collecting coins for profit

i have been an off and on coin collector for nearly 42 years

and i have to admit that i have probably lost money on all the numismatic coins i've bought in my lifetime ...
however have made huge gains on all the bullion coins i've bought

in the 1960's ...

i pulled $80 worth silver coins out of circulation for face value by roll picking ... and made a huge killing
i also bought some old lincoln cents from the 1910's and 1920's in circulated condition from a coin dealer ... really not too much profit there


in the 1980's ...

i bought some BU commemorative halves and have lost money on all those ...
however I also bought some BU rolls of common date silver Ben Frank. halfs and silver FDR dimes (more of a bullion product) ... and made a big profit


even in recent times ... ...

i bought nearly $40,000 in AGE's and ASE's last year ... and made sizable gains on that in 1 year ... Perhaps up 35%
while i am nearly flat to perhaps slightly down on any numismatic coins i bought in the past year

is this typical?

perhaps the numismatic coins i buy arent rare enough to have sizable gains ... most of the numismatic stuff i have bought in my life was in the $5 (long ago) to $500 (more recently) price range

i mean dont get me wrong ... i probably enjoy the numismatic coins more ... like my 1827 AU Bust Half or my 1862 3 cent piece or my 1937 MS66 Texas Commem ... i still like looking at those (i prop them up next to my computer) along side some of my money making AGEs and ASEs ... but in terms of making money on the numismatic coins ... it's been slim pickings for 42 years!

what is everyone elses experience on this subject?

 

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My guess, based on my personal observations, as well as what I hear from others, is that a large majority of collectors lose money in coins.

There is a lot to overcome: making up large buy-sell spreads, problems with over-grading, needing to know how to grade, buying and/or selling at the wrong time, etc.

Those collectors who buy their coins because they really like them, and are patient, knowledgeable and well informed, have a much better chance of financial success than those who do/are otherwise.

 

I agree - a lot of the bullion coins I bought in the 80's and 90's I made good money on when I sold them. Now the collector coins - not so good, but a couple of those are serious learning mistakes. Again - not all of the collectors coins am I losing money on - a few I have made some money on. All in all - with selling (collectors coins only - with commission) losing about 12%. Which is fine - I liked all the coins, but it was time to clean up the collection. Narrow it down.

 

i think you are right, Mark and mark.

it's interesting
i remember someone posted a link to a chart of the value of an index of rare coins ... i think they have been on the decline for a while.

i wonder if the decline in rare coin values is linked to a declining collector base? (no idea on that)
but i do know in the 1950s and 1960s coin collecting was pretty popular ...
today you rarely hear of kids or twentysomethings collecting
i think that most of the collectors today are older (might be wrong on that ... dont know really)

my bullion coin profits at least allows me the latitude to enjoy some money losing numismatic coins

i bet some people have made $$ in rare coins ... probably the ones that buy the very rare and expensive specimens
or got a great deal when they bought.

 

Yes - I agree. The funny thing is - I think my local dealer makes way more money buying and selling bullion than the coins. Yes - the do get some really nice coins and some rare ones, but not every week.

 

Ahhh ... here is the chart ... it's PCGS tracking the value of 3000 rare coins over the past 40 years

It's pretty interesting ... perhaps we have put in a chart base and can start moving back up? who knows ... right?

wow look at that peak in the late 1980s ... wow




http://www.pcgs.com/coinindex/indexallgraph.chtml

 

In terms of percentage of price increases, I believe that the run in 1979-1980, was even more spectacular than that seen in 1989-1990. Both time periods were extremely wild ones in the world of rare coins.

 

Bullion coins are, by definition, tied to the price of a commodity. Commodity prices have the stability of a flea on crack to begin with.

Not only does their price depend upon availability, production, and seasonal factors, but the most motivating pressure on their prices is, quite simply, fear.

So let's see...your bullion coin is, under NORMAL circumstances, going to change price rapidly, and by notable percentages. And then, every 20 years or so (60's, 80's, Current ring a bell?) go completely bonkers one way or another.

Not really a big shock that opportunities to make large amounts of money in short periods of time present themselves. Play the opportunities with even moderate skill, and you wind up being profitable.

"Numismatic coins" on the other hand are tied to absolutely NOTHING. A 1914 D Lincoln Cent has absolutely connection to the price of copper. And, almost without a doubt, there's NOBODY arguing that if the government collapses, we better all have our 1914D cents on hand, since "they've always been money". Indeed, even GOLD coins like a $20 Saint are relatively immune from such thinking.

The value of such coins depends upon their rarity, their condition, and the desire of collectors to own them.

