It must have been my lucky day. I couldn't sleep the other night, and I turned on the television. The first channel I caught was running a commercial for a coin dealer offering a very limited number of rare coins for sale. The first question I asked myself was, “How can these coins be rare if there is enough supply to run the same commercial several times?” While there are certainly many rare and valuable dates on most coins series, there are infinitely more common dates in uncirculated condition. Unfortunately, high bullion prices are bringing out the sharks, so would-be coin investors better be wary of the “good deals” on coins right now.
Morgan Dollars, Gold Eagles, and Double Eagles were minted in large numbers and are readily available in mint state condition for more years than not. In the past, not unlike today, most people preferred to use paper money instead of coins for their daily transactions, with the exception of those in western states. When was the last time any of us received a Susan B. Anthony or Presidential Dollar for change? Most of these coins were used for bank-to-bank transactions thus preserving these coins in their mint state. My definition of a rare coin is a coin that is not readily available for sale with years passing before one might become available.
So, okay, the coins advertised are not rare, but could they still be a good deal for investors? There are multiple commercials for “rare coins” currently running, but the one I caught was for a 1901 $10 MS 64 Gold Eagle. The coin was offered for two (easy) payments of around $900. At April 28th's market prices, Grand Rapids Coins would charge around $1200 for the same coin. Looking at this from an investment perspective, you would have to realize a 33% price increase on the advertised coin just to break even when you decide to sell it!
While gold and pre-1933 gold coins are enjoying the best year for price increases in a long time, 33% is a lofty number. Think about it in terms of a stock purchase: if ABC Company stock is selling for $1200 on the exchange and your broker wants to sell it to you for $1800, it might be time to shop for a lower commission broker. He’s trying to cheat you.
My advice to any coin collector would be: Do your homework. The internet has a lot of resources available to obtain recent auction prices and prices other dealers are offering. Research what coins are going for, look up the current price of gold, and see what other people have said about the dealer you are considering. We’ve said it before, but it’s very important to buy gold, including coins, from a reputable dealer. High bullion prices generate a lot of interest, but don’t let the sharks get you.