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10 Questions You Should Ask Before Buying Collectible Coins
At this time in the market for semi-numismatic coins,
we feel it is imperative that you be more knowledgeable as to what
a collectable coin is. Because we guarantee to buy back these coins
at the same grade, we, as a dealer, consider several factors that
our coins must have in order to guarantee our own liquidity. Liquidity
is to collectible coins what location is to real estate.
Therefore, we use these criteria,
to help us determine what types of coins will be desirable and easily
liquidated. In considering any type of collectible coin, you should
do the same.
I.
Was the coin minted prior to 1934? – After
1934, the U.S. and the rest of the world, discontinued to mint coins
as legal tender. Any coins minted after 1934, were minted for bullion
reserve purposes, and are not considered legal tender coins.
II.
Is the coin uncirculated, and how can you tell? Consider this question… Would you expect an uncirculated,
100 year old coin, to be dull with tiny scratches or bright and
shiny? If you answered dull, you are right. In it’s original condition,
an old coin tends to be dull or hazy, and may have a few tiny scratches.
If the coin is bright and shiny, and you see no scratches, typically
this indicates that someone has buffed or cleaned the coin. A
shiny coin attracts customers looking for the wrong thing. Eye appeal
is important, but a true uncirculated coin, should be purchased
in it’s original condition – not an altered one.
III.
In the future, will a dealer pay you a premium for the coin? Almost
all old coins carry collectible premiums, however, there are several
coins currently being promoted as collectibles. It doesn’t always
mean a dealer at some future time will be willing to pay a collectible
premium for the coin. If you follow these guidelines, they will
protect you from buying an illegitimate coin. You should carefully
consider all of these points. You should not disregard a single
one when choosing a coin.
IV.
Has the coin ever been re-struck ? In some
instances, coins were reproduced by a country reusing an old design
cast to make the coin. For instance, the Swiss and French 20 francs
were reproduced in the mid 1940’s using old die casts, bearing an
older date. Anyone wondering what happened to the gold stolen by
the Nazi’s may want to consider this. Austrian Ducats, bearing the
date 1915, are currently being reproduced, are offered as old coins,
and are selling for a premium. This creates a problem for the coin
as a collectible, because at this point, no one knows the true population
of the coins made with that date, nor how to tell the old from the
new. To better understand this problem, imagine Chevrolet reproducing
10 million more exact replicas of the 57 Chevy. Then try to imagine
convincing someone they were really built in 1957, once the news
got out.
V.
Is the coin protected from confiscation? A
precedence was set by our country when Franklin D. Roosevelt instituted
Executive Orders recalling gold bullion in exchange for paper currency. This effectively pulled real money out of the hands of the public, and put a currency that could be easily reproduced into circulation.
The only gold people were allowed to own was in jewelry and collectible
coins. In our country, if martial law is declared, and executive
orders are enforced, they will also institute exchange controls.
At that moment, our borders will be closed to prevent any wealth
from leaving the country, any foreign paper currency you own will
be called in and made illegal, and any bullion you have in your
possession will also be called in and made illegal.
Collectible coins are far
less likely to be confiscated, because of the government’s inability
to determine collectible value. Even if this were to change, and
governments go after collectibles at some point, you will have bought
more time, with collectibles, to be legal for as long as possible.
When Stalin and Hitler confiscated gold, they did not confiscate
collectible coins. But eventually, they declared certain segments
of their populations to be spiritually or politically incorrect,
and seized everything from those people. A sobering thought for
Christians and politically incorrect traditionalists in America
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VI.
Is the coin non-dealer reportable and privateHaving dealt with this issue earlier, we would like
to reiterate two concerns. First, for dealers to take advantage
of any exceptions, real or imagined, to 1099 Dealer Reporting requirements,
they risk an IRS audit of their client’s transactions to verify
compliance. We are not willing to use the exceptions for that reason.
We would rather “chew our arm off” than to fill out 1099 forms.
However, we will
report the liquidation of even a single gold coin to avoid an IRS
fishing expedition. A wise man once observed, “Do you know what
happens if you let a camel stick his nose under your tent flap?
Pretty soon, you have a camel in your tent.” Second, protecting
your privacy today insures your legal ownership from confiscation
in the future.
VII.
Does the coin have a low mintage? It
is not necessary for a coin to be “rare” strictly by population,
but for a coin to have collector appeal, it must have some scarcity
or rarity. Although the majority of old U.S. coins have significant
populations, what makes them rare is the condition they survived
in. However, if a coin has a low mintage population, this too, can
play a significant role in its rarity value.
VIII.
Is the coin under-valued or over-valued? In other words, does the
coin have genuine upside potential, or is it over-priced at this
time. This could be important in determining if a coin is currently
over promoted by dealers.
For instance, during the
Y2K scare, many dealers promoted cheap double eagles as a barter
coin that was protected from confiscation. These circulated coins
were only $80 to $100 above their gold value and seemed like a good
buy compared with uncirculated double eagles. After Y2K, many discovered
these coins were only worth their melt value.
In 1998, ICA began recommending
old, uncirculated, European coins with sizes and premiums similar
to modern fractional bullion coins. This helped our clients avoid
big losses with the barter portion of their portfolio.
IX.
Is the coin over-graded? All too often
coin dealers are unwilling to take responsibility for the accuracy
of the grading of a coin. Therefore, they typically will only guarantee
the coin according to the current grading service standards. This
actually poses a problem, especially if the standards change in
the coin grading services. In the face of strong market demand,
coin grading standards can loosen up in order to supply more coins
into the market.
So, what happens to the standards
when the opposite takes place, and suddenly there is no demand,
or even a market sell-of? Here at ICA , we guarantee
to buy back your coin at the same grade we sold it to you. This
insures that no matter what the current standards are at the time,
we know that the coins we sell you now will stand up to any standard
being used in the future.
X.
Is the dealer reputable and well capitalized? There are over 5000 coin dealers currently in existence in the United
States . Of those there are only a hand full of reputable, established
dealers in this industry having the knowledge to truly give their
clients the best service. ICA has a 28 year history of buying and
selling precious metals. ICA is one of the largest dealers in the
country. This insures our ability to provide a two-way market, and
give you the proper perspective.
All too often most people
are not given enough of the right information to make a good decision.
ICA believes that the integrity, information, and coins we provide
to our clients has been, and will continue to be, at the highest
standard by which the rest of the industry will be measured against.
Like Grandpa McCoy was fond of saying “ It ain’t bragging when you
done done it”
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