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COIN BUYERS, BEWARE!

Are you getting your money’s worth?

The cold, hard truth is that you just might not be.

Here are some very important things to consider when purchasing coins for investment:

Rule Number One: An ounce of silver is an ounce of silver is an ounce of silver. Let me repeat: An ounce of silver is an ounce of silver is an ounce of silver.

Now let me explain why that concept is so important: Some companies are taking an ounce of silver, which as of the time of this writing (October, 2006) is worth about $11, and they're painting it with some pretty colors or electroplating it with a few pennies worth of 24 karat gold, packaging it up in a pretty little box and calling it a "collectible" or a "limited edition" and charging you about $24.99 for it ~ but at the end of the day, you still have only an ounce of silver whose worth is about $11. Those companies are getting rich by packaging ounces of silver and then selling the package for three or four times the actual value of the silver ~ don't pay that kind of money if you are looking to buy just an ounce of silver, unless you just love the pretty packaging and can't live without it... at the very least, be aware of the actual value of the precious metal that you're buying, and proceed accordingly. When you buy coins, always try to think about selling them down the road... and always remember Rule Number One! Here's another good question to ask if you're buying something advertised as a collectible or limited edition: "If somebody else walked in off the street with a "collectible" or "limited edition" item that was identical to this one that you're trying to sell to me, how much would you offer them for it?". If the dealer is honest, they'll tell you ~ and if their buy price is substantially less than their sell price, it probably means you're paying a lot for the pretty package and not a lot for the precious metal contained in it. A dealer will "buy the coin, not the packaging" ~ and you should do the same!

EXCEPTION to Rule Number One: If you're buying coins as gifts for other people, then it's ok to pay a small premium for pretty packaging, because everyone wants to receive a gift that's packaged nicely. Just don't pay way too much over the current bullion value of the coin you're buying, and you should be fine. If you're buying coins for yourself as investments, and they were not produced and/or packaged by the U.S. Mint, don't pay much over bullion value because pretty packaging doesn't usually go up in value so one has to question if it is really a good investment!

2. The U.S. Mint produces a wide variety of coins and sets for collectors each year, such as proof sets, mint sets, commemorative coins and sets, gold and silver U.S. Eagle bullion coins, and other products. These items, available from the U.S. Mint at the time of issue, are also available “after market” by many reputable coin dealers, including the Nashville Coin Gallery, LLC at CoinBidders.com. Most coin dealers use a weekly publication called the Coin Dealer Newsletter (also known as the “Greysheet”) as a guide when buying coins, and these U.S. Mint-produced coins and sets are listed there. However, aside from the U.S. Mint, many other companies also produce commemorative coins and sets, as well as other coin products, and these items often look very similar to the items produced and sold by the U.S. Mint. The problem for consumers is that these items produced by other companies are NOT listed in the Greysheet, and when the time comes to sell those items, there is often very little or no market for them, or they will only bring something close to the actual bullion value of the gold, silver or platinum they contain -- IF the coins contain any precious metals at all! To be safe, if you're buying these products for investment purposes, a good rule of thumb in our opinion is to only buy items produced and/or packaged by the U.S. Mint, unless you can buy the products of other companies for the actual bullion metal value or very close to it. And remember to be careful, because some companies give themselves names that sound very official, and they package their products such that they look very similar to genuine US Mint products, but they're not! Let me clarify: In some cases their products are genuine US coins but they're not in the original US Mint packaging, so I would personally avoid such products unless you're certain you're getting a fair deal with regard to future marketability -- and the best way to find out might be to call a couple of other coin dealers and act like you've got the coin for sale. Say something like "What would you offer me for a __________ coin produced and/or packaged by the ________ company?", and describe the coin you're considering buying as accurately as possible. The other dealers' offers will be a very good indicator of whether you're being offered a fair deal or not. While there are no guarantees, and even some U.S. Mint products have gone down in value over the years, there are products that have gone up in value significantly – but at least there is always an active market for items produced and/or packaged by the U.S. Mint. The same cannot always be said for products produced by other companies. NOTE: Some companies have been selling coins or sets of coins that were produced and packaged by the U.S. Mint, but they've re-packaged them in larger or prettier boxes or packages and have charged substantially more than what the same coins would be available for without the enhanced packaging ~ and far more than you would pay if you bought them directly from the U.S. Mint! Hint: Many dealers won't want to hear you ask the second part of this question, but it would benefit you to ask "Is this coin (or set of coins) listed in the Greysheet, and does this coin (or set of coins) come with the original box and papers it had when it was originally sold by the U.S. Mint? If so, what is the current Greysheet 'Bid' price for it?" Again, most dealers use the Greysheet as a guide when buying coins, and they typically pay a percentage below "Bid" for the coins they buy. At least knowing what "Bid" is will give you a point of reference regarding the actual value of your coin(s). And remember, if the coin (or set of coins) you're considering buying isn't listed in the Greysheet, you might want to reconsider ~ and for the Greysheet values to be valid for your coin(s), your coin(s) must be in the original box or packaging, with the original papers that it came with when it was originally sold by the U.S. Mint. Without the original box and papers in nice condition, the coin(s) will bring less than Greysheet prices. (Original boxes and papers are for things like proof sets, mint sets, commemorative coins and sets, US Eagle bullion coins, etc.)

