Wednesday, May 12, 2010
Investing in rare and valuable coins is supposed to be a great way to diversify your portfolio, right? A wise choice to invest in hard assets. Gold, Silver, and Platinum are at all-time high prices. So how did Bill Johnson lose nearly his entire life savings "investing" in rare coins, limited edition numismatic collectibles, gold, silver, and platinum coins?
Here's the scenario. Bill is a retired gentleman, and has been purchasing what he thought were rare, limited edition, and valuable coins and collectibles for many years. Coins made of Gold, Silver, and Platinum. Buying coins with very limited quantities, after being informed that these would be valuable for generations to come, and only available for a very limited time, never to be released again. Something special, he was informed, to pass on to future generations. Bill thought he was making a sound and wise investment. So how did Bill lose his entire life savings when he sold his collection? Did the coin dealer he sold them to "screw" Bill out of his coins? Did someone steal them? How does one lose money when they sell something?
Bill Johnson purchased his entire coin collection from the Home Shopping Networks, QVC, Franklin Mint, American Mint, Morgan Mint, and the United States Commemorative Gallery, and other similar online and television shopping networks, and from the numerous catalogues these companies solicited him through the mail. After all, these were supposedly reputable companies, with well-known spokesmen, with years and years of experience, and some have been in business for decades. How in the world did Bill lose all his money?
Very simply put, Bill paid too much for every single item he bought. Way too much. In fact, some of the items Bill bought were absolutely worthless. And lest you think Bill got screwed by the dealer who bought the items from him, Bill brought his items to several dealers, and all of the offers Bill received were less than 1/10th of what he actually paid for the items originally. For example, one of the items was a Statue of Liberty, limited edition, commemorative coin, layered in Gold, from the American Mint. Bill paid almost $90 for this limited edition coin, touted by the American Mint as having a mintage of only 50,000 pieces. Bill thought he was getting a good deal. Especially after hearing advertisement after advertisement and program after program by the home shopping networks of the rising price of gold. In fact, the spokesmen have gone out of their way to stress gold prices, and the fact that these coins are layered in PURE 24K GOLD. So they must be valuable right?
Well, this particular example of the Liberty Commemorative Coin Bill bought is made of copper-nickel layered in Gold, but what the American Mint and Home Shopping Networks and all of the other companies Bill bought his coins from DO NOT TELL him or any other customer, is that there is less than 2 CENTS worth of gold in these coins. Not only do these places emphasize the rising price of gold, they stress the limited quantities and availability of these items. Available at these low prices for a limited time only!
This Liberty Commemorative coin has a metallic content value of less than .25 cents, which is all it is really worth. It isn't even a US Government issue coin. It isn't even legal tender. It is a nearly worthless medal slug, minted by a private corporation, for the purpose of making a profit for itself at the expense of uninformed buyers, who have been seduced by assumption-inducing tactics, plain and simple. Bill Johnson didn't get screwed when he sold his coin collection. Bill got screwed when he bought them. Bill spent tens of thousands of dollars on items that were worth less than a penny on the dollar.
Another one of the gimmicks some of these companies use is to Silver, Gold, or Platinum plated, regular issue US coins. Bill had a collection of Gold and Platinum State Quarters, and New Presidential Dollars that he purchased from a few of these companies. The Presidential Dollars were being sold for $9.95 each, and touted as an unbelievable bargain. Really? They take a regular issue dollar, and plate it with less than 2 cents worth of gold or platinum, and sell it to an unsuspecting customer for almost $10 dollars?
And those State Quarters? They will be worth a quarter for lifetimes to come. They minted billions of them. Gold plated, silver plated, platinum plated, makes no difference, the additional plating is worth less than 2 cents.
But Bill isn't alone. There are countless people falling for the sales pitches of companies like the Franklin Mint, American Mint, and the Home Shopping Channels. Billions of dollars are being bilked from under-informed buyers like Bill every year.
So Bill Johnson did lose his entire life savings of tens of thousands of dollars by purchasing what turned out to be face-value items, or worse, absolutely worthless metal slugs containing pennies worth of precious metal, simply by slick, and purposely misleading statements and advertising.
One of the easiest ways to prevent this from happening to you, is to simply ask the company you are thinking of buying an item from, what their return, or buy back policy is. If you are purchasing any coin, or numismatic item, a reputable company will ALWAYS purchase or repurchase the items from you, or at least give you an appraisal of those items. Especially if originally purchased from them. Beware of any company that offers only a 30 day refund, and especially beware of any company that will NOT buy back any of the items they sell, or refuse to appraise the value of those items. That is a warning sign that they are truly worthless.
For example, I personally sent an email to the Franklin Mint requesting information about their return/buyback policies. This is what I received back:
"Thank you for your email.
While our policy is to accommodate our collectors' requests whenever possible, the Franklin Mint does not buy back collectibles. Please also note that The Franklin Mint offers a 30 day cancel/return policy.The Franklin Mint does not have the facilities to appraise, evaluate, or track the aftermarket value of our products. Due to constant fluctuations in the collectibles market, we are unable to quote current prices. Nor do we recommend or endorse any agency or company in the secondary market. We hope this information has been helpful.
