collecting strategically - Question re: future "investment" value

This sing-song has been sung to the point where we know the lyrics by heart. Collect what you enjoy and can afford and you won’t go wrong, even though you probably won’t make a profit.

Invest in stocks, bonds etc. Don’t consider collector coins an investment. Except for a few of us, they aren’t.

 

Log in or Sign up to hide this ad.

Buy coins that future collectors will want to pay up for. Maybe, that hammered strike Merc dime with the nice color. Or maybe that stone-original attractive Seated Dollar in XF. Or that better date Barber half in AU. Whatever.

I would avoid common coins in meh grades if future value is a concern. There will always be tens of thousands these for collectors to buy. Look for "special" coins.

 

Thank you all for the amazing replies. I should clarify that by “investment” I don’t mean “make money” - I have a job for that I just like to think that I will ideally at least be able to get out, what I put in. More money storage than long term gains.

I asked for one because I have seen a lot of hobbies crash - Stamps, Lunchboxes, 12” GI Joe and Barbie, etc. I realize all different but I just like to do due dilligence!

 

I wouldn't worry as much with coins (or especially bullion) as those other hobbies.

A big reason for the crash of things like Beanie Babies or sports cards is that those things were made specifically to collect, for collectors. The producers of those items glutted the market with more and more of it. Eventually, collectors just said enough. There was so much of it that it became cheap to obtain.

Things like GI Joes, Barbies, Transformers, and other 80s toys are a little different. Those were very collectible 10, 15 years ago because all the 80s kids were hitting a period in their lives (25-40) where they suddenly had lots of excess income and were interested in remembering their childhoods. It was the fashionable thing to collect then. But now, all the kids who grew up in the 80s are reaching their late 40s+ and are less interested in such things.

Perhaps will see a wave of 90s nostalgia next? I don't know.

But what I am more confident in is that coins are an enduring collectible for all generations. And that they are an item not produced for the purpose of collecting. There is a finite number of numismatics, and they were made generally for something completely different than collecting, so people didn't hoard them thinking they'd make money later. Thus, there's a limited amount of them to collect. (Of course, newer coins are often made for collectors, but I am not counting those).

Then of course there is also bullion, which has a metal value attached to it that has nothing to do with collectibility. That's a safe collectible because it has a non collectible value. Collecting bullion is like collecting money. There's really no risk besides that you could have made more money with that money had you put it into investments instead.

 

If you want money storage, get some jars and throw change in there. If you want money you put into this hobby to remain your money, meaning you want to get out what you put in, there is probably only one way to do that...

follow Dr. Steven Ducker's advice (given in the summer 2018 issue of Cpg Coin &Currency Market Review, which I picked up for free at a coin show):

1) "Always have a mentor" and 2) "buy the very best you can buy, even if you can't afford it, hold onto it. Don't compromise. If you can't afford it and you can't stretch to buy it, don't buy it. Buy the very best and hold, don't go in and out, in and out. Don't get into the upgrade game."

and also...

certify your coins by a reputable company and then CAC them, because CAC only approves a small percentage if the coins it reviews.

Probably, like numerous other collectors, I have broken all of this advice, but truly I can see now that people who develop the knowledge, get a great mentor, apply patience, and only go for the best they can 'afford' (or can stretch and also be able to scrimp or manage on less for a while because of it) will have a true chance of getting out what they put in.

 

Interesting thread.

(1) if you buy coins today because of their toning/color be well aware that it may continue to tone/color. And over time it may not be as "pretty" as sooner or later it will turn black. So the longer the term you buy a toned coin due to it's color, the higher the probability someone may not buy it due to it's toning. Of course, all dependent upon how you store it and neutralize any further toning.

(2) Just like any physical investment, the economy comes into play for it's Future Value, based upon Supply/Demand.

10 years ago, no one was buying anything. So prices dropped. I'm sure some "really high end" stuff maintained it's value but for the regular stuff. Ouch.

So now, your future investment of when you plan on "cashing" in my be predicate upon "why" you want to cash out. Money crunch and you need the money, etc etc etc.

Conversely, if you bought PMs in 2011 and held it ... yikes, you have lost a ton of $$$.

(3) Bullion - the closest to spot you can buy it, assuming spot price goes up in the future, the better probability you have of making profit. Of course, if you like to track "total cost" of anything then you have to incorporate storage costs of all types into your total acquisition costs to determine if you actually made money in the future. I track all my bullion based on total acquisition costs.

(4) with anything, the faster you want money out of it, stereotypically, the less you will get for it. Pawn Shops will offer far less than Dealers who will offer far less than an End Collector.

(5) Higher grade/rarity. If you collect general slabbed Morgan dollars, there could be tons of them in the marketplace. Versus much rarer Morgans in high grades. The rarer ones will typically appreciate in value better than a higher grade general available coin.

