!

Now you are ready to buy your coin. You can bid with confidence or negotiate from a position of strength. It really doesn’t take too long to research a coin – less than an hour usually. The time you spend will be well worth it. I can’t promise you that you will get a better deal but I can promise that you will be more satisfied with the deal now that you know so much more about your coin.

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  1. […] tips from the PCGS Blog on how to research a coin before you buy or […]

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