Where have I heard that before ?

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Love that articles. Thank you.

 

Excellent article.

It is a seductive thought, though, one which at times tries to seduce myself. What better than thinking you can own an expensive coin which you desire with the rational that its an "investment". Calling something an "investment" rather than a hobby purchase self justifies the expenditure. Which, of course, is why so, so many coin dealers tirelessly try to promote the idea. They know that there are not a lot of their customers who can afford a $4000 draped bust dollar or Roman gold coin as "hobby money". Convince them, though, that its just as safe an "investment" as land, mutual funds, etc, and you have a much higher chance of moving that coin. And that, selling their coins, is bottom line what they worry about. They are not interested in your financial future, they wish to sell you things, and will use any argument they believe might open up your wallet.

That is fair though. They are in the business of selling coins, and are salesmen. I do not judge poorly this tactic, any more than any other salesman pitches. The fault, of course, is of those who put investment money into a hobby.

Enjoy your coins as a hobby. Consider the money gone as soon as you buy a coin. For most collectors, they will lose money in coin collecting. Its still worth it to me for the pleasure of the knowledge and friendships I gain from participating.

 

Good article. But, as you have to know, Doug, these days you're wasting your time trying to convince many that coins are not investments.

 

You could be right Guy. I haven't been around forever, but distinctly remember as early as the 70's a huge push was being made by the dealers about how great an "investment" in rare coins is.

Of course, you can always pick up books from the 80's detailing how stratospherically high by the turn of the century common date morgans in high grades will be priced.

 

What I look at is the collectors who have been fortunate enough to buy the really rare coins and assemble world class collections. I can't think of one of them that has profited much, if at all on them. And these are people who can drop eight figures on a single coin. I know plenty of dealers as well, and while they certainly aren't living a pauper's life, they aren't what I consider wealthy, unless they were by some other means. It's a hobby, no matter how hard some (usually metals brokers) try to convince us otherwise.
Guy

 

I was into baseball cards during the big run-up a couple of decades ago - not as investor, but as a collector. All of the sudden, I realized that some of my cards had appreciated in value. Unfortunately, in order to take advantage of the increased value, I would have to sell the cards. So basically, I could not have the cards and the value of the cards at the same time. In other words, as long as you keep a coin, it is absolutely worthless outside of whatever personal pleasure you get from it. I would rather have the coin than the value any day. That is why I don't worry if I overpay a bit for a coin. If I like it, I will pay what I think it is worth to me. That having been said, I still like under-paying for a coin.

 

Interesting that my family wants me to do my numismatic collecting as an investment not for enjoyment. When I first began two years ago, I read do not go into numismatics for investing purposes and have told my family that. I do my buying strictly for enjoyment. (Just so long as I do not way overspend) Some people may think I am crazy to do it this way, but I enjoy it.

 

Great article, thanks for posting

 

Yes, Doug, I do agree this is a very good article. Even with that being said, first the author says (“buy only what you really like and that which gives you pleasure to own,” and “periodically sell some of your coins")
although if you buy what you like, how can you sell them.

And in the next paragraph
(I have often argued that it only makes sense to buy coins that you think will go up in value.)
These might be mutually exclusive.

My prize coin (which some here might scoff at, but it's my baby) is a 1794 large cent that I bought perhaps 40 years ago for $300 from a company called First Coinvestors that was one of the early ones pimping coin collecting as an investment. I can probably get more for it than I paid, but probably not more than inflation.

Yes, coin collecting is a hobby, but one in which we hope to lose less money than we would with disposable goods.

 

My opinion is rarity, variety, high grade, gold and silver are investment. The rest of coins are hobby. Right now, I am filling my Whitman folders based on hobby entertainment and it has nothing to do with investment. However, I have other small batch of coins that I am keeping them as investment.

Correct me if I am wrong, but I think the writer from that article are trying to tell "coin investor" to stop hoarding rarity, variety, and high grade as many hobby collections have hard time to get hold of them for their hobby purpose. The writer trying to convince "coin investor" that they will not able to make any profit from them in near future.

 

"And even then, there are no guarantees. Because when you get right down to it, coins are a hobby, and they are assets that sometimes appreciate and sometimes depreciate just like all other assets. What they are not is investments. An investment pays a return, a dividend, generates income, etc. apart from the underlying principal"

Not true, a GOOD investment..........

How do you get this text with the aforementioned text together?

"To be sure, there are always some low mintage modern coins that do well, which can be flipped for a decent profit if sold at the right moment. And lots of extremely wealthy doctors, lawyers, etc., who can afford to spend tens of thousands or more on a really high grade and scarce coin will do well with those assets"

Then, in conclusion, what?

