Best Investment Coins

I recently renewed my interest in coin collecting with a vengeance. I had collected since I was a kid, joined the local coin club about 30 years ago and then lost interest for about 28 years. I noticed some of my stuff went up in value 3 or 4 times, maybe about 4% annually some less then that and some stuff was worthless. ( unscrupulous dealers). About 6 months ago I started reading books and scanning the internet sites like your forum here for good advice. I recently bought a few pcgs coins ranging from $750 to $2100 at auction and from reputable dealers I got from the Pcgs internet site.. I really have the bug. Dealer newsletters seem self serving to me. I am a self starter. I also don't much believe in dealer advice, if for no other reason that there is no source to confirm their investment record like there is say mutual fund managers...... By the way how come there isnt? Don't any of you dealers have a good investment record? I don't mean to be flip, but this hobby seems to need reliable investment advice. Now my question- unlike 30 years ago, i don't want to buy any more common stuff( i have enough of that anyhow). I like ms 62 and up and the way they look. I scanned the Heritage site and I noticed that over the past 12 years sometimes common coins go up faster than the ms 66 stuff. I would like to know if there are CURRENT books written on the best coins to buy for price appreciation. I notice that alot of the books are old 5- 10 years. Is there a very current book that suggests 10 or 20 coins that should get at least 7% appreciation annually over the next 20 years? I also would't mind your opinion on this, which 10 coins should provide superior investment returns in the next 20 years and why! Thanks so much for your input.....

 

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The biggest reason that dealers don't market investor advice is because they are not investment brokers. The FTC has very strict guidelines on whom may offer advice in a given market. For what information you are attempting to gather, I would suggest that you visit http://www.greysheet.com and look for the research and graph books. Both offer the given trends for specific series.

Now let me offer a little advice. Coins should never be used for investment purposes solely based on any dealers opinion. All coins with the exception of the ultra rare have fluctuated in value. By ultra rare, I refer to the 1804 Dollar, 1913 Liberty nickel, 1933 Saint Gauden. Dealers are not investment brokers, and if any attempt to give you advice on what coins will appreciate, you should run.

 

Here is an older thread regarding this issue.Investing into the coin market

 

coin investments

I appreciate all the timely responses.... but let me amplify what I am saying in view of the general ambiance of your reposnses so far. When a collector buys a coin, if he is to be a successful collector, how does he decide what to buy and how much to pay for it? Is it merely a matter of filling holes in an album? Is it, oh well, this coin is the most shiny, I will get this one? Or well, I like the story about liberty's breast so I will buy a 1916 quarter? I for one, as a person who has invested in stocks, mutual funds, bonds and real estate, must come to some conclusion about the purchase of a particular coin. Of course, we always know what tomorow brings. But life is about choices. When i make my choice about coins, I would really like to know the price history of that coin... for say 20 to 30 years, I would like to know if it is likely some hoard will greatly diminish its value, I would like to know based on rarity and colectors habits of the past that this coin has mostly stayed popular and should continue to grow popular in the future. I cannot be an expert at all things. So I would like to rely on experts in your field, as there are experts on tv who recommend stocks and mutual funds. Some of them are idiots, but I can judge for myself. I think if the numismatic experts avoid giving coin investment advice, they are doing a disservice. The books I have read including some of Travers books, seem to issue specific recomendations. That is what i am talking about... But the material in his books seems dated. I don't think that members of this forum need to be so gun shy on giving advice..... Not withstanding the Federal regulation you site. Are you saying that it is federal regulation that forbids you from even suggesting that a particular coin might be a good purchase right now? If so, why is that regulation so much different than stock brokers, who make a market in stocks and give advice! One other thing, from what I have read, there seem to be various studies that rare coins have been very good investments. That select rare coins have outpaced many other kinds of investments. Those studies did not just include 3 or 4 unaffordable rare coins....

 

About 1980, the Federal Trade Commission went hunting for coin dealers and they bagged some large ones: PCGS, Heritage, and Tulving. In the settlements, the defendents agreed to never again attempt to market coins as a investments. The defendents also agreed with the FTC that coin grades are subjective opinions, even when issued by experts.