Special note regarding U.S. Silver Eagle bullion coins: Some dates are more valuable than others, such as the 1986 and 1996 Uncirculated issues and the 1993, 1994 and 1995 Proof issues (among others), so be aware that different years will have different prices if you are building a set containing every year. Each year when the Uncirculated version of these coins are produced by the U.S. Government, they are sold in bulk to a handful of selected dealers across the country. These selected dealers have to pay a premium of more than $1 per coin over current "spot" silver price in order to buy them from the Government. Those dealers then sell them in smaller quantities to other dealers across the country, who in turn sell them to their customers. For that reason, it is normal to expect to pay a few dollars over "spot" for a "current year" Uncirculated U.S. Silver Eagle bullion coin. A reasonable retail price would be about $3.50 - $5.50 over current "spot" silver price.

3. Some companies sell “hype”, but “hype” has no resale value! Don’t be awestruck by a beautiful frame, pretty pictures and interesting historical information about a nostalgic period in history when a certain coin or set of coins was produced. You can get the same information from your local library so I wouldn’t even consider paying a premium for it! Some companies are making a fortune by putting about $10 worth of coins into a $5 frame or a lovely box with pretty pictures and some historical information and selling them to you for some outrageous amount like $129.95, but at the end of the day, you’ve paid $129.95 for $10 worth of coins. Buyer, beware! Don’t be swayed by the “hype”. Buy COINS, not pretty frames or pretty packaging, and be as educated as possible about the coins you're buying ~ unless you just love the pretty packaging and don’t care how much you’re paying for it. (NOTE: Sometimes, "nostalgia" sets of old U.S. coins are made up of coins that have been cleaned or polished, and are thus worth significantly less than they would be if they weren't cleaned or polished. It is for this very reason that unscrupulous dealers put them into these sets ~ it's the only way they can sell their damaged coins! Always get an unbiased professional opinion before paying good money for coins that could potentially be worth far less than you're paying.)

4. When a dealer advertises “raw” (non-certified) coins as “BU” (Brilliant Uncirculated) or “Gem BU” (Gem quality Brilliant Uncirculated), are they really uncirculated? Would the dealer pay uncirculated money for a coin in the same condition? Be aware that coin grading is just an opinion and not a science, but all reputable dealers can tell the difference between a true uncirculated coin and a “slider”. Some dealers sell “sliders” (coins that are close to uncirculated but are not), or coins that have been cleaned or polished, and pass them off as uncirculated – but they wouldn’t pay uncirculated money for them if they were buying them from you in the same condition! We recommend that you only buy from dealers who offer (in writing!) a 100%, no questions asked return policy, and if you buy a coin advertised as “Uncirculated” from a dealer you're not sure about, you might want to immediately take it to a couple of other dealers for a second and third opinion. Dealers (if they can use your coin) will want to buy it for a discounted price so they can make a profit, but they should still agree that the coin is uncirculated if you bought it as such. If they don't agree that it's uncirculated but you bought it from a dealer who represented it as being uncirculated, send it back to the dealer you bought it from and ask for a refund! NOTE: All uncirculated coins are not created equal! When coins that are intended for general circulation are struck at the mint, they are poured into bags with other coins, thrown onto trucks, etc. ~ and this harsh contact with other coins produces scratches, nicks and dings on the coins. Generally, the fewer "bag marks" a coin has, the better its condition and (for desirable coins) the higher the value. A grade of "MS60" (Mint State 60) thru "MS70" (Mint State 70) indicates that a coin is uncirculated, with 60 being extremely bag marked and 70 being absolutely flawless. Virtually no "made for circulation" coins will grade a 70, with the vast majority of uncirculated coins falling into the MS60 to MS63 categories. For some coins, the value increases dramatically for each one point grade, so if someone advertises a "raw" (non-certified) coin that they say is "MS65" or some other specific uncirculated grade, BEWARE! Unless you're an expert grader yourself, if you're buying expensive, uncirculated coins for investment purposes, we recommend that you only buy coins that have been certified by either PCGS or NGC, as those two grading services are the most widely trusted and respected in the coin business ~ and don't forget to educate yourself about Greysheet "Bid" price for those coins before you buy them! Here's another tip: Some dealers are charging high prices for modern coins, such as US Eagle bullion coins, modern Proof coins and / or modern commemorative coins that are certified as MS69 or MS70 (virtually perfect!) by PCGS or NGC, which are extremely reputable grading services. However, keep in mind that US Eagle bullion coins, modern Proof coins and modern commemorative coins were never intended for general circulation! What this means is that they weren't handled like normal coins ~ they were handled with kid gloves from the moment they were struck, so virtually all of them will be in near-perfect condition. For that reason, we recommend that you don't pay a premium for a modern coin graded MS69 or MS70 unless it was a normal, "made for circulation" coin and was certified by either PCGS or NGC. Remember that normal, "made for circulation" coins come into contact with other coins and are therefore at risk of getting bag marks on them -- so when these "at risk" coins escape in near flawless condition, that's something worth paying a premium for. On the other hand, special coins that were handled with kid gloves from the minute they were produced are pretty much expected to be flawless or near flawless, so I personally wouldn't pay a premium for one. That's not to say they couldn't be a good investment -- they're just not an investment I would personally make.

Bottom line: Make sure you are only buying from very reputable dealers – dealers who offer a written, 100%, no questions asked return policy, and seek other professional opinions if you're uncertain about a coin's grade and/or value.

Having said all of this, it must also be said that there are many, many honest, reputable coin dealers to choose from. Just be careful when buying coins ~ the best thing you can do to protect yourself is to become as educated as possible about the coins you're interested in buying. Coin collecting is a wonderful hobby ~ enjoy it to the greatest extent possible!

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