 

I understand what you are saying sir, but there is one fundamental flaw to any "owning as an investment" plan. What innate value does a collectible coin have other than face value or melt value? None, save for how much some goofy little coin collector, (like me), may wish to pay for his collection. That is the only return, the only demand, the only hope of a profit from such an investment.

So, any "investment" in collectible coins is basically a "bigger fool" hope, hoping you can find a bigger fool than you to pay more than you did. That is why fundamentally investing in coins or other collectibles is flawed. To me, "investing" is determining risks, rewards, and buying an asset that has underlying fundamentals of making money. Bonds produce interest and principle repayment, stocks are ownership of a firm that makes money, land can be tilled or trees grown to produce income.

Anything without a fundamental money producing aspect to it is really speculation, not investing. Yes, some speculators can make a ton of money, but its still speculating.

 

I haven't looked but are 1996 silver eagles really going for over hundred on the bay? I think the offer of $55 was fair.

I do agree with the rest of the article though.

 

I don't consider my collection really an investment, but I do think of it as a part of my savings. I know that if need be I can sell my collection for pretty close to a certain number if I ever needed it. Not that I would, or ever hope to have to, but plenty of folks have and there may come a day when I need to.

So what about us? The folks who use coins as a savings of last resort, if that makes sense.

 

It all depends on that certain number you think it will sell for if you ever need it. In my case it is always less than 100% of the purchase price. If you think this way, you will never be disappointed. That is what I like about the Heritage Spreadsheet Program. They only attach wholesale values to your coins, never retail. Much more realistic.

 

Any smart collector knows they will not make money in this hobby. If they do, that is a bonus. I was purchasing a silver bar from my dealer today and he asked me if I felt silver was going to go up. I said I really don't care. I just collect for fun. When I have the urge to spend why not buy something I know can't hit zero and has held its value over long periods of time? Coins hold their value for the most part too. When I do sell I hope to get most of my money back. It's not like I invested my life savings and college fund. People my age waste money on modifying their car or buying designer clothes which depreciate in large amounts. I prefer to buy things that give me enjoyment and have some value close to what I paid when I go to sell.

 

I don't think of my collection as an investment. Although I do have many gold/silver coins that I purchased solely with the intent of being a store of wealth these are mostly coins bought as bullion and really I consider these separate from my 'coin collection' as they are viewed as bullion only. My actual coin collection will no doubt someday be sold at a loss whether it be due to an emergency, death, etc in the future.
For this reason my wife and I don't consider our families coin collection in our savings. Our aim for the collection is to be passed onto our children and they can decide what they do with the part they inherit when they do if all goes as planned. Although, I hope that I'm able to instill the love of numismatics into my children and a love of the history of the coins in our collection. So that my children don't just see the coins for there intrinsic value but see and recognize them for the family history and 'true' value they represent. A large part of my current collection was inherited from my father who inherited a lot from his parents,etc. In fact I still haven't gone through much of what my father left me who passed in Feb 2012 of cancer. I've been doing this slowly and separating it out into each of the collections for my children as rewards each week for chores and brushing their teeth etc, although keeping the occasional coin for myself. Most of the coins that are considered 'junk' that were actually found by my father and I metal detecting together as a child have more value to me than other way more valuable coins do.
My wife's grandmother has also willed us a substantial collection upon her passing which includes not only coins but a lot of other family items and memorabilia including many interesting items dating back to before the civil war. In fact very recently my grandmother in law has given me a journal of my wife's ancestor who served in the civil war. Reading through this journal is frankly amazing and full of history much like the coins in my collection are. I find almost a romantic aspect to the very history of the coins in my collection as I'm sure many other coin collectors do also. I think that unless one is very wealthy or does this for a living coin collecting/selling/buying isn't really the proper avenue for investment.

 

Wait... So I SHOULD invest in coins to keep my retirement plan going rather than a good plan in 401k and other investments?

 

While I agree with the basic premise of the article, I beg to differ about the definition of "investment". The author states, "An investment pays a return, a dividend, generates income, etc. apart from the underlying principal." This is not quite right. An investment is merely money that is put into a project, undertaking, asset, etc., with the expectation of eventually winding up with more money than what was put in.

For example, most stocks do NOT pay dividends. This is especially true for start-up companies. Even Wal-Mart did not pay dividends for years after it went public. Yet people still invest in them with the expectation of making money down the road.

I own coins because I like them. Some of my coins will never be worth more than what I paid for them, like my ancient bronzes and various 19th century world coins. However, when I plunk down money for so-called "junk silver", I do so for various reasons. One is to treasure hunt to see if some "goodie" slipped into the bunch. However, I also buy these kinds of coins on the expectation that they will rise in value due to their silver content. This makes them an "investment", regardless of whether or not I derive any income from them before I sell them.