The Five Year Hold

Back in the Old Days of coin collecting (say 1998...) we dealers continually preached the mantra of the Five Year Hold. What the Five Year Hold said was that in order for your coin purchases to have a chance to mature financially (a euphemism, of course, for making a little dough...) you needed to hold your coins at least five years. But in the Age of the Internet, this maxim seems to have gone the way of the numismatic fixed price list.Revisiting this maxim in 2008, perhaps our sage advice wasn’t so anachronistic after all. I personally believe that many collectors have been fed unrealistic expectations by auction companies and large retailers and that they honestly believe that a coin they purchase in 2008 can—and should—be flipped in 2009 for a profit.

It’s hard to argue with the auction companies when they show you results like the 1805 quarter dollar selling for $402,500 in 2008 after bringing $74,750 exactly a year earlier. I mean every coin in this market is going to show a 5 ½ fold increase in a year, right?

I would contend that for every one of the incredible grand slams like the aforementioned 1805 quarter, there are other coins that show minimal appreciation after a short holding period. In fact, it is more likely that the typical coin is actually worth less after a year than its purchase price. Which is why the Five Year Hold might not be such a bad strategy to (re)consider after all.

Let’s say that you decide to put together a set of Type One Liberty Head double eagles. If you came to a specialized dealer and said that you wanted to complete your set in a year my guess is that the answer you’d get would be somewhere along the line of “well, it could be done but you’d have to cut some corners.” But I’m willing to bet that there a number of less ethical dealers who figure “hey, the guy is going to spend his money with someone so it might as well be me.” And our new collector would probably then be off to the races.

A year later Mr. Double Eagle is done and, if form holds, he’s already bored and looking for something else to do. So he’s ready to sell. Overlooking the fact that he’s probably bought more than his share of dud coins because he was in such a rush, he’s likely to learn the hard way that his collection, while no doubt very valuable, might not bring him the insta-profit that he was promised.

When you hold coins for a very short period of time, you run into at least three problems:

1. Your collection isn’t fresh. The chances are good that at least some of your coins have come directly (or indirectly) from auctions and can easily be pedigreed from these sales. Other coins may have bounced around from dealer to dealer and have a “staleness factor” that only insiders in a specialized market area are aware of. By holding your coins for at least five years, suddenly they appear a lot fresher. Most coin collectors and dealers have relatively short memories and 2009’s stale set of , say, Indian Head half eagles could well be fresh and interesting in 2014.

2. You are paying fees coming and going as a collector that you have to recapture before you can make a profit. Let’s say you are a newbie and you are exceptionally lucky to have hooked up with an honest, knowledgeable dealer who sells you very nice coins at competitive prices. You are still likely to be buying coins at 10-20% above this dealers cost. And when you go to sell your coins, you are going to be paying anywhere from 5% (unlikely) to 20%. So even in a situation where the collector is dealing with someone very fair his in/out fees are at least 15-40%. That’s a big hit to make up in a year and this is another reason why longer terms holds make sense. And that’s not even taking into consideration the fact that most collectors never find these trustworthy, honest dealers and wind-up dealing with the big budget, big mark-up guys.

3. By going in and out of an area quickly you are not allowing a full market cycle to occur. Chances are, collectors who rush into a series are doing so because of a promotion and the series in question has already begun an upward climb. Unless this is a series with a strong collector base that can maintain an upward climb without external stimuli it is likely that by the time the collector is ready to sell, the train has already left the proverbial station.

The reason that #3 has not always held true to form in recent years has been the phenomenon of the Set Registry. I can think of a number of sets that have been assembled quickly and then sold for a good profit to Registry Set collectors. But what if your set was the dumping ground for other quickly-assembled sets and there is no one else waiting in the wings to clean up after your mess?

The bottom line is that serious, high level coin collecting is more complicated than most new collectors and investors think and it is extremely important to find a trusted professional to work with you when assembling a set.

Coin Collecting Questions & Answers

I recently spoke at length to a number of people who were strongly considering becoming coin collectors. They all asked me a number of great questions. I thought I’d share one from each of them along with my answers. Q. How do I find a reputable dealer?