Equities dealers are regulated and licensed. Coin dealers are not. Equities are, like commodities, uniform: one hundred shares of GM Common is pretty much like another; a barrel of North Sea Brent is a barrel of North Sea Brent, regardless of which barrel it is. No two MS-62 1881 Morgan Dollars are alike, even when graded by the same service.

No two people get the same price buying or selling the same coin to the same dealer.

Retail/wholesale spreads are very real in numismatics. They are the first barrier that any "investor" must overcome.

Price guides have no coins for sale. Most prices are estimates, not actual reported sales. If you look in the WSJ, IBD, CNN Money, or Hometown Chronicle Business Section, you will see the same prices (subject to time, of course) for the same stocks, bonds, etc. That is not the case in numismatics. Different price guides report different prices for the same coins over the same time frame.

My heroes are Scrooge McDuck and the Ferengi because they do what I cannot.

If you think you can make money, please, enjoy the process! We all do!

 

Hello taxbuster

The advice given is sound ,, no hidden agenda, If you wish to invest in coins the best way to do this is only buy coins of the lowest mintages, they are the usual that continue on an upward trend,, these can be found in the redbook of coins ,with a little investigation, your opinion would be as sound as any that you could get from any author,

You are correct in the thought that the higher grade coins will probly bring the best return on resale, but as is stated in previous posts the coin market is fickle,and sale of such coins for a profit are at best a shot in the dark.

What you will find is that most here collect for personal satisfaction, and not so much for profit, although some do sell coins and perhaps make a little now and then, that is not the set goal of most collectors.

 

You may never meet the dealers with the best records. You may never even hear their names. Conspicuous consumption is not for most coin dealers. When you walk into your office and you have to kick bags of gold and silver coins out from under foot -- bags that you own -- to get to your desk, you don't care what your neighbors think of your car.

How much of the traded equities does the stockbroker actually get to put in his pocket if he likes it? Having loaded up, can he sell it, and short it? Conflict of interest? Insider trading? Reported sales of stock by majority holders? All of that is for the socialist side of the street.

You think that there is a market in numismatic for "investment advice" but you don't take any? Well, neither does anyone else.

You seem to think that you know a lot about "investing" and you probably do carry an encyclopedic database in your head based on your success in equities. Please, let us know how the transition to numismatics pans out.

 

You really should take your money and run if you don't agree with MMarotta's post above. If you still want to invest some money in coins than the best bet is to look for coins with a fundamental reason to rise in value. This can be as simple as returning baby boomers like buffalo nickels or clads are starting from near zero demand to more complicated reasoning like some gold issues don't exist in sufficient quantities to supply demand so some demand will shift to similar coins.

While coins don't make good investments for a host of reasons, the fact remains that prices can change sharply and quickly. If you can get ahead of these changes you can make a lot of money.

 

If by "successful collector" you really mean "succesful investor", others have already pointed out the pitfalls, and advantages, of "investing in coins". It differs in kind, not just in degree, from "collecting" coins.

There are collectors who:

• participate in the Registry Set activity, seeking to accumulate the highest graded examples of a certain series. They necessarily spend a lot of money.
  
• go through their pocket change looking for coins they don't already have, or coins in better condition than the examples they already have. They naturally spend only a modicum of money.
• specialize in one or more series of specific coins - Morgan Dollars, British Empire sixpence, Pre-Meiji Japanese silver, foreign coins produced by the U.S. Mint, and on and on and on. Some of them spend a lot of money, others spend very little.
• specialize in the coinage of on or more specific countries. They too may spend a lot of money, or only a little.
• collect coinage of a specific metal - gold, silver, copper, bi-metallic, etc. Again, they may spend a lot of money, or only a little.
• collect currency - paper money. Generally they spend a lot of money.
• collect exonumia, non-coin items such as Conder Tokens, elongated cents, Casino chips, etc. They too may spend a lot of money, or only a little.
• refuse to put limits on themselves, and collect anything and everything numismatic that comes their way. Generally they spend a lot of money.
• collect non-numismatic items, such as porcelain, toy trains, dolls, antique furniture, etc., etc., etc. They also may spend a lot of money, or only a little.

