Steve Duke: We are going to talk a little bit, actually, one of our callers started us off here. We are going to talk about coins. At Westchester Gold and Diamonds, we do buy a lot of coins. We buy collections. We buy individual coins. The one thing that will happen constantly is people will come in and they will say, “I have these coins. Do not try and rip me off because I have already looked them up on the internet.” I say, “Okay.” They will show me a silver dollar. They will say, “What are you paying for this?” You tell them, “Well, right now we are paying twenty seven for that because that is a common date silver dollar.” “Oh no it is not! I looked it up on the internet. These are selling for two thousand dollars.” You just kind of look at them, you try and hold your tongue.
Usually what I will do is I will walk in the back and pull out thirty or forty of them, the same particular date. I will put them on the counter, and I will say, “Well, if you would like to give me twenty nine dollars apiece you could take all of these and then sell them on the internet for two thousand dollars each.” They will kind of look with a quizzical look and say, “Why are you being so generous?” I will say, “Because whatever you looked up was not that particular coin, or if it was that particular date it was in a different condition than what you have.”
Again, they get that puzzled look on their face and they say, “What do you mean?” Basically what happens when we look at coins, a large portion of coins that are out there right now have silver and gold content. Silver is high, gold is high. If you look at the book value, depending on what kind of book you are looking at, you will find that a lot of times the silver content or the gold content is actually worth more than the coin value. You say, “Well how is this possible?” Well, the books were written with a lower silver price or a lower gold price.
When silver and gold are both low, then a lot of the coins have what we call a numismatic value. Numismatic refers to the fact that is the hobby where people actually collect coins. Someone who deals in coins is a numismatist. There is a scale called the Sheldon Scale. This is a sliding scale starting at one and it goes all the way up to seventy. It sounds a little complicated, but it is really not. It all refers to the condition of your particular coin. When people come in and they have a large cent, a one cent piece; these were coined all the way from the seventeen nineties into the eighteen hundreds, the late eighteen hundreds.
You can barely make out what it is. You will see a little head on it. You will see a date, a portion of the date. When you flip it over you might be able to read a piece where it says United States of America. It is in really bad condition. Everything else is pretty worn flat. People will say, “Heck it is from the eighteen hundreds. I can understand that, but what you have to understand is, there were millions, not hundreds or thousands, millions of these coins printed. Because they were unusual or odd, people put them away. They stuck them away because it was something you do not see every day.
You will find that if it is unusual, if it different, whether the person is really a collector or not, they stashed it somewhere. It was handed down over the generations. I have seen people come in with old change purses and things and little notes from grandma that said, “This is a coin that I got when I was a child. Hold onto it. It will be worth a lot of money.” When they come in they find that in that kind of condition it is worth anywhere between a dollar and five dollars, not a whole lot of money.
Now, that same coin could come in, and you would be able to read the date. You would be able to see all of the hair lines. You would be able to read United State of America on the backside of it, see all of the detail on it. Now the coin could turn around and instead of a dollar to five dollars, it could be a twenty five dollar to one thousand dollar coin depending on the condition.
Some of the different categories of conditions that we actually grade coins are: Number one would be in poor condition. This is one that you can barely tell it is a coin. You will have what we call the planchet, which is a piece of metal that they actually stamp a coin on. It could be made out of copper. It could be made out of nickel. It could be made out of silver. You can barely see any detail or design on it at all. That is going to be in poor condition. A lot of times when you first start collecting coins you buy a book, and it has all of these holes in it. The first thing we do is, “I am going to get all of these holes filled.”
It does not matter what condition that coin is. if it is in poor condition, and you can at least see part of the date, you put it in that hole. You are no different than maybe you dad was, or your mom was, or uncle or grandfather. They had the same idea. They are going to fill as many holes up as they can because this is their hobby. They are not doing it as an investment. They are doing it because it is fun. Back in the fifties coin collecting was huge, I mean just monstrous. You could go through regular change and pull out a lot of good coins out of change. You could go to the bank, we used to get rolls and rolls of pennies and go through them looking for a nineteen hundred and nine SVBD or a nineteen thirty one S penny or a nineteen twenty two plain.
