I enjoy collecting coins but I don't just collect for the sake of collecting. I try to build sets that I like but that also have investment value. Up to this point in my collecting career (for lack of a better word) I have built sets in the highest grade I can afford. I have stuck to that philosophy thus far. However, I am changing that approach for the next set I build. Instead of targeting the highest grade I can afford, I will look to buy grades that are among the lowest population that I can afford. Even if that means low grade. What are your thoughts?...
Careful . . . for many dates, the lower grades have low populations only because the coin is so common in those grades as to not be worth submitting in the first place. Therefore, it's quite possible you'll be building your set with many extremely common coins, unlikely to be worthy of your investment dollars. On the Cointalk forums there are many detractors of the investment mindset when buying collectible coins. I don't think the two have to be mutually exclusive, but you need to put more thought into the validity of your approach if you expect preservation of your investment. let alone appreciation. - Mike
I agree with Mike's great post. Another point would be even if a coin is truly scarce, what does that mean? I have quite a few US coins WAY rarer than something like a 1916d dime, but worth far less. I have world and ancient coins that are a factor of 1000 times rarer than a 1916d dime, and might be worth $40. Rarity truly means nothing absent demand. Many like to concentrate on rarity only when making decisions, but in this hobby it truly is borderline meaningless unless looked at in conjunction with demand. Short answer, there is a reason why scarcer, lower priced coins are lower priced. The market isn't stupid, the price reflects demand.
If you want to build a set of lower grade coins because you want to, then by all means do it. Sometimes lower grades are a challenge especially for the reasons stated - people won't bother to submit the coins since they know they're lower grade and not worth the return on the grading investment. Unless you're talking a lowball set (G or F grades, especially in moderns) - those can go for good bucks since they can be just as hard to come by as high grades - anything in the lower in-between range isn't likely to have any sort of returns, you'll be lucky to break even. Personally I've got 2 sets of Ikes I'm working on like this, full sets in MS-63 and MS-64. It's been very challenging to find the last 3 coins I need to complete both sets as the silver business strikes for 1973/4/6 are very hard to come by in those lower grades. You have to get lucky that someone sent in a bunch to grade and they came back lower like that. I'm doing it because I want to, and the challenge of finding those few coins that are very uncommon in those grades is a sense of accomplishment when done. However, I'm considering every penny I spend on these sets as lost money.
Maybe I am just weird, but I consider all of my coin expenditures as "lost money". I am just about to pull the trigger on a fairly expensive coin for me, it will probably be around $1400 when all is said and done. Will I ever recover a single penny of this money? No. I will never sell it. I collect for the pure enjoyment of it, for the love of the coins and the history. So, since I am not worried about the investing aspect of it, I am free to simply buy what makes me happy. To me, that is what a hobby should be. Btw, regarding high grades versus lower grade examples. Yes, we have been in a period of chasing condition above all else for quite a while now. I blame the TPG for making the grade the end all, be all to many collectors. Regardless, historically lower grade coins haven't gone up as much, but neither have the gone DOWN as much. So if you are talking about security of your coin dollars, I would argue that longer term lower grade examples might provide more security versus high grade examples. If you would have bought MS65 Morgan in 1989 you might still be underwater even on a nominal basis on that purchase, and on an inflation adjusted basis you would have lost 85% of your value. If you had bought an XF Morgan instead, you would have been well ahead of the game today. So, buying high grades will NOT immunize yourself from potential losses, in fact it might be increasing your risks greatly.
Medoraman, some good points about the lower grades. Hadn't considered the flip side of them, the lower chances of further decline rather than the chance of incline. I'd agree you're probably correct about that, there's probably not much lower for it to go. And no, you're not weird, if you don't look at the money spent as lost money you're in for a very rude and costly awakening later on. I share the same feelings, as I'm in it for the collecting, not the possible appreciation of value. I suppose I should have used a better choice of words there. Collectible coins are one thing, bullion on the other hand is a different story (and a different sub-forum ).
Man you're weird, haha. I'm joking. Anyway, I think medoraman brings up some good points regarding the higher volatility of high grades. Although, from my observations it seems the coins poised to appreciate most are top pops that are scare/rare. They also seem to buck the notion that higher risk equals higher reward. I dont find them to be that risky, all things considered. Collectors with deep pockets will always seek these pieces. That doesnt mean they dont come with any risk from an investment standpoint. A new top pop could emerge. The problem, for me, these top of the top coins come at a high premium [outside my budget]. The notion that does hold up is the rich get richer.
