I have come to the conclusion that without many specific examples of success and failure in any given field, broad principles or theories become hard to understand. "Buy the book before you buy the coin". A good principle but which book? Will the reader get the right one and be able to access the information to make the right decision as he/she enters the marketplace? In most cases I seriously doubt it. In the world of sales, biases, tainted motives by advice givers, in many cases those who buy collectibles or other things probably will not get the information they need by ordering a book where street smarts and lots of specific case by case examples of success and failure are not provided for edification and warning. Here is one example on a friend in Ohio. What was his background? An artist in Mennonite country in the Millersburg area. So he inherits a half million or so and looks around for investment advice. Like many in farming country he was skeptical of Wall Street and investing in that insider racket. So he was talking to some older men and they were advising coins and precious metals as investments. He starts calling around to coin magazine promoters, I'll spare some of the names, one was Blanchard which specializes in catering to high end customers. He lost a bundle with them. He got into precious metals, had high six figures in platinum at one point. Then he connected to Monaco/Monex where he bet the bank on futures contracts, one was based on silver going up 50 cents or so, where he would make a bundle if it performed in the short term as he speculated. Well, he lost pretty much everything; the sad thing was his wife, daughters and mother were living on his land and were all badly effected by this investment decision. I could give many, many examples, probably more of failure than success as for every "success" story there are usually many more on the other side of the ledger.
In this example you are showcasing someone who knew basically nothing about coins yet threw money at them anyway. THIS IS STUPID TO DO WITH ANYTHING!!!! You still have to have a knowledge base when getting advice (you can get this by checking out a bunch of books from the local library). Yes books can't prepare you for everything, for some things you need experience and advice However, as the old saying goes "don't believe everything you hear."
coins and metals are not a get rich methods of making money. your friend obvioulsy knew nothing of either 1. and to invest it all in both and it expect it to get him rich in the short term was just plain stupidity. you can make money on coins in the long run but that takes like 10-20 years depending on what coins they are. I have been collecting coins for about 15 years now. I always watch what coins bring money wise. I can tell which world coins are rarer than others in my topical/themed collections. from my experience the only way to know which coins to invest in takes a lot of experience with coins and looking at many many many coins. looking on Ebay or going to coin shows and asking dealers which coins have gone up in value recently. the Krause world catalogs are pretty good on values for most coins but way off others. platinum is not a good investment anyways flat as could be. silver futures ??? if he had bought the silver bullion he might still be ok.
BTW, he never asked me for advice. And the common denominator on many who lose big on "investments" is a subversive type of sales by those who play that slick game; try to convince the "investor" that the one selling the product is 100% legal, or the government is corrupt and is fighting honest "investments" such as they are offering, or they are the "leader", or that advice they might get from a lawyer or mainstream investment advisor or certified professional planner is biased by those white collar, overpaid mattoids.....But without rigorous due diligence, there is no way to know whether someone is giving good advice. The raw coin dealers with their "inhouse former PCGS or NGC graders" who call problem coins "MS64" etc., try to convince the sight impaired buyers to put their valuable investments in the safe deposit box ASAP, we wouldn't want to risk thieves getting at your precious "investment" coins would we?
who here has not been burned on coin buying ??? ask anyone here...everyone has been burned at some point. I know I have been burned on some coins but you learn from that. you also learn not to invest to much money on coins. unless your so deep pocketed that it doesn't matter if you loose money on coins. and with coins you have to ask yourself again... are you in it for collecting (fun), collecting for fun plus investment, or just plain investment ??? I am in it for fun, but realize which coins are scarcer than others in my own collection.
I worked for Blanchard for a few years. What they did was cater to the very high end customer, but in doing so, they would pay high margins on a coin that somebody wanted and turn a nice profit. This is not bad for someone who really needs to have a coin for a collection, but for investment, this method will seldom work. One collector that I worked with bought a complete set of Stellas including all of the aluminum patterns and the Hawaii five O specimen 1913 Liberty nickel and many other very high end pieces. All of these coins had to be purchased from other collectors who did not want to part with them, so the prices were higher than one would consider market value. I would think that the collector could sell these coins at a decent profit now, but they made the purchase about ten years ago. There is profit to be made in coin collecting/investing, but it takes plenty of knowledge, a little luck and many years of waiting for a return.
I've yet to be burned on a coin. Why? Because I don't see my buying them as an investment. As far as traditional investments, again, not everyone is a winner. If it were that simple we'd all be wealthy.
Your example is of someone who behaved foolishly. I really don't know what you are attempting to show in this thread.
There are what one may call "worse case" scenarios and many in between. I have found that case studies rather than speaking in generalities, "buy the book before you buy the coin" makes people smarter consumers, collectors, etc.. For too long people have been dumbed down by stereotypical pronouncements. The truth is the best disinfectant like sunlight.
tragic story there. I guess if I tried to jump right in with 500K into the pork bellies futures market with no knowledge or experience I would lose it all. Don't blame coins in this case blame a basic lack of common sense.
There are many stories of investment failures in any area, not just coins or PM's. If you view investing as an allegory of feudel warfare it's becomes apparent that you do not have any friends there. All you have are feudel lords who want to brag: "I ripped his face off."
I really don't feel safe investing in anything I know absolutely nothing about. If you are looking to buy something from someone looking to make a profit, it is unlikely they will give you sound financial advice.
There are good books out there. http://www.amazon.com/gp/aw/d/0470474807/ref=mp_s_a_1_3?qid=1376159708&sr=8-3&pi=SL75
Or Scott Travers' books, I have read a few. Some have good points and he frankly did recommend coins as an investment in a number of categories that did not pan out and some that did profit.
And I have never understood the rip off mentality; frankly there comes a day of reckoning, people do reap what they sow, either in this life or the next.
there are a lot of dealers out there that just want to rip you off for more money for their coins. but on the flip side there are great dealers out there that educate you about the coins they are selling and give discounts on coins that have not sold for awhile. it's also the responsiblity of the buyer to know what they are buying price and grade wise. hopefully the buyer and seller can come to a mutual agreement on price. sometimes if you know a dealer long enough they give you frequent buyer discounts. I get discounts on 3 dealers I frequently buy from some of the Las Vegas coins shows.
