Editor's note: The following post is part of Coin World's "7 lessons in collecting" series. Find links to the other posts at the bottom of this page. 

Investing in rare coins is not easy. It takes dedication to learn various aspects of coin collecting that are always changing: supply, demand, rarity, grading, and understanding how to maximize value when buying and selling. These are skills that take years, if not a lifetime, to master. 

Thankfully plenty of helpful resources exist in the coin field to help collectors willing to put in the legwork to maximize the investment return on their collection, including a new book by Robert W. Shippee recently published by Whitman, titled Pleasure and Profit. In it, Shippee discusses his pursuit over the course of more than a decade to put together a type set of each major design type from copper half cents to gold $20 double eagles, from 1793 to the present day. It’s a frank, candid tome filled with anecdotes that collectors can learn from. 

Lesson No. 7: Understand dealers

It seems that the rare coin market is turning more to auctions as a retail method of buying and selling coins, but dealers can offer guidance and opportunities that auction houses can’t. Most dealers offer a want list service where a collector tells a dealer what coins are needed, and a dealer tells you when those coins come on the market. Shippee provides a helpful note on this, writing: “It’s probably not a great idea to ask more than one or two dealers at a time to look for a specific rare coin. You don’t want to have too many people scurrying around a coin-convention floor looking for the same coin or, worse, bidding against each other at an auction. You’ll probably have better luck, and develop closer relationships, by working with one or a small number of dealers who will come to know your budget, tastes, and the kind of coins you’ll like.”

Where with dealers it’s important to know the individual, with auctions it’s essential to learn the system and how major coin auctions operate. Bidding at auction is not always what people expect and rare coin auctions often move much faster than potential bidders anticipate. As Shippee observed about one auction, “The bidding went very quickly — not at all like some art auctions I’d seen in movies, where each piece is wheeled out for bidders to gape at before the auctioneer begins the process of eliciting one bid after another from smartly dressed men and women who convey their intentions with subtle eye blinks and ear tugs,” he wrote. Instead, most coin auctions today have the bulk of bidding action taking place online before the auction even starts. A regular coin auction by a large auctioneer may go through as many as 150 to 200 lots per hour.

To participate in an auction, a bidder must register with the auction house, and typically registration is required even to view auction lots. A bidder can participate via live bidding on the auction floor, bidding live online, by placing a bid prior to the sale, or by working with a dealer to bid on the collector’s behalf. Most auctions don’t allow returns, and bidders pay a buyer’s fee on each lot, with most brick- and-mortar coin auction firms charging 17.5 percent as a buyer’s fee. 

More from the "7 lessons in collecting" series:

• Lesson No. 1: Invest in education first
• Lesson No. 2: Understand that mistakes happen
• Lesson No. 3: Learn how to grade coins
• Lessong No. 4: Quality and rarity don't go out of style
• Lesson No. 5: Understand supply and demand to find value
• Lesson No. 6: Look for special coins and stretch for them
• Lesson No. 7: Understand how to work with dealers

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