(6) But of course, as you get into rarer, higher grade coins .. your BUDGET comes into play Do you want to spend $100 for a "rare / high grade" coin or $1,000, or $3,000, or do you think $50 is high ??

Your budget and knowledge will dictate your thinking to commonize and convince yourself to what you are buying to fit into your concept of future investments. So the more open minded you can be, and the more your learn, the better off you *may* be in the future.

 

I collect cheap Morgans and Eisenhower Dollars. I expect to take a loss if I ever wanted to sell. There were a few higher dollar coins I have wanted like an 1885 CC Morgan in MS-65. That coin keeps dropping in price and I would rather buy a low premium Double Eagle instead. There is risk involved with that too as Gold just fell below $1,200. Then again I don't know where risk doesn't exist when it comes to investing. Research!

 

^^ now I don't have a mentor, but I try to use whoever I can to gain knowledge, and some of what I post is me trolling for info. I may not always look like I am learning, 'cause sometimes it takes time to get things through my thick head, but I do think I have learned some. Now, if I had a mentor or two years ago, I would be much further along. But great mentors don't appear all that easy. My advice if you are interested, go find a mentor. And be the best mentee you can be. Absorb knowledge, practice grading skills, practice looking for wear on coins, track markets, track what is really expensive and find the point in a series where a certain grade may not be the value holding point. A lot is subjective, as there are no books written that will give you all this.

Be prepared to get out of your holdings that you feel don't meet any of your 'new' standards at any time. Be ruthless... your money is better spent on better choices.

My thing I have been working on is finding the price point of a coin I might acquire and trying to determine the lowest grade that I can be confident that would sell easily for the same, given that some collectors would desire it as a piece or upgrade. Although the advice is to not get into the upgrade game, many collectors will upgrade a coin when and if they can. It takes too much self discipline to not do that, and I have seen many tell others they plan to do that (because they are applying future earnings to their today wants, meaning that instead of allowing a 'hole' to remain unfilled, they fill it with the most they can afford, or even less than they can, because they 'plan' to upgrade later).

One of the best examples I can give in buying the best you can, even if you have to go without other things for awhile or are able to put something else off is good shoes. Take any man or woman who works, they have to have comfortable and durable shoes. But really good ones that will last years are generally more expensive, and when you go get shoes especially if you are not well off, you go buy ones that look ok, and look sturdy, but they are cheap. Really good shoes cost (in this example) about two or three times as much so you don't buy them. You are saving money. But 9-10 months or a year in, your cheaper shoes are falling apart, so you do the same thing. Once you do that for or more times and then realize you have, over time, spent twice or more the money you would have if you had bought quality in the first place, you start realizing how much better off you will be in time if you try not to do that whenever you can.

So my advice is to stop buying coins you will not be proud to own years from now. I can't say I have taken this advice myself, but I am trying to make the changes necessary to accomplish this.

Another thing is Objective, Strategy, Tactics.

Define your objective, develop the strategy to accomplish it, and then apply the tactics needed.

 

Toned coins can be pretty, but some or many toned coins will end up, like @Clawcoins says, changed over time and may not be so nice. I have for the most part deliberately stayed away from toned ones (buying at premium or buying because the coin was toned) because of that, and because I don't know that the current or recent rage for these is anything more than a somewhat long-lasting fad. In other words, I don't feel confident that paying premiums for wildly toned coins or other toned coins will hold up with value. I could be very wrong, but that is how I feel.

I do have a couple toned coins, and some are nice and may stay that way. I have a few I don't appreciate the toning all that much.

 

If you want to tread water then certainly get into areas that are underpriced today yet still popular. Things like nice attractive and well struck bust coins are going to do better going forward but all the major trends will still work against you so getting your money back plus the inflation will be about the best you can do the next twenty years.

Most of the growth in numismatics will be in other countries and this is where the spectacular gains have been for the last dozen years. Modern base metal world coins in Gem have simply soared because they weren't available and weren't collected. They still aren't very available but they are collected in the country of origin. Prices have exploded especially in select countries and especially for nice quality Gems. I'm confident this explosion will continue and encompass many more moderns and more countries.

But, it is largely played out already and the low hanging frit has mostly been snatched up already. I checked out a coin show recently and couldn't find a single desirable modern on the cheap. In the old days you could find as many as fifty at a single dealer and sometimes even small quantities of rarities. Getting started here is getting expensive and no matter how high they go the returns will be muted by all the mistakes you are certain to make. My mistakes were 25c or a dollar. Now making a $1000 mistake will be fairly easy.