Sincerely, Elizabeth Jennings
So these companies are more than willing to sell you these "valuable" items, but unwilling to buy them back, and go so far as to refuse to offer any valuation of the items. RUN RUN RUN away from any company that cannot stand behind the products that they sell.
The lesson here is to be an informed buyer. Don't buy anything from any company that is unwilling to buy the items back. A true investment is one that you are able to buy, and sell easily and quickly, and although there are never any guarantees of future value, buying from a reputable dealer who will offer a free appraisal of the items, will certainly be a big help.
Charlton Coins will always repurchase the items we sell, at fair market prices. While no investment is guaranteed to have a high rate of return, our professional team of experts can certainly help you avoid costly mistakes and steer you in the right direction to make informed buying decisions.
Charlton Coins - A leading buyer and seller of coins, coin collections and estates, silver, gold, and platinum bullion. 508.335.6788
Wednesday, April 7, 2010
Here's a list of the most frequently asked questions regarding US silver coins:
#1 What US coins contain silver, and how much silver content is there in each? How do I tell if my coins are silver?
- All US Dimes 1964 and older contain 90% silver content, or .07234 oz. of silver.
- All US Quarters 1964 and older contain 90% silver content, or .18084 oz. of silver.
- All US Half Dollars 1964 and older contain 90% silver content, or .36169 oz. of silver.
- All US Dollars 1935 and older contain 90% Silver, or .77344 oz. of silver.
*A few additional US coins that have some silver content:
- Kennedy Half Dollars 1965-1970 contain 40% silver content, or .14179 oz. of silver.
- Jefferson Wartime Nickels 1942-P thru 1945-S contain 35% silver content, or .05626 oz of silver.
#2 How do I figure out how much each silver coin is worth?
All one has to do to figure out the silver content value of each coin is take the current silver bullion price, and multiply that by the silver content of each coin. Keep in mind this will be the retail value of the silver coins, and not the wholesale, or trade-in value of the coins. More on this later. Today silver closed at $18.13/ounce. So let me give you a couple examples.
Example #1: A 1964 Roosevelt Dime $18.13 x .07234 = $1.31
Example #2 A 1950 Franklin Half Dollar $18.13 x .36169 = $6.55
That is the simplest way to figure out the current retail silver value of each of your coins.
The way dealers figure out the value of silver coins is to use a Face Value multiplier. When you call a dealer to get an estimate of your silver coins value, they will typically quote you a Face Value multiplier for a price. In otherwords, a silver half dollar has a retail value of approximately 13 times it's face value, based upon today's silver price of $18.13. And this multiplier will change with silver price fluxuations. Here's how the dealer would figure it out.
Example #1 Silver Half Dollar .36169 x $18.13 = $6.55, $6.55/.50(face value) = 13.1
Example #2 Silver Quarter .18084 x $18.13 = 3.28, $3.28/.25 = 13.1
This is just a shortcut dealers use to quickly figure out the value of the silver coins without having to do a lot of complicated math. It's easy for a dealer to quote the silver value to a customer by asking how much face value in silver coins they have. The dealer can easily quote a price for your silver coins by offering a quick quote of say, 13 times face value. For example, a customer may have 500 silver dimes, or $50 face value. A dealer only has to multiply 50 x 13 = $650 to quickly figure the retail value.
One thing to keep in mind when figuring out the silver value of your coins, is that the figure you come up with is the retail value of those coins. The retail value is what the dealer would be selling those silver coins for, so if you are selling your coins to a dealer, the dealer will be offering you a wholesale value for your coins.
Typically a dealer will offer you a wholesale price, about 80%-90% of the retail value for your silver coins. A dealer will offer you closer to 80% if you only have a few coins to sell, and closer to the 90% if you have a large quantity of silver coins.
For example: Say you have $10 in face value of silver coins. The retail value at today's silver price of $18.13 is 13.1 x $10 = $131. A dealer would typically offer you 80%-90% of that 13.1 multiplier, or 10.5 - 12.0 times face value, or $105-$120, leaving the dealer a small margin for profit. A dealer must be able to make a profit, and is certainly entitled to do so, that is why they are in business. In the case that a customer has a large quantity of silver, say $1000 face value in silver coins, a dealer may be able to offer more than 80% of the retail value for that size purchase. Each dealer is different, and I always suggest calling around and checking prices.
You may also wish take into consideration the service each dealer is willing to offer you, in addition to the prices they offer for your silver coins. Some people may be willing to sell their coins at a slightler lower price, especially if a dealer is willing to come directly to you to make the transaction. First of all it saves the clients time. Secondly, it may be inconvenient or not possible for a customer to physically carry a large collection of coins to the dealer. Or perhaps a client may be concerned about the safety or security of carrying around a significant amount of coins or cash, and may feel more comfortable if the dealer is willing to come to them.
