jdmyprez_deo_vindice
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- Nov 30, 2007
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I have seen many threads here on RPF dealing with buying coins and other forms of PM's in traditional methods yet I have never seen anything dealing with buying these at public auction. So since I am a professional auctioneer I thought I would use my experience and knowledge in the subject to help some of my fellow liberty activists out.
WHAT IS AN AUCTION?
Believe it or not, some people are totally unfamiliar with what a public auction is so for those of you who fall into this catergory here is a bit of a background on what they are and how they operate.
It is said that auctions are the second oldest business on earth. Auctions have been held since the beginning of recorded history and you can literally auction off anything including coins and other forms of precious metals. The purpose of an auction is to offer the good or goods up for sale to the highest bidder (whoever agrees to pay the highest price on an item will become the owner of said once the auctioneer says "sold") They serve as a means of quick liquidation of all goods held by a business or person.
Public auctions are held either at galleries owned by the auction company or at public locations such as fire houses, hotel banquet rooms or fair grounds. Auction companies will announce the date, sale and terms of the auction (more on terms in a bit) usually 2-3 weeks in advance unless it is expected to be a multi million dollar auction which could be announced months in advance. You will find announcements for sales in traditional formats such as newspapers and other classified publications and in modern times you will find the majority of auctions listed online through websites such as www.auctionzip.com and other websites of that ilk.
Prior to an auction, there will be what is called a "preview" which will allow you to enter the facility and examine items for sale. This preview period depends on the auction company and the location. Some will have a preview of only a few hours while some will have preview periods that can last days. Most advertisements will list the time and date of previews and if not you can find out with a quick call to the auction company.
On the day of the sale (and after previewing the items) you will need to register with the auction company and get a bid number (this number will identify you to the auction company so that your purchases can be tallied at the end of the sale). At this time you will need to ask the registration clerk what the order or sale is (more on this later). When the auction begins, the potential bidders will assemble and the auctioneer will begin to sell the items. Auctioneers sell the items at a rapid pace (good auctioneers can sell between 75-100 lots an hour) and you will need to pay special attention to what is being sold and what the current price is. When the last item you are interested in has been sold you will go see the checkout clerk and present them with your number so that they can get a tally of all of your purchases and with that you will be done. At the end of the day you should have acquired some items that were far undervalued and if nothing else, you spent only a few hours time and had a decent night.
HOW DOES THIS APPLY TO PM'S?
Most auctions will have at least one item that is made from precious metals and some of these items are ones you would not think of from investment purposes. The most often encountered form of precious metals at auction is coins though you can acquire PM's through buying antique items made from coin silver, candlesticks,pocket watches, bars of precious metals (these come up more than you might think), jewelry and sometimes just oddball items made from precious metals (I once encountered a miniature russian bear figurine made from solid gold). If there is enough interest in this or a desire to know more about how to identify antique and vintage items made from precious metals than I will do a thread on that as well but for now I will stick with coins since they are the most often encountered.
HOW TO BUY COINS MADE FROM PM'S AT PUBLIC AUCTION
One might think that you cannot find true bargains in pm's when other people are allowed to bid but that is far from the truth. There are various tips and tricks you can use to increase the odds of you finding precious metals for next to nothing. First, knowing the type of auction you will be attending is key. A general rule of thumb I use is "the smaller the auction the better the odds". Auctions that are just starting out in the business or auctions that run on a very infrequent basis (this will require a bit of research on your part) almost always attract much smaller crowds than auctions that have an established, regular business. Obviously the less people you have to deal with, the better your odds will be of getting something as cheap as possible. Finding auctions in rural areas will be your best bet for this so it may require an investment of time and travel for those of you who live in and around metro areas but it could pay off big time for you.
There are many exceptions to this rule though as bigger auctions attract very serious dealers and collectors. Dealers and collectors will be very familiar with the established auction firms and will show up in droves to buy mass quantities of coins but the saving grace here comes with the knowledge that those interested solely from the investment standpoint will typically not waste their time hitting an auction with only a case or two of coins. At the established auction houses you will see rare or desireable coins in good condition going for over book value on a regular basis however, there will always be coins that are in a condition that leaves them unappealing to the big bidders. The dealers and collectors want coins that are of the highest grade possible and will routinely ignore coins that have a tarnished look or that do not have a highly desireable year or mint mark. Many of these coins will be silver and will have the same meltdown value as those coins they just spent an ungodly amount of money on and here is where you can really make a sound investment or a quick profit. With the undesireable coins, auctioneers will routinely group them into a lot (more on this in the terms and definitions section) and you will be able to buy them for a low price. For example, I have often been able to buy stacks of Morgan silver dollars for as little as $2 simply because they were deemed "ugly" or "junk" by dealers and collectors.
