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Rare Coin Market Update January 2, 2005
Hello All and Happy New Year 2005,
2004 was a great year for everyone involved in the rare coin and precious metals business. From the collector, investor, dealer to speculator, not many people have anything negative to say about 2004 in this business! Since gold-bottomed 4 years ago, the yellow metal is up 78%. The buying activity in the last 12 months for rare gold and silver coins has been nothing short of breathtaking. In several series, particularly in the realm of Early Gold, we've seen some prices double. There also seems to be a growing interest for rare coins in general by the investor crowd (see WSJ, Dec 1, 2004). More people than ever before are involved, one way or another in coins whether buying coins, starting collections, investing in rare coins and precious metals, and even becoming or trying to become coin dealers, as we've seen a virtual explosion of activity at coin shows, rare coin auctions and internet marketplaces such as EBay and the like.
With this kind of activity though, the adage "Sell when it's hot, Buy when it's not" really takes on a special meaning and I urge you to carefully consider what you are doing, examine your motives, take stock in where you are placed right now, with whom you are doing business with, and be ready to make changes as the times they really are a changing in this fast moving coin market atmosphere. I'd like to share with you a personal story of which I believe is quite relevant to where we have been, where we are today and where we might be headed in 2005 and beyond.
Nearly a decade ago, I found myself in a financial position to actually "collect" coins almost the same as my customers have been doing for so many years. Strange as that may sound, it's not easy for a dealer to be a pure collector as with various expenses among other things, the dealer is sometimes left in a seemingly unfortunate position of "having" to sell material, and not be able to enjoy these little spheres of gold and silver as "normal" people are able to do. That being said, I found myself with a virtually paid for home, and considerable cash flow, so I was finally in a position to start and build a collection of coins which would not be advertised, would not be "for sale or trade", but would be my collection, and actually part of my retirement fund. I had always liked Early US Gold coins, had been the conduit for many many examples in all series but could never quite afford to keep them for me. This was about to change when I started buying (actually accumulating) Early Eagles (1795-1804) in mostly about uncirculated condition, with some specimens lower, some higher. I bought my first one, a 1799 Eagle, graded by NGC as AU-58 and paid $4500.00 for it, which at the time was average money. A beauty that by today's grading standards might be a candidate for a "crack-out" or upgrade and I was more than pleased. The collection was started! It was my intention to build a collection of these early pieces of Americana in earnest and I did just that. In the following year, I bought over a dozen of these gold coins with an across the board average cost of under $7,000.00 each, then in year two, I bought nearly a dozen more of them, along with a 1796 Eagle, in PCGS AU-58 for the then whopping sum of nearly $35,000.00 and this was PQ (premium quality) money for that coin (which by the way, it's been resold by someone else in a higher grade holder, in excess of 6 figures) It was my belief from an investment point of view that the more common early eagles would someday be worth 20-25K. Very few collectors were actively looking to buy these coins and at least for the first 2 years, I had no trouble at all in buying them. This was to be a nice chunk of cash on the side for my retirement not to mention the kick I was getting in accumulating what I believe was one of the largest inventories of early eagles ever assembled. In year 3 however, these coins really started getting difficult to find, much less buy until not many were offered to me at all, at least at prices I could justify paying and so I just sat tight with what I happily acquired. Oh, I forgot to mention one coin that I bought for a customer of mine which was a 1795 9 Leaf Eagle, in PCGS MS-61. I paid 90K for that beauty and flipped it to him for around 100K. His wife got cold feet and he finally sold the coin thru me at auction about 18 months later where it realized $178,500.00. I believe that coin was also upgraded and imagine what it's worth in today's coin market!
