20 Interesting, Undervalued U.S. Gold Coins You Can Buy for Less Than $5,000

In a recent blog, I mentioned the fact that the entry level to become a buyer of interesting United States gold coins was a much lower barrier than many new collectors realize. I mentioned some general issues and types that could be found in the $1,000-2,500 range that I felt were interesting and good values. I'd like to expand this idea and discuss 20 specific rare coins that can be purchased for $5,000 or less. 1. 1865 Gold Dollar. Unlike the low mintage gold dollars from the 1880's, this Civil War issue was actually used in commerce. Only 3,700 business strikes were produced and just a few hundred examples are known today. I wouldn't exactly call this issue "rare" but it is certainly not one that you are going to be able to go to a national-caliber coin show and find more than one or two; if that.

For a collector with a $5,000 per coin budget, you can buy a really nice 1865 gold dollar. As an example, Heritage 1/11: 6672, graded MS61 by NGC, brought a reasonable $3,450. I sold a solid PCGS AU58 last year as an "E-Special" to raregoldcoins.com preferred clients for $1,500.

2. 1872 Gold Dollar. The 1872 is another low mintage issue but it doesn't receive the attention that the 1865 does since it isn't a Civil War issue. Only 3,500 were struck and I doubt if more than 200 or so are known; most in the AU53 to MS61 range.

This date remains very affordable in the lower Uncirculated grades as witnessed by the recent sale of an NGC MS62 for $1,265 in the Heritage June 2011 auction. Interestingly, only one example better than MS64 has sold at auction since January 2009 (an MS67) yet a nice quality MS64 should be available, with some searching, for around $3,000.

3. 1839 Quarter Eagle. This date has been a favorite of mine for years. It is by far the rarest Philadelphia Classic Head quarter eagle. Interestingly, it has fewer appearances at auction over the last two decades than the celebrated 1838-C and 1839-D and it might actually be a rarer issue than these two first-year branch mint emissions.

Despite the scarcity of the 1839, it remains a good value for the collector with a $5,000 and lower budget. An AU50 is currently worth Around $2,500-3,000 while an AU55 goes for $3,500-4,000 and an AU58 should sell for $4,500-5,000. Be aware of the fact that this is an extremely hard date to find with natural color and surfaces and a choice, high piece is worth as much as a 50% premium over a typical example.

4. 1845-O Quarter Eagle. This is another long-time favorite of mine. The 1845-O is by far the scarcest quarter eagle from New Orleans and it has an original mintage of just 4,000. This date has been recognized as a rarity in higher grades and a nice AU coin is going to be out of reach for the collector with a $5,000 budget. But that doesn't mean that a presentable example is out of the question.

I sold a nice NGC VF25 example of this date a few months ago for around $1,500. Heritage 3/11: 4631, graded EF40 by PCGS, sold for $4,025 and as far as I can tell this seems to be a record price for an EF40 that was clearly not going to upgrade; others have sold in this grade for $2,500-3,000 in the last few years. I can see EF's eclipsing the $5,000 mark in the near-future so this is one undervalued date that might not be so undervalued the next time I write an article of this sort!

5. 1867 Quarter Eagle. You'd think that an issue with a total PCGS population of just twenty-nine in all grades (that's the exact same number, by the way, as the 1856-D quarter eagle; an issue that's worth more than 10x an 1867 in AU) would be better recognized as a scarcity. Yet the 1867 continues to languish and it remains an affordable issue.

Trends for the 1867 quarter eagle is $1,900 in AU55 and $3,000 in AU58 and, when available, examples tend to sell for a discount in relation to these numbers. If just a few people started to collect Liberty Head quarter eagles by date (or if one or two people began to haord 1867 quarter eagles) I could see the price of this issue doubling nearly overnight.

6. 1883 Quarter Eagle. The date run of quarter eagles produced between 1877 and 1895 contains many low mintage issues and a number of these are affordable, scarce and undervalued. I probably could have chosen four or five of them for this article but decided to focus on the 1883, an issue that I like very much.

Just 1,920 business strikes were made and my best estimate is that around 100-125 are known today. I have never personally seen an 1883 quarter eagle that graded higher than MS62 and only one or two at that level. The last Uncirculated piece to sell was an NGC MS61 that brought $4,313 in the Heritage 3/11 auction. Despite this coin obvious rarity, you can still buy a nice AU in the $2,000-3,000 range and MS61 examples have sold in the $3,500-4,500 during the last few years.

