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The 15 Truths No Coin Dealer Wants You To Know

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THE
NO COIN DEALER
 WANTS YOU TO KNOW 
15
TRUTHS


 
 American Federal Rare Coin & Bullion
1
THE 15 TRUTHS NO COIN DEALER  WANTS YOU TO KNOW!
If you own coins or are considering owning coins chances are you have or will be working with a coin dealer, and chances are they are going to be making a lot recommendations to sell you coins. You need to
walk into that relationship with condence and a basic understanding
of rare coins. Most will try to tell you about the virtues of rare coins and perpetuate the many myths out there. Your main source of information is going to be the dealer that you choose. Unfortunately most dealers
want to sell you coins they make the largest possible prot from.
In over 30 years in the business of buying and selling coins, I have probably heard every pitch, trick and theory there is and have seen too many investors get burned. So, to keep you from making some of the basic mistakes and losing money, I have put together these 15 truths that coin dealers don’t want you to know about. Dealers will not like what’s in this booklet because it will expose many of the fallacies they continue to promote. The following insider’s information will be extremely valuable to you when considering your gold, silver and rare coin investments. I believe when investors are given an honest transaction they are likely to come back for more. So, while some will say my information hurts the market and could scare people away from rare coins, I maintain that an educated buyer is the best thing for the
rare coin market. Please, enjoy and prot with the information I share.

 
 American Federal Rare Coin & Bullion
2
THE OVERWHELMING MAJORITY OF COIN INVESTORS LOSE MONEY
 
Very few people have made money investing in rare coins, except for those who have purchased either bullion related coins or the super rarities. For starters, you can’t even buy the super rarities from 90% of the dealers out there. Why? Because most dealers need to sell coins they can supply in bulk. They sell and promote what they can control. Most buyers are then simply sold whatever their particular dealer is pushing. Most dealers are so blinded by their own rhetoric they never stop to ask why their clients aren’t making any real money on the coins they’ve continued to sell for 10, 20 or 30 years. They rarely evaluate what is really happening, possibly because it would be very inconvenient to discover the truth. The bottom line is that gold has gone up as much as 600% since 1999 while most of the “Hot Buys” in rare coins have barely broken even.Nevertheless, dealers continue to push rare coins year after year
hoping for different results. Isn’t that the denition of insanity - doing
the same thing over and over again and expecting a different outcome? The myths and lies about rare coins:1) Coins are safe2) Coins are liquid3) Coins outperform gold4) Coins don’t go down in value
5) Coins are safe from conscation
6) Coins are not reportable to IRS
ALL FALSE!
2

 
 American Federal Rare Coin & Bullion
3

 
 American Federal Rare Coin & Bullion
4
The rst sign your dealer is lying to you is if your dealer shows you charts, graphs or statics comparing coin prices in the 1970’s with today’s prices, don’t walk away, RUN!!
This is a manipulation of data and an extreme distortion of facts.  Any dealer who uses grading comparisons from 1970 is outright misrepresenting the coin market. Standards used today cannot be compared to the 1970’s. In fact many of the grades used today did not even exist in the 70’s. Plus, today’s grading standards are much stricter than what was acceptable prior to 1986.
In fact an MS-65 in 1970 would most likely only be considered an MS-
63 or LESS today. This difference in grading can result in a substantial difference in price. For example a $2½ Indian Gold piece is worth $715
in MS-63 and $2000 in MS-65. Therefore, it is misleading to suggest an MS-65 coin purchased in the 70’s is now worth $2000 when it’s most
likely only worth $715 or LESS.It’s bad enough that every dealer knows this fact. The worst part is that the dealers use this as a way to avoid repurchasing coins yet use these misleading charts to make the claim of rare coins’ performance. The only truthful charts begin at 1986 or later. No surprise, these tell a completely different story. In fact the
Coin Dealer Newsletter
only charts from 1990 to present. These charts clearly show that rare coin market as a whole is worth LESS today than in 1990. Not surprisingly, even the best performering sectors are only up 20% since 1990! Add the dealer
markups and the prot disappearsThe charts and statistics most dealers share do not include the mark-
ups, fees and actual prices charged. They are comparing only “bid” to “bid” prices. In reality a coin you pay $1500 for is probably “bid” at only
$1000. So if you’re extremely lucky and that coin doubles - you would only realized a 33% prot. Plus most dealers want to make 10% to 20%

 
 American Federal Rare Coin & Bullion
88
 
SOMETIMES THE PRICE OF A COIN HAS TO DOUBLE OR MORE FOR YOU TO BREAK-EVEN
Why invest in something that costs $1,000, but you can only sell for
$500-$750 the next day?
Most dealers charge a 29% or more spread (not markup) for rare coins. However, many dealers mark up their coins an onerous 50% to 100%...or more, although they go to great lengths to hide it.
You have to understand that “spread” and “mark-up” are different.  A 29% spread is a 41% mark-up. It works this way; a 29% spread,
means that the dealer supposedly will pay 29% less than their selling price. So a coin they sell for $1000 will have a buyback of $710. However, if a dealer pays $710 he is marking it up about 41% to sell it for $1000. So this coin needs to go up about 50% just to break even. This is why most dealers want to trade you into more coins instead of cash you out. If you trade for more coins they can hide their markups.
Dealers deserve a fair prot margin, but if a coin has to go up 50% or even double in price just for you to break-even, it’s not really an investment no matter how “special” it is! Be sure to nd the wholesale
trading range for the coin before you buy. It’s easy to do. Simply call
any dealer and ask for the “Certied Coin Dealer Newsletter price” Be very careful about buying coins that you can’t easily nd independent
price listings for. Those coins are generally esoteric and only for true experts.

 
 American Federal Rare Coin & Bullion
9
 Y 
 
our Break Even Point after dealer 41% Markup (29% spread)
 Actual Coin ValuePrice You Paid
 
$1000$710
Caution: There are few if any pricing guides that I am aware of on the Internet that will show you anything but retail “wish” prices. Even price guides put out by reputable companies and grading services like PCGS
and NGC will show high retail prices-not true liquidation value.
 
Using these self-serving pricing guides guarantees you will end up
paying too much.Wouldn’t it be easier to simply buy bullion coins from a transparent
company like American Federal? Call us at 1-800-221-7694 and we’ll
make sure you get honest, accurate pricing.

 
 American Federal Rare Coin & Bullion
10
“BUY & HOLD” = BUY & LOSE
This is a classic recommendation coin dealers make...even many of the most honest and reputable ones. They tell you to “Buy and Hold”… They say, “put your coins in your safe deposit box until you need them at some distant point in the future“.Many tell you to hold for 5 to 10 years. This is so they don’t have to worry about buying them back.This strategy fails miserably. First of all, most of the coins investors have put away have gone down in value over the past 20 years.
Usually that’s because they were poor investments in the rst place,
and they‘ve only become more common and less desirable over the years. The last real bull market in rare coins ended in 1989. If you missed that opportunity then holding coins has only cost money. If these investors had checked up on their coins every year or so, they would have been able to identify the ones that were bad investments and they could have done something about it. Instead, many investors
simply wait until they need the money, and then nd out their coins
are worth a fraction of what they paid. In the meantime they may have completely missed out making money elsewhere. Worse yet is that most people believe their coins were appreciateing while gold went
up and nd out that wasn’t true years later. Re-evaluating and trading
into bullion coins would have increased the value of their holdings by as much as 792%. Any good money manager evaluates their holdings