A. I recently moved to a new city (Portland, Oregon) and had to find all new doctors, tradespeople and stores. I made my decisions two ways. For the big decisions I relied on recommendations from trusted friends and acquaintances. For the less significant decisions I went with my gut. Choosing the right coin dealer(s) is the same.

If you’ve decided to form a highly specialized collection (Middle Date Large Cents, Three Dollar gold pieces or Civil War Tokens, as examples) find out who wrote the standard reference works and who typically handles the greatest number of choice, high quality pieces within a specific specialization. If you are working on a more general collection, ask around. Post on the PCGS and NGC message boards and determine whether Dealer X has a good reputation or not. I’d also strongly recommend sticking with PNG dealers. These individuals tend to be more established and reputable and most of the leading dealers are members of this organization.

And, finally, trust your gut. If a dealer strikes you as being a blowhard or a sleaze, don’t deal with him. Remember: your first impression about a coin dealer (or just about anyone else, for that matter...) is usually correct.

Q. Can I teach myself to grade coins based on images on websites?

A. Not a chance. Coins are three dimensional objects and until images are capable of accurately representing three dimensional objects they will never show subtleties such as luster and surface preservation. A good photograph can give a new collector a decent impression of a coin’s appearance but a clever photographer can manipulate an image through lighting or digital enhancement(s). Not to mention the fact that most new collectors do not really even know what they are looking at when they view images.

So, how does a new collector teach himself to grade? I’m not sure I can provide an answer that most collectors want to hear. I think that many collectors will NEVER be able to learn how to grade really well because grading is an aptitude. It’s no different than being able to hit a baseball or not. A limited number of people can hit a baseball well and only a few hundred people in the world can do it well enough to play professionally. Same with coin grading.

What the collector CAN teach himself is how to determine of a coin is nice or not. You may never be able to consistently figure if an MS66 is a nicer coin than an MS65 but you can be taught that certain “looks” on a coins are preferable to others. And that, I think, is what the new collector should aspire to learn.

Q. Is it important to go to coin shows?

A. It depends. I personally think that going to third-rate coins shows is a complete waste of time. But for the new collector, a good show like FUN or Summer ANA or Baltimore can be a useful experience. I think shows are more important as fact-gathering sources for new collectors than as places to buy coins. At shows you have to make quick decisions in a setting that is less than optimal. If you establish a good relationship with a dealer or two, you can be sent coins on an approval basis, view them at home, study price and population data and generally feel a lot less pressured than if you have to make a snap decision at the dealer’s table.

Q. How important is price when it comes to buying coins?

A. Everyone likes to feel that they got a fair value when they buy something. The same holds true with coins. But collectors who are totally focused on price are probably going to wind-up with a mediocre collection. I’m not making this statement just because I’m a dealer and I’m trying to “convince” you to pay a price for my coins, or anyone else’s. I can tell you, however, that to buy nice coins you have to be willing to pay a strong price. Collectors who are primarily focused on price are probably going to do this at the exclusion of quality.

So how, then, do you establish what a fair price is for a coin? For items that trade with frequency, like a common date MS65 St. Gaudens double eagle, this is very easy. You can see what examples have sold for at auction and you can check various dealer websites and see what specific coins are being listed for. With rare, thinly traded coins it is harder to determine value. Auction prices realized are certainly a good source. Asking a trusted dealer what you would have to pay for a certain coin is good idea as well.

Do you have questions about rare coin collecting that you’d like answered? If so, please feel free to email them to me at dwn@ont.com. I make no guarantees that they will get featured in future blogs but if I like your question(s) there is a good chance that they will become a topic of discussion.

July 2006 Coin Market Assessment

When’s the last time you a coin dealer told you the market was going to be slow for a while? Take a deep breath…July is going to be a slow month. I think a short-term slow-down in the market is actually much needed and will, in the long run, be good for everyone’s mental health.

Just think about it. For the last few years nearly every month the coin market has seen never-ending auctions, continual shows and intense flurries of activity. I, for one, am tired. I’m not asking for this paragraph to be accompanied by strings but I could use a break. And you know what? I’m going to take it easy for the next few weeks.