7. 1867 Three Dollars. In circulated grades, the 1867 doesn't sell for all that much of a premium over some reasonably common dates of this design. I have found the 1867 to be a challenging coin to locate and it appears for sale less often than such heralded issues as the 1864, 1870, 1871 and 1872. There were 2,600 struck and most are seen in the AU grades.

For $3,000 to $4,000 you can purchase an attractive AU5 to AU58 1867 Three Dollar gold piece. I would personally look for a really choice AU58 with original color and choice surfaces. These pieces do exist although they are hard to find.

8. 1884 Three Dollar. I've been a big fan of the low mintage Three Dollar gold pieces from the 1880's for years. The 1884 is not the rarest issue of this group (that honor belongs to the 1881) but it is very underrated, especially in higher grades.

There were exactly 1,000 business strikes produced. Unlike many of the low mintage Threes of this era, the 1884 is nearly impossible to find in grades above MS63. In Uncirculated, this date is going to be out of the price range for the sub-$5,000 coin buyer but I have sold at least two or three nice AU58's for less than $4,250 in the last two years.

9. 1842 Large Letters and Small Letters Half Eagle(s). There are a number of No Motto half eagles that are great values for less than $5,000 and both varieties of half eagle dated 1842 rank close to the top. The Large Letters is the scarcer of the two but both are extremely hard to locate.

Every year at auction, I only see maybe one or two decent 1842 half eagles yet EF coins continue to sell in the $2,000-2,500 range while AU's bring around $4,000-5,000 depending on quality. I very rarely see examples that are choice and original and I personally think a high end coin, even in VF grades is worth a significant premium.

10. 1842-O Half Eagle. I could have put at least three (if not four) New Orleans half eagles in this article. Despite a big boost in popularity in the last few years, nice EF No Motto examples of the scarcer date New Orleans half eagles remain within reach of most collectors.

The 1842-O is the second rarest half eagle from this mint. Probably no more than 50-75 are known from a mintage of 16,400. I just sold a very presentable VF example for around $1,500. Last summer, a pair of PCGS EF45's sold at auction for $3,738 and $3,881 respectively. I think a really nice EF45 coin can still be bought for less than $5,000 and I think it's one of the single best values in this group of twenty: a rare coin, a coin that's in demand and an issue that becomes extremely pricey as the grade scale is increased.

11. Undervalued Dahlonega Half Eagles. Even though this series is avidly collected by date, there are at least three Dahlonega half eagles that I can think of that carry virtually no premium in VF and EF grades yet are two or three times rarer than the "common" dates of this type. The ones that come to mind are the 1846-D Normal Mintmark, the 1848-D and the 1851-D.

The most recent Coin World Trends values the common date 1853-D and 1854-D at $3,000 in EF45. In the same grade, the 1846-D Normal Mintmark is valued at $2,750, the 1848-D at $2,750 as well and the 1851-D at $3,000. At common date valuations, these three issues are extremely good buys for the collector. A little hint: the 1848-D half eagle is really rare in EF with a sharp strike and natural color. At a price anywhere near its current Trends value, it is a really exceptional deal.

12. 1850 Half Eagle. This is the rarest half eagle struck at the Philadelphia mint between 1843 and 1862 (with the possible exception of the 1859 which is another really undervalued issue). Yet the last two I've sold in AU58 (both were nice coins, by the way) fetched around $1,500 each.

The 1850 half eagle is actually a scarcer coin in AU grades than its Charlotte and Dahlonega counterparts; at around a quarter of the price. Yes, I know the C+D mint issues are around four times more popular but the 1850 half eagle still seems like a great value.

13. San Francisco Half Eagles, 1858-1867. If you like truly rare coins and have $2,500-$5,000 to spend on each purchase, this subgroup would make for a very interesting date run. You can't buy the 1864-S in any grade without spending at least $10,000+ but the other nine dates will be within your budget as long as you focus on VF and EF grades.

