Insider's Tips for Buying and Selling Coins

Get the Inside Scoop on Buying and Selling Coins

Me holding 1 and 2 dollar Australian coins closeup
Derrick Coetzee/Flickr

Whether you are buying or selling coins, you can increase your advantage when negotiating with coin dealers by understanding how things work behind the scenes. One of the biggest problems I see, as an observer of the coin collecting marketplace, is the wide gulf between what the average consumer expects from a coin dealer, and what the average coin dealer believes he should provide to the consumer.

The majority of these differences boil down to trust.

The average consumer thinks he can trust the coin dealer to give him an honest appraisal and pay a fair price for the coins he is selling. The average dealer feels it is right to pay the lowest price he can for the coins, to maximize his profit, and that it is up to the consumer to do his homework. Fortunately, by finding this article, you will be on a much better footing when dealing with coin dealers.

The Coin Dealing Business - A Brief Overview

There are two major categories of coin dealers - the wholesaler and the retailer. The wholesaler aggressively seeks to bring new material into the marketplace, and often attends coin shows, local auctions, and runs advertising offering to buy coins. Most of this material is then sold in bulk lots to retail-based dealers.

The retail coin dealer gets most of his stock from the wholesalers. Although he, too, may attend coin shows and buy locally, most of his business income is from servicing a clientele of single-coin buyers.

A dealer of this type is more likely to pay you higher prices for your coins, since they don't have to pass through two sets of hands before being sold, but local dealers are also often the worst of the cheats! This is because the larger dealers are more likely to belong to organizations that require them to subscribe to a Code of Ethics, such as the American Numismatic Association or the Professional Numismatists Guild.

The number one consideration that anybody who buys or sells coins must consider is recourse. What kind of recourse do you have if things go bad?

Wholesale Coin Prices

One of the best ways to arm yourself against the savvy coin dealer is knowing the wholesale prices he pays for his coins. A very widely-used standard in U.S. coins is the "Grey Sheet," sometimes referred to as the "CDN." This is the Coin Dealer Newsletter, which is printed on grey paper stock, and comes out weekly.

Most serious coin dealers subscribe to this publication, which lists the "bid" and "ask" values for every major type of U.S. coin, plus mint sets, slabbed coins, and banknotes (called the "green sheet.") "Bid" prices are the prices that dealers are paying if another dealer brings the coins to them. "Ask" prices are the prices for coins a dealers asks to buy. For example, if I call and ask to buy 100 common date Silver Eagles, I'll be quoted the "ask," or selling price. But if I want to sell the 100 Silver Eagles, I'll be quoted the "bid" or buying price.

The difference between the two prices is the profit margin. It is quite thin for most coins.

An important concept to remember when discussing Grey Sheet prices is that we are talking about the wholesale market. Two things characterize this market: (1) Deals are usually done in bulk numbers, so the prices don't refer to single coins, in general, and (2) Deals are minimal service transactions. You can't go up to a coin dealer who has to appraise and grade your collection for you, and expect him to pay Grey Sheet "bid" prices. However, the Grey Sheet should give you a good idea of what your coins are worth in a general sense, so you don't sell a $1,000 coin for $200.

Coin Dealer Profit Margins

As a general rule, the more common a coin is, and the lower grade the coin is, the higher the profit margin (expressed as a percentage of the selling price) for the dealer must be. The reason for this is that low-grade, common coins are harder to sell. Another reason for this difference is dollar value. If a dealer buys a common date, heavily circulated 1940 Wheat Cent from you, he might pay you 2 cents for the coin and sell it for 5 cents, making a greater than 100% profit (but still only 3 cents!) But if he buys a key date, heavily circulated coin, such as a 1931-S Wheat Cent in Good (G-4 grade), he might be able to pay you $50 for it, even though he will make only a 20% profit when he sells it for $60. The difference here is that the 1931-S is likely to sell much faster than the 1940 Cent, plus the dollar value involved in measurable.

Another general rule of wholesale coin pricing is that the more valuable the coin is, the smaller the profit margin needs to be, percentage-wise. If a coin will sell for $15,000, a dealer can make a nice profit if he buys the coin for $14,000, but he might have this coin in is inventory (and his investment in it tied up) for a long time before someone who can afford $15,000 a pop for coins comes along.

All told, the profit margins for coins are primarily determined by these three factors:

  1. How quickly the coin can be resold (market demand)
  2. How high the dollar value is (capital outlay)
  3. The condition of the coin market overall (market dynamics)

Coin dealers must strike a balance between these factors to remain profitable.

Coin Dealers and Common Junk

One of the reasons there is such a disparity between what the average consumer expects, and what the coin dealer actually delivers when it comes to buying coins from the public is that coin dealers see vast amounts of common "junk." By "junk" I mean common date wheat pennies, circulated Buffalo Nickels and Mercury Dimes, worn Washington Quarters and circulated Franklin and Kennedy Halves.

Coin dealers are offered so much of this type of material that many of them get tired of seeing it. They give such material the cursory once-over and offer low-ball prices for it based on long experience. Usually people have already pulled out the more valuable coins, leaving the "junk," (or at least the the dealer must assume so.)

