Determining Undervalued Coins

I ultimately collect coins as a hobby because I enjoy the search and have a sincere appreciation for my collection. But one of the real benefits of collecting coins as a hobby is that, while you can spend a lot of money, you aren't really "spending" it in the traditional sense. I'm willing to spend money on coins, and probably spend more than I should sometimes, because I know that what I am buying will retain value. I certainly don't consider my coins as investments, and do not want to approach collecting from an investment perspective. However, I do consider my coins as something analogous to a savings account. It's a win-win situation if I can enjoy the pursuit of coins, enjoy owning and displaying them for a number of years, and then recoup the value at some point down the road. I want my collection to focus on coins that are likely to increase in value or maintain their value as a means of ensuring that this will be the case.

 

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You are? Hmm. How much is a nice F worth? I bought that coin in 1992 for $200 and many at the auction thought I was overpaying. IDK the market, so I really am just asking.

 

Best advice I would give is buy quality, and really learn the series you are collecting so you become a discerning buyer.

 

The 1877 IHC is nowhere even close to being rare as a date... rarity and popularity do not walk hand-in-hand. Keep in-mind that there are not as many set collectors as in the past, so assuming that these so-called keys will "do anything but increase in value" is rather risky IMO. There are plenty 77 IHCs, 85 Vs, 09-S VDBs, 16-D Mercs, etc to go around, so if demand is not kept high, what do you think will happen to prices?

 

I have a book with values of US coins that my pap gave me. I can't remember if it is from the late '70s or the early '80s. Either way, I think that it will be the only way to solve this. Now I just need to find it.....

 

Tell ya what. Let's all gather here in 20 years. If the 1877 IHC is still worth $670 or less in G-4, I'll eat my hat.

 

Is that $670 accounting for inflation? If so, then you might need to put some BBQ sauce on that hat! I'll be there, 6/22/2032 right?

 

$200 sounds very low for that time.

 

Wait a second. Aren't you the guy who posted that you "do not want to approach collecting from an investment perspective?" And now you're demanding that your coins beat the rate of inflation? Sounds like you absolutely view coins as an investment, and are placing a pretty high bar on their performance, higher than most CDs and money market funds out there now. Well, no, I can't say that the 1877 IHC will beat the rate of inflation, compounded yearly. No way. But I can say with confidence that it will retain its value and then some. Not bad for something nice to look at and show to family and friends.

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I don't have an opinion for whether it will or won't, or should or shouldn't go up or down. I'm just saying that if it's something you may have to eat your hat over, then the parameters need to be defined.

 

Sorry but in my mind that absolutely means it would have to meet or beat inflation. Or by definition, it has absolutely not retained it's 'value'. Value is buying power, not a dollar amount. Fiat currencies will eventually always go to their intrinsic value which is pretty much zero. Some just do it quicker than others. Well if in 30 years, $670 dollars only has the buying power that $275 dollars does today then has it retained it's 'value'? I think most reasonable people wouldn't have to deliberate very long on this one.

It is an interesting topic and ideas and good reading in this thread. Aside from amassing a pretty good collection of silver, both 'junk' and collectable precious metal coins, I have looked elsewhere. Places other than the US. I think everyone is correct that demand drives the price or value of coins. Well where does that demand come from? Aside from very rare/expensive coins I personally think a very large portion of it come from the middle and upper middle class! This is were I imagine most of us fall. Well what is happening to the middle class in the US? And what will the size of the middle class be in 10, 20, 30 years from now? It appears to me that, for the recent past, the middle class has really been the ones getting the beat down. The wealthy are as wealthy as ever and our trend towards a welfare state and handout for everyone, including those that might just not feel like pulling their weight (also a growing segment of the US). Who's footing the bill? The middle class is taking the biggest beating. I think that alone has a possibility to cause some of the demand to go down in the future, at least from people with in the US! Hobbies like collecting SL dimes might not seem so important and 'fun' of you can't afford to put food on the table, fill your gas tank or buy clothes for your kids. In fact things like this will also potentially cause more supply as people sell collections to make ends meet. Maybe this will all be a faded distant memory in 20 years but times are tough for a lot of people and it may very well get worse and last for quite a time.

