Profitable Collecting Takes Patience
The April 14 edition of Numismatic News was excellent! Working from home has not affected your ability to put out a great product.
The “Viewpoint” by CPA Ron Thompson was insightful. With most of the piece easy to agree with, a few ideas may be viewed differently.
The accountant is not the “bean counter” that most people are referring to when the term is employed. The bean counter is the production manager who is so stingy that his decision costs his company much more than his penury saves in production cost; he saves 10 cents to install a poor quality part that costs the customer hundreds in future repairs or the company millions of dollars in product liability lawsuits. The auto industry is famous for bean-counter management.
At the U.S. Mint, the bean counters are the decision-makers who alienate long-term customers with bonehead policies designed to boost short-term profits. The problem is chronic in management throughout the United States. Customer loyalty is inadequately valued.
The “Viewpoint” discusses why proof sets issued by the U.S. Mint do not appreciate in value. The Mint often sells more sets each year than collectors demand because speculators buy sets for immediate resale. If fewer sets are sold than collectors demand, the price will not drop below the original issue price on the secondary market. The proof sets of 2012 appreciated.
Even if more sets are sold than collectors demand, the value could rise above the original issue price if the proof coins contain precious metals. If one compares the original issue price versus the current value of every year set since 1950, one will notice that sets containing silver coins have held their value much better than the clad sets. The 1960-1964 sets are worth more than the original issue price even though mintages greatly exceed recent year sales.
In the long run, rising silver bullion will lift the value of all sets containing the metal. In recent years, the Mint’s price for proof sets containing silver was so high that many years may pass before the value moves above the original issue price. Absent a surge in the number of new collectors, many clad proof sets might never be worth the original issue price.
Another issue in the “Viewpoint” is whether collectors should expect profit from sale of the coin collection. Expectations should be based on a collector’s original intention in entering the hobby. If a collector does not care about appreciation, he may liquidate at a loss. A collector who educates himself as he enters the hobby is much more likely to profit at sale time than one who acquires coins without exercising care to make sure that he buys value.
Many strategies can be employed to make a profit; strategies exist that will result in a long-term loss – like buying from telemarketers. People who get swept up in promotions are not as successful as those who take the time to look for genuine values. One may collect a series to completion without paying much more than he needs to. Collectors who must have a coin “at any price” to fill an album hole may be too impatient to wait for a good deal.
Every collector makes mistakes, paying too much for a particular coin. But the collector who minimizes mistakes and buys value will make money in the long run. If dealers can earn a living daily buying and selling coins, why can’t the average collector make a net profit in the long run?
In the past, contributors to Numismatic News have introduced strategies for gaining long-term profits. Much of the advice has been sound.
Some coin values have declined in recent years, but many are higher. One cannot expect profit from every acquisition, but sound purchase practices will yield more profit than loss. Bargains will always exist. The collector who has the patience to look will find them.
The Mint is Failing at Gaining New Collectors
While the debacle regarding the 2019-S Reverse Proof silver Eagle was a disservice to the collector community it was only the latest. The ATB quarters “W” mintmark program is another. The belief that finding one of these in their change would inspire many to start collecting was a decision that could not have been supported by research. Who, other than a collector or a collector’s friend, would inspect their change for something as subtle as a mintmark?
Not only has the distribution been spotty, but significant numbers are being screened out before they reach the marketplace. People have sat down with their tellers and bank managers to sort through rolls of coins to extract those with the “W” mintmark, and I expect similar actions take place at agencies that receive bulk coins from the Mint. Once again, these coins are showing up on the secondary market at hugely inflated prices.
I believe this program has resulted in the loss of more collectors than it has gained. There are collectors with a primary interest in collecting modern quarters. For the most part, these are people of modest means that can afford to buy uncirculated coins from the Mint but cannot afford to buy individual coins on the secondary market. They have been abandoned by the Mint and have simply stopped collecting. I don’t know who makes these decisions, but next time please seek the advice of collectors – not the high-end guys but us Average Joes who make up the bulk of the numismatic community.
Dr. Bob Cudworth