This very short article on coin grading and honesty among coin dealers and collectors. Two of the biggest problems in the coin market, as laid out by Q. David Bowers, are current grading standards and honesty in the hobby. Here is a link to the article: http://www.coinworld.com/news/us-coins/2017/02/be-honest-when-making-sales-pitches-to-customers.html
Although coin grading does not effect the error market very much, it is still relevant. Without going into much detail, the bottom line in our opinion when it comes to grading (and we cannot overstate these points):
1.Buy the coin for it's eye-appeal, and not for the grade on the holder.
2.Do not ignore detractors (ugly toning, surfaces problems, poor strike) just because the coin has a high numeric grade.
3.Do not pay a large premium for 1 or even 2 grade points higher. It's not worth it, and when grading standards are as lax as they are, and when eye-appeal plays so little a role in determining grade, it's expecially not worth it.
Grading standards go up and down, and what are currently the grading standards may not be the standards in 10 years time. Paying very high premiums for minute differences in a coin's appearance is a bad idea almost always.
Honesty is another problem. Coins should be sold at a reasonable profit to the seller (be it a collector selling or a dealer), but all coins should be sold at a price that the dealer/collector would be willing to buy the item back for a reasonable discount, if offered the coin the next day. It's important to add the "next day" because if market conditions change, obviously a dealer or collector should not feel obligated to base their "buy" price on coins sold in a now evaporated market. A coin worth $1000 3 years ago may only be worth $200 now because a "hoard" of the coin came out, or because demand (and therefore the retail price) has dropped. Or it may be still worth $1000, in which case the dealer/collector shouldn't pay $200 for it, but should be honest and pay a reasonable price.
Honesty does not have a price, and we should all do to others as we would have them do to us. Its the right thing to do, and will also benefit the dealers, the customers, and the hobby as a whole in the long run.
Error coin collecting and the error coin market have always had their ups and downs, with both the popularity and prices of errors going up and down. It’s a “seesaw” effect, which is seen in all collectibles and areas of investment just as it is in the error coin market. However, even knowing this, it can be disconcerting to see a coin that was selling for $1,000 drop in price to $700, especially when you paid the $1,000 price for it. The good thing is there are many reasons why there is this up and down to the market, and most of the time they are not reasons to get worried about but are simply normal give and take in the hobby and error coin market.
As a coin dealer, I set up at most of the largest coin shows held throughout the U.S., participate in major auctions, buy and sell to both collectors and dealers, and also get a chance to talk to quite a few people in the hobby. With the U.S. coin market being soft right now, there has been general concern as to how much that is effecting the error coin market, and it is a question which often comes up in conversations with other collectors and dealers. In the last several years, the U.S. coin market has experienced a fairly major drop in prices for some series of coins, while other coin series have held up well. Does this effect the error coin market? Yes and no. Note: for purposes of this article “U.S. coins” refers to non-error U.S. coins.
Above: A 1976 Kennedy half dollar struck on a clad quarter planchet. Coins like this are very scarce, and are in fairly high demand right now.
The error coin market and the U.S. coin market are connected, but only somewhat. A great many error coin collectors collect error coins exclusively, and so are not in tune with the U.S. coin market, and so price changes in U.S. coins are not of any great concern to them. Also, error coins are collected more for what they are, and far less for their grade, which means problems such as “gradeflation” have little if any effect on the error coin market since error coin grading standards are similar, but not the same as they are for non-error coins (note: “gradeflation” is the belief by some collectors and dealers that grading standards for the 3rd party grading services are slowly becoming more and more liberal, and that coins previously being certified at a lower grade are now being graded at a higher grade. Many believe this is pushing down prices for U.S. coins due to lower quality coins being assigned higher grades.)
