Where Is The Best Value In Coins Today?

I've been pondering this a lot over the last week.

The way I look at it, a coin's worth is based on two distinct components:

1) The collector's value
2) The intrinsic value of the material (silver or gold)

I'd actually speculate that these could be inversely correlated. High inflationary times mean Factor 2 goes up, but possibly at the Expense of Factor 1. If inflation jumps up, I'd definitely be more worried about financial stability and spend less in coin collecting. If inflation rises a lot, people also want to start selling their bullion, supply goes up, prices go down.

I got an MBA a couple of years ago, and in Finance they teach you can't beat the market--or rather, if you do it's a consequence of luck and not of foresight. What you can do is minimize risk relative to expected gain by diversifying across asset classes.

If you grant the assumption that it's hard to beat the market (and I know not everyone agrees with that), then I think you can kind of apply the rule to coins. Buy stuff that will do well under different scenarios. Buy bullion coins, but also buy some stuff that you think has more pure collector value too.

Anyhow, I could be just talking myself in circles. I'm sleepy.

 

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What's interesting about the whole coin realm is that all of them are made of metal.

Increasingly, global demand will keep increasing the price of copper, nickel and silver
to a point where we may see fewer and fewer metal coins, especially in the developed countries or at best coins more coins made from less costly materials such as aluminum.

Personally, with plastic, sometimes I'll go weeks without touching currency, be it paper or metal. I carry around a well-worn AG-3 1881 Morgan as a pocket piece just to remind me what real money should feel like.

I think the future of coin collecting is secure, because the not as many coins will be minted in the future using attractive base or precious metals.

Coins will increasingly become relics and increase in value because of this.

 

In an inflationary environment, both the intrinsic value and the collectible value go up and in the case of rarer issues, the price increase due to rarity far exceeds the percentage increase of the metal it's made of.

If you happen to own a collection during an inflation spike, you can make money not only on your rare issues, but also on the "melt grade' stuff that has no collectible value, but a higher commodity price.

There are a number of reasoned forecasts that indicate that to get out of the present recession will take about a 3-4% inflation rate in order to re-invigorate the economy.

At this point in time, we're early in the game. However, at some point say the 1st or 2nd quarter of 2010, we could start to see the inflationary side effects from the government stimulus with positive benefits for collectors of coins, art and other rarities.

 

I appreciate that this is a question which is difficult to answer. I collect many different types of coins ranging from Roman, German, U.S coinage and South American Colonial.
By far the biggest value-appreciation, however, has been with my U.S coins.

22+ years ago i decided to follow the advice given back then by Q. David Bowers, the deasn of U.S Numismatics: concentrate on the keys. That is what i did. And here i agree with Clembo. A rare or semi rare coin will always remain rare, and be more desirable.
I bought the keys whenever my budget allowed it, often by-passing for example an 1805 Quarter in E.F, for an 1804 (the key to the series) in only VG. I then put my U.S collection aside for 15 years. I could not beleieve when i came back to U.S coin collecting! The values for the keys had increased significantly more that the type coins. I don't know if this still holds true today, but there is was basic wisdom in what QDB was saying: collect what is rare and desirable. In the long run, and here the key is long run, you can make few (or less) mistakes.

Eduard

 

The best value is always,

The best value is always in the under-graded coins, key & semi-keys dates and the choice original stuff. IMO there is no value in bullion right now, it's too high.
Study the charts/price guilds when you see a XF just a little more than a VF why buy the VF?
When you find an AU-58 that looks better than many MS-63's - why buy the mint state coin?
While it's hard to afford the keys/semi-keys, some are not bad - examples 1909-S Lincoln in VG to fine. 1908-S Indian in the same. 1921-D Mercury in fine, 1933-S Walker is fine, the list can go on & on.
The key is to look, and then wait until "that coin" shows up - and always, always ask for a little bit of discount - you may not get it but then again you might.

 

"In an inflationary environment, both the intrinsic value and the collectible value go up and in the case of rarer issues, the price increase due to rarity far exceeds the percentage increase of the metal it's made of."

I'm not saying that's untrue, but I'd be interested in looking at the historical record and just seeing what trends took place. Is there anywhere online that has a historical record of coin values through the 1970s?

 

Excellent advice..with coins as well as many other types of collectibles, he who does his homework and is a value shopper will win over the long haul..

Great post..

 

Generally true..however there are strange times like January of 1980 during the time the Hunt Brothers tried to corner the silver market and the price of silver shot up to $50.00/oz. It crashed to $11/oz two months later. Obviously, a good time to sell crummy melt value stuff..
but probably not the best time to buy.

Historically, with regard to coin values, as an example, a 1921 Morgan dollar (a very common year) was worth $1 in 1921, now worth $14.00 in VG condition, the least collectible grade, which is a gain of 1400% in 88 years for a very common coin. Not such a bad gain. If you had sold it for melt value in 1980 at the height of the silver market, it would have fetched around $38-$39. All this tells us is like many other markets, coins can be volatile, but for quality the long term trend is rising prices.

 

I'm starting a low grade problem free Barber half set. This is a long term project, but it could be said that these coins are underrated (I guess).

 

Looking at it from a different perspective, the best value can also be with coins that are not in the spot light right now!

Hopefully I don't get eggs and tomatoes thrown at me by any dealers here for making this statement , but...... :secret: Lincoln cents are red hot right now and the early dates have become a huge focus by everybody and their brother because of the anniversary year. It's a frenzy.

I'm not going to be-little anyone for buying Lincolns. I bought my first, nice MS 1909 VDB myself last year. I got caught up in it too. But in reality, now is probably not the best time to be buying Lincolns!!

As Bowers puts it in his "Expert's Guide to Collecting and Investing in Rare coins"...... popularity for different series comes and goes in waves over periods of time. You don't want to be the guy buying at the height of a series' popularity or the peak of the craze. Pick one side or the other to buy on. It's not the rule but CAN and has been the case for many series over the years.

The 1950-D nickel was used as an example. It used to be all the rage and everybody wanted one. Prices soared and many people paid it. Now they're way down from what they used to be. Nobody but a few people are even thinking about Jefferson nickels right now. And those collectors probably want it to stay that way!
Chances are, they very well could be the next series that lights up and people will be buying into the series at the peak. While stuff can be bought up cheap now.

Somebody else mentioned that half cents are an excellent value and are the best kept secret for getting very nice, early coppers at reasonable prices. .....For now.

Don't be afraid to wander off the beaten path and take a look at a series that nobody's talking about right or isn't popular right now. It could be anything. It may be the next big thing.

Same goes for state quarter proof sets. Some people will not like this.

I've decided to wait for the 99 silver set to come down. And it is definitely coming down from what I'm seeing.

I'm waiting to see if it's a real price because of rarity, or an over-inflated price caused by current demand because the series is still fresh in everyone's minds. They're still 'new'.

Will they increase? Or will they come down after 5 years? Once the state quarters program is all but an after thought in the hobby and people turn to the "next big program" with low mintages, that the mint comes up with to generate revenue?

Why do I have this theory? Well, there are plenty of commemoratives available, silver and gold, with 1/4 the mintage of the 99 quarters set or less.

They have mostly been forgotten and the shows I've been to, I hear dealers tell me they can't move them! So why would I think the same thing can't happen with a basic, 800k mintage, basically commemorative quarters set? Will the popularity and fanfare last 5 years from now? 10 years from now? I'm going to say no.