That brings me to my next idea. If demand is what drives the prices and the middle to upper middle class provide the backbone and majority of this demand, then WHERE is a good place to collect? Think of third world or developing counties that are (or have been) predominantly in poverty but are quickly and constantly growing economically? Don't these countries also have drastically expanding middle classes that all of a sudden aren't so worried about putting food on the table? That all of a sudden have something called disposable income? The capacity for people to become collectors is expanding quickly in some places while it may very well be decreasing here. Now one thing for US coins is that they are popular the world around and demand from these 'other' places may very well maintain the prices of US coins and even help increase them over time, hard to say either way. But I will say that there are 'other' places like this with coins that are relatively dirt cheap in excellent condition even though the have extremely low mintage's compared to what most here think are low. Major circulated coins with mintage's in the 1 to 2 million range, silver coins (non circulated) with mintage's as low as 800, 1500, 2000, 5000 are not hard to find. It does not take much of a demand increase (relatively) to create a very healthy return on your investment if you are talking about mintage's this low! Relatively modest increases in demand will send the prices through the roof. I know that Chinese coins are getting more popular and I suspect that this has something to do with it. I have other ideas/places and thoughts that interest me and that I keep an eye on. Some I genuinely enjoy collecting and might never get rid of but others I watch because I think there is a lot of potential in the future. And hey, if they are silver and you can buy them for not much over spot and they have relatively very low mintage's, how can you possibly go wrong? There's a good chance that silver alone will maintain it's value if not better down the road anyway.

MV

 

Well, this is interesting. But I think if instead of worrying about how well you will fare in the future by trying to speculate today on down the road values. Collect what interests you and enjoy the benefits of your hobby. IF you happen to increase in value .....fine. If not, then you still have the enjoyment of the hobby. Coins and metals can and do fluctuate, so unless you are buying St Gauden's $20 series, there is always a risk. The world economy could stabalize and silver fall back to $15 an oz or lower. Collectibels could rise as discretionary spending would allow for it.I don;t think there is any guaranteed item. But I've been around for 3 major recessions and recoveries as an adult and have seen strange things happen.Buy what pleases you and get your profit from enjoying that and you will never experience a loss. IMHOgary

 

Very interesting article Cherd, and I applude you for your research and grapht's.
Just as Coin Talk should be, the responses are intellegent and informative. Thanks for posting.

 

On a lot of the stuff I buy I need to make 20 or 30 times my moneyjust to break even. This is because I have very little money invested in it but lots of postage, shoe leather, blood, sweat, and tears wrapped up in it. I'd go through large quantities of junk looking for anything that was rarely seen or Gem. A lot of these coins I have less than a penny apiece in and even though they've gone up to a dollar I still can't really break even. Not that I'm crying since I've got profits of 10,000 fold and higher on some stuff as well.

The real era of opportunity is now because there are so many of these rare coins from the developing countries that haven't gone up yet. Brazilian coins have shown no increses in decades but I know the demand must be increasing because the economy is very strong. Incredibly no Chinese circulating coinage is showing any increase yet (though they accidently left Taiwan out of the new catalog). There are opportunities everywhere but the downside is it will take you time to learn the difference between common junk and rare coins. There's some small guidance now and this information can be extrapolated to apply to other countries.

I'm just dumbfounded by some of the coins that are exploding upward. A few of them are ones I passed on at $1 because I thought they were too common. Now they list for hundreds and routinely sell on eBay. Most get shipped out of the country because that's where the demand is. So long as we continue on the current path our middle class will continue to shrink but many of these foreign countries will continue to grow no matter what we do. The one thing no one saved in this country were moderns. They didn't save US moderns and they didn't save world moderns. Now there's demand at home for many of these coins and there's no supply for some of them so prices are explosive. I might start selling into some of this strenght but truth to tell I think most of this will prove the tip of the iceberg. There are lots of coins with mintages in the tens of millions which barely exist at all and are rarely seen in pristine condition. The country of origin didn't save the coins and neither did US collectors. People will be searching poundage for this stuff for decades now.

 

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