Tips, Tricks and Strategies for Maximising Your Performance In Ancient Coin Auctions
Most ancient coins are sold at auction. Auctions are different from the fixed-priced lists of dealers. In fixed-price lists, it is clear what you need to pay to buy a coin. Auctions, on the other hand, are designed to create a sense of scarcity, urgency and competition. They prey on the emotions of bidders to drive bid values up, returning higher commissions for the auction house and greater consideration to its consignors.
How often have you gone into an auction with a clear budget on what you wish to spend and setting the top price you are prepared to pay for each coin, only to end up with coins you didn’t want and paying too much for those you did.
If this has happened to you, don't worry, you are in the majority.
The good news is that after reading this article, you'll be less likely to fall into the same trap again. Follow these techniques and thank us later – perhaps through buying a coin!
Study the Catalogue
This is the first mistake people make. If you haven’t done your homework, you are ill-equipped too bid. By study, I don’t mean, just looking at all the fancy photos.
- Decide which coins you will bid on and why. For instance, a coin might generally appeal to you, or it might fill a much-needed gap in your collection.
- Check the availability and price of those kind of coins in other locations. This serves two purposes. First, it is valuable pricing information. Second, greater availability means, you should not bid as fiercely.
- Find sold prices for similar types of coins. You will find these in online auction archives, or in the inventories of dealers who still display their sold listings. This will also give you an indication of how frequently those kinds of coins are available at auction.
- Confirm the hammer fees charged by the auctionhouse (typically 20%).
- Estimate the shipping & handling fees and any taxes or duties payable on importation. For example in Australia, a 10% Goods & Services Tax (GST) is payable on large purchases from overseas.
- Understand the foreign exchange rate. You should not bid if you don’t know off the top of your head the conversion. Some auction allow the price to be displayed in different currencies.
Using the above information, determine the maximum bid for each coin, ensuring you factor in the hammer fees, shipping & handling and any duties or taxes payable on importation.
Whilst a lot of the time, the maximum bid should reflect what you believe the market value is, it will often be overridden by the value of the coin to you. Coins of low availability and which complete a very specific gap in your collection may well be worth a lot more to you than others, or the market generally. There is nothing wrong with this, nor is there anything wrong in bidding more than what others perceive its value to be if securing the coin is important to you.
The process above is to ensure you think hard about why you want a coin, and what you are prepared to pay for it so you can resist changing it later on mere whim or by giving in to your emptions during the auctions.
Placing your maximum bid
A good question is when to place your bid. Most auctions allow you to place a proxy bid instead of attending the auction in person. These proxy bids are ‘maximum bids’ where the auction house will bid on your behalf against all other bidders until your maximum bid is exhausted.
Auctions typically take two forms: the traditional kind, where proxy bids are entered prior to the auction commencing; and the kind which run for days or weeks with live bidding from the get-go.
For the first kind, it is recommended you don’t use a proxy bid unless for whatever reason (e.g. time zone difference) you are unable to attend the auction in person, or bid live online. Some firms have a terrible habit of revealing the highest proxy bid during live bidding. This undermines the strength of the proxy bid. Thus is better to keep your cards closer to your chest and bid in increments until you hit your maximum bid.
For the second kind, placing your proxy maximum bid early will reveal it too early and influence the bidding strategies of others to your disadvantage by allowing them to reassess their maximum bids. However, in the case of coins that have received little or no bids close, it may be wise to place a smaller proxy bid, to discourage opportunistic bidders entering the arena.
- Practice Discipline
Be disciplined. Bid on the coins you agreed to and none others. If you are placing a proxy bid, do not exceed your maximum. If you are live bidding, bid in increments up to your maximum and no more. If you bid to your maximum and are still outbid, walk away. If you still decide too bid more, then either you failed to do your homework properly in setting your maximum, or you are yielding to temptation.Review
After each auction, review what happened. Did you win the coins you wanted to win, or did you end up with coins you didn’t want. Did you exercise sufficient restraint?
Most importantly, no matter how you think you performed, do you beat yourself up. Auctions rarely go the way we want them to.
Take an auction which runs over the course of a week. You lazily flick through the auction catalogue just before it starts, your eyes drawn to a particular coin, with a starting price of $50 and an estimate of $90. You don’t do any homework so you assume the estimate is representative of market value.
On the first day, you overzealously bid $105 for the coin because you don’t like to lose. ‘I’ll win that coin for sure’ you think, very pleased with yourself for going hard early
On Day 2, unbeknownst to you Bidder A places a maximum bid of $90 which is equal to the auction estimate thinking that would be a fair price to pay for the same coin.
Your maximum bid prevails and Person B is outbid, with the coin now at $95. Unfortunately Bidder A now knows that their maximum was less than required to win the coin.
Bidder A very wisely sleeps on it. But the next morning they decide they really want the coin, so they place a new maximum bid of $110.
That same morning whilst you are enjoying your coffee and still pleased with yourself, you hear your phone beep and you see a notification that you have been outbid.
You are incensed. Outraged that someone has bid more than you. You were already above the auction estimate. Despite promising yourself to be disciplined and stick to your maximum bid, you decide you really want to win the coin and teaching the other bidder a lesson is worth the extra price. So you enter a new maximum bid of $130.
At the same time, because you are worried you might not win the coin, despite your new maximum bid, you place bids on other coins, thinking it would be shame if you didn’t win anything at the auction.
A few moments later, the phone of Bidder A beeps. They are about to start dinner and thinking hard of an explanation for their spouse about the coin they bid too much on. A sigh of relief passes over their face as they read the message ‘You were outbid’.
A few days later, you win your coin, after revising your maximum a few more times due to other competing bidders. You paid $150 for it, that is 50% above the estimate. You then pay another $30 in auction fees making a total of $180 before shipping & handling. You are horrified when one week later you see a similar coin for sale at only $90. You then remember that you won several other coins that you had not initially planned to bid on. Dinner time is approaching and you start planning hard on what you say to your spouse.