A hobbyist with an eye towards investing

I am a hobbyist but try to collect coins with good investment potention. First off, I don't by too many coins but always try to buy high quality. What I mean by high qulity (at least for me) is PCGS or NGC slabed coins in the $500 to $1500 range. I buy mostly 19th century and early 20th centrury US coins. I search long hours tring to find coins at the top of their grade or undergraded. I only purchase coins with nice eye appeal. What I would like to know, is this a good stragegy for investment, especially the price range. I feel that coins over $1500 might be a bit too difficult to move if you want to liquidate. Also coins under $500 may not be rare enough or have the demand for a good investment. In that price range I can get coins with population of only 20-100 finer. Also what do you think about the date range I am targeting.

Any opinions would be appreciated.

Mike

 

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Welcome to the neighborhood, Mike!

I've always held the belief that if you treat the hobby as an investment, you won't fare as well as you'd hope. I used to say that if you wanted a good return on your money to buy real estate, but now, I've changed my mind. If you want a good return on your money, learn to play Texas Hold-Em and buy real estate with the profit.

Chris

 

Sorry, here is a repost with carraige returns

I am a hobbyist but try to collect coins with good investment potention. First off, I don't by too many coins but always try to buy high quality.
What I mean by high qulity (at least for me) is PCGS or NGC slabed coins in the $500 to $1500 range.
I buy mostly 19th century and early 20th centrury US coins. I search long hours tring to find coins at the top of their grade or undergraded.
I only purchase coins with nice eye appeal. What I would like to know, is this a good stragegy for investment, especially the price range.
I feel that coins over $1500 might be a bit too difficult to move if you want to liquidate.
Also coins under $500 may not be rare enough or have the demand for a good investment. In that price range I can get coins with population of only 20-100 finer.
Also what do you think about the date range I am targeting.

Any opinions would be appreciated.

Mike

 

There is nothing wrong with using " Rare Coins " as an investment vehicle. However, you must be able to understand and know the difference between Rare Coins and Coins that are high priced, over-graded or otherwise over rated. Than, you must also be willing to be in it for the long haul . Investing in Rare Coins is not a short term vehicle.

 

Personally I think the Early Silver commemoratives are undervalued right now. Most of these have been trending down the past few years. I personally think the emphasis on Gold and Silver have moved folks away from other rare coins.
If you are looking for an interesting set to collect you might look into these. Except for the major keys to the series (Hawaiian, hudson, spanish trail) there are really nice examples in the $500 to $1500 range.

A good reference is the NCG price guide.

 

I agree, early commemoratives are in a dorman state right now. I always like collecting areas that are not "hot", as I can take my time and cherrypick exactly what I want. I would say most traditional collector coins with the exception of silver dollars are getting to be better buys since so many people are getting silver mania. Early commemoratives, nice 19th century type, and large and half cents I think are all very decent areas right now.

 

Me too. I try to collect coins that might retain their value or increase in value. However, I basically collect coins as a hobbyist. I sort of agree that coins in the $100 to $1,500 price range might be more easily sold than those outside of that range.

Welcome to the forum. Do you have any photos of your coins that you could post here?

 

Coins in the $500-$1,500 range are still relatively common in the scheme of things... I mean think about how many low end RB Unc 1909 S VDB's are out there in the top of that range... lots.

I'd really save my money and find something in the $3k-$5k range... MUCH rarer coins and much more likely to increase in value... anything less then that isn't going to change much...

 

Being a successful investor in coins ironically requires understanding of the coins that can only be attained by starting out as a collector first. When you're on the outside of the collection world, all you have to go by are catalogues, auctions, and book values. When you actually collect coins, you learn about them, their features, and you literally get a sense of the pulse of the market. You're able to look at auctions and say "wow, that guy overpayed" or "wow, I should have bid on that, what a bargain", which are judgments that are hard to make as an investor not familiar with the coin beyond the scope of a coin being a piece of metal with some worth to some people who you're not familiar with.

