Those with experience buying rare coins know that research and careful purchasing are the most important safeguards against making imprudent investments. Investing in rare coins can be a tricky science, but with diligence and patience, it is possible to make serious profit from such investments.
Read on for some tips on protecting yourself from fraud and bad investments when buying rare coins.
1. Take Your Time
The first step in buying rare coins should be extensive research. Some people get involved in rare coin investments on a whim, perhaps after passing by a rare coin shop or reading about coins selling for large amounts of money.
However, the formulas that determine rare coin values can be exceedingly hard to figure out and apply to your purchases. That means that you will need to have as much knowledge of coins ahead of time so that you can get fair prices when you buy from dealers or at shows.
Of course, this patience does not just apply to the period before you start buying rare coins. Some of the most successful coin investors spend very long periods of time considering a purchase so that they can be sure they have all of the right information to get a fair price.
2. Don’t Fall for Dealer Tricks
Rare coin dealers are known for using various tricks to get less experienced buyers to overpay for coins. In order to avoid those tricks, it is important to understand the rare coin dealing business model and recognize the tricks that are most common.
In doing business with rare coins, dealers make their money by adding a premium to the coin’s value. This is why you would never be able to sell a coin for the same price at which you buy it from a dealer. Most dealers inflate prices by significant margins, so if you can find a dealer with premiums of only 15 percent, you know you are getting a good price.
Commonly, dealers try to make buyers think they are buying something different from what they are actually getting. Coin prices are determined by a number of factors, so it can be easy to mask a coin’s true value. Be careful about checking the accuracy of grading certifications and the true rarity of any coins you decide to buy.
3. Sell at the Right Time
If you start buying rare coins just to grow a collection, then you don’t need to worry about this step. However, if you are buying rare coins as investments, it is vital to know when the best selling points are.
First, you need to prepare yourself mentally to be able to part with your coins. These are considered collectibles, and, as such, many people value them for more than just their prices. However, selling regularly can help get the hang of the transaction processes and help you make the most money on your investment.
In addition, you should be careful not to be caught up market fluctuations. When coin dealers buy high and sell low, they inevitably lose money.