Estate auctions are also a great place to find coins and a great place to buy them. Estate auctions are notorious for having antique dealers and little old ladies looking to buy up fabrics and glass but they will rarely draw serious investors in precious metals. Almost every estate I have ever handled has had coins in it to some extent and you never know what is going to come out of an estate. Even if you do not see coins listed in the advertisement it is worth it to go during the preview or at the very least give the auction company a call. Many auction companies either pay for advertising out of their pocket or charge only a fraction of the advertising cost to the consignor so they try to fit as much into as few words as possible. Unless they know that a coin is rare or valuable they will often times not even mention them or just list them as simply "coins" in the advertisement. You would not believe how many estate auctions I have attended in the past whose advertisements made a big deal out of duck decoys, John Deere memorabilia, depression glass etc but said nothing at all about the coin collection that was part of the estate and is being sold that night.
TIPS & TRICKS FOR SUCCESS
Read the terms and conditions of the sale first and foremost. Does the auction company charge a buyer's premium? Is the auction going to accept telephone or internet bids? Is the auction listed as an absolute auction? I will delve into what these mean in the terms and definitions part at the end of this but be aware of what you are walking into.
Get to know the auctioneers and auction staff. Most auctioneers are not experts or even enthusiastic about the stuff they sell and while it may seem ridiculous (and it is) many auctioneers do not go out of their way to learn everything about the items they sell or to become skilled in the art of appraisal. So get to know who you are dealing with. Is this an auctioneer who knows a lot about valuable merchandise or is it in auctioneer who views it as only a job and would rather talk about Nascar than discuss the content of standing liberty quarters? It helps to know this about auctions you plan on attending on a frequent basis as it will give you an idea even before you walk in as to what the odds are of finding PM's at any given sale. For example, if you know the auctioneer has a lot of knowledge yet you do not see any listing for anything that could be made of PM's than you will know you might be wasting your time. If you know the staff are morons than you will know that they were either too ignorant or too lazy to bother listing, researching or looking at their items ahead of time.
Get a good price guide and keep it in your vehicle. Even if you are not going to buy as a coin collector but simply buying as a PM investor you should get one. The good guides will not only list the price but will also list the metallic content of the coins you are interested in. A quick trip to your car will let you know very quickly how high you should really go on those coins.
Become familiar with the big collectors and dealers in your area that attend these auctions. Many times they have purchased what they consider "junk" coins that were lotted with something more desireable and will be more than happy to sell these in bulk to you for next to nothing and will consider you a sucker for buying them. Remember, many collectors and dealers are only interested in the highly collectible coins and do not stop to consider the meltdown value of those "junk" coins.
Know what YOU are before bidding. If you are only interested in being an investor in PM's than avoid that temptation to buy those rare, great condition pieces (no matter if it is a coin or not) and stick solely to the "junk". Once you start buying the high dollar stuff you are no longer a mere investor because you have crossed the line into a collector.
Do not make the mistake of seeing an auction listing (either in a print advertisement or in the more detailed listings on an auctioneers website) that has coins and think they are all desireable and not go. Remember, time and money is precious to auctioneers and they will generally not waste time or money by listing what they know will not bring in big money bids. If you see coins, they will almost always have more than what is listed.
If you know you are going to be there awhile it might be wise to pack your drinks into a cooler with some ice. Auction houses sometimes make more money from concessions than they to do from their consignor fees. You will save a lot of money just taking your own and keeping it in your car.
Take a fanny pack, briefcase, lock box, etc with you. Public auctions (especially those that are poorly organized) can be a hotbed for theft. You would be amazed how many people put something into a box beside them to bid on something and find items they purchased earlier in the evening are now gone. So take something that you can keep on you at all times or something you can lock up. If you do this, be sure to place a tag on it identifying it as your personal property and not an item that was for sale and be sure to alert the auction staff to the fact that you are bringing it into the facility as your property.
