Coin collecting has become one of the most popular hobbies in America. The success of the State Quarter program (1999 to 2008), Presidential Dollar coins and the First Spouse series (to name just a few) have brought millions of new enthusiasts into this hobby. The United States Mint has increased their advertising budget dramatically in recent years. There is a variety of coin shows on television. Newspapers often print full page announcements offering special deals on "rare" or "limited" sets, including Olympic coins, old silver dollars and "historical" issues. The Internet is loaded with websites for dealers. And on it goes. How can you navigate your way through the "jungle?" A little common sense, research and comparison shopping will save you a lot of money! Here are some do's and don'ts for any prospective buyer or seller of precious metals and coins.
Determine WHAT you want to collect. You have many choices. Are you trying to assemble a complete set of Lincoln pennies, Jefferson nickels or Washington Quarters? There are lots of choices. Perhaps you like Proof sets. Then again, you want to explore a "Type" set and try to collect a different coin of each denomination issue during the past 200 years. Finally, you may wish to speculate in the precious metals market (gold, silver or platinum bullion).
Take the time to thoroughly research coins and coin collecting. Subscribe to "Coin World" magazine, an excellent publication. Go to the website of the American Numismatic Association (ANA), which is chock full of useful information for the aspiring collector (see link in Resources below). Finally, there are hundreds of articles on every type/denomination of coins issued from the colonial era to the modern era. Before you buy or sell, learn the hobby!
In order to determine the value of a coin, it must be graded. Although there are several coin grading services out there, only two are recognized by the experts in the hobby: NGC (Numismatic Guaranty Corporation) and PCGS (Professional Coin Grading Service). When a grade is established for a coin, a value can be placed on that coin. (The highest grade is 70.) The price is based on the grade and is accurately determined by an experienced dealer. A graded coin takes the guesswork out of pricing. On the other hand, a "raw" or ungraded coin can have any price, and you may be rest assured that the seller will not always get the best deal! Check out the websites for NGC and PCGS (see Resources below).
Do not purchase coins from TV coin shows. Although you may get a bargain here and there, you will almost always lose money if purchasing coins from a TV coin show. Most of these shows purchase their coins from the United States Mint, and mark up the prices accordingly. Or they send these coins by the droves to the grading services to establish a base price for the coins and sell them. You may be rest assured that it will be higher than is appropriate for the grade. Occasionally, the TV host will announce the "fill in the blank" hoard, which they acquired from estate sales or collectors. Their on-air personalities are colorful, and your hear the metronomic drone that coins are a great investment or a wonderful gift for children. Compare prices if you are tempted to buy, and buy graded coins if you must purchase "TV specials!"
Do not buy coins at flea markets. It costs money to rent space, and then there is the time the dealer has to invest. A lot of flea market dealers will purchase bulk lots of raw coins and place the said coins in their own "flips" or holders with an inflated grade. Most coins at flea markets are "raw" and in less than desirable condition. Any officially graded coins will be overpriced. For all intents and purposes, you are buying bullion.
Do not sell coins or precious metals to "hotel" dealers. Occasionally, you will see half or full page ads in your local newspapers announcing the purchase of "old" gold, silver, diamonds and so on with buzz phrases such as "highest prices paid," "certain coins might be worth $10,000," "instant cash for gold" and "old jewelry wanted." These nomadic dealers set up shop at a local hotel / function hall for a weekend and have a cadre of staff ready and eager to help. In most cases, they pay considerably below "spot" price" on bullion and their diamond/jewelry "experts" will pay less than real value. Are their scales certified or accurate? Most sellers are ordinary people and have no idea what a "gram" of gold is or what the carat number of their necklace or bracelet might be. It costs money for these folks to set up, pay their help and advertise these shows; someone has to pay the freight!
Do not buy or sell "raw" coins on the Internet. Here is the same old problem! Ungraded coins and a vague idea of their real value can really cost the uninformed collector a lot of money. Of course, you might think your "raw" coin is "almost uncirculated" or a "Mint State 62" and an Internet buyer will say it is "Extra Fine" or "Mint State 60." Beauty is in the eye of the beholder! Ditto for the profits! Here is another vote for graded coins; that is for sure!
Buy from reputable dealers, especially in your area. Make sure your dealer is an ANA member and has several years of experience in the hobby. Obtain references. As stated above, graded coins are the way to go. And if you are buying or selling bullion, be sure to check the daily "spot" price of the metal and negotiate the final price.
If you must purchase coins from a Mint, make sure it is the United States Mint. Forget about all of those other fancy names. If the company claims to be a "Mint" and their web site is NOT www.usmint.gov., stay away! Most of these are not really mints at all; they buy a lot of their products from the U.S. Mint and mark up the prices. Or they manufacture commemorative coins of their own. These are, for all intents and purposes, bullion pieces. Most are very difficult to sell. While some of the U.S. Mint products are speculative, most are priced fairly and are of great interest to the average or novice collector. -And they are great with the young hobbyist! And, on some occasions, you may land an instant rarity!