You can have unlimited funds but without adhering to a basic core group of numismatic fundamentals, I believe it is very difficult--if not impossible--to build a great collection of coins. Some of the best collections I have seen in the last few decades were built by collectors with average discretionary income levels. But these people were true collectors and they understood most of the points that I am going to raise and address in this article. There are literally dozens of fundamental rules that a collector could follow. I am going to stick with ten and give you some insight as to how these rules help me when I make my own decisions on what to purchase and what to avoid.
1. Learn to Identify Value. Some coins are good values while others are poor values. The smart collector is one who is able to identify the coins that are the best values and then takes advantage of this situation. There are numerous 18th and 19th century that are very undervalued. Some of these are likely to remain undervalued because they are in series that are likely to never become popular. Others, however, are part of series (such as Liberty Head half eagles or eagles) that are either just on the cusp of becoming popular or, in the case of eagles, are already coming into their own.
How do you identify coins that are really good values and not those that are being hyped by dealers who'd like you to believe that they are? In this day and age, it is easy to have access to a tremendous amount of numismatic information. The PCGS and NGC population reports, while not perfect, offer insights into rarity and availability that are unparalleled. The PCGS and Heritage auction result archives allow collectors to determine how frequently a coin appears at auction and in the case of the Heritage archives, has photos of each coin sold. Virtually all major dealers now list coins for sale on their websites and this is another good way to determine what is available and what isn't.
A world-class collector is able to identify coins that are good values before they become widely known. The collector who, a decade ago, bought undervalued issues like the 1854-O and 1856-O double eagle, saw tremendous returns on their purchases. What will the next undervalued rarities be?
2. Carpe Diem. Translated into English, this term means "seize the day." In the case of building a great collection, fast and clear thinking is very important. Really nice coins are incredibly hard to find right now and the collectors who are able to buy them are the ones that make fast decisions. In the case of my company (Douglas Winter Numismatics), when I buy coins, I typically put them on my website on a first-come-first-served basis. I constantly hear from collectors who wish they had pulled the trigger faster.
Here's an interesting story. At the recent Philadelphia coin show, I was talking to a very sophisticated collector about his coins. He couldn't really remember everything he bought; understandably so when you consider that he owns hundreds of great coins. But he did remember every single coin that he should have bought but which were the ones that "got away." And I don't think that this gentleman is alone. Most collectors who have great sets of coins grew these sets by intelligent, quick decisions; not hemming and hawing for three days.
3. Learn How to Determine What's a Nice Coin. Notice I didn't say "learn how to grade." I've written this statement before and I've come to realize that this is not a realistic goal for most collectors. It's like a doctor telling me to learn how to self-diagnose. Even if I had the time, I don't have the skill(s) to learn this. And neither do most collectors.
But you can learn to determine what makes a coin nice versus what makes one ordinary. You can learn how to determine if a coin has original surfaces or if it is bright and shiny from a recent processing. You can learn what color a Charlotte gold dollar from the 1850's is supposed to be and learn to pass on coins that aren't "right."
How are some of the ways you can learn this? Study photos online. Look at which coins have CAC stickers and pay attention to these higher-end coins. Go to auction lot viewing and check out the coins which are relevant to your field of specialty. Most importantly, don't sweat the small stuff when it comes to grading. Its more important to learn the difference between a nice MS62 Dahlonega gold dollar and a low-end one than it is to be able to tell the difference between an MS61 and an MS62.
4. Cultivate a Trusted Source. It's likely that some readers will misconstrue the intentions of this point and say "Oh, he's a dealer and he's just trying to drum up business for his firm." This is partly true; I do write these articles partly to boost the DWN brand. But I also like share information and feel it is important to mentor new collectors. And I think having a good source for your coins is really important. As someone who collects paper money, I can tell you that you can't build a great collection all by yourself; you need an expert to provide you with a second opinion.
If you have a real job, you are never going to be able to compete against a full-time coin dealer like myself. (If it makes you feel better, I have no visions about being able to compete against you in your business. But I will be happy to play you in a one-on-one basketball grudge match...)
