by Craig R. Smith
Author, CEO, Swiss America
[Excerpt from "Rediscovering Gold in the 21st Century:
The Complete Guide to the Next Gold Rush" (8/01, IFP)]
In the thirty years I've been in the business of buying and selling U.S. rare coins, I've yet to have a week go by that a customer hasn't asked one of my staff about price. So, I will try to answer these commonly asked questions now...
~ Was the price I paid the right price? ...
~ How is a coin's real value determined? ...
~ What publications or services provide accurate prices? ...
Where to get reliable market information
The Coin Dealer Newsletter (CDN) is the most popular guide to pricing. CDN has published a weekly report on the coin
market for 35 years and is the accepted standard by most dealers. The Coin Dealer Newsletter is often referred to as
the "Greysheet" which serves both dealers as well as the general public. Along with the weekly report, CDN also
provides quarterly and monthly supplements that detail each individual coin. The Greysheet is set up in a "Bid/Ask"
format and reflects national dealer-to-dealer wholesale prices on a "sight-seen" basis. (More on this below)
The Greysheet and The Red Book, although a great help in establishing value, are not the final word. Many coins trade for well above
Greysheet and The Red Book -- in some cases, even multiples of the sheet -- and some trade for well below the sheet. The Greysheet
gives us a general feel for week-to-week market movement. The Red Book tracks a coin's value from year-to-year.
Real Money Perspectives, Swiss America's FREE print and electronic Market News Digest, featuring the top economic stories and commentary, as well as gold and coin market news -- celebrating 20 years of continuous publication in 2006. 1997-2006 ARCHIVES
Another factor in coin pricing is tracking the major coin auctions and the prices realized each week.
Then, coin buyers must negotiate with wholesalers almost daily. After all this … coin buyers get the feel for what a coin is really worth.
Well, almost.
Bear with me, here's where it gets a lot easier. You don't need all of these services and reports to determine the value
of your coins. However, if you wish to track your progress, or determine if you received value at the time of the
purchase, you do need much more than just another dealer's word or questionable opinion.
In the coin market, price
does not automatically equate to value -- such as a car purchase or buying a six pack of Coke. Not all coins are
created equal. "Sight-seen" coins are priced differently than "sight-unseen" coins (a coin that is ugly won't sell for the
same price as a pretty coin).
I have traded with well over 35,000 clients in the last 20 years while in the coin business. Here's the bottom line; you
get what you pay for. There is no free lunch out there. Don't get me wrong, you may find a similar coin for more or less
money, but it won't be the exact same coin.
As you explore further, you'll also find out that the service of the company
behind the coin will vary greatly. For example:
~ Does that company that you are comparing have a buy back policy
behind it?
All coins are not created equal.
A rare coin is not a commodity like sugar, wheat or bullion gold. Have you ever seen
a 100 oz. bar of gold? Some are ugly and beat up, some are brand new and shiny, but they both trade for the same
value. This is not true in the Numismatic coin market. The way a coin looks (known as 'eye appeal') as well as the way
it was graded is very important when making your comparisons. Frankly, unless the other dealer has the coin you
bought right in front of him, he can't make the comparison correctly. He simply can't see the coin through the
telephone. Even if you went to his shop, he probably doesn't have another coin to compare it with that is the exact
grade or date. Often, coin shops will try and use another date or grade coin, which then invalidates the comparison.
My point is that it's easier for many to believe they made a bad trade than it is for them to believe that they bought a
great coin at a fair price. We Americans (and I'm guilty too) always believe a bad report a lot easier than we do a
good report.
Comparing "Sight-Seen" and "Sight-Unseen" Coins
Speak to anyone knowledgeable in coins, and they will tell you to always pay a little more and get the better quality
coin. For years David Hall, founder of PCGS, would recommend only MS-65 or better. Why? Simple. He knew that you
should always buy the best you can afford. Many times when comparisons are made, dealers are quoting sight-unseen
( lowest price) against a sight-seen (highest price)--making the client think he didn't receive value. When we made
the distinction, all of a sudden, the coins are neck-in-neck on pricing. Also, I have personally seen coins from other
dealers being compared to Swiss America coins that were down right ugly. In one instance, a coin offered by another
dealer had so many copper spots that it sold for 15% below the current Greysheet price.
Here are some very practical steps that can help you to determine that "the price is right," when buying coins.
~ Have they been through the ups and downs of the markets?
~ Was it a sight-seen coin that was inspected by
three knowledgable numismatists, or was it looked at by a person who just started in the coin business?
~ Was it one
coin of a group of five in which four others were rejected due to copper spots or other detractions that could keep the
coin from having optimal market appeal to future buyers?
~ Are you truly comparing apples to apples?
Another area that can really distort the shopping process is comparing a "sight-seen" priced coin with a "sight-unseen"
coin. The differences are like night and day. Sight-seen simply means that the buyer has had a chance to view the coin
before he or she buys it. Sight-unseen prices are the prices that dealers will pay for coins they have never seen and
have no ability to return if they don't like the quality or look of the coin. Simply put, sight-unseen coins are generally
bottom-of-the-barrel (ugly) coins that most reputable dealers reject--or generic coins that are just used to fill orders,
without regard for quality. Many newcomers to the market will buy the lower priced coins and hold themselves out as
the "real market" on coins. Baloney!
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DISCLAIMER: All of the information in this story is believed to be true, however errors are possible. Past performance is no guarantee of future performance. All investments have risk. -SATC
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