What you should know
Buying coins is also easy, right? Just look up your local coin shop in the yellow pages, go over to the shop and find something that catches your eye, and buy it. Again, this is a very common way of purchasing coins. Even coin dealers occasionally shop their competitor's stores on behalf of their good customers and to try and find the occasional bargain. Of course, there are some advantages to dealing with a coin dealer. A good coin dealer knows the needs of his customer. He is constantly seeking the coins the customer desires to collect. He knows how to authenticate and grade coins accurately. He can help educate you about coins and their attributes. Above all, a good coin dealer earns your trust over time.
Most coin dealers will knock a bit off a price if you ask. Typically, simply asking will save you 2-5%, so it is well worth the trivial effort. I recommend that everyone spend some time at the local coin shop on occasion. You can learn quite a bit hanging around the shop, but in addition, you can cherry pick undergraded coins, unattributed errors and varieties. Again, knowledge is key to buying coins at a good or even fair price.
Many other methods exist for buying coins.
Auctions are a great way of buying coins, if you are knowledgeable. Every auction has bargains, and if you know how to recognize them, you can pick up good quality coins for a low price. The key to successful auction buying is preparation. View the coins prior to the sale, know the variety, grade, etc. of the coin prior to bidding on it. Don't blindly accept the auction house's grade any more than you would a dealer. Be careful on grade, even with slabbed coins. NGC and PCGS have made their share of mistakes as well.
It is also important to have a price set in your mind beforehand for each coin you wish to seriously contend for. Don't bid more than this set price, this auction frenzy can be as addictive as gambling. The adrenaline is your worst enemy. If you find yourself with buyers remorse after an auction, you may want to abandon this channel for buying coins and join a 12-step program. You can participate in the most auctions without going, but there is benefit to being there in person and examining the coins.
One big advantage of participating in auctions is the catalogues. They have lots of good information, and often have tremendous pictures of astounding coins. Nobody can afford to buy everything, so auction catalogues provide a good record of what has happened and provide material to drool over. They often have a good deal of information about the coins. In some cases, auction catalogues are the only source for some good numismatic information.
Mail Bid Auctions
Mail bid auctions are an interesting phenomenon. They are usually closed auctions (meaning that you don't know what your competitors are bidding). So your offer has to win or loose on your first bid. Some mail bids have weird rules. For example, sometimes they split the difference between your high bid and the next highest bid. This gives you the idea that you may not pay quite as much as you bid. Don't buy it. You will pay very close to what you bid every time. Check the return policy carefully. Note who pays for the mail in the case of a return. You need to know how to grade coins to effectively participate because you won't see the coin until you win and it is sent to you. In some mail bids, I just assume that the coin is a grade lower than stated, and bid accordingly. Often I win because others have learned to do the same thing.
Web and E-mail Based Auctions
Bidding in an e-mail or web based auction can be a lot of fun. They are usually open auctions in that you can see the price go up over time. Most of these auctions go over a period of a week or two. The better ones will e-mail you when you've been outbid. Some also allow you to input a maximum bid so that the price goes up automatically. As with all mail order, make sure they have a liberal return policy.
Since there is a new web based coin auction coming up every week (or so it seems). You can end up spending a lot of time just looking for the coins you want in these auctions. This is one of the problems we hope to eventually solve here at American Coin on the Net. See Online Coin Auctions for more details.
The most obvious example of this is Teletrade . They send out a catalog for two auctions a week. For buying ultra high grade moderns, they have the most material of any other channel I'm aware of. Be aware that the first time an error coin shows up on Teletrade, it typically goes for more than its real value. The second or third coin sold will go for closer to the real value.
Shows are another great way of buying coins. There is a great variety of material in one spot. You get to look at the coins before you buy. You have extra ammunition to haggle effectively. Here you will find the vest pocket dealers that don't have the overhead associated with a physical store. These guys are knowledgeable, helpful and usually quite friendly. The smaller and more local the show, the more likely you are to get good deals. If the dealer has to travel to Long Beach, he has to pay for the trip. Also, the low overhead dealers can't afford to go that far for that long, they usually have a day job.
Shows are also very fun. You can make lifelong friends attending coin shows over time. Even if you don't purchase or sell coins at shows, going can be a lot of fun. If you enjoy coins, there is no better place to be.
You can generally buy coins directly from other collectors at coin clubs. Although the selection is not generally terrific, this is clearly the most cost effective way to both buy and sell coins. Particularly if the club doesn't charge to set up tables at the meeting. In a sense, American Coin on the Net is a big clubhouse. This is exactly the feeling we hope to achieve for buyers and sellers of coins. If we succeed, this will be the best place to meet collectors with whom to buy/sell/exchange coins with.
When local coin shops have bid boards, this provides a method for buyer and seller to meet without being in the same place at the same time. This is a very effective way of transacting coin business. The only downsides being that you actually have to deliver your coins to the shop, and that the dealer has his small cut of the profits.