Our Philosophy on Coin Collecting

These pages are to give you some insight into my philosophy about numismatics.  This is not to bore you to death, or to blow my own horn – if you choose to read further, you might find something that resonates with your own interests and why you do what you do.

Coins Are Cool:I think coins are “neat”. That consideration is the basis of being a successful collector, whether of coins, baseball cards, old tractors or widgets; in other words, you are happy with what you do and what you collect. Too many people forget that fact, and get tied up in the financial aspects of their hobby.  They worry too much of the time about whether they are making (or losing) money.

A more scholarly approach takes into account the history and cultural impact of coinage, and that is certainly important. The technical aspects of metallurgy and production of coinage, the relationships between the development of the concept of “money” itself and human society, how coinage has impacted world events and vice versa, or even the pure artistry of design of coins and currency, all are reasons that have attracted individuals to the study and collecting of these little bits of metal.  If you asked a particular collector to explain exactly why they got into their particular hobby, most would be hard pressed to define the precise reason for their interest.  Something about the subject just resonates with them.   That is certainly the case with myself, as I cannot really tell you, except in general terms, why I got into coin collecting in the first place. And that is what makes it a great hobby.

The happiest collector that I ever met was at the 1998 ANA Convention. I had a So-Called Dollar in my case which while a very scarce item had some wear and had been cleaned.  He asked to see it, and when I pulled it out I apologized and remarked that the marked price was the best that I could do (I had it marked at my cost).  He smiled at me, handed me three $20 bills and said, “It’s the last piece that I need for my collection.”   That sense of completion, of having found his way to the theoretical end of a particular journey, was more important to him than price, condition, or anything else at that moment.   I met him again at the 2009 Spring ANA, and he and I both remembered the transaction, very unusual after a decade!

Ultimately, that is why I do what I do.   The ability to make a connection with someone who shares a common interest, or has a similar intellectual bent, is worth the hours of work, and it ads to my own fascination with numismatics.

Coins and Money:

It is commonly stated that one should take the long view in terms of collecting and recovery of value.  I would like to put it another way: collect what you like, and like what you collect.   That way, you depreciate some of the “expense” of collecting (i.e. your sunk cost or the acquisition costs of your collection) in the enjoyment and study of your collection over time.   The figure often used is that you have to own a collectible for 15 to 20 years to be reasonably able to expect to make a profit when selling the collection. This is reality given the difference between the wholesale and retail (sales) value of collectibles, as well as the fluctuation in markets.  This is certainly true of coins and currency, as if you purchase in a bull market and sell in a bear market, you will probably lose money.  Ask those folks who bought collector coins in the early 1980’s during the gold and silver price run up, and sold in the early 1990’s when the market was soft.   Of course, you can be very lucky and buy at just the right time, right before a major market move, and be able to take advantage when you sell, but those opportunities are few and far between.

The people that I have dealt with that are least satisfied are those who make a purchase and turn around and sell within a couple of years, who are disappointed that they not only are not able to make money, but have not even made back their initial investment.   Typically, these are what I term “marginal collectors”.   I use the term “marginal collectors” not to denigrate, but to indicate those people who are not really a true collector at heart but have purchased numismatic items for other reasons, such as for spurious “investment” reasons, on the spur of the moment off TV, or who have bought into the sales pitch of a telemarketer or someone similar.   These people of course tend to disappear from the hobby as a result.

The beginning collector, the true hobbyist, often has the same thing happen to them – i.e. losing money selling numismatic items that they have lost interest in.  Usually, this is the result of lack of focus when a relative newcomer to the hobby.   Many beginners have the urge to spend money in their initial wave of enthusiasm about coins, only to change their minds later about a purchase when another type of material beckons.   While this may be inevitable to some degree, this painful experience can be reduced by reining in the spending urge and concentrating on learning a little first.  The axiom “Buy the book, before the coin” may be old, but it still has validity.   When people ask my opinion about what they should collect, I urge them to spend some time looking around at as much different type of material as they can before settling on an approach to collecting.  What I commonly say is “Keep your eyes open, and your wallet shut”. While tough, this will pay off in the end.

Knowledge is Power:

Ultimately, as a collector at whatever level, you have to make your own decisions.   You cannot let someone else determine your interests, or when and how much money to spend.  If you do this, you are an investor, not a true collector.   Not that you cannot be both, and long term a nice coin collection (notice that I did not say “portfolio”) can make you money.   Time and time again, it has been shown that a well thought out collection of nice “things” (whether coins or something else), chosen for completeness and quality, has almost ultimately appreciated over time, given a sufficient number of years.

The key is knowledge.   An interest and willingness to learn, to apply the information to your hobby, and the stubbornness to keep at it, are the ultimate keys in my opinion.   Time and again, I have met collectors who know more about a particular subject that I do.   This is not as surprising as it might seem.  Dealers commonly need to be generalists, in other words they need to know enough about a lot of areas of the hobby to apply that knowledge to make a living.   How many stories have appeared in the numismatic press about a rare Large Cent or Bust Half variety being “cherrypicked” at a coin show, then sold to another knowledgeable dealer/collector at the same show for hundreds or thousands of dollars more?  I can tell you – more than a few.

I have used my own knowledge for the same purpose in buying coins from other dealers for less than their ultimate value because I knew more about the subject than they.   And, I have had collectors do the same to me!

The best example of this axiom I can think of was John J. Pittman.  Pittman was a “regular guy”, but his application of his knowledge combined with buying the right material at the right time (also a learning issue) led him to putting together possibly the greatest collection ever, in terms of the difference between what he paid for the coins, and what they sold for.   His collection will probably always rank within the top five to ten greatest collections ever assembled, along with those of princes of industry and old-money privilege.