A number of factors are conspiring to make the upcoming four to six weeks a slow-down period. First of all, with the exception of the Baltimore show (July 13-16), there are no significant conventions. Secondly, there are (as amazing as it seems…) no major auctions until the middle of August. Thirdly, the slowdown in metals prices has brought some activity to a halt. And, finally, it’s the summer. People are taking vacations and enjoying the nice weather.

Now I know some dealers just never slow down and they will tell you that they’ll be as busy as ever in July. Don’t believe them because they won’t be. There are just not a lot of coins available now and even the seemingly-insatiable demand of early 2006 has slowed down.

Will this fallow period last long?

Nope. Be prepared for a very active August as the pre-ANA and ANA auctions come around and then the ANA convention takes place. I personally think this year’s ANA will be a true barn-burner and am bracing for one of the busiest shows of my professional career.

I’m told that between the auctions being conducted by Superior, ANR, Bowers and Merena and Heritage that there will be well over 10,000 lots with a value of over $50 million available for sale. Am I worried if the market can absorb them? Not really. This has now happened for the past three or four summers and every year, despite dire end-of-the-world prognostications from certain quarters, the market seems to be doing just fine, thank you.

What really worries me is how I’m going to physically handle viewing four auctions, attending God knows how many sessions, being at the coin show for four or five days for ten hours each day and, gasp, having to wear nice clothes for a week.

I’m planning on enjoying my new place of residence (Portland is phenomenally nice in the summer, FYI), working on a top-secret new book project and getting a tan so I look spiffy in those nice clothes that you’ll see me in Denver this August.

Coin Consignment Questions

As a dealer there are few things I like more than getting coins on consignment. To my way of thinking, you’ve got to love receiving nice coins for inventory without having to write a check for them. In a market like this, where it is very hard for me to buy nice, fresh coins, I am enthusiastic about receiving consigned coins from gold collectors. But I have noticed that many potential consignors do not fully understand the process. Here are my answers to some consignment related questions. What consignment rate do most dealers charge?

The usual rate ranges from a low of 5% to a high of 10%. The rate depends, of course, on the size of the consignment, the relationship of the consignor to the dealer and what sort of coins are involved. If one of my very best clients was consigning a nice group of fresh $5,000-10,000+ coins, I would be likely to charge a lower rate than for someone I barely knew offering me a group of slightly better date Type Three double eagles. Consignment rates are generally lower when the money generated by sales is applied towards new purchases from the firm chosen to handle the consignment.

What should consignors expect from dealers?

The consignor should expect full paperwork from the dealer explaining the consignment rate and the expected length of the consignment process as well as payment and return terms. The consignor should also expect that the coins will be imaged and described in a fairly prompt period of time. The image(s) and description(s) should be of a similar quality to the dealer’s regular inventory.

What consignor requests are considered unrealistic by dealers?

Some consigned coins sell quickly and some take a long period of time to sell. Don’t expect the dealer to sell all of the coins in a week. Price your coins fairly. If the consignor paid too much for a coin from another dealer do not expect the dealer who is now trying to sell the coin to be a miracle worker. The dealer should not be expected to write unrealistic descriptions or to make an ugly coin look nice through the miracles of digital photography.

Are consignment sales better than putting coins in auctions?

This really depends on the coins and the firm(s) in question. Without blowing my own horn too loudly, I would say that in most situations my firm is a far better choice to sell certain coins than a major auction company. The main reason for this is personal service. At an auction, you’ll be one of 100+ consignors at any given time while at my firm, you may be one of only two or three consignors. I tend to know the coins I specialize in far better than an auction company and, in my opinion, can do a better job pricing and marketing them. But my ability to outperform an auction company is probably best exhibited in my ability to sell United States gold coinage. I do not think I would be a great choice to sell a collection of Peace Dollars. I think the same can be said for most specialist-dealers when they operating outside their realm(s) of expertise.

In most cases, consignment sales can be a true win-win situation for dealers and collectors. It is a scenario in which both parties are working for the same goal and one that, as long as everyone understands what is expected of each other, should turn out well.

