Investing in gold numismatic coins

Do any of you have any experiences on buying gold bullion, modern gold eagle coins or numismatic gold? I am considering investing in gold, and to make it more fun I would like to consider numismatic gold. Any thoughts?

 

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Perilous journey to undertake. My advice would be to.....not invest.

 

If you want to invest in gold, use bullion coins (not slabbed) or an exchange traded fund.

 

Agreed. "Investing" is not intended to be fun. Hobbies are for that.

 

I certainly agree with what everyone has said, but I do have a personal theory/strategy for some of my coin purchases. Always one to measure downside risk of investments, I figure that collectible grade double eagles - type one's or Carson City $20's, for example - in grades that don't cost more than three time the gold content value - do provide some measurable hedge on downside risk - and even some hedging on gold prices because of the collector value that can tend to stabilize, or if you're lucky appreciate when gold goes down. But the catch, if you want to call it that, is that you have to put a considerable amount of time and energy into knowing/understanding the esoteric characteristics of the type of coins you are interested in. If you do that, it might be possible to consider large gold collectible coins as investments - more so than for silver or smaller gold collector pieces because of the higher percentage of gold content and lower percentage of subjective collector value.

 

If considering an "investment" in numismatic gold, first "invest" in yourself. The more you learn and understand before even thinking of removing money from your wallet, the better off you'll be.

 

excellent advice.

 

excellent advice. I am considering a combination of silver/gold bullion and numismatic gold, possibly in 1 oz or double gold eagle coins in MS64 grade. For numismatic value for many of these is little above the gold content. But I have a lot of homework to do and I am not close to invest. I will say it is interesting stuff.

Maybe I should invest in more beer in my fridge...

 

Yours is a reasonable approach. The challenge is that it is necessary to correctly anticipate both the trend in the gold price and the changes in the premiums of these (or other substitutes). Like many others, I have thought about doing this in the past with generic common dates (Indian Head or Saints) in MS-63 or MS64 but have never actually tracked the premiums or prices over time because it doesn't really interest me.

From posts on coin forums, it is my understanding that the premiums on at least some of these coins (such as MS-64 Saints) are (and maybe recently have been) low. But if this is true, my opinion of the gold price is not positive in the intermediate term, though it is short term and longer term.

I consider gold to be in a correction of the decline from the $1921 peak but expect it to later sell for less than its recent $1046 (I believe) before it sustains an advance.

On a similar theme, I have also thought about buying one or a few high AU Territorial $20's. Not really for "investment but that the downside also seems relatively limited. The prices seem to fall less than bullion but also don't seem to increase as much, presumably because the collector demand is substantial. I have never done it though and probably won't because I'd rather own other coins and for "investment", think bullion is a better value.

 

Investment?


Lets check out the 1909 S VDB:

Values are Trends, as listed in Coin World:

val @ 09/03 (coin World trends) = $650.0 from $500;
as at 06/07/04= $700;
@ 10/04/04= $750;
@ 08/05= $800;
12/05= $800,
01/06= $800,
10/06= $1000
04/08= $1200


04/16= $650


I am still +, but an investment?

I shouldda bought Apple.

 

How about the 1914 D?

ORIG VAL= $300, @ 07/05,
10/06= $350
10/07= $450


04/16 =$225

 

collect, don't invest

 

It has to be fun and interesting or it's probably better to put your money somewhere else - but it is a diversification strategy - and you certainly can't measure the long term profit or loss based on any one coin - you win some and you lose some -that's how it is. The Book by Robert W Shippee, "Pleasure and Profit, 100 Lessons for building and selling a collection of rare coins" is really good. He gathered a huge US type coin collection over 20 years or so and tracked every coin - cost, sale price, profit and loss. Lots of info about each coin. Very interesting. He had a lot of money to put into it and he worked with professional dealers and advisors. He made pretty good money.

