Renting Quality Coins? An Alternative Collecting Approach

Originally published on October 8 2017

There are numerous approaches for collecting coins. Some individuals take a traditional approach and strive to complete a date and mintmark set of their favorite design and denomination. Others enjoy exploring numerous design types and will build silver or gold type sets. Then there are others who just enjoy owning early type coins with strict originality and superior eye appeal. Several GFRC customers are what I fondly call the "PCGS blue box collectors". They limit their collection to only one PCGS blue box of 20 coins. As the box becomes filled, the collector must decide which of the existing coins will be sold to make room for the next acquisition. This approach of divesting a coin to add an upgrade leads to an ever-improving collection. Earlier purchase decisions are dispositioned with capital being recovered towards the next purchase.

This latter concept of holding quality coins on a short-term basis is equivalent to "renting" coins for short term possession and enjoyment. Some Blog readers might frown on this approach due to the financial losses to be suffered by short term holds and liquidation costs. Their point is valid if the collector uses a major auction house to sell the discarded items. High buyer's fees and small consignment lots mean no bargaining leverage with an auction house and a sizable financial exposure.

Then GFRC came along with a business model targeting those collectors who wish to remain active with buying and selling at a small "rental fee" for short term holds of quality coins. Yes, a short-term hold of a quality coin is equivalent to renting that coin for a fixed period of time. The longer the holding period, the lower the cost per year to own a coin. For example, let's assume that a collector purchases a better date gem Seated coin with CAC approval for $3,000. Quality CAC coins are always in demand and straightforward to sell at retail to the next buyer. By using GFRC's consignment program, the collector would experience a 9% rental fee divided by the number of years he owned the coin. If the coin was held and enjoyed for two years, the rental fee is $135 per year. How much does $135 buy in today's consumerism environment that would provide the same fun and pride of ownership? Please consider this point carefully as it might just change how you approach the numismatic hobby.

Some individuals see coins as primarily financial assets, like stocks, with breakeven being a minimum requirement while seeking profit upon divestment. These individuals will probably immediately dismiss the "rental fee" concept. But should they?

Individuals who hope to make short term money on coins tend to be Value Buyers. Value Buyers seek to find underpriced coins for short term profit. The issue with this approach is the amount of knowledge required to discern value. Many lower priced coins are value priced due to subtle issues that only an advanced numismatist will comprehend. Value coins can be difficult to sell due to low demand since the internet is rapidly increasing collector education and awareness.

Knowledgeable collectors will purchase the best possible quality and pay the premiums. These coins are easily found on the GFRC price lists; those with a Gem quality rating and CAC approval! Gem coins will be priced above PCGS guides due to superior surfaces and eye appeal. But once purchased, gem coins also provide substantial "pride of ownership" and viewing enjoyment. When the time does come to divest, dealers and collectors will jump at the opportunity to purchase Gem rated coins with CAC approval. Due to strong demand, the asking price may be increased to minimize the "rental fee". In some cases, the demand is so high that the consignor has enjoyed his coin rent free!

Gerry's advice? Purchase coins for their beauty, historical significance and overall enjoyment and acknowledge there may be a "rental fee" at some point in time. You will be a much happier numismatist if employing this collecting philosophy!