Relative Value

It can be very difficult making a purchase decision when buying rare coins. There are numerous price guides in the market place that offer retail values for United States coinage. One can also consult population reports and, in many cases, recent auction records for comparison. The biggest problem with retail price guides is that only one price per grade is stated. As the price editor of The Guide Book of United States Coinage (the “Red Book”), I know all too well the difficulty of listing a retail price for an issue that can look so different, yet still be the same grade. A quick glance at any listing of auction records will show the sometimes broad price range of coins sold in the same grade at the same sale. Consider the following example:

• 1907 High Relief Double Eagle Wire Edge NGC MS 64
  Bowers and Merena, March 2010 - $25,012.
  


• 1907 High Relief Double Eagle Wire Edge NGC MS 64
  Bowers and Merena, March 2010 - $31,625.
  

The coins were probably not identical in appearance as one would expect from the $6,000 price difference. Perhaps the more expensive coin had superior luster, or fewer marks for the grade. It’s also possible someone thought the more expensive coin was certified many years ago and could potentially grade a point higher today. An NGC MS 65 coin would be worth over $40,000. This same scenario plays out at every major auction and on the coin show bourse floor.

Which coin represents the best value? Although much has been written about the wisdom of buying the best you can afford, little advice is tendered regarding relative value. Your acquisition cost for a rare coin is critical to your success as a collector or investor. I have many clients with large want lists who become quite impatient waiting to find something they need. In many cases, however, finding the coin is not the problem. It’s finding the coin at the right price. If you pay 40 percent too much for a coin, you must wait years to recover the extra cost before making a profit.

When shopping for rare coins, buyers should take many factors into consideration. First, realize that not every coin of the same grade looks identical. An MS 65 Morgan Dollar can be bright white, darkly toned, toned on one side, exhibit rainbow toning, be softly struck, have a needle sharp strike, and about 1,000 other variations of the above. The question to ask yourself: Which one represents the best value? Is the MS 65 1921-S Morgan Dollar priced at $1,900 a better value than another MS 65 1921-S Morgan Dollar priced at $1,200? If you have a basic understanding of quality, the latter should be strongly considered. Nobody is recommending buying unattractive coins based solely on price. The point is that just because someone deems a coin is superior for the grade it does not make it a good value. Paying too much is not offset by quality in most cases.

Education is the key for anyone serious about purchasing rare coins. You do not have to become an expert in rare coin grading, but fundamental knowledge of how a coin should look for the grade, as well as other characteristics for the issue you collect will be very valuable when making a purchase decision. Also, collectors should study price guides and other sources of information for the series they are most serious about. Patience is incredibly important as well. Find the coin you like, but try to judge for yourself if the coin represents good value for the price and grade.

In recent years, many collectors have become very involved in registry set collecting. Knowing how your set stacks up against other collectors is very exciting. Sometimes, the urge to be number one can be irresistible. Auction records in many series have been shattered as a result of the Registry phenomena. Prices for some post 1934 coins boggle the mind. Are these coins good value? As with any purchase, it varies on a case-by-case basis. However, the climb to the top of the registry ladder is a thrill many collectors value over finding the best value when collecting. Some collectors actually do quite well. Always do your homework, and seek expert advice when possible.

Jeff Garrett bio