A collector recently asked me an interesting question: “what makes you to decide to buy certain coins and to pass on others?” The factors that I use in deciding what to buy for my inventory are actually quite similar to the factors that a good collector should use in deciding what to buy for his set.
The first thing I consider is if I like the actual coin itself. In most situations, I try to buy nice coins. By “nice” I mean a coin that has good overall eye appeal and one that I would rank as being in the top 10% for the grade. But there are situations where I might buy a coin that I regard as being “average” quality for the grade or one that I know has been dipped or which seems a bit enthusiastically graded. These situations, which are pretty rare for me, tend to occur when I am offered a date that I really like or a coin that I think is really undervalued. As a collector, I do not suggest you indulge in this compromise behavior very often.
As a dealer, liquidity is very important to me. I like to sell my coins quickly and I try to buy coins that I know will move in a few weeks. I carefully monitor my inventory and if I see that a certain coin gets a lot of attention when I post it on my website, I try to buy other examples of this date. The liquidity factor of a coin should also receive consideration from a collector. You never know how quickly you might have to sell your coins down the road and you will generally find that having coins that are easy to sell are a lot more enjoyable than owning coins that take forever to get rid of.
I try to buy coins that are good values. This does not necessarily mean that I think a coin is undervalued. What it means is within the context of a specific series I like the value that a coin offers. As an example, I like virtually all New Orleans eagles from the 1850’s. If I am offered nearly any reasonably attractive, fairly priced piece from this era, the chances are good that I will buy it. I also like all higher grade New Orleans eagles from the 1890’s and early 1900’s. But there are specific higher grade coins that I will pass on because I feel that the premium over the next grade down is way too high. As an example, I recently bought a nice PCGS MS62 1892-O for under $2,000. I also had a chance to purchase a piece graded MS63 but it would have cost more than triple the price of the MS62. Even though the higher grade coin had a very low population and seemed interesting I didn’t like the level of value it provided. Therefore, I passed.
I try to purchase coins that are popular but not necessarily too popular. It can be hard to define the line between popularity and “too popular.” An example of a coin that I will always buy because of its popularity is the 1861-D gold dollar. But I tend to shy away from higher grade examples of this date because I am not sure that I believe that a decent Uncirculated 1861-D is now worth close to six figures.
This is a fine line that smart collectors and dealers always have to walk. You want to be somewhat “cutting edge” when you buy coins and find a market that is undervalued. But by the same token, you don’t want to be the lone voice in the wilderness buying a series that only you feel is undervalued.
So, in summary, I’d say that the things that mean the most to me when I buy a coin are the following:
Is the coin nice?
Is the coin relatively easy to sell?
Do I like the value that the coin represents?
Is the series that this coin is included in currently undervalued or have values peaked?