Market Blog - Written by Doug Winter on Monday, March 9, 2009 15:45 - 3 Comments
Cleaning Up Your Collection
As I write this, there is a real disconnect in the coin market. Simply put, despite what is very probably the worst economic year since the height of the Depression, the coin market remains comparatively vibrant. I think this represents something that many collectors are overlooking: this could be a great opportunity to clean up some of the messes in your collection and come out without taking a nasty financial hit.
This statement is making a big assumption: that the financial mess we are in now will impact the coin market more intensely than it has so far. Who knows; maybe it won’t. But my guess is that we will see a further drop in prices on coins that aren’t really exciting, either off-quality, not rare or a combination of the two.
If you are like most collectors, you’ve probably made some mistakes over the years. And if you are like most collectors you may have hidden your mistakes in the back of your safety deposit box and figured “out of sight, out of mind.” As I mentioned above, this might be a really good time to consider trimming the fat.
I have long been an advocate of the “quality trumps quantity” school of numismatics. In my experience, most collectors own too many coins. Some collectors own way too many coins and they have a considerable amount of money tied-up in “stuff” that has little relevance to their current collection. I think it’s a great idea every few years to weed out some of the stuff that has accumulated in your collection.
The coins that are most likely to lose value in the coming year are coins that have either gone up too much in value in the last few years to sustain their market or coins that have a limited amount of demand. You might want to include these along with the “what was I thinking when I bought that…” coins.
When you look through your collection, you should use what I called the “ahhh…. test.” Coins that you like are going to make you go “ahhh…” when you view them and you can probably remember the exact circumstances in which you purchased them. Coins that don’t speak to you or which don’t tweak your memory haven’t passed this test and they might be candidates for a purge.
You might own coins that you don’t really care much about but which are still strong. A great example of this is generic gold. Many collectors have salted away a few St. Gaudens double eagles or Liberty Head eagles over the years. They might not care at all about these but they might also be able to make a nice profit if they sell them at the currently-high premiums in the market. If I had a decent position of generics in my collection, I’d seriously consider taking a few and selling them right now.
I’d be even more interested in selling these Misfit Coins in my collection if I had an alternative coin coming down the pike that seemed like it was too good a deal to pass up…and I didn’t necessarily have the ready cash to make this deal happen.
Here’s another circumstance where you might have coins that are no longer useful to your collection. Let’s say you started a collection but lost interest and now you have a 50% complete set lying around. If the coins are nice quality and price levels aren’t way off on the series in question, it might not be a bad idea to sell the coins you have and use the money on coins in the set(s) you are actively collecting.
What is the best way to clean up your collection? You have a number of options and these options depend, at least in part, on the type(s) of coins that you own. If you live in a town with a reputable brick and mortar coin shop and you have pounds and pounds of “stuff” then selling this material outright or on consignment might be a good idea.
If what you have fits more into the specialist category, choose a specialist dealer to make an outright offer or to take the coin(s) on consignment.
And, of course, you can always go the auction route if you are thinking of selling very high-powered or highly specialized material.
In conclusion, this might be a good time to get rid of some of your less-exciting material at levels that aren’t going to insult your sensibilities. For what’s its worth, this is exactly what I’ve been doing with my own inventory for the last four to six months and even though I’ve had to make a few decisions that were painful at first, I’m very glad that I sold some of the coins I did at the prices they went away at.
3 Comments
Doug,
Great advice, that I have been following for the last 18 months. The coins that sold at the summer 2008 ANA did fine, and the few I have consigned to dealers are moving, at adjusted lower pricing.
As high end as my collection is, there are always coins that have slipped into the back drawer. And they are no longer of interest to me. At one time, I thought I would complete a type set in silver, and now, I still have quite a few examples in series that I do not follow.
And then there are the duplicates that are nice, but not necessary. The proceeds can be put to good use( not the stock market, but maybe a car and TV.)
Mr. Winter…
I wish that I had the gift of being able to communicate, clearly and simply, like you. It appears you have “been reading my mail” as the concerns you express in the first two paragraphs above are exactly the reasons for my present nervous, perhaps even fearful, condition.
I have no qualms about the quality of the coins in my “mish-mash” collection, but with three years experience in this market, I have come to the conclusion that I know a lot less now than I did when I purchased my first gold coin. Altho’ I am merely “treading water” at present with my investment, I would say that in comparison to other markets “treading water” might not be so bad. At any rate, I, too, am not convinced that further damage can be avoided, and the old adage “An ounce of prevention is worth a pound of cure” comes to mind, and I have been flirting with the idea of selling coins (some at a loss) and purchasing silver bullion instead.
My initial plan was to “hold” my coins for 5-7 yrs, which may or may not be a proper plan. It looks like a generic, gold coin should be in the domain of “day-traders”, tho’, and sold whenever the first opportunity at a profit presents itself. But I really don’t have a clue these days, and have missed a couple of chances, already, to do just that.
May I say, in passing, how much I enjoy your website, and how much I appreciate the liberality with which you share your knowledge and expertise with the likes of me. Good day, Sir and…”Thanks, again”.
Great blog, Doug.
I am going to take your advice and go through the safety deposit box in the next couple weeks. If I told you about some of what is in there, I could imagine the patented DW grimace. 
I like your idea of the “ahhh” test, but I have another idea for a test. I have challenged myself to make a list of all of the coins in my collection from memory, excluding bullion, albums of coins assembled in childhood, and recent stuff from the Mint for the kids. Any coin that is not memorable enough to make the list will be sold.
Then, there are the “mistake coins”. I know exactly which they are, but selling them will only compound the pain of actually owning them. One really has to be motivated to move these coins out, but once gone, usually there is a sense of relief. It’s kind of like getting out of a bad relationship.
Most collectors do not have unlimited resources, so having cash tied up in coins that are no longer appreciated impedes one’s ability to move the collection in the preferred direction.
Dale Friend - Mar 9, 2009 08:24 pm