Coins are bad investments because....

If it is new then you can just look at the mint website... for example the 2012 silver proof sets were about $60 and now they are more than twice that. As for older stuff you really do not make money on that.... that sort of stuff is more for collecting for sentimental reasons.

 

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Did you enjoy collecting and having them?

 

Because in the long run, someone will rip you off.

 

IMO any investment has a risks. Thats the game you play when you "gamble". It is not 100% you will win, but sticking with something that has better odds is the key.

When it comes to coins, I do not think of them as an investment. I feel its a hobby where I have a better chance of making money/money back if I needed to.

I now buy with that thought. If a coin books(which varies I know), for price x, I need to feel as if I am getting a deal. If I buy that said coin for X dollars, that price may be 40% what it books for under normal conditions. You can find key date coins for a decent price. Making sure you will be able to recoop/make money is key if thats your intention. If the coin goes over that comfort level, do not buy it, wait for something else.

In submation, if you are collecting a set then this may not be for you, but think about it. Everyone wants to feel that they get a deal, and with some people selling, they may make $10 and be happy, others not so much. As far as "investing" I do not see the coin market dropping anytime soon.

 

Also, some people will tell the price to make you feel that you are getting a deal. I feel sometimes that they are not being truthful, just making you think you are getting a better deal than you are.

 

The 1oz gold reverse proofs look amazing. Anyone know the mints asking price on those yet?

 

we shall see on 8-8 (it certainly will not be cheap)

 

I ate them all!

As far as any collectable you may be lucky enough to make a profit at one time or another, but over all there are much better investments. I collect certain coins for the fun of collecting and not as an investment. I collect deco bookends because I like them, not as investments. However, if I was to sell one of my bookends when they are popular I would probably make a handsome profit. Of course you MUST be knowledgeable about what you are buying or selling if you have any hope of making a profit.

I had a friend back in the 60s who bought a nice 55 double die and I"m sure he didn't pay more than $100. Now that turned out to be a good investment, but if he bought $100 of Microsoft in 1986 and sold it at it's high after stock splits you'd be a happy camper.

 

L

Less than $2,000? I've never bought gold from the mint.

It says on the website to check the prices on another page but I never seen anything with a dollar amount.

 

I think that you can single out many good and bad investments over any given period.

The OPs question is about coins as to why they aren't a good investment. If I am correct, many regular investment vehicles regularly outperform coins in returns and are more liquid and more predictable.

Can you make money on virtually anything? Yes. Can you lose money on virtually anything? Yes.

Just because one can sleep in a tent doesn't mean that it's a place to take up permanent residence.

 

My problem with coins as an investment is that there is no accurate, reliable, and respected estimate of value, for exchange from a property to a cash value, as there is for bullion, commodities, stocks, real estate, etc.

Now if you only have 1000 coins , you probably could keep up with it, but if you have 10,000 or even 100,000 coins , what data source can you use to figure your investment if you need to cash out part for life expenses? Stocks, right there by phone or internet to broker ( cash now!) , commodities the same. FOREX, yes, Coins - NO!, it is too small commercially to be an investment~ it is a hobby! Enjoy it and hope you never have the need to quickly cash out.

 

can't go wrong with key dates. holding them for 5-10 years you will make money on them. along with scarce mintage world coins are a good invesment. short term selling is a bad idea. long term selling is a better bet on making money on coins. I do agree with there being right times to sell. best time to sell is probably selling during tax refund time. worst time to sell is before and after christmas...people spent there money on gifts and recovering from the loss of money.

 

S&P 500 in January 1967: $90.20
$450 invested at $90.20 = almost 5 shares

S&P 500 price 8/2/2013: $1,709.67
Almost 5 shares X $1,709.67 = $8,529.39

You’re right Danr, they’re pretty close but the S&P still wins. And they both beat the 1916-S dime to shreds, as it’ll run you $2-$3 today.

The larger point is that if you want to make money, collectibles of any sort isn’t a reliable way to do it. It’s possible for someone to pick a winner and make out okay, but they’re a lot more likely to be stuck with a bunch of worthless beanie babies. If you really want to appreciate your assets invest them sensibly, don’t collect stuff.

 

You forgot to mention the cost of selling on places such as Ebay.

 

Money can be made on coins, but I really hesitate to call them an 'investment' as they do not produce value. I think people throw around the term 'investment' to make themselves feel better about spending money on coins, it's self-deception. If you can't justify spending the money on a coin without the investment angle then you should not buy it IMHO.

