Thursday, March 15, 2007

Ancient Coin Purchasing: Math 101

I am sharing a few thoughts about purchasing ancient coins. I receive lots of inquiries about my coin purchases each time I post a nice ancient coin I have cleaned. I have access to the same vendors as my readers have. I have been buying quite a few coins for the past five years and have learned a thing or two that helps me.

The very first thing I do is read or ask about the vendors return policy. If I get a “poor” lot of coins I want to be able to return the coins to the vendor and still maintain a good relationship. To date I have never returned a batch of coins because of this understanding. I have had a couple vendors modify my lots because of very poor quality or because of a miscount. I find the vendors I deal with to be fine people who are simply trying to make a few bucks and in many situations enjoy the hobby too.

Now let’s get on with the ancient coin math. I think it took about a year for me to become wise to the following and I call it my “Ancient Coin Math 101.” Let’s assume we buy a lot of 30 coins at a buck each. Now remember I am dealing with my findings and all vendors and deals will vary. We are dealing with unknown quality. Currently I find I get about 20% attribution from a typical batch of dollar coins. Of course, the attribution rate of dollar coins was much higher five years ago but I am speaking of this year.

Now let’s assume that I buy a batch of “premium” coins from a vendor for $2.50 per coin. We just spent $75.00 dollars on the same quantity of coins we paid 30 dollars for on dollar coins. However, I expect an 80% attribution rate from the 2.50 coins as opposed to 20% from the dollar coins. One other thing, not only am I getting more in attribution quantity but I find the quality of the 2.50 coins is very much higher!

Consequently, I have six lower grade attribs in the 30 coin dollar batch and these six low quality coins have, in reality, cost me 6.00 dollars per coin! Let’s look again at the “premium” grade coins. Our coin purchasing knowledge indicates we should expect 80% attribs. Our 101 Ancient Coin Math tells us we should harvest 24 higher-grade coins and the cost per coin? $3.13 per coin. It is now almost 4 o’clock in the morning. I hope my math is correct. Oh well, you guys will let me know!

In reference to the information I have shared I add the following. Some dealers do not like the term “premium.” I use it often when asking dealers about their coins and I think they know what I am asking. Another thing. There is no way I or anyone else can guarantee you the ratio of good coins to bad coins I have spoken of. Please remember I am sharing my personal experiences with you as I have learned. I received one small batch of dollar coins without a single attrib. By the same token I think some of the finest coins I ever bought were dollar coins I bought a couple years ago for a buck! However, I think those days are long gone.

It is incumbent on you to determine the course you should take. I suggest you keep some kind of record of coins you purchase and from whom you purchased the coins. I keep notes either on my bags or in the coin bags. I have developed a “feel” for about how high the attribution is running. Currently, I have two or three dealers I rely on. These are dealers who post to us on a continuing basis. I hope this helps you to find some kind of economic equilibrium in your purchasing. Let me hear from you and let’s ask some questions. I would also love to see feedback from dealers. God Bless.. Jerry..

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