3 Fast Ways To Lose Money Buying Coins

CDN Publishing · Oct 18, 2018


By Joshua McMorrow-Hernandez, Editor  So much is written about how to make money in coins, and it’s great that this content is available. But what about ways you





By Joshua McMorrow-Hernandez, Editor 

So much is written about how to make money in coins, and it’s great that this content is available. But what about ways you can lose money in coins? It may seem counterintuitive to some that one would specifically seek out this information, but it’s also helpful to understand some of the common ways that a coin deal can financially go wrong for buyers.

Unfortunately, every day there are many people (collectors and coin dealers alike) who don’t take the time to research what they’re purchasing and end up buying coins with questionable origins or other problems — and end up losing money in coins. Of course, knowing how you can lose money in coins can in turn help you make money in coins — knowing what “not” to do, shall I say.

Ready? Here’s a rundown on three fast ways you can lose money in coins…

  1. Don’t check for authenticity of coins — If you really want to lose money in coins, then simply avoid taking any steps to determine whether or not the coins you’re buying are authentic. This means buying a coin, and especially a rare or valuable coin, without checking for any signs that can help you ascertain what you’re buying is the Real McCoy or a fake. Buying “raw” (or uncertified) rare coins isn’t necessarily bad in and of itself, but it is highly risky if you’re not familiar with the diagnostics of what an authentic example of said rare coin should look like. Even still, fake coins are becoming increasingly deceptive these days. It’s generally advisable to buy slabbed rare coins if you’re not very comfortable and confident in what the real deal should look like raw. Oh, and don’t forget to ensure that the slab itself is real, too!
  2. Buy cleaned or damaged coins — Want to lose money in a hurry next time you buy coins? Then make sure you’re buying cleaned or damaged coins, especially those that are not labeled as such. It’s actually amazing how much money you’ll lose if you buy cleaned or damaged coins that are masquerading as problem free and are also paying “problem-free” money for them. Even if you know you’re buying a cleaned or damaged coin, chances are it’s not going to increase in value as quickly as its problem-free counterpart, and it will be all the harder to sell, too, when you decide to liquidate. Figuring out what a cleaned coin looks like versus one with original, untouched and unaltered surfaces takes some time and requires collectors to look at many examples of both cleaned and uncleaned coins to see how they look different from each other. You might also consider buying slabbed coins. Third-party certification firms label coins in such a way as to describe pieces that have been cleaned or contain other forms of damage. Remember, label descriptors such as “Net,” “Scratches,” “Cleaned,” “Damaged,” etc. all indicate problem coins. And the term “Genuine” is a politically correct way of describing a coin that’s authentic but has problems that disqualifies the coin from receiving a grade.
  3. Pay more than you should — There’s nothing wrong with paying a pretty penny for a premium-quality coin, and some of the most strategic coin professionals will pay well above Greysheet coin prices for truly superior coins. But paying over-the-top prices for a standard — or worse, substandard — coin is a sure way to lose money in coins. Like so many aspects of the hobby, there’s an art to buying coins. You have to know how to spot top-quality coins, and then understand when to pay more than typical “going” prices for it. Some of the nuances include looking at your personal finances, weighing your desire to obtain said coin, evaluating the amount of competition for a given coin, etc. That said, it’s possible to overspend on even the nicest of coins. And it’s certainly easy to overspend on ho-hum coins. Dealers who use the Greysheet for bid prices, collectors who refer to the CPG Coin & Currency Market Review, and those who utilize the CDN pricing app for mobile devices will gain a better understanding on realistic coin prices, helping wholesale and retail buyers know the latest coin prices.

 
The best tip for losing money in coins? Be an uninformed buyer. True, many smart, educated people — even those who have spent years as studious numismatists — have overspent on buying coins. In fact, it’s probably safe to say that everyone in the hobby has, at one time or another, grossly overpaid on coin purchases. But the more informed you are as a buyer, and the more time you spend on getting to know the market and how it works, the greater your chances of making an excellent purchase, increasing your odds of making money in coins.

Comments (3)

  • Burns R Searfoss

    "Cleaned or Damaged coins"... stop the madness!!! I collect hammered and early machined European, United States, and other 16th through 19th century coins. If you purchased a 100-year-old automobile, you would expect it to have been cleaned and to have some damage. Same way with antique toys, artwork, stamps, sports cards, pinbacks, documents, pictures, photos, etc. But do coin collectors expect these antiques to have never been cleaned or have some damage? Obviously, coin buyers and grading companies do. That is why most of the coins I have submitted, even with the lightest cleaning and slight damage from circulation, come back with a "Details" grade. Get a life people...and don't bother to collect anything else that might be found in a museum or "history house", because, heaven forbid, someone might have dropped or cleaned it in the last hundred years!

    Tuesday, October 23, 2018 1:30 AM EST
  • Bret Leifer

    I collected type 3 $20 libs for a few years. A dealer friend of mine said that he was looking at an MS64 1878. He offered $30K for the coin, but the seller said no. He told me the coin was the finest he'd ever seen and shouldn't really exist in this condition. So, I thought I could pay the extra 20% for the retail price. I knew it was a lot of money especially since the gray sheet bid, at that time was $22,000. When I started to sell the coins, I put this piece in an auction with a $30K reserve. The coin did NOT sell. Then I told myself I may have to bite the bullet and take a $5,000 hit to sell the coin. I eventually put the coin in a Stacks auction with a $28,000 reserve. There happened to be - in this sale- a large old gold coin collection which had been OFF the market for 60+ years in that auction. That collection attracted many advanced gold coin buyers which, I thought had to help my coin. At $30,000 bid, there were still 4 bidders in the game and my coin sold for $52,800. So, sometimes overpaying for a special coin can have a happy ending..

    Saturday, October 20, 2018 1:19 PM EST
    • John Feigenbaum

      Great point Bret!

      Monday, October 22, 2018 4:17 PM EST
  • B ELLIS COX

    My reply is this, regerding how to lose money/ Most collectors (SHREWD) LOOK TO CDN FOR PRICING AS WELL AS DEALERS ,WHAT NEEDS TO BE SAID W/O PREJUDICE IS HOW THE GRADING COMPANIES ARE FARING IN RESPECT TO THAT SUBJECTIVE SKILL. I AM TALKING THE 4 RESPECTED AND REALLY 3 LATELY. THERE IS A GREAT DEAL OF DIFFERENCE DUE TO SHAREHOLDER DISCRETION IN 1 PUBLIC COMPANY , AND FOR POLITICAL RESONS CDN CANNOT PUBLISH ANYWAY . JUST AN OPINION. THAT COMPANY IS LOOSING RESPECT. AS THE CADILLAC GRADER AND I SEE WHY. E. C. COINS

    Saturday, October 20, 2018 11:23 AM EST

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