The Graying of the Coin Business

The coin business continues to grow but will there be any dynamic younger dealers left to service the next generation of new collectors? I am in my mid-40’s and I represent one of the last waves of coin dealers. If you go to any coin show, you’ll see plenty of dealers in the 40-60 year old range. But you’ll see virtually no coin dealers in their 20’s or early 30’s. This worries me. What sort of future does the coin business hold if there are no up-and-coming dealers?

The lack of young dealers means that this business will become more “self-serve” in the coming years. By this I mean that most collectors will have to purchase their coins through impersonal sources like EBay with little or no guidance from a trusted resource. For some people, this will be no problem; they do not need the guidance they get from a dealer. For others, they will never get the satisfaction that a good dealer-collector relationship can provide.

I think the lack of young dealers boils down to one major issue: the extreme expense it takes in starting and running a successful coin business in today’s market. When I opened my business in 1984, I had less than $50,000 in operating capital. Today, it takes a significant six-figure investment to run a coin business.

I would personally like to see organizations like the Professional Numismatist Guild (PNG) create mentoring programs that match young numismatists with dealers and foster an environment that encourages more young people to choose numismatics as a career. Some large firms like Heritage and NGC offer internships for college age numismatists that are a great introduction to the reality of numismatic as a career.

While I’m not sure that I’d like to be 25 years old again, I’d sure like to be well-positioned in a growing industry that has a future leadership void. Teach your son or daughter how to grade coins…you have a better chance of him becoming the next Jim Halperin than the next Tiger Woods!

Why You Should Use An Agent To Bid For You At Auction

If you bid at auction and do not have an agent, you are at a huge disadvantage. There is a possibility the lots you win will not be high quality, desirable coins and that, ultimately, you will not be doing yourself any favors "saving money" by not using an agent. Before we get started, let me disclose that this article is somewhat of a plug for my services as an agent but, I hope, not a shameless one. I consider myself to be an extremely good auction representative but I am also busy enough that I am not beating the bushes looking for many more collectors to bid for.

Let's also get some terminology straight for collectors who might be new or unfamiliar with the world of auctions. Coin auctions are held both live and on-line. Live bidders are able to examine the coins in person and have the advantage of knowing who is bidding on which coins. In my opinion, these two factors are critical. If you collect coins that are very rare or somewhat esoteric, the chances are good that auctions will be a major source of your purchases.

Auction representation generally works as follows. You decide there is a lot (or lots) in auction that interests you. You call your representative as early as possible and discuss them. He views the coin(s) in person. Then you set a limit on what you are willing to pay. Your representative then (hopefully) buys the coin for you. After you pay him the hammer price plus the auction company's 15% bidder's charge, as well as a pre-determined representation fee, your agent sends you the coin. Hopefully, you are happy and repeat the process.

Why should you pay someone to bid for you? This is a good question which requires a multi-stage answer.

1. You Can't Compete With The Professionals: There are only a handful of collectors who are so knowledgeable that they can go to an auction and compete against specialized dealers. Doesn't it make sense to hire your competition to work for you?

2. You Can't Grade Coins Based On Images: While digital photography on coin auction websites has improved dramatically in recent years, do you feel safe bidding on an expensive or important coin based solely on an image? It is my contention that if you or your representative don't view a coin in person then you can't really figure what it's worth.

3. You Have A Real Life: Let's say you are a busy professional who lives in Cleveland and there are coins in an auction in Los Angeles. Are you willing to be away from the office for three days in order to examine and bid on coins? Not to mention the expenses you will incur in getting to the auction, dining out and staying at a nice hotel. Most times, it is cheaper to hire someone to do the work for you!

4. You Should Stay Anonymous: If a dealer sees you bidding on certain items at auction, you might be revealing more about what coins you need than you should. This is another reason it makes sense to hire someone you trust to be your representative.

Assuming that you are now convinced that hiring an auction representative makes sense, the next step is to determine who to hire. There are a few parameters that make sense to follow:

1. Find A Dealer Who Attends All Major Auctions: It doesn't make sense to hire a dealer to bid for you who rarely, if ever, goes to auctions. Even if this person is knowledgeable and trustworthy (see below) he will be of little use to you if he is not "in the loop" as far as coin auctions go.