Stay away from specialty coin auctions (auction houses that only deal in coins and currency). This may sound stupid but those auction houses are already very well known and very well attended by investors along with dealers and collectors and the odds of getting a steal on anything are slim and none.
KNOW BEFORE YOU GO/ TERMS & DEFINITIONS
Some terms relating to the auction business can be confusing for someone who does not attend on a regular basis or someone who might attend for their first time. To help you along, get to know these terms as they will help you a lot.
BID - The amount you have agreed to spend to purchase the item.
BIDDING - The act of placing a bid on an item or group of items.
ESTATE AUCTION - When a person passes away their items will often go on the auction block either through the wishes of the family or through the order of a probate/orphans court. Many times, these sales will include virtually everything a person has accumulated through their life and sometimes will even include the sale of their house or property.
ON SITE AUCTION - These auctions are typically always held in rural locations where parking is possible because they are held right on the person's property. You will most often see this when the person's house or property is also being auctioned off or when there are too many items to reasonably transport to an auction gallery.
LIVING ESTATE AUCTION - These sales are the equivalent of a garage/yard sale and it is up in the air as to if you will find any good pm's at these. These are usually held when someone is moving or at the order of the court because of a divorce or family feud.
ABANDONED PROPERTY AUCTION - This will usually be an auction of an abandoned or delinquent storage lot. You will very rarely find PM's at these sales though stranger things have happened.
BUSINESS LIQUIDATION AUCTION - These are usually held when a business is going out of business or through court ordered bankruptcy proceedings. Unless the business in question was a coin shop or an antique shop, the odd's of finding PM's of any type are not good at all.
BUYER'S PREMIUM - Be cautious of how much you spend when you encouter an auction that is charging a buyer's premium. This simply means that the auction house is going to charge you a certain percentage more than your highest bid as a type of service charge. These charges can be as low as 5% or as high as 45%. If at all possible, avoid auctions that charge a buyer's premium but if you cannot do that than be aware of what they charge and add that percentage on top of each purchase you make so that you do not go over budget accidentally.
ABSOLUTE AUCTION - Absolute auctions are sales where no item features a reserve price and every item will be sold to the highest bidder. If an auction is not listed as an absolute auction than there will be items that have a reserve. It is best to contact the auction house to verify this as some auctioneers never think to list their auctions as absolute.
RESERVE - Reserve means that the auction house or the consignor (usually the consignor) has set a certain price that a specific item cannot sell under. I would typically avoid these sales as they are very irritating.
AS IS WHERE IS - This means that the auction is offering no refunds, rerurns or exchanges and that all sales are final.
SOLD - We all know what this means but in auction terms, the sale of an item is not complete until that auctioneer yells sold. A person can bid against you until the second that happens
MINIMUM BID - Many auction houses are now using minimum bids and for most auctions that amount is $1 or $2.
LOT - If an auctioneer cannot get the house minimum bid on an item they will often lot it up which means they will take another item from the same consignors group and offer it along with the item they could not get a bid on. In regards to PM's you will see this a lot with junk coins. They will grab handfulls and offer them all for one price. Lot can also mean the entire grouping of a person's consignment. You will notice that sometimes an auctioneer will say "lot 18" or some other number. This simply means they have moved to a different grouping by a different consignor. Same word but different meanings.
TELEPHONE BID - A bid made by a registered bidder who registered over the phone and is bidding through a proxy bidder.
INTERNET BID - A bid given by a registered bidder over the internet either through e-mail or in real time through a proxy bidder.
PROXY BIDDER - A person (almost always an employee of the auction house) who bids on behalf of those who cannot be at the sale in person. I would generally avoid an auction house that accepts bids through proxy bidders too much as it is very irritating.
ORDER OF SALE - The order of sale simply means the order in which the items will be sold. This will vary by auction company and it is best to ask about this before the auction starts. Some auctions will have just one auctioneer going while some will have multiple so it is important to know this in order to not miss any bids that you wish to make.