My advice, is invest a bit of money in collecting. Let's say you want to get a $1500 Morgan? $3000 Morgan? Start out by buying a few cheaper ones, get a sense of their strike, the way they're graded, and the mintmarks that make certain ones more collectible. Don't buy a "$1500" Morgan because a dealer told you it's worth that or 1 auction ended with that final price, that's not reliable data. Once you're comfortable with the coins, then make your big investment and sit on it. You don't want to find out years from now that what you thought someone said was an MS-66 or 67 for sure is nothing more than an overgraded 64 and realize your money went into the toilet, investment-wise.

Also, another piece of advice from me will differ from what others here may share: I don't collect US coins, only foreign ones. And I think a coin "investor" should have a global perspective on the hobby, not just US-centered. The US coin market, in my opinion, is saturated. It's not that there are a lot of collectors that are falling over each other, it's just that there is a large number of core collectors who are knowledgeable, financially stable, and highly experienced. When you move into foreign coins, that falls apart REALLY fast. If you pick the right country, right coins, the right market, the profit in store is bigger than what can be made in the US coin market. Just a few days ago I saw a beautiful, UNC foreign gold coin sell for $20 below melt, shipped. You think you can find that in the US coin market?Think about a global perspective on your investment. Collectors in the US are falling over each other racing to get silver at bargain prices, a few percent below melt or AT melt. But that doesn't always have to be the case in the world coin market... About a month ago I won an eBay auction for a bit over 3 oz of foreign silver for $50, shipped (no joke, I can post a link). Within 24 hours of getting it, I resold it for $145.

Good luck in whatever you do. Despite what many will say, I have found coins to be a very lucrative hobby with lots of real profits.

 

A wise man once told me to buy coins that look so outstanding that even in a poor coin market everyone will want to own them. He also said to buy the key's or semi-key dates first as the key's are always in demand. He recommends PCGS or NGC graded coins but said to buy the coin not the slab. His name is Joe Kaminski. If you get to talk to Joe you will learn a lot. Look him up as he goes to all the major show in the USA.

 

Pretty funny. But I disagree.
Most show a similar progression. I wouldn't buy them for strictly investment reasons but I think they will go up over time.
Take a MS-63 1935 Hudson as an example.
1935 $6
1936 $9
40 $5.50
45 $15
50 $15
55 $55
60 $100
65 $275
70 $250
75 $500
80 $1700
85 $1050
90 $720
95, 2000, don't have any info
2005 $950
2010 $1050

 

IMO, collector coins in that price range are rarely good investments. One out of ten people will make money, and most will get taken to the cleaners. If I were dead set on investing collector coins, I would stick to the keys. If I were focused on investing, I would look to precious metals plays (like generic gold or bulk silver or even platinum) as the margins tend to be thinner -- a very important consideration particularly if your investment horizon is short. Investing in the coin game is dangerous, and the table is seriously tilted against you. Good luck...Mike

 

p.s. a serious question for you to consider, and apologizing in advance for my bluntness: Do you really have the ability to judge eye appeal and micro grade coins? The point being, the classic mistake in coin collecting is hubris -- thinking you know more than you really do. Virtually every collector has a rude awakening when it comes time to sell coins (i.e. where the rubber meets the road when it comes to judging eye appeal and grade/value). And that's saying nothing about the typical transaction margins of the coin game.

 

I wouldn't recommend coins as an investment, no. Keep it a hobby.

If you lose money on some coins (and you will), consider it payment for the time you enjoyed them. You pay for most everything else you enjoy, right? If you make some, consider your good fortune.

Certainly you want to be smart about what you buy and how much you pay for it.

As for the types of coins and prices you are paying, no one knows if what you're doing is wise or not. Buy what you like and like what you buy.
Lance.

 

That is a great post, and some very sound advice. Where I differ somewhat with Rhino is on his recommendation to stay away from US coins. I think it's a simple matter of supply and demand. US coins are where the interest, and hence the money is. You will always find a market for rare US coins simply because they are so popular. You may have to hold on to them for a while, but over time I think they will prove to be a great investment, if you know where to focus.