Believe it or not you could actually find some of these coins in everyday change. Nowadays it has gotten so commercial. You are not going to find them. Now occasionally I constantly have people from the bank who will come in, and some older person was disposing of coins that they had laying around. They just said, “I am tired of these silver dollars. They take up so much space.” They turn them in for a dollar. They could have turned around, come over to the shop and gotten anywhere between twenty to thirty dollars apiece for them, minimum.
If you have stuff like that, that is kicking around do not just run to the bank with it, stop and see us at Westchester Gold and Diamonds. We are happy to look at that stuff. If it is good we will tell you. If it is not good you can always take it to the bank.
The next condition after poor is fair condition. You can see a little bit more of the detail. It gets into what we call “good condition”. Now you can tell it is a coin, you can tell a little bit of detail. It is starting to look better and better.
Then we have what we call very good condition. Good to very good is like the first category that dealers will really look at a coin, and it starts to have some kind of collectible value to it. Unless it is an extremely rare coin, unless it is a good to very good, it is not going to have much premium at all regardless of whether it is silver or gold. It is going to have the silver, gold content but very little numismatic value.
We get into fine condition, and I talked about this will be called the Sheldon scale. Basically what this means is, if you have a coin and it is in at least fine condition and it happens to be a rare coin, you can send it to some of the independent grading companies out there. The three that are most known by anybody who really deals in coins is going to be PCGS or NGC or ANA. These are the three independent grader that hold more credence than any other company out there.
Since coins have become a big collectible and a big money collectible, we find that there are a lot of different companies that have jumped up and copied these grading companies. Why would they do that? Here is a little lesson on why they would do this. Number one, a lot of times people look at these coins, they have may see it on home shoppers club. They sit there and they say, “These are silver eagles. It is the complete set of silver eagle coins. They are all graded by ICG. They are all MS70 coins.” You are a collector. You have looked at stuff, and you say, “MS70 is the best. That is the highest condition you could possibly have, and these coins are all graded MS70. The set is only five hundred dollars.”
I went on the internet and I looked and I saw that an MS70 in that particular year and it selling for three hundred dollars by itself. “I am going to buy this. This is a great deal.” Now you have bought the set. Your economic standing changed a little bit, now it is time to turn around and cash that in. You know you only paid five hundred dollars for the set, and it should be worth a lot of money. They probably screwed up when they sold it on television. They sold two or three thousand sets. They did not know what they were doing. No, they did know what they were doing because none of these coins were graded by a recognized company that could have any kind of resalable value to them.
This means, when you took it to a dealer and the dealer looked at these coins, “You know, these are all graded coins and they are what we call slab, which means they are encapsulated in a clear, plastic holder. It tells the date and it tells the condition. It protects the surface of the coin. They are now worth about a dollar over the silver content.” “What do you mean? You are crazy. These are MS70s.” “They may be graded MS70s in somebody else’s world, but a coin dealer whose worth is salt is going to say to you, they are not graded by PCGS. They are not graded by NGC. They are not graded by ANA. In the real coin world, they are not going to have that MS70 grading because no one will accept the ICG grading.”
All of a sudden you are saying to yourself, “He is trying to rip me off.” You take it to another dealer and say, “He is trying to rip me off.” It never occurs to the people out there who are not that knowledgeable yet, until they have bought this set and have found out that it is not the dealers who rip them off, it was the company on television. You did not do your homework. You did not learn enough like I have talked about on collectibles. If you are going to invest money, and I mean serious money in collectibles you need to get a little information. You need to some knowledge before you jump in with both feet. You can get hurt in a real hurry especially in the coin market.
I am sitting here and I am saying to you, “MS70 what am I talking about?” On this scale it started from one to seventy. When you get to a coin that is in fine condition, this is the lowest grade that you really want to get a coin slabbed in, this is called an MS70. The MS stands for mint state. What we are talking about is, if you can visualize a coin coming from the mint and being circulated, put in everybody’s pocket and spent and sold and spent and sold, this is a coin that has been circulated so this is going to have a lot of wear and tear on it. This is going to be lowered down in the mint state.
