TV Sales Pitch: Just Say NO!

At least once every month a reader will send an email note asking about the worth of coins they bought from a television shopping channel or from a company that advertises on cable television. Last week, someone asked specifically about coins bought from a company that sells gold on the show of a nationally known cable television personality.

I was surprised to learn what was being sold as investment quality coins. The person who I was corresponding with was sold Swiss and French gold coins whose values are a few percentage points over the melt value of the coin. My correspondent paid much more than the coins value. Unfortunately, the spot price of gold would have to climb over $1,500 per ounce for this person to break even on these coins.

Another email asked about the worth of State Quarter sets purchased from a television shopping channel. This person bought these sets as part of a subscription and paid three-to-five times the numismatic value for these coins. Even though the coins had nice presentation packaging, I was able to show the user online auctions where the coins are not selling for a premium that would allow him to break even.

Over a month ago, someone wrote to ask about a coin set sold by a large mail order coin dealer. As with other coins sold by this dealer, they were quality coins but were overpriced when compared to other dealers and price guides. Although the coins were in special packaging creating the illusion of a set, the price of the coins was 15-25 percent above the retail prices published in price guides.

The common denominator in these stories is that these people bought the sizzle and not the stake. They bought the special packaging or the promise of value trust the person on television, the other end of the telephone, or the pretty advertisement in a magazine. It breaks my heart to tell these people they overpaid!

Each of these people would not have made these mistakes if they had done a little research. Research is not that difficult. It starts with some basic questions: What is this coin really worth? Is this a good investment item? Who is this person I am buying from?

Over the last 10 years, there has been a surge in the publication of numismatic resources, whether it is in print or on the web. Books are being published by traditional hobby publishers and other general purpose publishers that can teach you about any coin type, how to invest in coins, and now there is a book that discusses how to sell the coin collection your grandfather left for you.

Other resources include online price guides, hobby magazines, and various websites that can help you in almost any topic in numismatics.

If that is not enough, ask questions. No question is too basic. When I taught college courses, I would remind my students that there is no such thing as a stupid questions—the only stupid question is the one not asked! Ask your favorite blogger. Ask your favorite dealer. Ask your question in a public forum that caters to coin people. Just ask!

The axiom that if the deal sounds too good to be true, it probably is not true. If you talk with someone about purchasing coins and they try to pressure you into buying immediately, do not give in to the pressure. It is your hard earned money and it is your prerogative to understand everything about how you spend that money.

Before I make any significant purchase, I will analyze the cost of the item before attempting the purchase. I select specific vendors to negotiate with and then contact them to open the conversation. When I negotiate I remember that I have the power. I may want the item, but it is my money the vendor wants. If the vendor wants my money then that person has to work with me. Otherwise, I am prepared to walk out.

If the vendor cannot answer my questions, I walk out unless they say they will find the answer. If the vendor will not answer my questions, I will walk out. If they negotiate in bad faith, I will walk out. If they treat me like they are doing me a favor, I stand up, shake their hands, thank them for their time, and then will I walk out.

Remember, you can say “no” as often as necessary. You can say “yes” only once. Make it count. Do not let the slick talking sales person sell you something that is not in your best interest. Know what you are buying and know how to just say NO!

Confusion With Investing in Coins

There have been reports of the coin market continues to grow as the economy is falling. One measure is the PCGS3000 index that is based on a sample of 3,000 coins. Looking at the graph (see the right side of the page), the trend (blue) line continues upward. In fact, there is no downward place on the line. A trend graph would give an indication that the market is very hot and trending upward. But is that the case for the entire market?

The PCGS3000 is supposed to be a representative sample of the coin market. But like the Dow Jones Industrial Average, it is not a complete view of the market since there are other segments that have reacted differently. One area that is more sensitive to the movement of the market is the Generic Gold Index (right). This index looks at what many consider common date gold and gold bullion coins where the coins are worth their metal value plus a nominal numismatic premium. The graph shows a volatility that can be traced to the market value of gold.

Gold is a volatile market. When I thought that rare and proof gold would be a better choice, I found that the Mint State Rare Gold and Proof Gold indices seem to be affected by the price of gold. While there may be individual coins that perform better than others, the market itself seems to belie the trend of the PCGS3000 index.

The idea from this article came when a friend asked me they should buy if they wanted to invest using coins. My friend heard that the US Mint was having problems producing gold coins and wanted to know what to do. Since I am a collector and not an investor, I had to do some research.

Researching market trends is not easy. Online price guides do not provide the historical data to make an analysis. Gold dealers are quick to tout the investment in gold and how great of an investment option it is. But I was suspicious. After all, if even rare coins are affected by the gold market, maybe gold is not the best of investments.

I started to click on the links for the other graphs at the PCGS site and stumbled upon the Morgan and Peace Dollar Index (right). I have heard some dealers say that this market was moving, but I thought that was wishful thinking. But the graph shows that in the last year, the trend is upward. This was very interesting until I looked at the 10 year graph for Morgan and Peace Dollars.

My first impression was that the graph would overlay the trends in the economy with the exception of the downward trend during the technology bubble.

I was not sure what to tell my friend. I mentioned the Morgan and Peace Dollar market as a potential investment area. I also told the story of the GSA Morgan Dollars and their worth to collectors. I suggested high grade Morgan Dollars and later date, high grade Peace Dollars. I even discussed finding various die varieties that gets some collectors excited.

Although I was having fun clicking through, my friend was looking for something to invest in to either preserve a investment or to make money. I finally relented and suggested reading Profitable Coin Collecting by David Ganz. It seems to be the type of book that investors may find interesting.

While it is nice to see my collection is worth more than I purchased it, I am not collecting Morgan or Peace dollars because they are or will be worth more than when I purchased them.

Graphs courtesy of PCGS.

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