Most of these issues have surviving populations of less than 100 coins and nearly all become very rare and very expensive in AU50 and higher. Yet they remain affordable in VF and EF grades. They certainly aren't plentiful; as an example, PCGS has only graded twenty-five examples of the 1862-S in EF and lower grades. Factoring in resubmissions and ugly coins, this probably equates to no more than fifteen or so pieces. Rare, yes, but not so much so that you can't find one without some patience. And at $3,000-4,000 for a nice VF+ example, a hard coin not to like!

14. Slider No Motto Liberty Head Eagles. If I were collecting gold coins and had a $2,500-5,000 per coin budget I'd give very serious thought to assembling a date run of No Motto Philadelphia eagles from the 1840's and the 1850's.

With the exception of a few dates (the 1844-1846 and 1858), most of these issues can be found in AU58 in this price range. The more common dates can be found for less than $1,500. Given the fact that a very common With Motto issue has a "basal value" of around $750-850 in slider grades, the fact that you can buy a coin like, say, an 1852 $10 in AU58 for around $1,500 seems like great value to me.

15. 1862-1877 Liberty Head eagles. As long as you are patient and willing to buy coins in the VF-EF range, there are some great values in the eagles series. Almost every date struck between 1862 and 1877 at the Philadelphia and San Francisco mints was melted in abundance and this fact, coupled with low original mintages in many cases means rare dates. In most cases, we're talking about 75-100 known.

It would be fun to collect coins like this in conjunction with similarly dated half eagles. In the eagle series, your $2,500 per coin expenditure isn't going to go very far so it might be wise to budget closer to $5,000 per coin. At this level there are plenty of interesting coins.

16. "Better Date" Liberty Eagles, 1880-1907. One of the consequences of the current weakness in the generic gold market is the near-total evaporation of the Market Premium Factor for certain semi-scarce to scarce eagles produced in the 1880's, 1890's and early 1900's.

Let me give you an example. Currently, a generic MS62 Liberty eagle is worth around $850. For $900-$1,100 you can buy coins like an 1882-S or an 1889-S in this grade that are many times scarcer than a common date. Will the market premium factor that these issues once had ever return? I think they will, to a degree. But in the mean time, it's kind of fun to buy conditionally scarce coins for little or no premium.

17. 1889 Eagle. I couldn't mention the late dates of this denomination without specifically discussing the rare 1889. You can make the case that a number of the issues from the 1880's and 1890's are scarce solely based on grade but not the 1889; this is a genuinely scarce coin in all grades with an original mintage of just 4,440.

An About Uncirculated 1889 eagle has a current market value of around $2,000. In Uncirculated, you should expect to spend around $4,000 or more for an MS60. It should be noted that this date almost never comes with good eye appeal so, in this case, a clean(ish) AU55 might actually make more sense than an abraded MS60 to MS61.

18. 1854 through 1858 Philadelphia Double Eagles. No, I don't own rolls of these and am not constantly self-promoting them. But as a dealer who sells alot of Type One double eagles, I'm always looking out for the 1854 Large Date, 1855, 1856, 1857 and 1858 in nice AU53 to AU58.

My experience has shown me that these coins are very popular, very liquid and still within the budget constraints of most collectors. I find that many San Francisco Type One double eagles are not well struck and have appearance issues. These five Philadelphia issues tend to be better struck and have better eye appeal than their San Francisco counterparts.

19. 1869, 1870 and 1871 Double Eagles. These three Type Two Philadelphia double eagles remain affordable in EF and AU grades yet they are scarce and desirable issues.

Of the three, I personally like the 1871 the most but all are hard to find in the higher AU grades. You are looking at around $3,000 for a low-end AU and a bit more than $5,000 for a coin at the upper end of this range. I'd suggest being patient and waiting for examples that are clean for the grade, choice and as original as possible.

20. Big Spread S Mint Type Three Double Eagles. The early date San Francisco Type Three issues (specifically those produced between 1877 and 1882) are true condition rarities. Most of these issues are expensive in MS62 and above but affordable in MS61. I like the value of these coins in MS61.

Here's an example. In MS62, an 1879-S is worth in the $11,000-13,000 range. The same date in MS61 is worth around $4,000 to 5,000. In some cases, a high end MS61 is as attractive as a lower end MS62. As Type Threes become more popular with date collectors (and I think they will), it seems like many people will gravitate towards the 1879-S in nice MS61.

There are dozens of other undervalued United States gold coins that could have made this list. I'd be curious to hear from you with your comments about omissions as well as about those included on this list.