Bottom line: find a dealer who you like, who you trust, who has nice coins and who is fair with you. They are out there.
5. Learn How to Sell. From time to time, you will need to purge your collection. You might have a duplicate that you want to sell or you might have generic Saints that are in a profit position. Learn how to sell them and how to maximize what you have to sell.
Not everyone wants to sell coins the same way. Some collectors want to micro-manage their sales and decide to conduct the process by themselves. Other collectors want limited involvement and decide to put their duplicates in auction. I like the option of using your trusted dealer (see #4 above) as a selling source.
Coin collecting is a two-way market. People spend lots of time learning how to buy coins but seldom learn the selling aspects. The best collectors that I've met understand both and have had positive selling experiences.
6. Build a Library. I have a pretty nice working library and seldom does a day go past that I don't use it. Books and catalogs help me make intelligent buying decisions. They help me establish pedigrees. They help me determine how rare a coin is. I can't imagine being involved in numismatics and not maintaining at least a small coin library.
You don't need to overdo this. If you collect U.S. gold coins, an essential working library might consist of about 10 to 15 books (I'd like to think that at least a few of them will be ones that I've written...) and maybe two to three dozen auction catalogs. To be honest with you, I don't use probably 90% of the auction catalogs that are in my library and over the course of time its likely that I'll jettison the ones that I don't regard as essential. To build a good gold coin library you are talking about $500 to $1,000. It's the best money you'll spend. Trust me on this one; even if you don't believe me on any of the other points I'm trying to make here.
7. Be a Mensch. Yeah, I know the cliche is that "nice guys finish last." And I know that to buy coins you have to be aggressive and even a bit pushy. But you can be a nice guy when doing this and being a nice guy is going to score a lot more points with dealers, auction houses and other collectors than being a jerk.
Many of the men that come to mind when I think "great collector" are really nice guys. People like Barry Enholm, Tom Bender, Steve Duckor, Robert Kanterman, and Dale Friend. These guys are A+ collectors but they are also the types of people I'd actually like to go out with and have a nice dinner. And there is a reason that these guys get offered great coins. Hint: its not only because they are serious and they can write a check for a big coin. It's because they are nice guys who are easy to deal with and whose word you can take to the bank.
8. Really Learn Your Market Area(s). I love dealing with smart collectors and I try to do everything I can to make collectors smarter. But I often meet collectors who have made really bad decisions because they didn't learn their market area(s).
I understand that people are busy and they can't become overnight experts. This is one reason why I've always liked the concept of specializing. It's easier to be very knowledgeable about a few dozen issues (say, Dahlonega quarter eagles and half eagles) then it is to try and learn the ins and outs of the entire early gold market.
But this doesn't mean that you can't learn a few basic market skills. Learn how to see what coins are selling for at auction so you don't wind-up overpaying. Become savvy enough to determine which population figures are reasonably accurate and which are obviously inflated by resubmissions. Analyze what sort of premiums CAC coins are selling for. I believe that the time you take to learn your market areas will pay great dividends for you.
9. Patience, Patience, Patience. You can assemble a set of Dahlonega gold coins in a few months. Believe me, I've seen these rushed sets and the results are usually not very pretty. The collector who has rushed through a set might be lucky and one-third of his coins are be nice. But it is more likely that most will be over-graded and many will be hideous.
Or you can assemble a set slowly and carefully. Its likely that a few coins won't be high-end but most are going to be very nice. You'll have more fun buying one coin here and one coin there. And when you go to sell your coins, your bottom line should be a lot more exciting. Remember: relax, have fun. Collecting is a marathon and not a sprint.
10. Don't Take It So Seriously. As I mentioned above, no one likes a passionate collector more than I do. I feel lucky to be working with collectors who love coins as much as I do. But sometimes I meet a collector who takes things a little too seriously.
Relax. Its just a hobby. Have fun. Coin collecting is supposed to be therapeutic; not something that puts you into therapy.
I could go on and on with suggestions on how to assemble a great collection and how to be a great collector. I'd like to hear your suggestions and welcome your comments.