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Harlan J. Berk, President, Harlan J. Berk, Ltd.

How long have you been in business?

This is my 45th year.

How can people find dealers with a high level of expertise in this area?

Well, the best thing is to get a directory from the Professional Numismatist Guild; that’s an organization of the best dealers and if there is a problem, they’ve agreed in advance to submit to binding arbitration.  You should talk to a lot of dealers, people you can come face-to-face with, and see who you are most comfortable with.  You should get everyone’s catalogs, whether they are auctions or fixed-price lists, and learn everything you can about coins, or the area of coins you are interested in.  Deal with everyone, but if you deal through one dealer only, you’ll become as important as you can become to that one dealer, and if he or she is the right person, you will get then the best service and the best advice

How is the value of coins determined?

The value of coins is determined by rarity, condition, historic significance, and supply and demand.  It is just very simple economics.

People have been turning to gold as an alternative investment, perhaps to move their money out of the stock market and put it in gold and see what happens.  But that market is complicated as well.  Are there any myths about gold or investing in gold that need to be dispelled?

It really isn’t very complex.  The only thing that I would say is that you get a better deal for the larger units that you purchase.  For example, if you buy a kilo bar you get a better price for the metal than if you buy a one ounce coin.  Or if you are able to buy 1,000 ounces of gold, you are going to get a better price than if you buy a 1 ounce coin.  If you buy a 1/10 ounce coin, you are going to be paying a large premium because it costs as much to mint a 1/10 ounce coin as it does to mint a 1 ounce coin.  The 1 ounce coin is probably going to sell to someone who is pretty smart and is buying for investment purposes.  The person who is buying the 1/10 ounce coin is probably buying it for jewelry, therefore they are not so attuned to what the market is and tend to pay more because they are not looking at it as an exit strategy.  They are looking at it to make into a pair of earrings.  There isn’t anything wrong with that; it is just a different market and it is a different mind set.

Investing in gold: Good idea?  Bad idea?

Well, you know I dropped my crystal ball when I came through the door.  Nobody really knows.  For years, gold was terrible.  Approximately four years ago, gold was at $275 an ounce.  Now we are in the $900 range.  So gold is a good thing to have to balance off your portfolio, but it pays no interest.  And if gold stays at a certain place, say $900, for five years, even though interest rates aren’t very high, you’ve lost five years worth of interest.  If you are buying at a time when you are fortunate and gold moves up very quickly in a period of year, you can make a lot of money.  But it is not a performing asset, it doesn’t pay interest, and so the only time gold is good is when it moves.  Right now, in 2009, the stock market is going down and a   savings account might pay you 1.5 to 2 percent.  You probably can’t buy real estate unless you pay cash.  So gold is a good haven at the moment, but for the long-term, you have to decide for yourself.  However, if you have a fair number of assets in different areas, then it is not a bad thing to have a position in gold, platinum, or silver.

Have you found that people are selling things more often, perhaps downsizing  their coin collection?  Are your regular clients doing more selling, or has that stayed relatively steady?

First, let’s address the bullion situation.  In recent months, gold was going down and there was no supply.  The reason is that people were selling their paper positions in gold that they bought on the commodities market.  They had profits in that, so they were selling to balance their losses in the other areas of the markets.  So since we had prices dropping for a while and no supply, premiums went way up.  Now there is a little more supply, but not much, and so we have perhaps 30 percent are selling and 70 percent are buying.  As far as rare coins, when people lose their jobs. They sell their coins.  If they haven’t lost their job, they are not selling their coins and they are continuing to buy.

What defines a collectible?

Collectibles to me are Beanie Babies, Jim Beam bottles, or things you can buy in a garage sale.  If you are talking about coins, ancient coins, or American coins that are worth $10,000, $20,000, $30,000, $50,000 or $1 million, that is not a collectible.  Would you consider the Mona Lisa a collectible?  Probably not.  So I would say the things that people can buy in garage sales, things that are given out by McDonald’s, or things that are common and not of much value can be termed collectibles.  But if you are talking about numismatics or upper-level stamp collecting or collecting of art and paintings, collectibles is probably not the right term.

Are collectibles manufactured specifically for the purpose of contributing to a collecting craze period?  For example, during the Beanie Baby craze, they were selling for significant amounts of money for those who were buying them.  But now, of course, if I sell my Beanie Babies, I probably won’t get the same return.

