Knowledge Is King

One of the "rules" of numismatics, one that you'll hear over and over again, is that there's no Santa Claus in the coin business. Put another way, no one is going to sell you a coin for $200 that's worth $10,000. At least…not on purpose. But, the reality is this - there are plenty of undervalued coins just waiting to be picked off by knowledgeable collectors. The key word is "knowledgeable." If you know what you're looking for, if you have the right knowledge, you can score big.

Just ask Ed Fuhrman, a half cent collector, who recently reported snagging a coin worth $10,000 from a major, on-line numismatic auction firm for a mere $198 plus shipping! The coin wasn't hidden - any of the thousands of collectors who visited the site could have seen it. The coin wasn't mis-described - it was listed in the right section and the grade seemed accurate. If anything, the coin was under-described (you'll see why) and that's where Ed's knowledge gave him the edge.

The coin that everyone saw was an 1804 half cent graded Fine-12, worth approximately $80-90 (according to most price guides). Given that information, most collectors would think Ed overpaid for the coin. Some might even think that Ed was "crazy" or "stupid" for paying so much, or that he'd never, ever, get his money back. But, Ed knew exactly what he was doing and he knew the coin was worth considerably more than what he had paid.

Ed is a student of the half cent series and concentrates on the Draped Bust type issued from 1800 to 1808. He knows all about the die varieties that were made each year and he's always keeping an eye out for the rare ones. Now, don't lose interest and start rolling your eyes here. What I'm about to tell you may be arcane and obscure, but it can make you a lot of money.

Here's what Ed knew: What most people saw in the auction was a common 1804 half cent with a Crosslet 4 in the date and stems at the ends of the wreath. What eagle-eyed Ed saw was a 4 in the date that was so high it nearly touched the drapery of Liberty's dress. He also noticed that the zeros of the fraction were far apart. Ed knew that the combination of the high Crosslet 4 and the widely separated zeros occurs only on Spiked Chin varieties. However, this coin did not have a Spiked Chin. It was one of the extremely rare, early states of the dies, struck before the die was damaged and became a "Spiked Chin." In other words, it was a spike-less "Spiked Chin." In 1981, this was actually considered a separate die variety, of which only two or three were known. Another example was discovered a few years ago, making Ed's coin the fifth or sixth example known.

One might argue that this is information that only a specialist could know, but for an investment of $50-150 in books and an hour or two of your time, you could have known just as much as Ed. That doesn't mean you could have bought the coin for $198 (Ed wouldn't have let you), but you would certainly have recognized the coin for what it was - an extreme rarity at a bargain price.

Which brings me to the title of this article: "Knowledge is King." If you are armed with the proper information, you could be the one to find the next rare variety. How does one gain this knowledge?

1. LEARN. Knowledge comes in many forms. Beginning collectors will benefit from a basic reference book, such as "Coin Collecting for Dummies." For intermediate collectors, the PCGS "Guide to Coin Grading and Counterfeit Detection" contains lots of essential and useful information. Numerous specialty books exist for advanced collectors. For instance, the best reference books for half cents are: "American Half Cents - The 'Little Half Sisters' (Second Edition)" by Roger S. Cohen, Jr.; "The Half Cent Die State Book 1793-1857" by Ronald P. Manley, Ph.D.; and "Walter Breen's Encyclopedia of United States Half Cents 1793-1857" by Walter Breen (you can find most of the books cited here through an on-line search or on eBay). You need not memorize the contents of each, just understand the concepts enough so that you know where to return when you come across an unusual item. The price of a good reference book can often be made up many times over with a single purchase, as this story illustrates.

2. JOIN. Specialty groups or clubs exist for just about every area of interest. Many of these groups publish newsletters or books that contain extremely valuable information. In fact, the story of Ed Fuhrman's astute purchase came from the November 2004 issue of PENNY-WISE, the official publication of the Early American Coppers Club (www.eacs.org). Beginning collectors should consider joining the American Numismatic Association (www.money.org) which has numerous membership benefits, including their monthly publication "Numismatist."

3. SEEK. Coins will not come to you. You must seek them out. If you don't want to leave your house, the Internet is a particularly rich source of coins, some hidden in obscure sites, others massed along with thousands of others in popular on-line sites (such as eBay). Try visiting your local coin dealer(s), who are often a good source of coins and information. For a list of PCGS authorized dealers, some of whom may be in your area and/or have Internet sites, visit PCGS Authorized Dealers. If you can travel, coin shows and rare coin auctions are great ways to see and learn about coins, especially the rare and unusual ones. The key is exposure…the more you look, the more you'll find. The more you find, the greater are your odds of getting lucky.

The next bargain is out there waiting to be found. But, don't take my word for it. Use your new-found knowledge and reap the rewards for yourself!