When I resumed collecting I had no concept of coin populations or differences between MS grades. I grew up in the era when coins had “UNC” or “BU” scribbled on the cardboard holder. I bought what I liked. I thought any coin I bought for less than the PCGS price guide was a “deal”. It was an expensive introduction to collecting. I bought quantity instead of quality.
Rule 1: Do your homework. I maintain a spreadsheet for every series I collect. I list the minimum grade I want for each coin based on population and price (yes, this is influenced by registry points). I don’t buy any coin in a grade less than I want no matter how pretty or necessary to fill a hole in my collection. This disciplines me from bidding on more coins than I should (and keeps Mrs. CC from having to buy all her clothes at Dollar General) and prevents the need to upgrade later which is what happened with most of the coins I bought in the first two months of collecting. Transaction costs (auction fees, shipping, etc.) are a killer in collecting so you have to buy right.
Use the auction house search tools to avoid scrolling through pages of coins you don’t want or need. Many web sites let you post bid notes. Here is an example in the shorthand I’ve developed:
A+ | (@)Tgt 67 | 18/1 PCGS $2400 | 4/- CAC | CC=66 | RedDevil=Null | Auctions under $2k non CAC – last CAC sold on HA for $2500 Hammer+
The first letter is my grade for the coin. I only bid on A or A+ coins. The second section shows the coin is at my target grade of 67. A 67+ were being auctioned that would show as (+)Tgt 67. The third section indicates the population of the coin at and above this grade followed by the PCGS price guide number. Next I note how many CAC coins in that grade and above. Fifth section shows if I own the coin now and in what grade. In this case I do, probably a dog I bought when I started collecting. Sixth section shows what any aggressive bidders I consistently run into have in their collection (thank you PCGS public registry listings). The fact RedDevil (a real person but not his real name) does not have the coin means I am in trouble if he is following this auction as he is never outbid. Finally, I have any relevant auction notes. In this case I show auction prices and what the last coin sold for (here at Heritage Auctions) at hammer+ which translates as what the coin went for including auction fees.
Rule 2: Develop a bidding strategy and stick to it. Early bids can be a tool to gain information on other bidders interest in the coin. My first bid is about 60% of what I want to pay. I do this about 3 days after a coin goes up for auction. If that bid puts me on top I will have a 50% chance of eventually winning the coin. If the initial bid doesn’t put me on top I immediately bid 90% of my maximum. I then discover quickly if I have any chance of acquiring the coin and can focus elsewhere. If my 90% bid is comfortably above the next bidder I can gauge my chance of success which almost always will be less than if my original bid was on top.
Some people bid $1 over the opening $1 bid on a no reserve coin. Next guy bids $1 over that and so on. I have seen $5k coins with six bids and the bid is now a whopping $10. Maybe these people get lucky but I’ve never seen it. Do these people think if they bid $1 a on a thousand coins they will get lucky? They certainly are gaining any information with their bids.
A real life example of the “bid $1 over the last guy strategy”. This coin went comfortably over $3,000 before bidding closed.
A certain subset of bidders will bid only during the last 2 minutes of an auction. I have been winning bidder all week only to be blown away in the last 30 seconds. A coin is worth $250 but I am willing to pay $275 because it is really nice. I always go into the final stretch with my maximum bid already entered. The last minute bidders could have bid $300 a week ago and pushed me out of the bidding but they get some thrill out of swooping in at the last second. I lay traps for those people. If I strongly suspect RedDevil or his ilk is bidding against me I will add to my maximum bid to drive up the cost of acquisition. He will swoop in the last minute with a $500 bid to make sure he captures the prize but will find I already have a $400 bid in place waiting for him so he will pay something over $400 for a $250 coin. This tactic is not as risky as it sounds. If a rational bidder is in play they may bid $300 and I will acquire the coin for a little more than I wanted to pay but that is okay. Someone would have to be only half irrational and bid $390 for me to really lose in this game and fortunately that hasn’t happened yet.
Rule 3: Don’t be a last minute bidder. It is easy to get excited and overpay in a last minute click fest. A secret joy is watching a $250 coin go for $1000 as two last minute bidders get into an ego war. Really, if time didn’t run out they would gladly pay $2000 if they could. It happens at least twice a month on some coin I am tracking. The record for this is a $1000 coin that went for $5000 and $4200 of the bidding came in the last 45 seconds!
Rule 4: Auctions just aren’t about buying and selling coins. Auctions are great sources of information on pricing and market trends. I often track coins I don’t intend to bid on so I can monitor the market. Do the coins I find ugly really go for less than recent auction prices? Is a coin I bought last summer selling for more or less?
Rule 5: Be patient. Almost no coin is a must have. Frequently when some rarely seen coin you desperately want goes for insane money that will flush other coins out of collections and into auctions. I seldom saw 1943 MS68 CAC Lincolns on the market until a few went on auction and got multiples of what the non-stickered coins were getting. Now the market is awash with them and prices are down. I have seen half of some coins with a population of less than ten hit the auction houses within the last two years. For whatever reason silver PF70 Guam quarters were abnormally rare in auction despite the population numbers. I would have paid $100 for one to help complete my set. Then several hit the auctions at the same time. I had to buy mine as part of a set of three but paid only $12.68 including buyers fees for each of the three. Eventually the right coin at the right price will come along.
Go into an auction with a plan. Know beforehand the most you will pay and only buy coins you really want. Always remember to account for auction fees in your bids. The price guides and auction histories include auction fees so keep that in mind.