One effect that the U.S. coin market does have on error coins is that collectors and dealers of U.S. coins are more tied-up for cash right now due to a general decrease in the values of their collections/inventories, and also the decrease in values makes collectors and other dealers reluctant to buy coins unless they are “sure” that they are a good value. This means that there is less of both dealers and collector’s cash flowing into the error market, and while they may never have bought many errors anyway, there is still a small effect from this lack of buying.
It’s not just U.S. coins which have reduced collector/dealer cash flow, but also lower bullion prices have contributed to the situation, since the bullion they’ve bought has been dropping in value of late. Additionally, there have also been many gigantic U.S. coin collections hit the U.S. coin market, and that has also created an increase of supply of U.S. coins, and a corresponding decrease in prices since collectors and dealers have had to sink their cash into these (often) expensive coins. Although there is some flexibility in dealers and collectors ability to absorb all these news coins on the market, that flexibility has its limits.
And last, the U.S. and world economies have been sluggish for years now, resulting in lower incomes for some collectors, and a corresponding effect on coin dealers. If people are working and making good money, they generally are not going to spend their money on collectible coins.
So while some of this sounds like bad news for the error coin market, there is actually a lot of good news as well. As an error coin dealer, this has been our busiest year, with more sales than we have ever had in a given year, and with sales to many different customers as well (in other words, the bulk of are sales weren’t simply to a few collectors, but were spread out among many collectors.) Error collectors are buying, but the requirement is that prices be in line with the market. Some coins have gone up in value and some have gone down, but if as previously mentioned, an error coin had dropped in value from $1,000 to $700, the price needs to be at the $700 level and not the $1,000 level. This is true in any market, and so errors that have dropped in price could be a good value, while those that haven’t dropped simply are still in demand and perhaps have farther to go upwards.
Above: Rare errors such as walking liberty half off-center strikes are in high demand. The above coin is a 1944 walking half struck 30% off-center.
Rare errors in a nice grade are very much in demand, and as a dealer they are as hard as ever to buy, and are easy to sell. Rare U.S. type errors, and various early 20th century coin series, and rare major errors are always hard to find and while they may take slightly longer to sell due to their being more expensive, and so not easily affordable to the average collector, they do sell well. Modern major errors (2003 to present) are also hot, and there is strong demand for the scarcer error types since 2003. Major off-metals, transitionals, and rare or wild striking errors have all been popular this year, with the coins being much harder to buy than to sell.
Above: more common errors such as the common date nickels on cents or 11c double-denomination cent on dimes are cheap right now.
What is soft? Summed up, it would be common errors. Any of the common date or more common error types are down in price right now. Common nickels on cents, 11c double-denominations, state quarter errors, die caps, bonded coins, planchets—any common errors in those series are soft for this year, although there are others that have had weaker demand as well.
In auctions such as eBay, or major auction houses, prices have been generally good. While some coins sell cheap, others sell very strong, and as a whole, I would give a thumbs up to prices realized in auctions. Sometimes coins sold “cheap” because there is little demand currently, while some are cheap simply because bidders missed the coin and it “fell through the cracks.” Other coins have sold for very high prices because they are rare, very difficult to find errors for which there is high demand.
The stock market has also been good for the coin market, with record prices in stocks contributing to some collectors having extra funds for buying coins. This is a good thing for the coin market as a whole.
So should you be concerned about the error market? I don’t think so, at least not as long as you are buying to hold for 5 years or more. The “buy and hold” strategy is usually a winner for coin collectors, and while there are no guarantees in any market in terms of prices increasing, the error coin hobby has a lot of devoted collectors behind it who love the hobby for its camaraderie amongst collectors as well as the thrill of building and owning error coin collections, and I fully expect good things for the hobby in 2017 and for many years to come.
Now that the summer is over, vacations are done, and we are getting well into the fall season, coins are back in the minds of collectors. This is true for the numismatic hobby at large, as well as for error coin collectors.