What Does "On Hold" Mean on Your Website?

I was asked this seemingly innocuous question by a client the other day and it made me pause. Even though many coins are listed as "on hold" on my website, there are actually a number of potential scenarios that could more accurately describe them. These deserve a brief explanation and an end-of-the-blog realization (I hope) that just because a coin marked on hold it doesn't mean that you shouldn't inquire about it. In most instances, a coin is marked "on hold" because it has been ordered by an existing client and sent out to him on an approval basis. Generally, the status of such a coin will change quickly as I tend to ship coins out the same day they have been ordered by overnight delivery. If a coin on approval is sent out, say, on a Tuesday, I might known its atatus as early as Wednesday or Thursday.

However, I do not mark such a coin as being "sold" until it is paid for. If I trust a client enough to send him a $5,000 coin on approval, I trust him enough to pay me in good funds for it. That said odd things do happen from time to time and it is not impossible for a coin that I thought was sold on Thursday to become available again on Friday.

If a coin is sold to a client and he requests extended payments, the coin is taken off the website. This way, coins won't sit and fester with an endless "on hold" status. I update my website constantly and as soon as I know the exact status of a coin, it is marked as such.

There are times when another dealer or a collector will ask for a coin on my site to be put on hold for a pre-determined period of time while he tries to sell it or, in the case of a collector, he makes a decision. In most instances, this decision-making period is 24 to 48 hours. I don't think its fair for a coin to be tied-up longer than this and I do not generally allow for this to happen.

In a case where a coin is "on hold" while being considered, I will typically tell the second person who calls that they have second shot should the deal fall through. This doesn't happen often but it does happen enough that I would strongly urge you to request second shot on a coin you want even if it is already marked as being on hold.

The "on hold" process might be slowed down by a few factors. If the potential buyer of a coin wants it sent to CAC for approval or to PCGS for a crossover this will add time to the process. I don't want to take such a coin off my website as it is still not technically sold but, to be fair to the buyer I might attempt to get the coin stickered or crossed. Or, there might be a situation where the coin was shipped to a collector on Monday but he is out of town on business for a few days, slowing down the process.

Sometimes I will have a coin on my site marked as "sold." There are a few reasons for this. The first is thast, after selling a rare or important coin, I kind of like to brag a little bit. I might leave it up as being sold for a few days just to show people looking through my coins that I am capable of selling major coins. Plus, it feels good for me to browse my coins and see a few "solds" here and there.

I'm in the business of selling coins, so I want as many people as possible to feel confident about the entire buying process at DWN. I know collectors get frustrated when they go on my website and see many of the coins marked "on hold." I'd like to think that this is because I sell really nice coins and that there are a lot of people looking for the quality that I specialize in. Because I run a small, boutique coin business, I don't have salespeople who will manage want lists or send out emails with specific coins you may (or may not) be looking for. My feeling is that by maintaining and frequently updating a high-quality website, I am giving everyone an equal chance of purchasing coins with character.

Please remember that a coin marked as "on hold" could become available but if I don't know that you have an interest in it, it will never be offered to you directly. Just send me at email at dwn@ont.com or phone me at (214) 675-9897 when you see a coin on my site that is of interest. I will give you as much information about its availability as I can and, who knows, it might be sitting on your desk in a few days!

Smart Collecting 101: Is It Ever Right to Buy the Wrong Coin?

In the first installment of Smart Collecting 101 I discussed the "coin churn" and how to avoid it. One reader made a great suggestion for the second topic and I'm going to discuss it at length here. The topic involves buying the "wrong" coin and if there is ever a right time to buy a coin that you clearly know is not optimal for your collection. The brief answer is yes. It depends on what sort of coins that you collect and what your ultimate goals as a coin collector are. Let's look at a few scenarios.

If you are a die variety collector there will probably be a number of instances that you'll be offered a coin that is a major rarity but which is either ugly or damaged or harshly cleaned or maybe even a combination of all three. But you may still have to buy the coin. Let's say you collect die varieties of early quarter eagles. There are a few varieties that are exceedingly rare and might literally be available once per decade; even once in a generation. In this case, if you aspire to have a truly complete collection, you'll buy whatever becomes available for the extreme rarities; even if the coin is damaged. And you'll probably be thrilled just to have the chance.

