Tarnished transactions

Coin collectors have made the Internet their main pathway for buying and selling coins and keeping in touch with each other.

The Web also makes it easier for bad guys to pull scams or work a heist.

“For dealers and collectors, the Web is very important. It’s caused a revolution among coin collectors,” said Bruce Morelan, a Spokane businessman who has one of the country’s most impressive collections.

Pre-Web, collectors gathered periodically to compare coins or examined collections at coin shows. They shared their insights through newsletters.

Now all that information, along with detailed images of prized coins, is a mouse click away.

But as Morelan has learned, a coin online is not always the same as the coin in-hand.

Donn Pearlman, a media spokesman for the Professional Numismatics Guild in Fallbrook, Calif., said the increased reach of the Web also means more risks for coin buyers. “There are many good sellers online. There are also many who are not legit,” he said.

For people like Morelan, the thrill of collecting is both having fine items preserved and knowing a coin will appreciate in value.

Over the past three years, the value of the most actively traded rare coins has increased 11 percent. That’s a strong return, but not nearly as strong as the stock market. The Dow Jones Industrial Average during the past three years has grown almost 18 percent.

Apart from bogus coins, buyers need to watch for overstated coin values. Morelan spotted a valuable U.S. Trade Dollar for auction on eBay a few years ago. He paid $19,000 for it.

When it arrived he discovered the silver dollar had a major defect, a skid mark caused by something dragged across the face. “I negotiated a $3,000 return,” said Morelan, meaning the seller sent back $16,000 when he returned the coin.

Just last week, that same seller offered the identical trade dollar for sale on eBay. This time his asking price was $25,000. No one apparently bought the coin.

Morelan and others now rely on using partners or associates to view valuable coins in person when possible. “There’s no substitute for seeing a coin in person,” said Morelan, the 45-year-old owner of Power City Electric Inc. in Spokane.

In early 2007, Morelan tried to sell one of his most valuable coins, a 1913 Liberty nickel, one of five minted. He had purchased it a year ago for $4.15 million, considered the second-highest price ever paid for a coin. A recent auction in Orlando, Fla., found no buyers. Morelan said he was looking to sell it for more than $5 million.

Morelan said he rarely buys coins online anymore. The time he spends online mostly involves helping keep information updated at the site of LegendCoin.com, a coin dealership he owns with two partners.

Morelan also spends several hours a day at forums catering to coin enthusiasts. He often takes an active part, adding comments, giving opinions and helping educate more inexperienced collectors.

While collectors once kept valuable coins in books or in display holders, Morelan and others keep their treasures inside bank vaults. Anyone wanting to see Morelan’s better coins can find all of the images and other information on his site, Tradedollarnut.com.

Trade dollars are a niche interest among U.S. collectors. In the late 19th century, the U.S. government issued those coins with a full dollar’s worth of silver, which was more than the value of the standard U.S. silver dollar at the time. The goal was to increase trade with China.

While serious collectors know how to value and distinguish the real thing from the bogus, Morelan said, “I’d guess seven of every 10 trade dollars for sale are fakes.”

As collectors have learned to be more careful, two companies, the Professional Coin Grading Service and another company, Numismatic Guaranty Corp. (NGCcoin.com), have stepped forward as the chief professional grading services. The two professional grading services provide an online ranking system based on uniform standards. That’s one key step, Morelan said, in helping cut down sales of bogus or inflated coins.

When contacted by the newspaper for this story, Morelan clearly wanted to avoid being photographed. At the same January 2007 auction in Orlando where Morelan tried to sell the Liberty nickel, another dealer was robbed of $4 million in valuable coins. The robbery occurred at knifepoint as the dealer was unloading suitcases from a vehicle in a hotel entryway. Orlando police are investigating the robbery.

Pearlman said he’s not surprised Morelan wanted no extra publicity after the recent Orlando heist.

“Collectors for obvious reasons don’t want their names and their likenesses all over the media. It just raises their profile,” Pearlman said.