Ideally, an MS70 is a coin that is absolutely beautiful. It has no microscopic scratches on it. It is perfect. The detail is wonderful on it. It is free of all blemishes. This is an MS70 coin. That is pretty hard to find in a coin that has been circulated in nineteen twenty, but they are out there. An MS60 is what we call an uncirculated coin. This coin does not have to be beautiful. It can be ugly, but it is a coin that when we look at it, it does not have what we call a whole lot of eye appeal, but all of the details are just like it came from the mint. It can have some scratches on it.
These are what we call contact marks. When these coins are printed at the mint, they are on a conveyor belt. The planchet, which is the piece of metal that they are stamped on, comes in and it goes between two dyes. They are stamped and it comes back out. There are thousands and thousands of coins printed at a time. They are put in bags, and they are sent to the mints or the banks, wherever. These coins get scratched up, but they do not have any wear and tear on them. They are what we call contact marks from other coins.
Back in the early eighties, the mint actually found all kinds of Carson City silver dollars in thousand dollar bags in their vaults. They turned around and they put these in special boxes and they made them available to the public. They sold them at a premium. A lot of these coins have appreciated dramatically in value. They are listed as uncirculated coins.
What happens is a lot of these have scratches. They are really ugly, but they are uncirculated. There are different of uncirculated. From an MS60 quality coin which is one that has not been circulated, but it is not particularly pretty. When we say “eye appeal” what I mean is, does it look nice? Does it look pretty? Is it free of blemishes? Yeah, that sounds pretty cooky, but a lot of coin collectors are cooky. They are willing to spend their hard earned money to buy the best they possibly can. There are different degrees from MS60.
We get MS61, 62, we get to an MS63 there is a dramatic jump from an uncirculated coin to an MS63, which is an uncirculated coin that starts to have some nice eye appeal.
Then there’s MS64, which jumps up quite a bit. MS65 is sort of like a threshold – this is a really beautiful coin. It’s a rare condition; it’s almost perfect, but not quite there.
Then from 65, we go to 66, 67, 68, 69, and to a 70. When you see an MS70-graded coin, this is a perfect coin. That’s a pretty unusual thing, because what we have now are a lot of dealers who sit there and they want to tap this new market, this market where people are putting their money from their IRA into coins.
You can actually do this now. There are certain coins that you’re allowed to put in your IRA. They’ve got to be graded; most of them have to be proof, but there are some higher-end coins that can be put in there as well.
So we have these dealers who buy all these coins brand new from the mint. They’ll turn around and send a thousand of these brand new coins, which are virtually perfect, because they’ve just come from the mint. They’re not circulated. The mint prints these as bouillon coins.
When I say bouillon, what I mean is they print what we call silver eagles, they print gold eagles, and these coins have no monetary value other than the value of the silver or gold content in them. They trade at a little bit of a premium above their spot gold or spot silver price, but what happens is we get a lot of these dealers.
When we talk about dealers, we’re talking about fellas who do this for a living. We’re not talking about guys who spend a thousand dollars or a hundred thousand dollars on these new coins. They spend hundreds of thousands of dollars buying these new bouillon coins, whether it’s silver or gold, sending them to independent grading companies.
Most of them don’t send them to PCGS, or NGC, or ANA, but the smarter guys do. What happens is if they get an MS69, which is virtually a perfect coin, that’s great! Now they can turn around and they could sell that at a huge premium to people who don’t realize that MS69 at a modern bouillon coin means nothing.
I’m going to tell you, probably 98 out of 100 coins that come right from the mint that get sent in to be slabbed and graded are going to grade MS69. It’s not a big deal! Most of them are virtually perfect coins.
You might get two of them that come out MS70, and at MS70, yeah, there’s people who will pay pretty good premiums for these MS70 coins. But again, if they’re graded by PCGS, NGC, and ANA, you’re probably going to get a premium on those coins. If they’re graded by some other company independently, one of the smaller companies, they will not carry that premium.