Let's say that you are a date collector and you are focusing on a series with major rarities in it. If the series that you are pursuing has some incredibly rare issues (say Fat Head half eagles) it certainly wouldn't be "wrong" to purchase a decent looking but cleaned example of a coin that you know might not be available again for years or which may exist in decent condition but which might be ungodly expensive if ever offered. My feeling here is that if you are someone who likes high grade coins you should avoid specializing in a series that has certain issues that almost never come in high grades.

This leads me to another scenario. Let's say you are a person who hates flatly struck coins. You have waited many years to fill a hole in your set and the date in question finally becomes available. The only problem with the coin, and let's say it's fairly decent in terms of overall quality, is that it is flat as a pancake at the centers. What should you do?

I'd suggest that you research the series and learn what percentage of the issue in question comes with this sort of strike. If every known example is weakly struck, then you just need to buy it. If some examples do exist with decent strikes, I'd say that you pass and wait for a sharper example.

There are some issues that are just so rare or so popular that I will compromise my standards and purchase problem coins now and then. As an example, if I saw a decent looking but cleaned 1870-CC eagle for sale I think I'd buy it; as long as it were priced fairly. It's rare, its in demand and its a cool first-year-of-issue. Plus I think its undervalued in comparison to other high profile Carson City issues. But I wouldn't buy most of the other CC eagles with problems. The reasons for this are simple: they would be hard to sell, they aren't in great demand and nice examples are available with enough frequency that the wrong coin makes no sense. I would take this even further with scarce but not overly rare issues. I'd be patient and wait for the exact coin I wanted.

My high degree of standards would also slacken on great rarities (notice I didn't say "expensive coins." I said "great rarities.") I would have no interest in a damaged ex-jewelry Stella but I would consider an 1864-S half eagle or an 1875 eagle if it were cleaned, very well worn or heavily abraded. In fact, these two issues are rare AND undervalued so I would probably not only buy one "wrong" example, I'd buy as many as I could find.

In the case of truly rare coins like the 1841 quarter eagle or the 1854-S quarter eagle, appearance is almost not an issue. Take the case of the 1854-S. There are around a dozen known with three of these actually being "nice." But in this case, "nice" means EF or AU. The others range from very heavily worn (the discovery coin, ex Eliasberg, is a Good 4) to "not as worn but very messed up from scratches or other non-mint damage." You don't get to be fussy with an 1854-S. You see one, you don't hate and you can afford it...you buy it.

Let's say you are one of those collectors who doesn't really have a super narrow focus and your strategy is "best available coin." You don't aspire to finish any series although you might have a preference for San Francisco half eagles or Philadelphia eagles. In such an instance there is really no reason to buy coins that are not right. If a specific issue is too expensive, just pretend it doesn't exist; you aren't completing a set of Liberty Head quarter eagles so don't sweat it if an ugly but rare 1842 Phildelphia becomes available. Sure, it's rare but another will come along and wouldn't you rather pay $8,000 for a really nice example than $3,000 for one that looks like it was gnawed on by numismatic rats?

The "best available" collector may just want to focus on branch mint issues that grade MS60 and above. This might eliminate a host of issues that do not exit in Uncircuated. It might take other issues that are exceedingly rare in Uncircuated and make "compromise coins" very important. Let say there is an issue like the 1859-S half eagle of which just two or three are known In Uncirculated. If the one nice Uncirculated example is sold (which it was, last year, by DWN) this leaves one or two marginal MS60 to MS61 coins in NGC holders that are the best out there. They may not be "new" in the strictest sense but are a good degree better than the coins that exist in AU55 or even AU 58 grades.

In series like the gold coinage from Charlotte, Dahlenega and New Orleans, there are very, very few coins that are rare enough or ones that come ugly enough that a major compromise must be made. The 1849-C Open Wreath dollar is extremely rare with just five known and I would be happy to own one of the two lower grade pieces at the right price. There is really no Dahlonega issue that is so rare that buying the wrong coin might be right although I'd lower my standards on the 1861-D dollar, the 1854-D three dollar and the 1861-D half eagle given their great demand. In the New Orleans eagle series, I would be willing to buy "wrong" examples of the 1841-O and 1883-O because they are relatively inexpensive and because even the "right" coins have eye appeal related problems. Two others that would cause me to compromise would be the 1854-O and 1856-O double eagles. Sure, I'd want my set to contain lovely Choice AU examples and if you have the $1,000,000 to $1,500,000 it will cost to purchase Condition Census or Finest Knowns of this pair than I'd say go for it. If you have budget constraints a lower grade coin or an example that is genuine but cleaned might make sense. But not for the more common 1857-O and 1858-O. Catch my drift?