The customer, however, feels that his coins haven't been given a fair appraisal. What if the dealer overlooked something rare? Shouldn't he look each coin up to be certain?

Continued on the next page. >

Edited by: James Bucki

People who sell their coins to coin dealers often feel they have been given short shrift. The dealer might stir his finger around a box or jar of coins for a minute or two (if that long) and then make an offer that seems too low. Even worse are the cases where the dealer opens up the blue Whitman folders, takes a quick glance, and then offers $9 for the whole collection. How can he know what the coins are worth if he doesn't even look at each one first?

Is he trying to rip me off?

The Realities of Selling Coins

As explained on the previous page of this article, coin dealers see a vast amount of what they commonly call "junk." Although these coins do have a (minimal) value, they are so often seen for sale, but so hard to sell, that dealers are reluctant to buy them, and when they do, they can't afford to pay much money for them. When someone brings in a large can of Wheat Cents, for example, most dealers will run their fingers through them to assess the range of dates and average quality of the coins. If they appear to be run-of-the-mill common date, circulated Wheaties, the dealer will usually offer a flat rate for the lot, either a price for the load based on his estimate of the weight or coin count, or he might run them through a coin counter (or weigh them) and pay a per piece price. Whatever he does, he assuming two things:

  1. That any valuable dates have been removed from the lot already, and
  1. Even if the coins haven't been searched, the valuable dates are so rare anyway that in all likelihood, none of them will turn up in this lot.

Therefore, he pays a "worst case scenario" price for the coins. The same is true for most of the coins minted in the twentieth century, whether they are Buffalo Nickels, Mercury Dimes, Washington Quarters, etc.

A quick assessment of grade and dates is done, and a bulk price is offered, frequently based on the bullion value of silver for coins made of this metal. If the dealer should happen to find a rare coin in the batch, that's great, but most of the time he doesn't, and such coins are not worth the time it takes to check each one.

If you want to maximize the price you are paid for such coins, you'll need to sort them yourself into batches, and be sure to remove any coin worth ten times face value or more according to the Red Book. The way coins are sorted for maximizing the price varies from type to type, but for Wheat Cents sorting them by decade will help somewhat. For example, at the time of this writing, Cents in the 'teens go for 15 to 18 cents each on up (depending on average grade.) Cents in the 1920's go for 10 to 12 plus; Cents in the 1930's go for 6 to 8 on up; but circulated Cents in the 1940's and 1950's usually go for 2 cents each. Mixed, unsorted Wheaties go for 2 cents each, or maybe a little more if the dealer sees they are heavy in early dates.

By sorting them into decades, you've improved your profit margin. Further sorting, into individual years can also help if you have enough to make full rolls.

Selling Coin Collections

If you have complete collections, whether in folders or albums, it is best to leave them in place. But when it comes to selling partial collections, keep in mind that dealers can often make really quick decisions about the value. For example, most dealers who buy coins see dozens of those blue Whitman folders every month. They can glance quickly at the coins in the folder and appraise the value of the collection based on which holes are empty (they are usually the same 3 or 4 key coins.) Without those few rare "keys," the coins might as well be in a jar or shoe box, and the dealer gives you the price accordingly. If the coins he sees in the folder are of higher than normal grade, his offer should be higher, too, but most people feel slighted when coin dealers merely glance at their collections and then make offers.

The same principle applies to coins in other folders, such as Dansco albums and other coin folder and album brands. It only takes a moment for someone who has the key dates memorized to check to see if they're there.

To maximize your profit when selling coins in these folders, especially the ones in low-cost folders like the Whitman type (where you press the coins into little holes in the cardboard,) you can remove the coins from the folder and put each one in a 2x2 coin holder. Mark the date and mint mark, if any, on the holder (but don't put down grades on these holders if you don't know what you're doing.) Keep a separate list of the Grey Sheet or Red Book value for each coin if you want (with the grade estimated as best you can) unless you know you're going to sell them all anyway, no matter what (as long as the offer is reasonable, even if low.) There is something about a coin in its own "place" that makes it stand out as an individual, and although the dealer will still basically price the whole group together, you'll probably get a markedly higher offer than if you'd left them in the Whitman folder. Part of the reason for this is psychological; making each coin its own, rather than as part of an incomplete collection, it seems to be worth more. But part of the reason is practical, too. If the coin is already in a 2x2, the dealer will save time and a bit of expense, which he can pass onto you.

Selling Coins in Slabs and 2x2's

If the coins are in slabs (plastic grading service holders,) they are generally worth more than the same coin that isn't in the slab. How much more depends on the quality of the slab it's in. If it is a PCGS or NGC slab, the coin should trade very near the Grey Sheet "bid" price, since these prices are for "sight unseen" coins which tend to be among the lowest examples in that grade. If the slab is ANACS or ICG, it is still pretty solid, but not worth as much as the top tier of PCGS and NGC.

If the coin is in any other slab than these, it is usually worth about the same amount than if it was in a 2x2. The best way to maximize profits for non-premium slabbed coins and 2x2's is to consult the Grey Sheet and try to get near the "bid" price for your coins. Knowing the values ahead of time is the key, but remember that the dealer needs room to make a profit.

Edited by: James Bucki