FINAL NOTES
Even for those of you who are not investors in PM's auctions can be a great way to save a lot of money. You can literally buy anything from furniture for your home for only a few dollars on up to seeds, plants, livestock and tools all for next to nothing. They are great sources if you are hoping to get off the grid or even if you want to just save a ton of money.
WHAT IS AN AUCTION?
Believe it or not, some people are totally unfamiliar with what a public auction is so for those of you who fall into this catergory here is a bit of a background on what they are and how they operate.
It is said that auctions are the second oldest business on earth. Auctions have been held since the beginning of recorded history and you can literally auction off anything including coins and other forms of precious metals. The purpose of an auction is to offer the good or goods up for sale to the highest bidder (whoever agrees to pay the highest price on an item will become the owner of said once the auctioneer says "sold") They serve as a means of quick liquidation of all goods held by a business or person.
Public auctions are held either at galleries owned by the auction company or at public locations such as fire houses, hotel banquet rooms or fair grounds. Auction companies will announce the date, sale and terms of the auction (more on terms in a bit) usually 2-3 weeks in advance unless it is expected to be a multi million dollar auction which could be announced months in advance. You will find announcements for sales in traditional formats such as newspapers and other classified publications and in modern times you will find the majority of auctions listed online through websites such as www.auctionzip.com and other websites of that ilk.
Prior to an auction, there will be what is called a "preview" which will allow you to enter the facility and examine items for sale. This preview period depends on the auction company and the location. Some will have a preview of only a few hours while some will have preview periods that can last days. Most advertisements will list the time and date of previews and if not you can find out with a quick call to the auction company.
On the day of the sale (and after previewing the items) you will need to register with the auction company and get a bid number (this number will identify you to the auction company so that your purchases can be tallied at the end of the sale). At this time you will need to ask the registration clerk what the order or sale is (more on this later). When the auction begins, the potential bidders will assemble and the auctioneer will begin to sell the items. Auctioneers sell the items at a rapid pace (good auctioneers can sell between 75-100 lots an hour) and you will need to pay special attention to what is being sold and what the current price is. When the last item you are interested in has been sold you will go see the checkout clerk and present them with your number so that they can get a tally of all of your purchases and with that you will be done. At the end of the day you should have acquired some items that were far undervalued and if nothing else, you spent only a few hours time and had a decent night.
HOW DOES THIS APPLY TO PM'S?
Most auctions will have at least one item that is made from precious metals and some of these items are ones you would not think of from investment purposes. The most often encountered form of precious metals at auction is coins though you can acquire PM's through buying antique items made from coin silver, candlesticks,pocket watches, bars of precious metals (these come up more than you might think), jewelry and sometimes just oddball items made from precious metals (I once encountered a miniature russian bear figurine made from solid gold). If there is enough interest in this or a desire to know more about how to identify antique and vintage items made from precious metals than I will do a thread on that as well but for now I will stick with coins since they are the most often encountered.
HOW TO BUY COINS MADE FROM PM'S AT PUBLIC AUCTION
One might think that you cannot find true bargains in pm's when other people are allowed to bid but that is far from the truth. There are various tips and tricks you can use to increase the odds of you finding precious metals for next to nothing. First, knowing the type of auction you will be attending is key. A general rule of thumb I use is "the smaller the auction the better the odds". Auctions that are just starting out in the business or auctions that run on a very infrequent basis (this will require a bit of research on your part) almost always attract much smaller crowds than auctions that have an established, regular business. Obviously the less people you have to deal with, the better your odds will be of getting something as cheap as possible. Finding auctions in rural areas will be your best bet for this so it may require an investment of time and travel for those of you who live in and around metro areas but it could pay off big time for you.
There are many exceptions to this rule though as bigger auctions attract very serious dealers and collectors. Dealers and collectors will be very familiar with the established auction firms and will show up in droves to buy mass quantities of coins but the saving grace here comes with the knowledge that those interested solely from the investment standpoint will typically not waste their time hitting an auction with only a case or two of coins. At the established auction houses you will see rare or desireable coins in good condition going for over book value on a regular basis however, there will always be coins that are in a condition that leaves them unappealing to the big bidders. The dealers and collectors want coins that are of the highest grade possible and will routinely ignore coins that have a tarnished look or that do not have a highly desireable year or mint mark. Many of these coins will be silver and will have the same meltdown value as those coins they just spent an ungodly amount of money on and here is where you can really make a sound investment or a quick profit. With the undesireable coins, auctioneers will routinely group them into a lot (more on this in the terms and definitions section) and you will be able to buy them for a low price. For example, I have often been able to buy stacks of Morgan silver dollars for as little as $2 simply because they were deemed "ugly" or "junk" by dealers and collectors.