I echo Rhino's advice to collect first to familiarize yourself with the coins' details such as strike, rarity, condition etc. but focus on the most popular US coin series. Then buy the 'super key dates'. So for example I'd recommend taking up Morgan dollars and buying the 1893 S, the 1894 and the 1889 CC in the highest grades you can afford. Collect a set of Mercury Dimes, then when you have a feel for the series, get the best quality 1916 D you can afford. Collect Standing Liberty Quarters, then buy the best 1916 SLQ you can afford.
Always buy the key dates slabbed by NGC or PCGS. If you are really confident in your ability to pick out premium quality coins, and you are a very proficient coin grader, you might want to consider coins slabbed by ANACS as well, you can find bargains here. Remember to buy the coin and not the slab.
A look at the price history for the super key dates of the most popular US coin series will bear out how well they have done relative to other investments. While past performance is no guarantee of future investment potential, I think with the recent explosion of bullion coins, the hobby will benefit in the long run, meaning more upward pressure on key dates.
If you are interested in reading more on the subject, I recommend "Rare Coin Investing An Affordable Way to Build Your Portfolio" by David Ganz
Although for his recommended portfolios, the affordable part is relative.
Whatever you decide, good luck!

 

LEADFOOT makes a great point about buying rare coins. It takes a lot of years to learn the ability to judge eye appeal and grades. You need to almost go to every major show to just keep up with what is hot or not. And yes you will lose money on some of the coins you buy but show me a hobby that you don't lose money on. I have friends who are stamp collectors and I have never seen one yet who got rich on stamps. As far as I am concerned there is a big difference between coin collecting and hording silver and gold. And once bullion has gone south, we will get back to coin collecting instead of worrying who has the most bullion. Jim

 

See, the old adage " Everyone has an opinion " is true. I don't care what the investment instrument is , unless you know exactly what your doing and are comfortable with the degree of risk potential , keep your money under your mattress . There are many different means of playing the " Investment" game and just like a professional poker player say's , " a break even is a win " . In the end, your ultimately responsible for knowing when to hold em and knowing when to fold em, but first know the game your playing . If you don't, your doomed to loosing unless you got a dollar and dream. Oh wait, even that to !

 

Thank you all for your input

Well, you certainly all gave me a lot to think about. Since I was never talking about a true investment, just trying to make a few bucks out of hobby I enjoy I will still buy coins I like rather than going for ones that have the absolute highest chance for appreciation. I would just like to focust on coins that have a better chance for a return. Also I am in this for the long haul. I want to enjoy my coins for many years before I sell them. From sifting through most of the comments, it seems there is some consensus that should focus on rarer coins and key dates. Sounds good to me, I will just have to limit myself to fewer coins, but they will be coins I will be happier with. As far as being up to the task of knowing what an overgraded coin or and undergraded coin looks like, I have no ego issues there. I realize I am far from an expert, but I spend a huge amount of time reasearching a coin before I buy it and many hours trying to find coins at good prices. I do my best not to overpay at auctions and let a lot of coins go because I thought the price went too high. So while I may have a lot to to learn, I do put in the hours, so hopefully there will be a slow but steady improvement there.
Thanks again to all who responded for you valued insight.

Mike

 

Mike, best advice is collect what you love, what you find appealing. This will be your greatest reward. Secondly, there are whole debates about key coins, etc. I just read an article comparing 14d and 14s cents in MS65. It turns out that the 14s is rarer based on TPGers, but the 14d is MUCH higher priced. Why? Because its "key". To me, this means dates labeled as "key" are truly overvalued versus their rarity. Will these dates always keep this sky high premium? I don't know.

When I think rare coins, I think coins that are truly scarce and desirable and not modern day "rarities" like modern MS 70 coins, or "condition census" common coins. Those have their place, but I would say its safest to collect problem free "collector coins" like high grade type, large cents, early commemoratives, etc. Look around at a coin dealer or a show. Pay attention to what the dealers have, and more importantly what they DON'T have. Coins like I describe are not in their inventory much, because they are desirable. This makes it more of a search to find them, but tells you that they are more likely to increase in value and be easy to sell when the time comes.