But there are still vast swathes of world coins that are vastly underappreciated because they are still ignored. I'm talking about rarities. Also there are numerous early 20th century virtually unknown in Unc and quite scarce in XF that can be had for a dollar or two.

The difficulty in working in any uncharted area is that it is uncharted. Nobody can tell you old Haitian coins are tough in AU so you have to look at a lot of coins to know.


Watch out for India. This market is going to stun people for 50 years.

 

Thank you all

The only reason I would want out (cash out value) is emergency. I was part of a large downsizing years ago and was laid off longer than expected, and selling off part of my toy collection saved me. Since then I am more conservative about what I buy “just Incase.”

Generally I’m leaning towards a US type set (I believe that’s the term - one example of every style minted since post revolution) and just random foreign coins that I think are pretty (I like a lot of the designs on the Franc)

This has been a great read!!!

 

Most of this has been said but...

The scarce stuff will always be scarce and desirable.
The coin market cycles.
Buy coins with great eye appeal.
Don't buy coins with problems.

 

This is the most important piece of advice in this thread.

It's also not something you can just pick up and do. It takes years of study to get any good at this hobby - you have to have a passion for it. If you put in the time to learn about the coins you're interested in and the market, you can make money within your area of specialization.

I'm not sure what the experience is like for other collectors, but I would imagine it is similar to mine. There are coins I buy to make money on, when bargains present themselves - overall I do well on those. The coins I buy for my personal collection that I end up selling later on - I perhaps break even at best.

 

You're right, Doug.

For example, look at the 1867-S eagle. It's selling in AU50/53 for about the same absolute price ($6-8K) today as 20 years ago, which means it's value has declined because today's dollar is worth less than 1998's dollar. In 1998, a couple could buy a compact car; 3 would be needed today. In VF20-30 though, it's about doubled in absolute price (from about $2K to about $4K). So the VF coins at least kept pace with inflation. Only part of the increase was due to increase in the bullion value. The coin has about $550-worth of gold at today's price; about $130 at 1998's price.

This coin is rare in any grade, and an expensive coin for most collectors even in VF. Demand for the issue may have increased, but fewer collectors could afford AU, so competed for VF coins.

Let's look at a common date eagle, the 1881. In MS64, it's price has stayed at about $2K for the last 20 years. So its inflation-adjusted value has declined. In VF20-30 the coin was a little above bullion value in 1998, and that's the case today. So it's more than tripled in value and beat inflation. The "bullion floor" was sloped-up over the last twenty years, and that's what caused the more impressive value performance of the lower grade, common coin.

[Coin prices above are from PCGS auction prices realized; gold prices from goldprice.org]

Cal

 

curious as to what toys you sold ? I have a huge star wars action figure collection. someday I will sell it. but holding on to it now for a little while longer. I know that the market is flooded with star wars collections now. It is taking up way to much room in my apartment. I like coins they don't take up to much room.

 

One thing you might consider is whether the particular coin you are looking at is 'investment' grade or 'collector' grade. When you look at a price guide, look at the percentage of price increase from one grade to the next higher grade. As you move across the grades, you will usually see at some point there is a much larger gap between the two grades. That is because the value of the higher grade is increasing faster than the value of the next lower grade. When you see the big gap, you know the grades to the left are collector grades and the grades to the right are investor grades. The coins to the right will most likely to increase in value at a higher rate than those on the left. That gap occurs at different spots for different coins. When I was young and just trying to move from collecting to investing, the conventional wisdom was XF and higher were investor grades and any below XF were collector grades. But that has changed.

 

I hate to be so cynical, but if you want to protect your investment, avoid areas that are "hot" today and buy what collectors will want in 10-20 years. Of course, I don't know what that will be, but extrapolating from the past, it will be coins that have always had collector (not investor) interest. In other words, don't buy slabbed Morgans and Saints.

 

Read , read , and read some more !! The best is to buy what you like as mentioned by some members . If you do just that then you have instant value because what you bought has enlightened your sense of life. I recommend if you buying new products only buy something with very low mintages. some of the Canadian mint products have a mintage as low as 450 only. if you buy these very low mintages they seem to sell well down the road at a hefty premium. I still think buying coins that are hard to find , and are older. Most of all what price can you put on being happy? So if the coins are making you happy you already won the most important value of coin collecting. Buy low sell high and good luck with that as very few do extremely well in this type of thinking. Someone laughed the other day at a leaf designed coin that the RCM made and the mintage is only 450. I would venture a guess that this coin will double possible triple in value over the next 15 years. It is quite pricy to purchase , and I am not telling you to buy this , that's if there are any left. Most of all buy what put happiness in your life , and perhaps share this with a child if you have one. This will become a great bonding time between father and child if you get to that point or maybe past that point already. The value from coins does not only come from their monetary worth. Good Luck Dillan