For numismatists: those who love coin collecting

Coin-collecting: Don't Get Burned

Begin by obtaining books on coins and coin-collecting. Your goal here isn't to figure out how you can make the most money. Your goal is to see what kinds of coins appeal to you and get a feel for the difficulty (and expense) involved in obtaining those coins.

Next, you will want to see some actual coins. Do you know somebody who has a coin collection? If so, that's a good start. See what's involved in cataloging those coins. Ask this person to tell you a little something about each coin. If s/he cannot, then this person isn't a real coin collector. To find someone who is, find a local shop that deals in numismatics (buys and sells coins). Plan to spend a little money, but not much. Just enough to get your feet wet. Whatever coins you buy probably won't start the collection you will ultimately go with.

Patronize this store a little and introduce yourself to people. Tell them you're just starting out and are trying to get an idea of what kind of collection you're going to build. Ask them about theirs. Listen actively to people who respond to these inquiries. You'll be able to determine who is really knowledgeable, and you'll start building relationships and trust.

As you make coin collection contacts, you'll be given opportunities to see coin collections. You'll also learn about coins in general and specific coinages.

Have you noticed that we have not yet talked about mail order coins, buying coins online, or getting Franklin Mint coins? The reason is those outlets are rife with traps for novice coin collectors. After you get a few years of specialization under your belt, you might consider buying coins sight unseen. But typically, you aren't going to find true enthusiasts doing it this way.

One of the traps for nascent coin collectors is the "rare gold coin" scam. This is often done by telephone. The caller identifies himself as being with some prestigious-sounding firm that has, amazingly enough, a huge collection of extremely rare coins (your first clue there's a problem). The market is poised to take off, and you can probably double your money in eight to ten months. So these coins are going for only $600 each. Did you want to place an order for 100, or start smaller at only 50?

Geez, how nice of them to give up THEIR opportunity to double their money in less than a year. Aren't they stupid? Sure, of course you'll take those coins off their hands. Is it possible to get more? "No," the agent tells you, "this is an exclusive offer. Don't be greedy."

So you take delivery of the coins, and sure enough they are gold coins with an old date on them. The day they arrive, though, you get a call from the agent asking to buy those back. "But I just got them," you say. "Yes," the agent says, "but my boss is all over me. Those coins are worth $750 today and they are poised to rise even more in the next few weeks." You tell him that's too bad, and he reluctantly concedes that, after all, he sold them in good faith and that's just the breaks.

Now with this good news, there's no reason to see how much those coins are actually worth. Why would a guy offer to pay $750 for a coin you just paid $600 for?

The following week, you get another phone call. Now the agent tells you the coins are $871 as of this morning. You smile. The agent then says, "Look, I know you want to ride those coins to the high profit that they will achieve. But I have another deal you might be interested in."

Gee, is this guy a glutton for punishment? Yes. He tells you these other coins aren't quite the spectacular deal as the ones you bought, and won't double in value for at least eighteen months. They're $125 right now and he has 23 of them. But the firm needs to raise cash for an acquisition. Wow, what a sucker this guy is!

Now you have two sets of very valuable coins that you're going to sell at a huge profit. Months go by, and you don't hear from him again. So you call his 800 number. It does not work.

Well, that figures. This guy was such a sucker, he probably went out of business. Selling gold coins and not understanding how to make money the way you do.

Then the magic day arrives. It's time to get the value from those coins. You go to the local coin shop, and ask for an appraisal. The dealer tells you these are junk coins that are gold-plated, and they're worth about $4 each if melted down.

To avoid getting burned, know what you want to collect and don't buy coins based on some dude's promises that you're going to make money. Coin collecting isn't something people do to make a huge financial gain. It's something they do because they have a keen interest in a particular coinage. If they someday make money off it, that's a bonus.