Their rarity will change very little, if at all. Who, after all, is out there destroying 14-D's or Saints? So...the number available's going to remain RELATIVELY fixed. if anything, it might go UP if a large cache is found...weakening the value, of course.

Condition can ONLY get worse. not to say it WILL...such coins are usually protected, of course. But the condition can not get any BETTER. Its GRADE might, depending on when/where it's submitted (if it is), but its CONDITION will not. So, again...the only thing its value MIGHT do is drop, if the coin deteriorates.

Collector desire is the most volatile of factors, but even this changes slowly. There's not likely to be a sudden mad rush to suddenly own 14-D's. Admittedly, it happens every so often with collectibles, as baseball card, beanie baby, or coin shops spring up en masse for 2-3 years, and then quietly fade from existence. capitalizing on this, however, requires a fair bit of luck, decades of patience, AND the desire to sell.

In other words, making money as a coin COLLECTOR takes time, luck, and willingness to part with your babies.

Do everything right with bullion, you make money.

Do everything right with coins, you have a nice collection that MIGHT find a buyer IF you're lucky and IF you're willing to part with it.

 

good summary, gb

 

I agree with the summary GB, though I would say if a collector buys quality coins, at a decent price, long term they will appreciate about the same as inflation. People who 25 years ago were paying $20 a month to buy a Roman Republican coin now pay $50 a month. Collector coins go up with inflation, but like Mark said there is a lot to overcome, like buy sell spread. I would not put much faith in the PCGS chart since that is extremely high grade biased, "investor" grade coins. I am talking about collector coins, what most of us collect. Coin colelcting is a hobby, I know many of us get carried away because of the "guarantee" they will be worth something someday, and dealers promote that, but if you treat your hobby as an expense and have something to sell when you are done, you are already ahead of the game versus most hobbies.

Bullion as the OP described you can make a lot of money on quickly, and lose just as quickly. Buying a bunch of bullion in 1980 would have meant you have to wait almost 30 years to get your money back from the gold, and you would still be underwater on the silver. Yes, you can make money, but remember that this cuts both ways guys. Anyone loading up on silver and gold right now, remember the price can go down as quick, or quicker, than up. Not saying it cannot go up, just do not get caught up in the euphoria.

 

I agree wholeheartedly, with the observations stated above.

 

medoraman, you certainly have a point. Most coins will probably appreciate with inflation, but I'm not sure that counts as a "profit", since one's buying power doesn't change in such a scenario.

I think you hit the nail on the head with collecting, though.

Hobbies are SUPPOSED to cost money. As far as I've ever known, they're activities you pay to participate in because you enjoy them. *heh* If, as you said, some of that money sometimes comes back, so much the better.

Trying to make a profit doing something is, pretty much by definition, "work" or "a business", and HAS to have different rules of engagement...like buy/sell spreads and the like. That's the whole reason the two aren't the same...their POINT isn't the same.

 

and @ WingedLiberty....you have no idea what
people my age (20) have to go through to buy coins
from dealers...I walk in a coin store and I immediately get
disregarded...dealers think "oh he's not a serious buyer"
he's probably here to buy a cheap cull....I hate when people
judge too quickly about people and that's why you lose people
to the hobby and customers...I'm guessing there are fewer young
coin collectors since they get brushed off by dealers who
think they are not mature enough to handle their so called
"prized possessions"

and @ coin collecting for profit...bullion is profit and
coin collecting (hobby/instant gratification)

 

I don't expect to make a profit on anything I buy. With that said, I only buy when I believe I could turn around and sell it for a profit elsewhere.

 

That doesn't sound like a very enjoyable way to collect.

 

Makes it a challenge to find the coins I want. Also gives me the ability to walk away from a coin I want if I feel I'm not getting a solid deal on it.

Think of it as working on an extremely restrained budget.

 

I respect your collecting choices and discipline. In my case, both as a collector and a dealer, many of my best and most enjoyable coins to own (and in a number of cases, ones I did well with, too) were ones that I did not get a solid deal on. In fact, I had to pay dearly for them.

 

I can't afford to pay dearly for coins, unfortunately. My financial situation dictates that restraint be not only displayed, but actively practiced in regards to my coin collecting.

If necessity were to arise, I'm sure I could sell all the slabbed coins for what I spent on them, if not a bit more.

 

It probably makes you a better collector. So you know, when I said "pay dearly", I didn't mean high priced items in all cases. For example, it could be paying $100 for a coin that typically sells for half that.

 

I didn't mean it in a bad way...
coin collecting is what I love to do<3
but as far as profiting from it...
I buy what I want...if I think it's appealing..