Pay Attention to Fundamentals When Considering a “Hot Coin” Purchase


image001-2Like all collectibles, certain types of coins tend to get “hot” and are in high demand for a period of time and then they cool off.  What drives these trends?  Pure rarity, trade publication articles, publicity of particular series (Washington Quarter became “hot” when the Statehood Quarter program began), and increase in gold and silver prices.   However, too often “hot” coins are the product of ambitious telemarketers… prices increase short-term and then retreat to pre-promotion prices when the promotion is over.  Read on to learn how Grand Rapids coin collectors can avoid these schemes.

Have you ever watched a coin television show?  Very professional production techniques and a slick pitchman will promote “highly collectable” coins at “bargain prices” that are certain to go up in value as the public recognizes how rare they are.    Unsuspecting collectors looking for quick profits are usually disappointed.  Too often, these “bargain prices” are nearly double the base collector market retail prices.  A buyer, later seeking to sell such items, might find the value to be just 40%-60% of what they paid.   

Consider the run-up in value of common date graded Morgan dollars in 2011.   As the price of silver and gold rose, the base price of common date Morgan dollars also rose and demand from knowledgeable collectors increased.   Stories began to appear in the trade publications about the quickly rising Morgan dollar values.   That’s when the telemarketers jumped into the game.   Telemarketers purchased volumes of graded Morgan Dollars for a television promotion which lauded the rarity, the recent price appreciation, and future value expectations.   They sold the coins on television with great success for nearly double what they sold for in early 2011.  However, once the telemarketers’ inventory was depleted and the promotion ended, predictably, prices returned to pre-promotion levels.   Those who purchased via the television programs now had coins they could sell for no more that 50% of their purchase price.  

image002-1Telemarketers have similarly promoted proof and mint sets, modern coins, statehood quarters and other fairly common “collectibles.”   Almost always, they are sold at values far above true retail value.  

My suggestion: study and gain as much knowledge as possible prior to purchasing collectible coins.  Avoid the telemarketing promotions and buy coins that appeal to your collecting goals.  Do your research on coin dealers, coin shows, and online sites  You can even buy coins online, or at any of these other outlets, and bypass the telemarketers entirely.   And avoid the “too good to be true” opportunities… they are almost always not true!

Contact Mullen Coins, your Grand Rapids coin dealer, to find out if your potential purchase has legs, or if it really is “too good to be true.”

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