Advanced Rare Coin Set Building Strategies - Mistakes and Pitfalls
Now that you've started building your set and defined your collecting or investing goals, its time to get into the more advanced set building strategies. The mistakes most people make are the following:
- Buying the more common date coins in your set/collection first and then buying the key date coins last.
- Buying rare coins based on price alone.
- Buying rare coins with the wrong "look" for the type or grade (ex: darkly toned or coins with spots).
- Buying the wrong grade coin for the date or type.
- Buying common generic coins instead of rare coins.
Let me explain these pitfalls in more detail before I get into advanced set building strategies.
Buying the more common coins in your set/collection first and then buying the key date coins last
There is a tendency amongst newer buyers to buy the cheaper, and therefore more common coins of their set before tackling the rarities. I suppose it is a natural reaction to want to get "more coins for the money", however it is fundamentally the wrong approach to take when buying U.S. rare coins. The fact is, that key date coins are going to appreciated more and at a faster rate than the common date coins. By waiting to acquire the key date rare coins you are effectively costing yourself a lot more to finish your set and limiting your upside on it. It is always best to buy the rarest coins in your set first.
Buying rare coins based on price alone
Now I know that everyone wants to get a good deal on their rare coin purchases, but as the old saying goes..."If it looks too good to be true, it is" probably is most true when it comes to buying rare U.S. coins. The fact of the matter is; it is best to buy the nicest coins for the grade at a premium price because it has been proven on the resale end. When a coin is priced abnormally low it is usually because:
- The coin is low end for the grade
- The coin has some visual detriment (dark toning, copper spot, carbon spot, die problem)
- The coin has the wrong "look" for the date/grade. For example, most Morgan dollar buyers prefer untoned coins, therefore a darkly toned expensive date Morgan dollar is not very saleable.
- The date or series has been run up in price and is therefore overpriced already.
Buying rare coins with the wrong "look" is perhaps the biggest trap most people fall into
This is the flip side of buying rare coins based on price alone. Typically, the coins that are priced too cheaply are priced that way because they have the wrong look for the date or type. The wrong look can best be described as, coins that are poorly struck, spotted, darkly toned, overly dipped or just coins that are on the low end of the grade range for that grade. When building a set, it is important that you know what the correct look is, in order to maximize resaleability. Now, I'm not going to tell you that you can learn this overnight, however when working with a knowledgeable dealer like Numismatic Assets, we can educate and guide you to recognize the right look.
Buying the wrong grade for the date or type
This is another problem I often see amongst collectors assembling rare coin sets. For every date or type coin there is usually a quality level that offers the "best bang for the buck". This is the best grade to put into your rare coin set, however most people fail to recognize what that grade level is. For example, when buying Morgan dollars, collectors will often buy a particular dated coin in MS-63 grade, when the MS-64 is priced only slightly higher. Gem MS-65's may be many times the MS-64 price, making MS-64 the best value for that particular date. Sometimes MS-65 or MS-66 is the pivotal grade but that depends entirely on the date. Having this kind of market knowledge is crucial to your success when building a U.S. rare coin set.
Buying common generic coins instead of rare coins
This is another major mistake I see collectors and investors make on a regular basis. Buying common generic coins from mass marketing coin companies is a trap that a lot of coin buyers get caught in. Remember, any coin that can be mass marketed...can't be truly rare. Telemarketing operations that push these types of "rare coins" do so because they have a hungry sales force to feed product to, not because they are the right coins for you to own. The types of U.S. coins really worth buying can't be mass marketed because there aren't enough of them left, making them truly rare.
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