2. Hire A Dealer Who Is Knowledgeable: Don't hire a Buffalo Nickel specialist to bid on Dahlonega gold dollars and vice-versa. It makes sense to hire the smartest, best-connected person you can find.

3. Hire A Dealer Without Conflicts: How many other people is a dealer bidding for in an auction? How many other people are bidding on a coin you really want? Ask these questions before the sale begins and make certain everything is clear and to your satisfaction.

4. Check The Dealer's Reputation: Ask the auction company if they know the dealer and if they have had any bad experiences with him. Post a message on the PCGS or NGC message boards about a dealer and ask any collectors if they have had good or bad experiences with this dealer as an agent representative.

5. Hire A Dealer Who Can Buy What You Collect: Even if the dealer you buy from is a nice guy, he may be in over his head bidding on expensive coins. Check his website and see what kind of coins he sells. If you are thinking about buying a $50,000 piece of Proof gold, hire a dealer who has experience with coins like this.

There are a few other points to consider in choosing an auction representative that you may wish to consider. The first is what to pay the person. A fairly standard rule is that an agent charges 5% to bid at a coin auction. Don't try to negotiate a better deal unless you are bidding on an extremely expensive coin.

Give the dealer explicit instructions on how much you want to bid. I am aware of at least a few situations where an agent was told "just buy the coin" and he proceeded to pay way, way over market value based on these vague instructions. Be careful that you are not hiring an agent who wants to set record prices to "show off" to his other clients or to the other dealers attending the sale.

Agent sales are not approvals and the collector should realize that he does not have the option of returning a coin to an agent if he does not like it. While this should not scare off any potential bidding, it does demonstrate the need for a relationship with someone whose eye you trust. In twenty years of auction representation, I have never had a problem with my describing a coin. But I have heard my share of horror stories from dealers and collectors alike and would caution anyone involved in this process to approach it with careful consideration.

Making Friends With Your Coin Dealer

Most high quality specialized collections are built with strong cooperation between a collector and one or two dealers that form a close, mutually beneficial relationship. What can you as a collector do to earn the trust of a dealer who will be critical in the success of assembling the sort of collection you aspire to form? How do you become the sort of collector that dealers like to do business with? If you look at the roster of great collectors over the course of the past century you will find a number of common traits: they were keen students of numismatics, they had strong financial resources, they were not afraid to "step out" when purchasing important coins and they had intelligent numismatic advisors who were regarded as allies and not adversaries.

In today's numismatic world, too many dealer/collector relationships are based on distrust. While there are certainly dealers who cannot be trusted, there are many specialized dealers who are extremely trustworthy and whose counsel should be eagerly sought by collectors.

Here are some suggestions on behaviors to avoid:

1. Don't Expect Continual Freebies: Imagine what a doctor's reaction would be if you called him up a few times and asked for a free diagnosis. A coin dealer will feel the same way if you call him repeatedly asking for information but never buy from him. By the same token, most dealers will be very happy to provide all sort of free services to good clients. I will sometimes make "courtesy purchases" from dealers who are good guys and who provide me with information that I find helpful. I am also happy to perform a number of free services for good clients including upgrading coins, looking at auction lots, sending detailed write-ups on coins and helping to establish credit with other dealers or auction firms.

2. Don't Be A "Know It All": I greatly respect collectors who admit their shortcomings. Admitting that you do not know everything is, in my opinion, far preferable to pretending that you do. I am a professional numismatist who has intently studied the coin market for over twenty years. I should know more about it than my clients, just like they know more than I do about what they do for a living. Most dealers are pretty adept at spotting a "faker" and it is hard to shed this label once it has been applied to you.

3. Be Accessible: If you are impossible to get in touch with, a dealer is not likely to make an effort to offer you coins. Let a trusted dealer know your "secret" cell phone number or whether you prefer to be called at work or at home.

4. Pay Promptly: Unless you make prior arrangements, send payment on the coins you buy within a few days. Slow payers get a bad reputation and tend to be forgotten when interesting new coins become available. It is very important for a medium to large-sized coin dealer to have good cash flow. If you slow up this cash flow, you make the dealer unhappy. Pay promptly and the dealer is happy.