Exactly; those things are fads, and they go in and out of style.  I think the worst thing anyone can buy is a limited edition.  I once was looking at some porcelain by Lladro and was told, “This is a limited edition; we are making only 5,000 for the U.S. and 5,000 for Europe,” and then I looked at something else, and I asked, “Well, what about this?”  “That is not a limited edition; we only make what we have orders for.”  And when I asked how many orders he had for that,  he said about 300.  So limited editions are produced in large quantities for collectors who keep them.

If you want to find out what to collect, follow people around and see what they are throwing away and collect that.  People are buying massive quantities of state quarters, and they are very nice and they are very educational, but they will be worth little more in 100 years because everyone is saving them.  Just like people were collecting sheets of stamps in the ’30s and ’40s, and now they are worth 20 percent less than face value after 60 years because everyone saved them.  They are available everywhere.  There is far more quantity than there is desire for ownership, so we use 50-year old stamps on letters but you have to put five stamps on a letter to get to your postage level.

How has the Internet affected either your business or the business of coin dealing, in general?  What would you say to people who believe they can shop on eBay and know that what they’re buying is authentic?

A large portion of the serious collector items that are on eBay tend not to be good deals or they tend to be fake.  The people who sell strictly on eBay can close up shop and open up the next week under a new name and you’ll never have a chance to get a refund or get any guarantees.  Now, we also are on the Internet and it’s been fantastic for our business because we are an established brick-and-mortar business; it is has introduced us to people that we never could have reached before.  So when you are dealing with the entire universe of humanity, you’ve got some good and some bad; you’ve got a lot of opportunists who don’t ever have to have contact with you, don’t ever have to look you in the eye.  You really don’t mean anything to them, so they can do anything to you.  You usually have zero recourse.  So the Internet is a place where you can go, but only if you know as much or more than the people doing the selling.  It is a very interesting, fascinating area, but it is extremely dangerous; you are swimming with sharks.

Do private collectors who purchase antiquities from you view these purchases as an investment?

We never sell anything as an investment.  Not a coin, not even gold.  We sell ancient coins, modern coins, bullion, antiquities as items that people may want to own.  But we never sell them for as an investment.  We don’t want people to buy them as investments.  We want people to buy them because they want them and want to enjoy them.  We do know that if people learn about what they are buying and build a real collection, a collection that has a theme and logic, and keep it for 20 or 30 years, when they sell, they probably will do very well.  If people buy from someone who calls them up on the telephone they probably will lose a lot of money, because telemarketers generally get items from regular dealers at their retail price on consignment and then sell them, and of course they have costs and they have salesmen to pay, so you might possibly pay two to three times what something is worth.  So whatever you are buying, whether it is a house, a car, or a coin, you need to know what you are getting into.

How often do you run into someone coming in saying I found this in my grandma’s attic, is it worth anything?

Every day.  People come to us all the time with things that are in their basements or that a relative left to them.  Generally what people bring in is not worth much money, and that is because common coins are found commonly, and rare coins are found rarely.  Why are rare coins valuable?  Because most people don’t have them.  If someone was a significant collector and left the collection to a relative, then probably most of what they have is pretty good.  But if you ask someone if they bought the coins in their collection and they say no, then what they have is probably not valuable.  They were probably taking silver coins out of change and throwing them in a jar.  There is a difference between a collector and an accumulator.  A collector will have one 1877 Indian Head penny, a collection that goes all the way from 1859 to 1909;  they will collect them generally in a similar condition and they will have one of each.  Maybe they will have some back-ups.  An accumulator, on the other hand, will have a bag of pennies,  a bag of nickels, 50 bags of quarters, and they won’t know what’s in them and neither will their family because they just liked coins and put them in a drawer; they didn’t learn anything about them and frequently don’t know what they have.  So there is a distinct difference between a collector and accumulator.

What would you say to someone who says it is too expensive to buy a valuable coin?

Well, an ancient gold coin might start at $300 and for some people that may be too much money but for most people it is not.  If you are buying a copper coin or a silver Roman coin, those can cost as little as $2, $3 or $5; a silver coin from 200 A.D. can cost as little as $20.  So these things start at a very, very low price.  They can go quite high if they are historic and very beautiful.  They can be worth a great deal of money.  But you can put together a rather large coin collection for less than $200 per coin.

- This is an edited transcript of an interview conducted February 5, 2009.

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