Charlton Coins always offers to come directly to the clients home, place of business, or secure agreed upon location, to make a transaction. Whatever is most convenient for the client, Charlton Coins is pleased to offer this additional service at no cost to our clients.
Charlton Coins can be reached at 508.335.6788
Friday, March 5, 2010
I saw an ad today on TV for the "$50 Gold Buffalo Tribute Proof", from the National Collectors Mint.
First thing I noticed was how "Official" sounding their name was. Like they were trying to sound trustworthy and official. I can see how many people would assume they are an authority in numismatics and are looking out for our best interest by the tone and context of their ad, but don't be fooled by official sounding names, or a crafty sales pitch.
Secondly, the very FIRST thing mentioned in the ad are facts about a coin they are NOT selling!
The advertisement starts off by telling you about the purest gold coin the US Mint ever minted, the .9999 ("four nines the ad says") of Pure 24K Gold $50 Gold Buffalo Coin. The ad then goes on to suggest that the US Mint had to stop production because they ran out of gold blanks to make any more coins out of. But, YOU can reserve your very own copy of the $50 Buffalo Tribute Gold Clad Tribute Proof in 31 mg of pure gold. How much gold is 31 mg of pure gold? Do you know? Does the average person know the value of 31 mg of pure gold? Read on to find out the actual value of 31 mg of pure gold.
The ad is misleading for several reasons. The first of which is, that the purpose of this particular advertising is to purposely mislead to you to make your own FALSE assumptions about what they are actually selling. They are telling you about the original $50 Gold Buffalo Coin, and how special it is because it is the purest gold coin ever minted by the US Mint, which it is, but that is NOT the coin this advertisement is selling! Secondly, they want you to assume that the US Mint ran out of gold blanks to make more coins out of. Since when does the US Government run out of gold? Fort knox is full of gold. This ad makes you assume that these coins are scarce.
The advertisement goes on to state that this $50 Buffalo Tribute Coin they are selling is a special release issue minted of 24K Pure Gold, a clad "masterpiece" that can be yours for just $19.95. The very next sentence mentions that this low price can only be guaranteed for a very limited time because gold is skyrocketing past $1000 per ounce. OH MY GOD you better get one right now before gold goes up or they run out of these coins!!!!!(please note sarcasm)
The entire advertisement is purposely misleading. The fact that the ad makes suggestions of scarcity, how pure the gold is in the original coin, and that these 31 mg 24K pure gold clad Tribute "materpieces" may not be available for long because gold is skyrocketing past $1000 per ounce. And you can only order a maximum of 5 of them.
There are plenty of folks out there that will fall for this type of advertising. If they are buying these tribute coins because they just want a "replica" of a coin they could not afford, ok, I have no problem with that. But...
What I understand is, that a majority of buyers are under-informed folks who fall for advertising like this because they "think" they are getting a good deal. The advertising leads them to make false assumptions about what they are actually buying. The ad makes the average person believe they are getting a scarce issue coin made of 24K gold, and it may only be available for a limited time because gold prices keep going up, and they better ACT NOW.
Here is the lesson to learn:
#1 31 mg of PURE GOLD is valued at 1.2 cents at today's gold bullion price of $1131 per ounce. This Tribute coin has less than .001 ounces of gold content. That's correct, less than a thousandth of an ounce!! Worthless.
Yup, that's corrrect, this advertisement for this Tribute coin contains less than 1.5 cents worth of gold. So why did it mention that these coins may not be around for long because gold is skyrocketing past $1000 per ounce???
#2 Advertisements with official sounding names, mentioning all kinds of facts about a coin they are NOT selling, should be a RED FLAG for anyone interested in buying coins or bullion.
#3 The National Collectors Mint is trying to sell you 1.2 cents worth of gold for $20 bucks. Is that a good deal?
One of the toughest jobs I have as a dealer is explaining to the good folks who are trying to sell me their collections is, why I am only offering them so little for some of their items, like these "replicas or copies". When they explain to me that they paid $20 or $30 dollars for these when they bought them, and they are only being offered .50 or $1 for them, they realize at that point that they had been "taken" by the slick advertising of some of these unscrupulous sellers.
Being an INFORMED buyer is crucial to being a successful collector and investor.
Wednesday, March 3, 2010
Throughout these blog posts you will learn the ins and outs of the hobby, from the perspective of a long time collector turned family operated business. You will learn how I started collecting wheat pennies as a young boy, and turned those very coins into my own business. You will also learn things like:
- How to get started in coin collecting.
- What should you buy and where should you buy it.
- Who can you trust?
- How to buy and sell on E-Bay.
- Learn the Art of Coin Grading.
- What determines a coin's value.
- How to determine if a coin has been cleaned, polished, or altered.
- How to start your own coin business.
And much much more. Stay tuned and please sign up to my blog for our most recent posts and information!
If you have any questions or comments please feel free to post them, or for any inquiries please feel to give us a call at 508.335.6788 or visit our website at: www.charltoncoins.com .
Find out how a one gallon plastic milk jug and the generosity of one individual changed my life when I was about 7 years old...