So, in summary, I'd say that buying the right or the wrong coin is not necessarily set in stone but is, rather, dictated by the collectors needs and circumstances. Just remember that if you buy an expensive problem coin for your set at some point down the road you'll need to convince another collector that he, too, can't wait for the right coin and that he needs to pull the trigger on this "coin with an asterisk."

Smart Collecting 101: Avoiding the Churn

When talking to collectors, I often find myself giving them advice as to what makes a "good collector." I thought it would be interesting to share some of my thoughts and observations in a series of blogs entitled "Smart Collecting 101." These will run, from time to time, over the next few months. One of the mistakes that many collectors make is allowing themselves to be "churned;" either by their dealer/adviser or by themselves. Churning is an expression that means too much buying and selling from an account (or in this case a collection) by a salesperson in order to generate profits for the company and commissions for the broker.

Many of the big marketing firms in the coin business (and some of the better known boutique retail firms) are notorious churners. They will sell a collector a coin and then, a few months later, encourage him to upgrade it.

What many new (and even old) collectors fail to realize is that there are hidden transaction costs involved in any numismatic transaction. Most collectors who deal with the larger marketing firms are paying at least 20% over cost and in many cases more. Now this isn't meant to imply that a 20% or 30% markup is unfair; it's not. But what the collector needs to understand is that the market has to rise at least 20-30% in a short period of time in order to break even on a transaction.

And this fails to take into account another hidden cost: selling. A firm that churns isn't expecting to take back a coin at a price level in which they can break even. Typically, though, they will mask this in a cunning way.

Let's say a dealer sells a coin for $10,000 and his cost is $8,500. And let's say that the current wholesale value for the coin is still around $8,500. What a clever salesperson might do to churn a client is to tell him that his coin is now worth $12,000 or $2,000 over the collector's cost. The salesperson has a coin in stock that represents an upgrade. It's worth $15,000 on a wholesale basis. He charges $19,000. He knows he will lose money on the trade-in but he is selling the new coin for enough of a profit that he is still able to generate a healthy profit. There is nothing really "wrong" with this but what it means is that the collector now has a new $15,000 coin that he is way upside-down on as opposed to an old $10,000 coin that he is only slightly upside down.

Not all churning is the result of sleazy or even "aggressive" dealers. Much of it is self-imposed by collectors.

One of the pieces of advice I try to give to new collectors is that they should "but the right coin the first time." What this means is that instead of impulsively rushing through a set of, say, Dahlonega quarter eagles an then upgrading their mistakes as they go along, they should take their time and buy the coin they will want in their set for the long term the first time.

Of course there are exceptions to this rule. You might have bought a great AU55 1854-D quarter eagle that has pretty natural color and surfaces as well as a great strike. But a few years later, a really superb MS61 becomes available; a coin with an even better strike, a nice pedigree and fantastic coloration. In this case, an upgrade might be a very smart move.

My feeling is that there are clearly times when an upgrade does make sense. Obviously, it is sensible if there is not much of an increase in price. As an example, if you bought a coin in your set for $2,000 and you are able to significantly improve it for $3,000, that's a no-brainer. Or, you might have a coin that you paid $5,000 for a number of years ago that's worth $9,000 today. An upgrade costs you $11,000; you can roll your profit into the new coin and downcost it to $7,000. (Yes, that's how coin dealers think...)

Sometimes, new collectors start a set tentatively and are not ready to spend $10,000 or $20,000 per coin; say on the aforementioned Dahlonega quarter eagles. Their comfort level to begin with is $2,000 or $3,000. This is understandable but my advice in this situation is to not rush headlong into the set. I have seen many great collectors start with small steps and grow into buyers of serious Condition Census-level pieces after they become more sure of themselves and more comfortable with the dealer they are working with.