5. Be Loyal (if the dealer has earned loyalty): There are certain collectors who are known in the business as being price shoppers. They will buy from whoever has the least expensive example of what they are searching for. Most dealers greatly respect loyalty and will reciprocate. A customer who has no sense of loyalty with any dealer will wind-up purchasing lots of low-quality, cheaply priced coins.

In the same vein, do not give your want list to every major dealer in the country. When I learn that a want list I receive is also in the hands of ten other dealers (and I will generally figure this out in a few days since I'll get phone calls from the same dealers looking for coins on the list!) I become much less interested than if the list is "fresh."

6. Let the dealer make a fair profit: In an ideal dealer/collector relationship, there will be as much disclosure as possible. In many cases, I'll tell a collector where I bought a coin, what I paid for, what I am pricing the coin at to dealers and what I have bought and sold other comparable examples. Most collectors will let me make 10-20% on coins that I have assumed all of the risk on and 5-10% on coins that I have assumed no risk on.

Some collectors just can't help themselves and will try and negotiate a reduction in price even after a deal has been struck. Don't get in the habit of taking "shots" at a dealer.

7. Decide whether you are a collector or a dealer: The Internet has created a new hybrid in the numismatic world: the collector who is simultaneously a dealer. If you are a collector, you are "entitled" to certain services which a dealer does not receive. These cost more money but provide a safety net. If you want to act like a dealer, than understand that you have to make quick decisions (see below) and you have little recourse for returning a coin after you've bought it.

8. Make Quick Decisions: No dealer expects a collector to make an immediate decision on any coin, especially one that is expensive. But it is very inconvenient when a collector ties up a coin for a week agonizing over a decision. Let the dealer know up front if it will take a while to make a decision. And if the dealer asks you not to show the coin to other dealers or ask for second (or third) opinions, don't blatantly do this anyway.

9. Understand The Dealer's Terms: Know in advance what a dealer's return policies are. Don't expect to be able to return a coin for a full refund after a month if the return policy of the dealer is stated as ten days. If a coin is purchased on a sight-unseen basis (a bad idea, in my opinion...) than the collector should understand that he has no return privilege.

In my two decades in the rare coin business, I have been very fortunate to meet a number of really nice collectors. Many of these people have become good friends of mine who I see on a social basis. They know that they are being represented in their numismatic transaction by someone who genuinely cares about their best interests. I know that their word is their bond. And that's what I am looking for in a customer: an honest, sincere person who will treat me with as much respect as I will treat him.

A Source List For Supplies

In over twenty years as a professional numismatist, I have discovered some excellent supplies and "peripherals" that make my business easier and more pleasurable. I'd like to share some of these with you. Coin Viewing: I generally use a 5x magnifier when I am viewing coins. In my opinion, anything stronger than this makes even the nicest coin look bad and does not present a realistic view of its appearance. When it comes to magnifiers, nothing compares to German optics. The best magnifiers I have ever seen are made by Zeiss. These are very expensive and given the fact that they can be easily lost, you may not want to spend this much (typically in the $100-200 range). I use Eschenbach magnifiers. They are reasonably priced (around $50 for a compact unit) and last forever.

An equally important component of coin viewing is lighting. When I am grading coins, I like to use a small, intense halogen source. The best halogen lamp I have found is made by Zelco. One model I like is the "Micro," which comes in a variety of colors and sizes. These can be purchased at a good lighting store or over the Internet.

Coin Insurance: If you have a collection that is worth more than a few thousand dollars, you should consider purchasing insurance. The insurance policy should cover your coins while they in storage and in transit. If you bring your coins home from time to time, make certain that your insurance is also applicable to your residence.

Most traditional insurance companies do not understand collectibles so it is wise to look for a specialist. I have used North American Collectibles for a number of years (as do many dealers) and can highly recommend them. Speak with Barbara Wingo at (410) 857-5011 and ask for an application.

Coin Storage: Unless you live in a house with exceptional security, you need to store your coins in a secure area. If you haven't already done so, I would strongly recommend going to your local bank and renting a safe deposit box. Most banks charge $100 per year for a good-sized box.

If you live in an area that has above-average humidity, consider placing a desiccant (moisture remover) in your safe deposit box. There are a few good products available; call one of the supply dealers listed below for suggestions. If you collect mint red copper coins and live in a humid area, it is IMPERATIVE that you use a good desiccant.