I could go on for hours trying to list the multitude of different kinds of "collectors" inhabiting this world, but they all share one characteristic: They spend money buying whatever it is they collect. In that respect, they differ significantly from "investors", who theoretically invest in what they invest in, with the ever-present intention (not always carried out) of selling their acquisitions at a profit.

Each collector I have described would have different standards to measure their "success" as collectors.

For example, several months ago I acquired the last coin needed to complete a date set of Japanese ¥100 silver coins. That was a true collecting success, and gave me a great deal of pleasure. But frankly, my hobby record keeping is such that it would take a great deal of effort to determine whether those 10 AU+ coins cost me more, or less, than I could sell them for. It's simply irrelevant in measuring my success.

Now, like many others on this forum, in addition to collecting coins, I invest in stocks, bonds, real estate, commodities, etc. In that milleau "success" is measured by how profitable it is. (If I don't turn a profit, where will the money come from to buy coins, or any of the other things my Beautiful Bride and I collect (food, shelter, entries in our passports, and so on)? I can assure you that my investment record keeping is very precise, and I can quickly and easily ascertain where I stand on every investment in my portfolio!

I hope I haven't bored anyone with this lengthy posting, but I am very passionate on the subject of distinguishing my hobbies - engaged in with no expectation of profit - from my investment activities - engaged in to assure food on the table. Simply stated, "success" is measured very differently.

 

"Is it, oh well, this coin is the most shiny ( and detailed ), I will get this one?"

That's me ( true words of any coin collector rather they admit it or not!!! )

For the majority of coin collectors, it's all about eye appeal man, die hard collectors don't do this for the investment, we do it for the love of it. And I shall say it right here and now, when it comes down to it, those collectors who are passionate about what they collect, and what they spend their money on, will be the ones who come out virtuous in the end, for we are the true caretakers of the coins that we hold so dear to us. I kind of went astray from the whole topic here, but, it needs to be said

 

There's only one way to know what to pay and that is from selling. Until you sell coins you don't really know what they are worth. You are taking a dealers word on it.

To get started look at the prices that dealers offer to pay in the classified ads in Coin World and the major papers and magazines. This is a sort of a base price. These prices are often very high compared to what other dealers are paying but if you have properly graded coins then these prices are really being paid. When investing you don't want to pay a great deal more than this but you'll find it usually very difficult to pay less than about 10% more. This may require a little effort since some ads will include "write for list" or the equivalent.

Even collectors should sell coins from time to time since otherwise they may not really know the value of their purchases. Certainly pure collectors don't as much need to know but there's never good cause to pay more for coins than necessary.

 

Let us know when you sell the coins for more than you paid for them.

Back when electrons were particles, I was a sales clerk in an electronics store. As with automotive parts and other markets, we had huge books of prices based on volumes.

Column 1: Manufacturer's Suggested Retail Price
Column 2: Discount Retail Price
Column 3: Wholesale 1-10
Column 4: Wholesale 10-20
and so on.

Note that there is a discount retail price in numismatics. I call it "the cool guy discount." If the dealer knows you as a good customer -- has made money off you in the past -- you get the material a few points back of Red Book or Trends or whatever. A dealer can get a little glow or halo that has a market edge by being able to say, "You that Noyes 7 that I had in the PCGS 10 holder? I sold it to Smedley. He liked it." Since Smedley is the author of the new standard book, that carries weight in the market. Of course, Smedley is no one's fool since this is his speciality, he got it at the price he wanted, which is not the price you will pay.

Collectors think that "Greysheet" is a coin dealer's wholesale price list. Dealers use it for the easy buys and sells, frequent traffic between dealers who know each other; coins easy to sell retail; etc. Collectors can get the Greysheet price pretty easily. (At the electronics store, we treated a lot of hobbyists like dealers: they were volume buyers, in a couple of times a week with a list of parts for a project. Sometimes they fixed TVs for their neighbors, etc.) However, there are other prices, down to 40% or less of retail. In real estate, it is said that there is no money in selling houses: the money is in buying them. That also applies to numismatics.

In The Celator, the magazine for collectors of ancients -- David Vagi (a dealer and a recognized authority in Roman coins) said that if you want to make money on your collection, then buy the most popular coins in the highest possible grades and hold them for at least seven years.