 

Diversity is the first rule of investing. So, don't put most of what you've got in gold or numismatics. If you want to invest in gold and buying common gold coins that aren't worth much more than melt makes it interesting, then buy your gold that way. Chances are, those coins will never be worth much more than melt.

As far as numismatics goes, collecting is hobby where you'll not lose too much if you get educated about it. You should get a little experience before buying anything really expensive. I wouldn't look at it as an investment though, but better in that regard than fishing or skiing. So, for the numismatic part, "invest" in what you find really interesting. You'll get more personal satisfaction and lose the least because you will be better educated and pay more attention.

Cal

 

Cal and fiddlehead - these are excellent comments, thanks. I want to invest but I might as well have some fun with it.

Regarding investing, there is no doubt you need to be diverse. You are an idiot or a mad genius if you place your nest egg primarily in precious metals or numismatic coins.

I was thinking about investing a few percent of my portfolio on this. Again, I have a lot of homework to do - I will not base my decisions on ads I see on Fox News.

 

Become a VAMmer if you want to "invest"

 

Coin prices have been a beneficiary of the greatest asset, credit and debt mania in the history of civilization. In other words, the one which exists now and has since at least 1994 when "lift off" occurred. I expect many (if not most) others believe otherwise, but I rate the chances of any similar performance at near zero.

Outside of bullion substitutes, coins are actually luxury collectible trinkets. And as a luxury item, they are susceptible to losing value because most people are worse off now and have been since at least 1999. This is the first reason I believe most coins will lose value because I have zero doubt that most people will be worse off for the indefinite future and this includes most collectors.

Second, I'd be interested to know the coins this author bought. My guess is that if I saw his list, I'd probably conclude they were both NOT rare and overpriced for their merits. And where they are actually rare or at least scarce, still primarily the beneficiary of the prior rising trend in the general market at the time.

There are a very low percentage of coins which are (in theory) immune from the adverse economic circumstances almost certainly impacting the majority of the collector base. (Those I call "ultra elite" or near it.)However, this doesn't apply to the vast majority of coins most coin "investors" are likely to buy both because they cannot afford them but also because they aren't really that compelling for what they are worth.

Unless the future collector base is (a lot) more affluent than the current one or existing (affluent) collectors allocate a (much) higher percentage of their assets to coins, there is a much better reason to believe that most coins will be losing value, rare or not. The primary exception I see is bullion substitute "investment" coins such as US generic gold and maybe some Morgan dollars since I expect higher metal prices years or decades from now versus today.

 

Mostly reiterating what others have said, but I do find your cautious approach very reassuring.

For me, you are taking two different and distinct ideas and mixing them together. I would encourage you to keep them separate.

If you want some precious medal in your portfolio then I think old U.S. coins with no numismatic value, junk silver/gold, is a good way to get it. Be aware that you will have storage costs associated with physical gold that you won't have with paper gold.

If you are interested in gold coins with numismatic value because you think you might be interested in collecting these coins good for you. But I would encourage you to think about this collection as totally and completely separate from any investment or retirement portfolio.

Now, I am sure there are many people who start off doing the first and move into the second as they catch the collecting bug. But I certainly know that keeping my hobbies separate from my investments helps keep my bias and overspending in check. It's much to easy to rationalize numismatic coin purchases because it's an 'investment'. For me, collecting coins is a hobby, I use spending money only, and if I woke up tomorrow and all my coins were worthless I would not bat an eyelash.

 

I am a collector/investor in old us gold. I prefer it to just bullion. For the most part, as gold prices go up, so do these old coins, but as gold goes down, these at least hold value above gold as well. You have to make your money when you make your purchase... in other words, buy carefully, and get a good deal. Most of my coins are always for sale (even if it is just a small profit). If you just buy and sit on them, they MAY go down long term. But if you made a good buy, offer it for sale for a small profit, and sell a few along the way, you are already seeing a return on your investment. You can then use that money to buy more, and start over again. My collection is always changing because most of them are always for sale.