Coin collecting always picks up appreciably beginning in the fall and going on through winter and into spring. We’ve noticed the change here at Sullivan Numismatics, with an increase in orders in the last month, and with orders by a wider array of customers, many of which had been buying few if any coins in the last several months. We’ve actually been selling far more error coins than we’ve been able to buy, and are working hard to find high quality errors to replace what has sold.
There are many great coin shows coming in the next 6 months, as well as major auctions, and just an increase in activity in the hobby, which is always fun. We will be busy buying all the coins we can from our sources, collectors, dealers, coin shows and wherever we can dig them up. In fact we are currently heading to the Baltimore Whitman coin show held this weekend in Baltimore, Maryland. It’s one of the very best shows of the year, with hundreds of dealers and usually with a good number of error coins showing up for us to buy, so we are hoping to pick up some fresh inventory for our customers.
Selling mint errors at this and other coin shows is generally weak due to the small number of error collectors in attendance, and if we had to make our money off coin shows, we’d quickly go broke! However, despite that, we do bring along as nice a selection of errors as we can stuff in our 5 exhibit cases at the show. Finding the right balance of less expensive errors in addition to higher end pieces means we have something for just about everyone, and it gives beginning as well as advanced collectors a good buying opportunity.
We look forward to working with all of you our customers, and if you have anything special you are looking for, be sure and send us your want list since customers with want lists on file get first shot at fresh inventory. Being on our email alert list also gives you first shot at fresh inventory, so sign up if you’d like to be alerted when fresh inventory is listed (you’ll receive an email about every 2-4 weeks.) Also, feel free to contact us if you have questions or need help with your error collection.
The ANA World’s Fair of Money is right around the corner, and we will be attending! The show has some 500+ tables, and thousands of collectors and dealers will be in attendance making for an exciting and fast-paced coin show. This year the show is being held at the convention center in Anaheim, California, which is right next to Disneyland. Here is a link to the ANA's information about the show: https://www.money.org/worldsfairofmoney
In terms of error coin happenings, CONECA will be having it’s annual banquet and awards, and the club will also have a table at the show (#789.) We will be set up at the show at table #747, with hundreds of major mint errors for sale. Other error dealers will be there, as well as well-known luminaries in the error hobby, so all in all it should be a busy and exciting show for error collectors!
PCGS and NGC will be set-up, and accepting submissions of error coins at the show, and if you have coins to submit, you can save shipping costs by submitting at the show instead of by mail. Also, PCGS is doing a bunch of giveaways, so stop by their table to take advantage of those. NGC will be having an opportunity for collectors to meed former Mint Director Edmund C. Moy, and the Mint's 12th Chief Engraver John Mercanti at their booth, and get autographs.
Although perhaps you should avoid showing them your mint errors, but the U.S. Mint will have a booth, as will mints from around the world. Typically they feature their newest coin products, and sometimes special sets are available there at the show. They mints are fun to wlak through, and see what new coins are being produced, as well as recent technological inovations that are occuring.
If you attend, be sure and stop by our table to buy, sell, or simply talk errors. We look forward to seeing you at the show, and if you come, you will have a blast!
(Image Courtesy of Coin World.)
Another $1.25 Mule has come onto the market! This is one of the best known and most popular mint errors, with examples typically selling for $75,000 to $150,000. Simply defined, a mule is a coin which was struck with the dies of two different coin denominations.
Such a coin has one denomination on one side and another denomination on the other. This has only occurred on a handful of U.S. coins, and so they are excessively rare and therefore expensive. For most collectors, a coin such as this will always be a "dream coin", and not affordable, and instead most collectors have to get a foreign coin mule, which can typically be purchased for under $500. Still, coins like this are the error coin hobbies version of a 1804 dollar or a 1913 v-nickel, and are the ultimate trophy error coins, which rightfully get a lot of attention when they come onto the market. Here's is a Coin World article with more information about the sale: http://www.coinworld.com/news/us-coins/2016/07/collector-buys-11th-of-15-known-mule-errors.html