I went into semi-retirement at age 45, moved overseas (Asia) which was about 6 years after I started this early gold eagle collection. After about 2 years of this new adventure however and after getting my brains beat in financially it was time to come home and face the music. I found myself having to start selling parts of the collection to pay bills and for cash flow as it was time to be a full time coin dealer again! The "lowest" wholesale price I got for the more common ones at the time (early 2003) was $10,000.00 and unfortunately for me, it seemed that this series was just starting to take off in price. I couldn't wait long though and sold most of them for between 10K and 14K. Sometime in early to mid 2004, these coins were "in-demand" for 15-17K and now I would have to pay 20K although some have sold for more than that at auction. The question now is, how willing am I to buy these coins for 20K? Not very willing I think, and frankly I am on to buying other coins, which in my opinion will show similar gains in the future ahead. If you own any of these early eagles, it is my opinion that you would be doing yourself a big financial favor by getting OUT of this area as soon as possible. I can help you if you would like me to do so. It's time to sell these and move on to other areas in my opinion.
By the way, I can cite many more examples of similar adventures with rare coins, this is just one, but one which is personal to me and so I used myself as an example to you all.
We've examined one series which I'm sure you'll agree that you wish you knew me then, or wished I was successful in convincing you to buy some of these once upon a time. Hopefully you're really thinking now as to the possibilities that exist in Numismatics, not just from a standpoint of making a few bucks (although that's a good thing right?), but also what to do, when to do it, and with whom to do it with.
In my opinion, there are many similar possibilities that exist right now in the world of rare coins. And it's not rocket science, but mostly common sense at least to anyone who has been in the business for any real length of time. Maybe you've been into coins for a while but not exactly overjoyed with where you stand right now. Maybe you're not totally confident in what you are doing, and maybe you didn't have a plan to begin with. Now is the time to make changes. Set down a real plan and then take action to get it started. Examine what it is that attracts you to coins and ask yourself what do you want to accomplish in what time frame. What about the dealer or dealers you're doing business with. Are they "really" connected or just merely bourse floor buyers and sellers with no real inside connections? Do they have a specialty or will they try to buy and sell just about anything that crosses their path? Remember this is a large and diverse business. It's important to bond with and buy and sell intelligently with people who know your goals and who know the particular part of the business or series that you are interested in. Or you'll get destroyed in short order and never quite realize the returns you would like to get, or have the fun getting there.
The collecting of coins or perhaps better put, the collecting of "rare" coins is nothing new. Coins have been collected almost since the first coins were made thousands of years ago for a variety of reasons ranging from collecting for the art, the history, the desire to own something portable and confidential to ones own personal likes, for the accumulation of a quiet wealth. The list could go on to a point where I could write a book just on the subject of "why men collect coins", but obviously this isn't the right venue in which to do this. However, in the past decade or so, this "collecting of coins" has become so big that the press has on many occasions released news stories about the US Mint and it's State Quarters programs, to reporting the multi million dollar prices realized for gold and silver rarities like the 1804 Silver Dollar, the 1913 Liberty Nickel, and the famed 1933 St Gaudens Double Eagle, and now at the tail end of 2004, we have the Wall Street Journal doing an actual story on the collecting and investing aspects of rare coins. Amazing really how mainstream coin collecting has become.
These times are without question witnessing the greatest base of collectors and investors ever seen in US history being formed, who are not only active, but becoming serious participants in this great hobby. This my friends spells good times and a most interesting future ahead for we coin "collectors". And in the months ahead, we will see more headlines in newspapers reporting as we most likely will from the Florida United Numismatists Convention in less than two weeks where more than 60 million dollars in rare coins will be auctioned in roughly a weeks period of time, which will bring even more information and news to the forefront and expand the base of collectors even more.
Please take heed to these changes and take action with your own coins, and goals as the great times we've seen thus far have only just begun. Just remember a few things, have a plan, be connected and sell when it's hot and buy when it's not. You'll be happy you did.
Cordially,
Thomas M. Pilitowski
U.S. Rare Coin Investments
P.O. Box 496607
Port Charlotte, Florida 33949
Tel: 941-629-4765
Fax: 941-629-6532
Toll Free: 1-800-624-1870
Email: tompilitowski@yahoo.com



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