So, you are in charge of a coin investment fund. What would you do?

There have been attempts over time to set up coin “funds.” Basically, the general idea of the question is that there is a pool of money that needs to be invested in the field of numismatics. It would hopefully be an open ended fund that could last indefinitely, but let’s say at least 25 years (closed end fund). You are in charge of the set up and operation. How would you run it? Would you hire the best numismatic professionals you could find and stay out of it? How would you govern them? Pay them? Would you set rules around certain areas? As far as the fund’s operation, Would you pay out dividends? Would you require a minimum investment period? Etc., etc. etc.

This is not a “you just won the lottery, what would you buy?” This is investors are counting on you to create this fund and set parameters of its operation to increase the chance that this endeavor makes money.

Try not to get bogged down in fiduciary responsibilities or similar legal issues. Just speak from your numismatic frame of mind and the basic premises (albeit with specifics within that premise) that you feel would make it a success.

 

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I'd start by STRONGLY suggesting they invest their money in anything except coins... coins are for collecting the market is way to variable to safe investing. Stick to AGEs and ASEs and even they almost anyplace including good old fashioned savings bonds will produce a higher profit then coins in anything under 20yrs

 

Wasn't this sort of thing done back in the eighties? And failing miserably?

 

Would that be issuing digital certificates in an ETF?

Of course the sight un-seen doggy digital certificates will probably get dumped into 401k's

Humbug. "Buy the the slab not the ETF!"

 

Go to Jail. Go directly to Jail. Do not collect Free Parking.

 

And then there was Coingate.

https://www.google.com/url?q=https:...EQFnoECAkQAg&usg=AOvVaw1RxA7VM51ZrzgTBotbymPA

 

Resign immediately.

My short term record has not been very good, except when I was dealer. Then I was buying stuff that I could turn over within a couple months or less.

As a collector I have purchased better material, although I did sell some big coins when I was dealer. My record was $78,000, but it was quick flip, and my mark-up was low compared to the total. BTW the coin was an 1898 $5 gold in Proof-66, Cameo.

So far as the long term goes, I've done well financially. But that's not what these funds are all about. It's about instant riches. The only people who do that are the Chinese who make their own inventory, or bottom of the barrel dealers who rip-off the widows of coin collectors. And yes, I've seen a couple of those.

 

I have no idea if my collection is increasing in value.
I don't track it.
And since my early bookkeeping was non-existent I don't have any way of doing so.

But as I told my wife, I intend to die with my collection intact.
And she has the name of a dealer who I suggest handle the dispersal.

 

Good points but I would add billionaires to the list, those who can afford the "finest known" and "rarest" specimens. They seem to do well when they sell off, usually after accumulating for many years. Not a sandbox ordinary folks like me will ever play in.

As far as the original question, I'll paraphrase Will Rogers:

"Buy coins that go up in value. If they don't go up, don't buy them."

 

First of all, as mentioned, how do you determine value.
All slabbed coins of course.
But then, as the value increases, how do you return value to the investor?

If an investor decides to sell their shares you now have to sell coins (assuming you don't use cash reserves). How does an investor "cash out" and how does that affect your "fund" ? Or can they Select a coin in inventory ?

With a regular Closed S&P fund it gets dividends and capital gains (assuming your investors don't do further investments). That component does not exist unless you sell the coin. And then when you sell you have cash.

The only real way to increase value is to sell coins that have gained value ... then go searching for raw coins and get them slabbed and hope they increase in value.

Then you have to worry about paying yourself as those dividends and capital gains cash flow isn't there.

Of course, you charge annual fees so you get an annual salary. But to do that you'll have to sell some coins, thus reducing inventory as there is no cash from dividends and capital gains.

My collection is gaining in value if strictly based on bullion value alone. I was buying silver when it was $7 ASEs, and gold AGEs at $400. But the value of the coins themselves excluding their bullion aspect? I have no idea until it gets sold as many are not slabbed.

I'd buy coins .. and some market funds lol at least part of it should increase in value over time.

 

I could see doing something like they are doing with art and sports memorabilia and instead of an overall fund you invest in shares of individual coins. The shares can be bought and sold 'in the club' and if someone makes an offer for a piece, all owners vote on whether or not to accept the offer.

 

An investment fund has to periodically revalue assets. Both for accounting statements and to allow investors to estimate the current value of their investment.


How do you do this if you do buy & hold on unique items? You can't. Unless you are regularly turning over assets it's just a guess.

 

Historically, it has also worked for collectors such as I. The trouble is you have to buy reasonably good coins from the start.

I just went over a collection to belonged the late father of my wife's hairdresser. He was a roll searcher. He spent a lot of effort on Lincoln cents, but he was missing all of the key and semi-key date and mint mark combinations. He had bank coin envelopes full of date and mint combinations back to 1909. The result is that part of the collection is not worth very much.

The valuable part of the collection was the "junk silver" he accumulated. That will net several hundred dollars.

 

In the middle eighties (86-87) a friend got in on a coin investment group/club.
This friend put in a set amount of money (say $300) and found 3 people who did the same.
After the qualifications were met the friend got a check/dividend on which one would reinvest back to the club and receive 1 half ounce AGE and 3 ASE's.
After his 3 people each got 3 more people and did the same the friend was to get another check/dividend on which one would reinvest back to the club and receive a 1oz AGE and 3 ASE's.
At which point each person of the 3 people would each get 3 more people as the cycle goes on...

Something happened with one of the guys claiming someone else got a dividend out of turn which upset another and it was OVER!
Couple days before the friend was to take possession of the 1oz AGE and 3 more ASE's
the government stepped in and shut down the investment group/club.
Lawyer's and CPA's over the next 4 years couldn't get the government to clear up things and it was put to rest.
Fast forward to today...what's the half ounce AGE and 3 ASE's worth?
Was it a good investment?
Good investment group?

 

pepperoni ponzi ...

 

Move to the Bahamas.
Set up another entity to loan to and borrow from the coin fund.
Live big.