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Beware collectible coin promotions

I recently received a promotion for MS63 $10 Indian Head coins at the supposedly fabulous price of $1,195 each. The real market for these coins is just above $800.

The promotional piece is full of misleading statements. For example, it says that the MS63 Indians are “just one grade point away” from MS64 Indians at $1,395 but that the MS63 can be had for “$200 less.” Actually, the real market for MS64 Indians is just under $1,000.

The piece even suggests that while gold bullion sales “require taxes, transaction fees and/or governmental reporting,” there are no such requirements for collectible coins. One-ounce American Gold Eagle coins, the best-selling 1-oz. gold coins in the US, have no reporting requirements, neither purchases nor sales.

A notable missing fact in the piece was that at times all gold liquidates at the same price, be it collectibles or bullion. This can happen when there is a huge run-up in the price of gold, and the sellers overwhelm the market, requiring dealers to buy at prices so that they can off-load the coins to refineries that turn the sold items into pure bullion bars.

In 2017 we saw this happen despite there being no run-up in gold’s price. What happened was that there were no buyers for the collectibles. The stock market and the economy were strong, and telemarketers were unable to foist collectible coins onto the unknowing. Hence, premiums shrank to bullion coin levels.

Most telemarketers advertise on radio and TV. Yet some use direct mail, such as the piece noted above. Their salesmen can be very persuasive. If you are promoted coins that you may have an interest in owning, call CMI before buying from any telemarketer. We can nearly always find the same coins at much lower prices.

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