Coin Boxes: I use two types of boxes to store my coins. My favorite is the hard plastic model sold by NGC. These fit twenty pieces and unlike the boxes made by PCGS, they comfortably fit coins graded by both major services. They cost around $5.00 each and can be ordered through NGC's customer service department (800-NGC-COIN).

For larger numbers of coins, I like the traditional "big red boxes" that are made from reinforced cardboard. These boxes, which also come in black, can be ordered from any good supply company for just a few dollars each.

Briefcases: If you plan to take a significant amount of merchandise to a coin show to sell, you will need a good case to transport it. I strongly recommend a canvas case that has a telescoping handle and wheels. I have burned my way through numerous expensive cases and found that the best rolling case I have yet to buy is the $50-75 version from Office Depot.

If this is not classy enough for you, look into a leather salesman's sample case or a ballistic nylon case from a manufacturer such as Tumi. I would strongly caution you against purchasing a fancy metal case (such as a Halliburton) as these are very heavy and conspicuous. In fact, they virtually scream at all viewers that "I am carrying something expensive. Please rob me!"

Shipping Supplies: It is a good idea to have some basic shipping supplies on hand. I would highly recommend purchasing safe-t-mailers. These are self-adhesive ribbed cardboard holders that fit inside a number of envelope sizes. They can be purchased from any of the supply dealers below.

You should also make certain you have a supply of padded mailers and tape. These can be found at any good local office supply company.

Coin Books, New: There are a number of good sources for new books. The American Numismatic Association (www.money.org) has an excellent selection of new books. Both Coin World and Krause Publications feature books that they have published, including a number of must-have titles for the gold coin collector. Any of the book dealers listed below will have a number of titles that are important.

Coin Books, Scarce and Out-of-Print: As you become more serious about coins, it is likely that your thirst for knowledge will increase. For many series, there are few current references and you will have to search for scarcer, out-of-print books, monographs, and auction catalogs. I strongly recommend establishing a good relationship with one or more of the following dealers. Let them know your interests and get on their mailing lists.

Charles Davis: numislit@aol.com

George Kolbe: gfk@numislit.com

Fred Lake: fredlake@tampabay.rr.com

Karl Moulton: numiscats@aol.com

Recommended Supply Dealers:

Brooklyn Galleries (www.brooklyngallery.com) 718-745-5701

J.T. Stanton (www.stantonbooks.com) 912-232-8655

TransLine (www.transline.com) 714-258-0963

South Park Coins (www.southpark.com) 972-564-6995

Selecting The Right Coin Dealer

A successful relationship with the right coin dealer is an essential component in the enjoyment of coin collecting. The collector who chooses to "go it alone" may be setting himself up for some serious problems, even if he is well-connected and knowledgeable. A client (and friend) of mine recently coined a phrase that I feel succinctly describes the ideal relationship between the collector and dealer: the "dealer-partner." The relationship between a dealer such as myself and my clients is mutually enhancing. I sell my nicest coins to my best customers and, in turn, will hopefully be able to reacquire these coins in the future. My clients buy nice coins at fair prices, acquire important insider information and market insights and, literally, put bread on my table.

When deciding on the "right" dealer, I would suggest that you think carefully about the following:

1. How much does the dealer know about the area that you wish to specialize in?

If a collector called and told me he wished to put together a set of Lincoln Cents, I'd probably recommend that he choose someone else. I think I have a great eye and I probably know more about Lincoln Cents than most collectors. But I'm not what I'd call an expert in this area. On the other hand, if a collector called me and said he wanted to put together a set of Charlotte gold coins, I could state with honesty that there is probably no better dealer to work with than me. The collector needs to choose a dealer who really knows an area. That's one reason why I have always respected specialized dealers and it's why, some twenty years ago, I made the decision to be one.

2. What are the dealer's credentials within the numismatic community?

It can be hard to determine how well respected a dealer is within the numismatic community, given the fact that many dealers are not quick to compliment their competition. If I were a collector, I'd want my dealer to have the following qualifications.