You have to hold them for seven years so that the 7% p.a. appreciation catches up with the wholesale/retail spread -- but he did not say that.

A "cool guy" with a lot of upfront money could do well holding on to a portfolio of keys in all grades: the 09-S, 1877, 16-D, and so on. Throw in an Ides of March, an Electricity Note in CU, and you have a portfolio. It still comes down to the person and their personality. One reason that numismatics is not a federally regulated investment medium is that no two people get the same prices for the same coins.

 

Amen, brother!

(My universal translator displayed that last phrase in Ferengi. Were you speaking Ferengi? The first translation came up in Vulcan: "... you objectively do not know how empirically little they are truthfully worth.")

 

Let me expand a thought on price guides or books:

The sole purpose of any guide is to give you a general idea of what a given item is selling for. Dealers routinely refer to their greysheet as a basis to find what the general market is doing.
A high end dealer with a stack of wantlists will pay more, while the local coin shop will pay less. There are many type of dealers here in the states, and we all conduct our business slightly different.

As an example, key date coins usually trade near suggested prices as they are sought after by the majority of the market.

Coin grading is a major factor in considering value. Just because X coin grading company states that a particular coin is MS-65 does not mean that the dealer will agree, nor any collector. All grading companies are not created equally either. Some in the past have been hit hard by the courts for suggesting values not readily accepted in the market place.

It is for this reason that I suggest that no coin be used for investment purposes.

When you factor in that grading scales have changed several times, and will so again, it makes the investment angle even harder. Until very recently the perfect coin was a myth at best. Now, several companies routinely slab coins in MS and PR 70. How will this effect the market? Who really knows?
Now key dates have consistently made gains over the years, yet at any time this can change. If you rush out and buy the 1909-S VDB Cent in MS-66 Red because it has a proven track record in the market does not translate that it will be tomorrow. If the grading standards change again, your MS-66 Red could be viewed in the market as MS-65. This would hurt the value considerably.

A year ago, a 1963 Proof 70 Cent sold for over $30,000 at auction. Many did not believe that the coin could hold its grade or value, and today that coin sits in a PCGS vault because it did not hold that grade.

Investors flock to coins each time the stock market changes. While it is good for the top 1% of the hobby, it should not be viewed as a market tool.

Dealers make their money in this business by turning over coins. None of us sit on material to give a substantial baseline for the information in which you are seeking. For every collector that makes money when reselling their coins, there are thousands that lose money.

The only way to "WIN" in this hobby is to collect coins for the sheer pleasure of owning the coin.

 

That's the real bottom line Steve!

 

Investment Coins

This is a very interesting thread and I think I have gotten some very good and informative reponses to my questions. I think I consider myself both and investor and collector. I would not buy a coin I did not like merely because it would go up in value. But, despite some of the very cautious responses here, i am not completely convinced that it is inappropriate to consider the price history of a coin when deciding how well it will do price wise in the future, or whether I should buy it at all. I think I understand many of the things that can go wrong. I have held mutual funds and stocks even when they have declined substantially. I am a long term investor. I think I also understand grading risk... something unique to coins. I am prepared to hold coins basically until I die, if I otherwise like a particular coin or stock, or I think it should recover in price. No doubt, even though I may still wish to buy some of the rarer coins out there, I will be ever more careful as a result of some of the good advice I have gotten here. Thanks all.....

 

Well sir, I wish you the best of luck. Just make sure that you research the trends carefully. BTW, welcome to the forum. I am glad that you have joined us and brought up this topic. It will help others learn about the investment side of the hobby.

 

I'm a collector who largely started out as an investor and discovered there's a lot of fun in the coins. I've probably done far better than most from an investment standpoint but it has come at a very dear price. One of the highest prices was in the ramifications of having to wait for increases decades longer than I'd have believed possible. It has caused significant dislocations and imbalances for me. There is not only no way to really know what coins will increase but there is less way of knowing when.

One thing that worked well for me was to get into many different coins, tokens, and medals. Since there are always a few things that are hot, you can simply trade those for items which are out of favor. It's a slow process, but a nice collection can be accumulated this way. At some point though you'll need to "cash out", so you need to know what the things are really worth.