Many of us keep track of the cost of our coins and how much we paid for them. Does anybody keep track of how much they cost in today's dollars? I know some of you bought coins 20, 30, maybe more years ago - a dollar then was worth many many of todays dollars. I was thinking because even something that cost $50 just 5 years ago would be over $60 in todays money. The difference is even bigger for higher value coins! It is also important when it comes time to sell your coins. That coin you bought in 1975 for $25, you might be able to sell now for $100. You look at your records and think you've made $75, but it really turns out that you've lost money! So does anybody else think about this? Let me hear your thoughts!
I don't take inflation into the cost, but I do see your point. And I believe around 20 years or so they might have spent more money on coins that did not hold their value. Not sure about that, but this is certainly an interesting topic.
I don't take it into account, specifically. However, I do recognize inflation makes making money at coins even more difficult.
p.s. how do you calculate inflation? That's not an easy question to answer, and if you think you can use the US Government's numbers, you are (IMO) sorely mistaken.
I am less concerned with accurate numbers in this discussion. I was more curious about whether people actually took it into account, how, why, what the effects were, how to practically appreciate it, and to get people thinking about the subject. For my purposes, I generally just assume an average 3%, but I wasn't around back in the Carter days when it was more like 18%.
Anyone using an Excel-type worksheet, who is willing to accept the US Bureau of Labor Statistics inflation calculations, can easily add this feature. Just create a column titled, for example, "Inflation Adjusted Cost". Then in each row of that column enter a formula which multiplies the amount in the "Price Paid" column by an appropriate factor. It could easily be kept up to date by making the factor entry a reference to a specific - not relative - cell. That way entering an updated inflation factor in that cell would update the whole worksheet. (I don't plan to bother doing it, unless I decide to give it a try just for the experience.)
I personally don't although I probably should take inflation into account while buying coins.. but again, who knows if it really makes a huge difference..
I'm one of those with coins that I collected many years ago. While I have tracked purchase cost, I use Excel, in my inventory I don't do anything with inflation. From a tax perspective it wouldn't make any difference for capital gains calculations anyway. In my professional life I did use US Bureau of Labor Statistice indicies for a varitey of contracual needs. They served a purpose, keep in mind the many varied index's available as well. For coins, my position is why bother?
this is interesting but at the same time how can you actually make sure you don't lose that value? inflation happens but do coins actually gain the same amount that inflation would take away? unless they are pm's I doubt it and if certain ones do who wants to limit themselves to only those coins? it kinda kills the collector on the inside
In most instances wouldn't the selling price be its cost adjusted for inflation? Assuming you sell it at FMV which is equal to the same amount of money you would spend to replace it. If you sell it for more than replacement cost you made a profit - sell it for less than replacement cost you had a loss.
Great topic but I really don't quite see it that way. Great topic but I really don't quite see it that way. 2 caveots though first. In really big investments it certaily does make a differents - I don't make really big investments in anything except enjoyment. The second is yes it may be that $100 is only worth $25 today as compared to 1975, (although I would at least hope it would be $35 or close to 1/3rd). Somethings go up but many go down so will that be factored in? - a TV or computer is a fraction of the costs were just a few years ago. If you are the type that's really into making up your dollars today as compared to years ago coin collecting is probably not the hobby for you unless you are buying coins over $10,000 on a regular basis - I'm glad that's not me but maybe you wish it were you. If so go for it. Time and time again on here I don't hesitate to mention that all this "coin stuff" is valuble in enjoyment, education, meeting folks and I find it very hard indeed to place a value on that. I mean "just how would you place your lifes satisfaction over 30 years on a scale of monetary inflation"? It could be that $25 spent in 1975 could be worth thousands today if you measured it against your learning and happiness that this hobby can bring. Could it not also be that that $25 spent in 1975 has garnered you the knowledge today to be able to save thousands upon thousands because of the lessions you learned from that cost. Folks I would love to see the answers to this in dollars and cents just to learn something from it. To be truthful I don't really know much about math, numbers, inflation and the like but if I wanted to get rich I would not invest in coins. I have found that most anything that has $$$ attached to it stears a body away from fun and becomes a job. That's not what I got into coins for.
BHP, great post! And you are absolutely correct - the enjoyment of the coin, and the things you've learned from it, do make up for many financial losses. Just to be clear, I am a collector through and through - investment is not a primary concern for me. I just enjoy economics as well, and calculations, and tables and charts. You are also correct that this sort of concern factors far more heavily in large purchases, of the type which I am not yet able to make (for the most part).
This was an interesting topic. I track a lot of stuff but this sounds impossible. Even if there was a way to pick out a real number for inflation. I know it's somewhere between 3 and 10% in a given year. Then you'd have to figure it out going back to different time periods as things were purchased throughout the years. Way too much. I think it's been said before that if anything's value is able to keep up with inflation, that's not necessarily doing bad. Whatever inflation has done, all I know is there were coins that were obtainable to most in the 50s, which are not obtainable to nearly everyone today. I have to believe $145 would be easier to come up with in the mid 50s for a high relief MS St. Gaudens than it is to come up with $20k today. I realize $145 would have been a lot of money back then as well. But it wasn't half a year's salary. If you buy a coin for $25 today and it's worth $100 in 10 years, reguardless of the reason for the price increase, it was better than putting the $25 in the bank at 1%. So I guess the inflation factor doesn't mean that much to me.
If you are going to calculate for inflation, you might as well plug in overhead, S & A cost, etc. Like a previous post said, if you are doing this for the money only...wrong hobby. I just like the idea that as a hobby, the items I am getting will appreciate. I have spent a lot of time entering all my coins in the "Coin Manage" program, which by the way I really like. It's kind of exciting to think 10 years from now how easy it will be to look at my list and see what I paid for coins and what are they worth now. Not worrying about true profit, because I don't ever plan on selling them. I plan on giving them to one of my kids or grand kids, who has kissed my but the most.