Even if you are not working on a specific set, you can still get caught-up in the World of Churn. I've talked to a number of collectors over the years who have had their entire "portfolio" changed around by their expert adviser a number of times. And some of the changes that they made were ill-advised to say the least. As an example, I recall talking to a man who had owned some fantastic coins like a Gem Proof Stella, a high grade High Relief and a sensational 1907 Wire Edge eagle. He had bought them at a low point in the coin market, held them for a few years and was in a great long-term position. The salesman at the firm he was working traded him out of these great coins not once but three times over the course of five years and had taken what would have been a small but superb group worth around $1 million and turned it into a bunch of mediocre, overgraded swill that would have been hard to liquidate at half that amount.

I think one of the best signs of a good, reputable dealer is the individual who tells you "no" from time to time. This is a dealer who is interested in a good long-term relationship but will tell you that a coin he has in stock that is a small upgrade over the one you currently own just isn't worth spending a few thousand dollars on. Desperate dealers always say "yes." Stable, dependable dealers sometimes say "no."

In closing, I'd like to ask you, as a collector, for some suggestions about topics for future editions of Smart Collecting 101. What questions do you about collecting that you'd like answered? Feel free to email me at dwn@ont.com with your questions, comments, etc.

Can A Collector Learn How to Grade?

Many articles about coin collecting (including more than a few written by yours truly) have suggested that it is extremely important for collectors to learn how to grade. In theory, this makes sense. But is this realistic? Can a person with a family, a job and interests besides coins realistically learn how to grade coins? I think that the “learn how to grade” advice that I mentioned above is fine, at least in theory. However, is this really any different than a doctor suggesting that in order to better care for myself that I learn brain surgery, anatomy and how to read X-rays in my spare time? I’m obviously not about to become an expert in any of these fields and I wonder if it is unrealistic for me—a professional coin dealer—to suggest that a collector become an expert grader.

I think there is really only one way to become good at grading coins. You have to look at thousands and thousands of coins in person. And then you have to buy and sell coins so that you have the confidence to determine that your skill level is there.

But even if you look at thousands of coins in person, if you do not have innate grading abilities, it probably does not matter. I know a number of dealers who have been viewing coins for years and years and I still don’t think they have a clue how to grade because they just don’t have a good eye. As I’ve written before, I think the ability to grade a coin is genetic. Either you have the ability to do it written into your genetic code or you don’t.

That said, is there a way that the collector can acquire grading skills that make buying coins a safer and more pleasurable experience? I think the answer is a resounding “yes” and I have some suggestions:

1. As I said above, there is no substitute for viewing coins in person. I think the best way to do this is to attend a major auction (especially the FUN or ANA sales) and spend a full day viewing as many coins as you can. It’s important to remember that as you are learning how to grade that you need a base line to compare coins. And it is also important to remember that you need to grade according to PCGS and NGC standards. Looking at coins that are already in slabs and which run the gamut from very low end to very high end is a great way to hone your skills.

2. For the basics in grading, taking the ANA grading class is a pretty unbeatable experience. The instructors at these classes are highly skilled professionals and the chance to work with experienced dealers or professional graders is pretty unique in this hobby. If you have a week to spare, I highly recommend this class. And if you have already taken the beginning class, the advanced class is even better. (For more information on the ANA grading classes, visit their website at www.money.org)

3. Any collector who decides that he is going to learn to grade a wide range of coin types or series in a short period of time is probably being unrealistic. I have always suggested becoming a specialist and one of the main reasons why is that a specialist has fewer things to learn about grading than a generalist. As an example, if you make the decision to collect New Orleans gold, it is not unrealistic to think that you can become a reasonably competent grader in a few years time. But if you decide to collect, say, all early gold coins produced from 1795 through 1834, there is an awful lot to learn and you are likely to have a number of gaps in your ability.

4. As you learn to grade, be less focused on numbers (i.e. MS63 versus MS64) and more focused on learning what constitutes eye appeal and quality in a specific series. I believe that most collectors are too focused on micro-grading and are not focused enough on the big picture.

5. In many cases, the most important thing a collector can do is to establish a good relationship with one or two dealers to help them buy nice coins, establish grading and eye appeal standards for a set (or sets) and to help make them better and less impulsive coin buyers. I will be the first to admit that not every collector needs a dealer’s guidance. If you collect ultra modern issues, you can most certainly go it alone and I know some other collectors who have built lovely collections pretty much on a solo basis.