First and foremost, I'd want him to be a member of the Professional Numismatist Guild (PNG). There are fewer than 500 dealers worldwide in the PNG and it is the only significant numismatic organization that doesn't admit everyone who applies.

Secondly, I'd look for a dealer who is stable. If he has worked for three firms in five years, that's a red flag.

Thirdly, I'd want to deal with an individual who was a proven expert. Has he written books or articles? Is he a contributor to the Redbook or other pricing guides? Do experts respect his opinions? A dealer who is universally respected and who has the credentials to back up this respect is a good person to do business with.

3. Does the dealer go to coin shows and auctions?

Unless a dealer attends shows and auctions, he will be "behind the curve" when it comes to knowing current market conditions. Dealers who get second hand information and pass it onto to their clients are not nearly as helpful as dealers who are out doing battle on the frontlines of coin shows and auctions.

4. Does the dealer actually enjoy working with collectors?

Some of the most knowledgeable dealers are primarily wholesalers who do not have the personality or available time to work with collectors. These are not going to be good people to work with due to their inaccessibility and lack of enthusiasm. But don't totally rule out one of these wholesale specialists as their knowledge tends to be far greater than the "typical" retailer.

5. Does the dealer own his inventory or broker it?

I have nothing against the concept of brokering coins. In fact, there are times when I wish I could take the considerable amount of money I have tied up in my inventory, place it in a money market account, collect interest and sell other people's coins. But I am a firm believer in putting my money where my mouth is. Every coin that is in my inventory has first been sold to a very strict set of eyes: mine. People who are coin brokers have often never seen the coins that they are selling. In addition, since they do not have their own money and/or time invested in the coins, they tend to be less concerned with their appearance.

6. Will you have too much competition for the coins the dealer buys?

Let's say that you are a Charlotte quarter eagle collector who wants to put together a world-class set. You should ask a potential dealer if there are other existing collectors in this dealer's base who collect the same coins. Will there be situations when the dealer will have to make hard decisions about which collector gets which coin? If so, how will the dealer make these decision? As a rule, truly choice and/or rare coins are scarcer than the collectors who want them. Will you be able to get first shot at the coins that mean the most to you?

7. Does the dealer make a two way market?

The best coin dealers are those who make strong two way markets in the areas they specialize in. They will be anxious to repurchase the coins they have sold you and will tend to be stronger buyers than non-specialists. It's easy to find dealers who only want to sell you coins. It's much harder to find dealers who want to buy them from you.

8. Does the dealer offer "post-sale service?"

Good coin dealers don't disassociate themselves from a collector after they've made a sale. Services that many dealers offer include giving advice on when to buy, sell or hold, upgrading coins or crossing them from one service's holder to another, letting you know if someone else is interested in a coin you own and getting you a discounted seller's commission should you decide to place your coins in an auction.

9. Is the dealer someone you like and trust?

This is an especially important question, in my opinion. If you are going to spend a lot of money with someone, you had better trust them. And if you are going to have a mutually beneficial long-term relationship, you'd better like them. If a certain dealer "gives you the willies" every time you speak to him, then you probably shouldn't consider giving him your business; no knowledgeable or well-connected he is. Conversely, if you really like someone and they give you a warm, fuzzy glow when you speak with them, they might be a better dealer for you than someone who is more knowledgeable and better connected.

In summary, you should ask the following questions to any dealer that you are thinking of doing a significant amount of business with:

Do you really know the series that I collect? How long have you been in business? How many years have you been at your current address? Do you attend shows and auctions? Have you written articles or books about coins? Do you belong to the PNG? Are you a retail or wholesale dealer? Do you own your inventory or broker other peoples coins? How many other important collections have you built? Will you be as anxious to buy my coins as you are to sell them to me? What will you do for me after you've sold me coins? What can you do to earn my trust?

The following are red flags that might make you think twice about doing business with a dealer:

He has worked for numerous companies in a short period of time He has been in the coin business for a shorter period of time than you've been a collector (nearly all of the really great coin dealers have been in the coin business since they were teenagers) He goes to fewer than three to five coins shows per year He has never bought and sold coins in the series that you collect He has no inventory of his own His level of knowledge does not seem much greater than your own