Estate auctions are also a great place to find coins and a great place to buy them. Estate auctions are notorious for having antique dealers and little old ladies looking to buy up fabrics and glass but they will rarely draw serious investors in precious metals. Almost every estate I have ever handled has had coins in it to some extent and you never know what is going to come out of an estate. Even if you do not see coins listed in the advertisement it is worth it to go during the preview or at the very least give the auction company a call. Many auction companies either pay for advertising out of their pocket or charge only a fraction of the advertising cost to the consignor so they try to fit as much into as few words as possible. Unless they know that a coin is rare or valuable they will often times not even mention them or just list them as simply "coins" in the advertisement. You would not believe how many estate auctions I have attended in the past whose advertisements made a big deal out of duck decoys, John Deere memorabilia, depression glass etc but said nothing at all about the coin collection that was part of the estate and is being sold that night.
TIPS & TRICKS FOR SUCCESS
Read the terms and conditions of the sale first and foremost. Does the auction company charge a buyer's premium? Is the auction going to accept telephone or internet bids? Is the auction listed as an absolute auction? I will delve into what these mean in the terms and definitions part at the end of this but be aware of what you are walking into.
Get to know the auctioneers and auction staff. Most auctioneers are not experts or even enthusiastic about the stuff they sell and while it may seem ridiculous (and it is) many auctioneers do not go out of their way to learn everything about the items they sell or to become skilled in the art of appraisal. So get to know who you are dealing with. Is this an auctioneer who knows a lot about valuable merchandise or is it in auctioneer who views it as only a job and would rather talk about Nascar than discuss the content of standing liberty quarters? It helps to know this about auctions you plan on attending on a frequent basis as it will give you an idea even before you walk in as to what the odds are of finding PM's at any given sale. For example, if you know the auctioneer has a lot of knowledge yet you do not see any listing for anything that could be made of PM's than you will know you might be wasting your time. If you know the staff are morons than you will know that they were either too ignorant or too lazy to bother listing, researching or looking at their items ahead of time.
Get a good price guide and keep it in your vehicle. Even if you are not going to buy as a coin collector but simply buying as a PM investor you should get one. The good guides will not only list the price but will also list the metallic content of the coins you are interested in. A quick trip to your car will let you know very quickly how high you should really go on those coins.
Become familiar with the big collectors and dealers in your area that attend these auctions. Many times they have purchased what they consider "junk" coins that were lotted with something more desireable and will be more than happy to sell these in bulk to you for next to nothing and will consider you a sucker for buying them. Remember, many collectors and dealers are only interested in the highly collectible coins and do not stop to consider the meltdown value of those "junk" coins.
Know what YOU are before bidding. If you are only interested in being an investor in PM's than avoid that temptation to buy those rare, great condition pieces (no matter if it is a coin or not) and stick solely to the "junk". Once you start buying the high dollar stuff you are no longer a mere investor because you have crossed the line into a collector.
Do not make the mistake of seeing an auction listing (either in a print advertisement or in the more detailed listings on an auctioneers website) that has coins and think they are all desireable and not go. Remember, time and money is precious to auctioneers and they will generally not waste time or money by listing what they know will not bring in big money bids. If you see coins, they will almost always have more than what is listed.
If you know you are going to be there awhile it might be wise to pack your drinks into a cooler with some ice. Auction houses sometimes make more money from concessions than they to do from their consignor fees. You will save a lot of money just taking your own and keeping it in your car.
Take a fanny pack, briefcase, lock box, etc with you. Public auctions (especially those that are poorly organized) can be a hotbed for theft. You would be amazed how many people put something into a box beside them to bid on something and find items they purchased earlier in the evening are now gone. So take something that you can keep on you at all times or something you can lock up. If you do this, be sure to place a tag on it identifying it as your personal property and not an item that was for sale and be sure to alert the auction staff to the fact that you are bringing it into the facility as your property.
