Investing in coins

[TonerGuy]

This "heat index" seems to be including collector sentiment since it at least partly relies on chat board comments. Not sure how this can be used in model.

 

The rest of it I would guess is a "flow of funds" since you mentioned he was a stock analyst. It is used in technical analysis.

 

I think he looked at forums from a stand point of what is hot now and then decided not to invest in those coins. I believe it was a way to develop a list of sleeper coins. Or at least thats what he said. I was just a witness to the conversation.

[World Colonial]

This "heat index" seems to be including collector sentiment since it at least partly relies on chat board comments. Not sure how this can be used in model.

 

The rest of it I would guess is a "flow of funds" since you mentioned he was a stock analyst. It is used in technical analysis.

 

I think he looked at forums from a stand point of what is hot now and then decided not to invest in those coins. I believe it was a way to develop a list of sleeper coins. Or at least thats what he said. I was just a witness to the conversation.

 

Makes sense; a form of contrarian investing.

[wdrob]

How so? How would they know the transactions even occurred, unless you volunteered the information?

 

 

If you deal directly with cash you might stand a better chance of going under the radar but if like so many (might I even say the majority) of those that collect coins and sell from time to time when their collecting interests change then you probably use PayPal, Mastecard, Visa, Discover ... etc.... any one of these as a means to accept payment.

 

The IRS has stipulated a number of years back that any Payment Card or Third Party Transaction Network must issue a 1099K to anyone that meets two requirements.

 

 

• The gross amount of total reportable payment transactions exceeds $20,000, and
   
  
• The total number of such transactions exceeds 200.
   
  

 

That means if you are a collector of 1/2 oz and 1 oz gold coins and various other smaller valued coins, you could easily exceed the 200 transactions and $20k is nothing when buying and selling high dollar gold coins.

 

If I just bough 20 decent graded $10 Gold Indians I have exceeded the $20k limit. Thus PayPal or anyone else that processes your transactions will be sending you and the IRS a 1099K.

 

I mean really, those numbers are not hard for a collector to surpass in the course of 1 year when dealing in a hobby of rare coins.

 

 

[asdfgh]

You could be right. Its a strategy that I have used for some time. Seems to be working ok for me.

I guess we will see in 5 to 10 years.

[Afterword]

How so? How would they know the transactions even occurred, unless you volunteered the information?

 

 

If you deal directly with cash you might stand a better chance of going under the radar but if like so many (might I even say the majority) of those that collect coins and sell from time to time when their collecting interests change then you probably use PayPal, Mastecard, Visa, Discover ... etc.... any one of these as a means to accept payment.

 

The IRS has stipulated a number of years back that any Payment Card or Third Party Transaction Network must issue a 1099K to anyone that meets two requirements.

 

 

• The gross amount of total reportable payment transactions exceeds $20,000, and
   
  
• The total number of such transactions exceeds 200.
   
  

 

That means if you are a collector of 1/2 oz and 1 oz gold coins and various other smaller valued coins, you could easily exceed the 200 transactions and $20k is nothing when buying and selling high dollar gold coins.

 

If I just bough 20 decent graded $10 Gold Indians I have exceeded the $20k limit. Thus PayPal or anyone else that processes your transactions will be sending you and the IRS a 1099K.

 

I mean really, those numbers are not hard for a collector to surpass in the course of 1 year when dealing in a hobby of rare coins.

 

 

 

When I sell my coins and notes it will be via auction. I sold some of my antique firearms and edge weapons at auction a few years back and have heard nothing from the IRS. It involved considerably more than $20,000.

[wdrob]

That might be because (more than likely) the auction house paid you via a check. That would not be a "Payment Card or Third Party Transaction Network". PayPal is a Third Party Transaction Network. The $20k and 200 transactions threshold only applies to entities such as PayPal. With CC Processors, there is no threshold and all must be reported.

 

Also "reporting began in early 2012 for payment card and third-party network transactions that occurred in 2011" might have something to do with it.

 

But if you deposited that $20k plus check in your checking account, I can assure you that the bank notified the IRS. They have to report any transactions greater than $10k / day by law. But I think everyone knows about that - and possibly about the other law I mentioned.

 

 

 

 

[Afterword]

That might be because (more than likely) the auction house paid you via a check. That would not be a "Payment Card or Third Party Transaction Network". PayPal is a Third Party Transaction Network. The $20k and 200 transactions threshold only applies to entities such as PayPal. With CC Processors, there is no threshold and all must be reported.

 

Also "reporting began in early 2012 for payment card and third-party network transactions that occurred in 2011" might have something to do with it.

 

But if you deposited that $20k plus check in your checking account, I can assure you that the bank notified the IRS. They have to report any transactions greater than $10k / day by law. But I think everyone knows about that - and possibly about the other law I mentioned.

 

 

 

 

 

 

Right, but the only transaction the IRS is made aware of involves a deposit into a bank account. Now, if I made such deposits regularly it might prompt an investigation.

[World Colonial]

You could be right. Its a strategy that I have used for some time. Seems to be working ok for me.

I guess we will see in 5 to 10 years.

 

My comments were a generalization. There are several hundred coins in the 1930-1960 period to choose from and it will depend upon which ones a specific collector buys.

 

A second consideration is the grade. You used MS-67 versus MS-68. Though I see no practical difference between most MS-66 to MS-68, I will agree that MS-67 pops generally are and will remain low enough where this can work financially to some extent under the right market conditions . I don't believe this is true for MS-66 or lower except in isolation.

 

It also depends upon what return the buyers expects to obtain. The reason I commented on substitution is that I don't believe more than a very small number consider a one point grade difference really important, including between the "undergrade' and one grade below it. Not where they are going to pay a substantial premium for it. Before I wrote one post in the Ike thread, I reviewed the PCGS registry and within the "basic sets", less than 5% of the 350 entries consisted exclusively of "undergrades" or better. What I saw certainly wasn't based upon availability, but entirely either because the buyers didn't have the money, didn't care enough or preferred to buy something else.

 

I don't know whether this same pattern holds for most other modern or recent classic series but I believe it does until proven otherwise. Same applies to those who participate in the registry versus those who do not.

[asdfgh]

what I have seen happening over the last 5 years or so is that the very top grade is either

not available or people are asking alot of money. (not that anyone is buying). I too do not

believe MS65 for the most part will every be worth even what you paid for it, way too available.

I try to pick non toned coins. I feel the toning hides the real grade which is probably one grade lower.

So I would look at the census, look at the available coins, ignore the bottom couple in the grade that

I am look at and buy the best one I can. just my approach....