I think a much better way to make a coin decision is to assume it will be worth nothing when you go to sell it, would you still buy it? I know for me the enjoyment, comradery, and knowledge I gain from collecting coins is what I am paying for. I save my investment money for companies that produce value and generate income.

 

Key to investing, and I am not being sarcastic. This formula goes for anything that has intrinsic value, and can be replicated in any field (stocks, bonds, coins, stamps, antique cars, bullion, antique furniture, etc, etc): BUY LOW. Do not overpay ever. Don't sell when prices are down. Sell high. If you follow this religiously, you will make money--period!!

 

This really does nothing to answer the question though. The part about buying low and selling high is obvious but there are many issue's The first one being the huge "vig" on coins. That is usually a tough nut to crack right out of the box.

Next you have the cost of storage and insurance you will need to over come. This will eat away at your profits every year. Instead of this invesmtnet paying you interest, you need to pay for the privilage of having it.

The third ties into the second, if you don't deal with number 2 properly, than you have a very real threat of theft to deal which can kill your entire envestment. BTW if anyone "pulls their gun out" at this point you are just fooling yourself.

Fourth, you need to contend with ripoff at both ends, both buying and selling. Buying even a single counterfeit coin in the 4 digit range can cause a loss that may be impossible to overcome due to the other factors and overall low return rate. Also there should be no one who thinks they are above being duped by a counterfeit, arrogance like that will cost you money. You can greatly reduce your chances by following good practices but you cannot eliminate them.

The fifth point is what Doug touched on, selling and buying at the right time. Who really knows? Difficult at best. You are subject to the unpredictable whims of collectors. Now even if you do things right on the buying side, you may be forced to sell at the wrong time due to unforseen circumstances. It happens and it happens a lot.

The sixth point is taxes. Any profit made on coins is treated very harshly by the IRS. There is no LT Capital Gains for coins. More money coming out of your pocket

Now to tie this all in as to why the post did not address the OP's question. Even if all was done correctly and executed flawlessly AND money was made, this certainly does not answer if it was a good investment or not. So money was made. Big deal. How much? Did you make money after costs? Did you beat inflation? How did the coin investment compare to other investments during the same time period? These are the type of questions that need to be adressed to determine the investment value of coins, not the overly simplistic, Did you make Money?

When you view the entire enchilada, it semes clear that if invesment is you goal, coins should not be your thing.

 

http://dqydj.net/sp-500-return-calculator/ gives me a value of $31,786 for 1967 to present but that's a deceiving number in several ways. First, it assumes 100% reinvestment of dividends. That's unrealistic because you'd have to pay taxes on those dividends. Second, in the 1960's there was no practical way to invest $450 in the S&P 500; index funds hadn't been invented yet. Finally, brokerage fees at the time made investing $450 in even one stock problematic -- brokerages would hit you with an "odd lot" surcharge.

But return is only one aspect of an investment -- risk is at least as important. A diversified portfolio of stocks has very different risks from a single coin or even a small group of coins. As a simple example, today that "XF" 1916-D from 1967 could slab out as high as AU53 (or even 55), or it could come back as a cleaned VF.

So in summary, I don't think you can draw any conclusions from these raw numbers, especially for future investing. My own opinion is that the bid-ask spread on individual collectibles is too high to make them a good "pure" investment play.

 

In the late 1990s I asked the Constitution State's #1 dealer what he thought about coins as an investment, he said they were the worst investment and recommended CDs; in the interim his company has made millions on coins and currency. Who has made money? Buyers who are sharper than the sellers; bullion holders; investors in semi-numismatics. Bullion has done better than over 90% of the rare and certified coins. But all those who bought paper investments and real estate in the 90s have had varied results, some have been quite lucky, some have lost their shirts. Plus as the price is rising at what point do you sell?? The real problem with a bull market in anything is taking your profits at the right time and knowing what to wisely invest those profits in.

 

Or worse depending on what time frame you pick...... Much worse recently...

 

I agree with Mike, Doug, Jim, and others here giving good advice OP. "Coins as an investment" is perpetuated by DEALERS. They have a distinct, vested interest in convincing you that spending big money on a coin is not a "hobby expense" but rather an "investment". Just like someone buying a 68 Mustang maybe can be lucky and make a little, or someone playing online poker can hit it big, its POSSIBLE to make a little collecting coins but unlikely.

Buying coins as a "good investment" is about as smart as buying scratch off lottery tickets in my view. My only caveat would be bullion coins. They are a whole other animal, with possibly a place in a balanced portfolio.