Let me give you an example of a collector/dealer partnership that over the course of many years has been highly successful. Dr. Steve Duckor (who is probably just about the most competent collector of American coins that I have ever met) was very fortunate early in his collecting career to meet and become a customer of David Akers; a dealer who I think has a rare and exceptional combination of ability and integrity. Together, these two individuals worked on a number of collections that have proven to be marvelous in terms of quality and scope. It’s truly been a win-win relationship for both individuals. And it’s exactly the sort of business relationship that I’d encourage you, as a collector (although with me, not David!), to aspire towards.

If you aspire to become a competent grader I commend you and hope this article will spur your interest and enthusiasm. Just remember that grading skills take a lifetime to develop and refine (I’ve been doing this professionally for over a quarter of a century and am still humbled at what I, from time to time, need to learn...)

Avoiding Costly Mistakes When Beginning a Coin Collection

Most new collectors make mistakes when they begin to assemble a collection of coins. Some of these are easily avoidable; others require a "heads up" from an expert such as myself. Here are some of the mistakes I see made most often and some practical suggestions on how to avoid them. 1. Buy Third Party Graded Coins

Unless you are purchasing inexpensive coins or bullion-related gold issues, you need to buy coins that have been professionally graded. It's a virtual guarantee that the "raw" coins you buy are going to be overgraded at best or counterfeit/repaired at worst.

2. But...Buy the "Right" Third Party Graded Coins

When it comes down to it, there are only two grading services that, as of early 2001, are readily accepted in the market: PCGS and NGC. Coins graded by other services either trade at a discount or are absurdly overgraded. You can save yourself a lot of grief and aggravation by buying only PCGS and NGC coins.

3. And...Buy the Coin and Not The Holder

Not every PCGS or NGC coin is "high end" for the grade. Establishing a relationship with a dealer who can determine which coins are nice and which are average (or inferior) is essential.

4. "I Can Do Everything Myself"

No you can't. You need to have a close working relationship with one or two knowledgeable coin dealers. New collectors who think they can compete in the market against experienced dealers and collectors are a virtual certainty to have their heads handed to them. End of discussion.

5. Take Your Time

Most great coin collection are assembled over the course of decades; not months. Sure, you can complete a set of Indian Quarter eagles in thirty days. But rushing though a set is a good way to make mistakes; most of which will cost you in the long run.

6. Learn about Coins

No matter what you collect, the more you learn the better your collection will be. Learn how to grade. Learn what nice coins look like. Learn about the coins you have decided to specialize in. Learn how the coin market works. If you don't have the time to learn as much as you should, establish a relationship with a dealer who can teach you basic knowledge in a short period of time.

7. Don't Overinvest

When you buy coins remember this: they should be purchased for enjoyment not investment and they should be purchased for long term hold. Even if you buy good coins from a very reputable dealer, there is a good chance that if you have to sell them quickly, you'll lose 10-30%. If you can't afford this sort of market risk, either don't buy coins or buy issues with smaller downside risk.

8. Deals That Are Too Good To Be True ARE Too Good To Be True

You hear about a coin that generally sells all day long for $1500 but is priced at $750. Sounds like a "great" deal, right? Wrong! When you see a coin advertised in Coin World or listed on Ebay that seems like its just too good a deal...need I say more?

9. Buy Quality Not Quantity

I look at coin collections to buy all the time. Some of them have hundreds (or even thousands) of cheap, low grade coins. Others have a small number of really nice (and not necessarily expensive) coins. Take a guess which collections excite me more. If you have an annual budget of $10,000, buy three or four really neat $2,500-3,500 coins; not thirty $300 space eaters.

10. Coins Are A Hobby!

If you view numismatics as a life and death endeavor, you won't enjoy it. Coin collecting is a fun hobby with many obvious benefits. Learn to appreciate the positive attributes that come with coin collecting and leave the stress to others.

11. Set Goals For Yourself

If your collection has a beginning, middle and end, the progress you make will be easier to measure. Make certain that your goals are realistic.

12. Stretch For Truly Rare Coins

Don't make the common mistake that you skimp on the rarest issues in your chosen set and splurge on the most common. The right way to collect is doing the exact opposite.