There are going to be companies that call you and say, “We understand you’re a collector.” Well, you bought something on television and they turned around and the guy on television sold your phone number and your American Express card number to these other companies.
They will tout you that these are great investments, and I’ve had people who bought one or two coins from these companies, and the next thing they know, they were on a mailing list. Every month these companies sent them coins.
A lot of our older people out there don’t realize that they don’t have to pay for those coins. You just have to call your credit card company and say, “Look, they sent me this without me agreeing to buy this from them,” and send it back.
I talk about a fellow who came into the shop, and they had billed his credit card $13,000 for these gold coins he had gotten. They weren’t graded by any of the large companies; they were graded by an independent company. They weren’t the grades they were supposed to be. When we went through to find out what they were worth, they were worth between five and six thousand dollars on a good day.
He was panicked. “I can’t afford $13,000 for the coins!” We got on the phone, we called the company, we called the credit card company, and stopped payment on it.
The coin company gave us a hard time. “You’re not going to send these coins back!”
I said, “Fine then, we’ll just keep them. We’ve already cancelled the credit card, so you can either give us a return authorization number or we’ll keep the coins.”
Eventually, they came around and said, “Oh, well we’re not going to get stiffed for our coins, so here’s a return authorization number.” You can do this.
I constantly have younger kids come in, you know, their mom and dad received these coins in the mail. What can they do? You can return those coins.
Collectible coins, the older coins – I’m talking about stuff from the early 1900s and 1800s and things – if they are slabbed and they’re graded by independent companies other than the three that I’ve told you about, they’re not going to bring the same kind of money as what you thought they were.
Again, if you look on the internet, you have to compare apples to apples and oranges to oranges. If you looked at an MS65 silver dollar and it sold for two thousand bucks, and you walked in with one that’s beat up, someone’s carried it for years and years, it was a pocket piece – the fact that somebody offers you $25 or $27 for it, they’re not ripping you off. You’re just not comparing apples to apples.
You’ve got to compare condition to condition, rarity to rarity. Now, don’t be fooled by somebody just saying, “Okay, I’m going to pay you $25 apiece for these silver dollars.” Bring them into Westchester Gold and Diamonds. We go through and grade them, and we look for rare dates.
There are quite a few rare dates out there in silver dollars. Not so much rare dates in the more common half-dollars, or quarters, or nickels, or dimes, but I mean, people will come in with a complete collection, like, “Well, I know it’s worth a lot more money because it’s a complete collection.” Not really.
Out of 70 coins that could be in the collection, only three or four of them are going to have real big premiums on those coins. We’re always happy to look through those and pay you a premium for them.
But you know, the biggest problem is a lot of people will get on the internet, they’ll look at it, and they don’t understand what they’re looking at. Condition is the most important thing. The company, if they happen to be graded, is the most important thing. What company did it?
If you’re going to invest your hard-earned money and thing that you’re going to get a coin that’s going to appreciate over a period of time, know what you’re buying. Understand the grading system. Understand the dealer you’re dealing with.
There are lots of fellas that jumped in – like I said, they buy gold and silver, but last week they were selling shoes. They look in a book, and they go, “Oh, this is a rare date! I’m going to get $300 for this coin!” They don’t understand the grading system.
Deal with people who are knowledgeable. Deal with people who you can trust, people who know what they’re doing. You know, don’t be afraid to get a couple different prices on your coins.
We’re always happy to give you offers on your coins. Like I said, if we don’t offer enough, take them somewhere else! Shop around and get the best you can.
We’ve been doing it for 38 years. We’re not going anywhere. We’re more than happy to give you a free evaluation and cash offer on those things.
I’m Steve Duke, the owner of Westchester Gold and Diamonds. We’re talking a little bit today about coin collecting and grading. If you’ve got questions, please stop in and see us. Ask for me, Steve Duke. I’m more than happy to sit down, go over what you’ve got, or help you add some coins to your investment portfolio.
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