Stay away from specialty coin auctions (auction houses that only deal in coins and currency). This may sound stupid but those auction houses are already very well known and very well attended by investors along with dealers and collectors and the odds of getting a steal on anything are slim and none.
KNOW BEFORE YOU GO/ TERMS & DEFINITIONS
Some terms relating to the auction business can be confusing for someone who does not attend on a regular basis or someone who might attend for their first time. To help you along, get to know these terms as they will help you a lot.
BID - The amount you have agreed to spend to purchase the item.
BIDDING - The act of placing a bid on an item or group of items.
ESTATE AUCTION - When a person passes away their items will often go on the auction block either through the wishes of the family or through the order of a probate/orphans court. Many times, these sales will include virtually everything a person has accumulated through their life and sometimes will even include the sale of their house or property.
ON SITE AUCTION - These auctions are typically always held in rural locations where parking is possible because they are held right on the person's property. You will most often see this when the person's house or property is also being auctioned off or when there are too many items to reasonably transport to an auction gallery.
LIVING ESTATE AUCTION - These sales are the equivalent of a garage/yard sale and it is up in the air as to if you will find any good pm's at these. These are usually held when someone is moving or at the order of the court because of a divorce or family feud.
ABANDONED PROPERTY AUCTION - This will usually be an auction of an abandoned or delinquent storage lot. You will very rarely find PM's at these sales though stranger things have happened.
BUSINESS LIQUIDATION AUCTION - These are usually held when a business is going out of business or through court ordered bankruptcy proceedings. Unless the business in question was a coin shop or an antique shop, the odd's of finding PM's of any type are not good at all.
BUYER'S PREMIUM - Be cautious of how much you spend when you encouter an auction that is charging a buyer's premium. This simply means that the auction house is going to charge you a certain percentage more than your highest bid as a type of service charge. These charges can be as low as 5% or as high as 45%. If at all possible, avoid auctions that charge a buyer's premium but if you cannot do that than be aware of what they charge and add that percentage on top of each purchase you make so that you do not go over budget accidentally.
ABSOLUTE AUCTION - Absolute auctions are sales where no item features a reserve price and every item will be sold to the highest bidder. If an auction is not listed as an absolute auction than there will be items that have a reserve. It is best to contact the auction house to verify this as some auctioneers never think to list their auctions as absolute.
RESERVE - Reserve means that the auction house or the consignor (usually the consignor) has set a certain price that a specific item cannot sell under. I would typically avoid these sales as they are very irritating.
AS IS WHERE IS - This means that the auction is offering no refunds, rerurns or exchanges and that all sales are final.
SOLD - We all know what this means but in auction terms, the sale of an item is not complete until that auctioneer yells sold. A person can bid against you until the second that happens
MINIMUM BID - Many auction houses are now using minimum bids and for most auctions that amount is $1 or $2.
LOT - If an auctioneer cannot get the house minimum bid on an item they will often lot it up which means they will take another item from the same consignors group and offer it along with the item they could not get a bid on. In regards to PM's you will see this a lot with junk coins. They will grab handfulls and offer them all for one price. Lot can also mean the entire grouping of a person's consignment. You will notice that sometimes an auctioneer will say "lot 18" or some other number. This simply means they have moved to a different grouping by a different consignor. Same word but different meanings.
TELEPHONE BID - A bid made by a registered bidder who registered over the phone and is bidding through a proxy bidder.
INTERNET BID - A bid given by a registered bidder over the internet either through e-mail or in real time through a proxy bidder.
PROXY BIDDER - A person (almost always an employee of the auction house) who bids on behalf of those who cannot be at the sale in person. I would generally avoid an auction house that accepts bids through proxy bidders too much as it is very irritating.
ORDER OF SALE - The order of sale simply means the order in which the items will be sold. This will vary by auction company and it is best to ask about this before the auction starts. Some auctions will have just one auctioneer going while some will have multiple so it is important to know this in order to not miss any bids that you wish to make.
FINAL NOTES
Even for those of you who are not investors in PM's auctions can be a great way to save a lot of money. You can literally buy anything from furniture for your home for only a few dollars on up to seeds, plants, livestock and tools all for next to nothing. They are great sources if you are hoping to get off the grid or even if you want to just save a ton of money.
