In last month's Point of View, we commented about ancient coin pricing and potential for appreciation. Not too surprisingly, we stirred a response or two. One, in particular, brought up some interesting observations, and has prompted us to continue the discussion this month. The letter is signed "A West Coast Collector", and we encourage you to take a temporary break here and read the letter (p.4), to which we have added the header "Observations on Investing".
The writer suggests that most ancient Greek coins are vastly overpriced and terrible investments because they are neither rare nor desirable.
The writer claims to have sold the lower 15% of his or her collection for a net loss of 60%. This ostensibly occurred because the collector, out of ignorance, bought poorly. The good news is that the remaining 85 % (the choice pieces we presume) need increase in value by only 10.5% in order to break even. This is not an insurmountable margin, and our collector/investor may be in reasonably good shape after all. Practically every collector that I have ever known has at some time made purchases that one might describe as a poor investment. This, frankly, is how we learn and grow.
The writer's contention that a glut on the market makes many Greck coins valueless is terribly simplistic. It is clearly an exaggeration to say that there is "virtually no demand" for Philip II or Lysimachos tetradrachms. Both of these coins are very popular issues, and many collectors would like to add specimens of these coins to their collections. The perception of a "glut" is fostered by two circumstances. Recent finds have increased the shortened availability of these types, and the typical price point of these coins falls precisely in a range that has been hit hard by the slow economy of recent years. Many collectors have preferred to wait with purchases of these types because they would rather spend their discretionary income on pieces that may not tum up again. This may indeed cause a temporary "glut", but it does not mean that the market is forever dead for Philip II or Lysimachos tetradrachms. In fact, what it means is that the astute collector can now pick up a choice ex- ample of one of these coins for little more than the traditional price of an average specimen. Now is a good time to buy these coins, not a good time to sell these coins-and certainly not a good time to look for profit on the sale of one of these coins bought several years ago. They are usually not thought of as investment coins, but in reality, they are probably better than average as far as coin investments go. Ancient coin investors tend to be a lot like pork producers-when the price of pork goes up farmers buy more hogs, when the price goes down, they sell their hogs. It doesn't make any sense at all to me!
The overall price of Greek coins has, contrary to our collector's belief, advanced over the past fifteen years. There are certainly cases where a specific coin sold for a higher price fifteen years ago than it did in recent sales, but there are also scores of coins, mostly less expensive coins, that have become more ex pensive over the years. Alexander drachms, for example. are selling for much more today than they were fifteen years ago. Why? Because they are increasingly popular in jewelry, and there aren't enough of them to go around. Greek bronzes have also increased in value. as have silver fractions and archaic issues. Why? Because they are comparatively scarce and proportionately inexpensive. The idea that Greek coins are "vastly overpriced" is a perception that is not supportable in fact. Greek coins that are absolutely unique, no published example anywhere, have been sold for much less than $1,000. Some have sold for under $100. When was the last time a comparably rare U.S. coin sold for that kind of money? The argument that there are more collectors of U.S. coins is meaningless, because an auction only requires two bidders to set a new record.
Many coins are sold in "inexpensive mail-bid sales", and rightfully so. It is genera II y true, however, that choice and desirable coins will be offered privately or in a dealer's stock before they ever make their way to a mail-bid sale. While coins can often be purchased more in expensively in that venue, remember that the first pick is probably going somewhere else-admittedly and properly at "dealer's retail". Our collector's comment that "only one half of one percent...are worth buying at anything like 'dealer's retail''' really boils down toa persona l opinion about what constitutes "choice and desirable". I haven't seen two collectors yet that can agree every time on that issue.
The market is unforgiving of lapses in quality as our collector points out; but frankly I wonder how intelligent the "market" is when an EF-but plug ugly - portrait coin brings more than its VF+ counterpart which is a wonderful work of art. Centering and surfaces are important, but they aren't everything. If my advice to "buy what you love" is the worst advice that one can follow, I would guess that may also be interpreted as "none of us have any taste". Fortunately, not all of us are investors, and we can still humor our own artistic sensibilities-even if the market makes us pay for our ignorance and poor taste. Education has never been free.
We sincerely appreciate the comments from our mysterious West Coast Collector and look forward to hearing your point of view!