Retaining Long Term Value on Coins

Well... I have been repeatedly slammed on this forum for suggesting that coins can be an investment, but I think if you do a significant amount of research before you spend significant amounts of money you could do very well.

You really need to have clearly defined goals before you begin, otherwise you will probably end up with something enjoyable, but no necessarily something valuable.

I have been able to find different ways to buy coins at the right price, and mostly it involves being patient. If you can get material at wholesale prices then you stand a much better chance of making money.

Always make sure you buy something very desirable if it is supposed to be an investment. Don't buy into fads like new quarters! It may be desirable for a time, but anyone can get them at anytime. They are not special, and they are not rare. Pay attention to coin price history as it may give some insight into how well your investment may work out.

Personally I think the rare coin market may start to suffer in the next couple of years because of the economy. Bullion may be a better short term investment.... but who am I???? That is why you need to do a ton of research.

 

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If you choose to invest in coins, you do need significant knowledge which is a given.

But you also need the knowledge of how to sell your collection, which is very important.

Selling at an auction house and you pay a hefty sellers fee, but the buyer is also reducing his bid by 15% to cover the buyer's fee.

This could negate much of your returns. Selling on ebay will also cost you maybe 10%.

If you don't have much experience selling to a dealer, they can be tricky to deal with, and you might not get top dollar.

It's far different from investing in a stock or mutual fund where you can just click sell.

There's so much to consider, but just make sure you are an expert at what you're investing in.

 

let's settle for decent then. I was able to teach one of the girls at work whose in college how to properly solve a calculus problem. You gotta love math when it comes so easy to you (even though I have more calculus and now statistics coming up next year )

 

Hmmm...retaining long-term value in coins. Aside from a few keys and rarities, your guess is as good as anyones. But, I'd bet you a million dollars that if you went out and bought a roll of quarters today, in 10, 15, even 100 years from now, that roll will have retained it's value. Beyond that it's a crap shoot.
Guy~

 

Also,

If you plan to seriously invest in coins, you would need to purchase insurance on your collection, and have an iron-clad method of keeping them safe.

You also need to be careful about storing copper coins, as they could very easily become damaged by the environment over 10-20 years, unless you know what you're doing and are a part-time chemist.

 

Get a time machine, go back to 2000 and buy all the gold and silver you can, bullion, scrap and the like. best way to make money in coins I know.

 

Too bad I didn't collect gold back in the 60's and 70's then turn around and sell them in the 80's for a 5 times gain. Or heck, even back in 2000 when gold was worth about $400.

-DJ

 

For every article that says "bad", there is one that says "good". Based on my IRA and TSP returns at this time.....

The problem with coins is you need a buyer. The redbook, bluebook, PCGS price guides mean nothing unless you have a buyer. Coins are much harder to sell than gold or silver bullion.


http://www.coinlink.com/News/us-coi...is-everything-reports-a-new-online-service-2/

http://www.coinresource.com/news/news2006/rare_coin_portfolios.htm

http://www.us-coin-values-advisor.com/old-coin-worth.html

 

If you ask me, if you're in this just for investment, sooner or later you're going to find yourself repeating those famous last words, "I'm hoping to get lucky and break even."

 

I agree. If you are interested in coins primarily as an investment you might have a difficult time turning a profit unless you have some inside information or special knowledge the rest of us are not privy to. There is a fairly hefty fee to be paid both when buying and selling coins. Other investments have lower fees - stocks and real estate for instance.

If you buy and sell your coins from/to a dealer you will most likely pay retail (or close to it unless you are able to make some special arrangement with the dealer). When you sell the dealer will probably pay you wholesale or less. The dealer is in business to make a profit and he makes his profit on the spread between what he pays and what he sells a coin for. It would not be unusual for a dealer to buy a coin for $900 and sell it for $1000 or more. So that coin that you bought last week for $1,050 might only bring an offer of $900 from the dealer today. Your coin would have to increase in value 16.7% just for you to break even.

It gets tougher if you are dealing with an auction house. Suppose the auction house charges a seller's fee of 10% and a buyer's fee of 15%. If you bought a coin at their auction for $1,000 your total cost (including the buyer's fee but not including shipping) would be $1150. If you sold the coin at another auction and the high bid was $1,000 you would net $900 after paying the seller's fee. That's a loss of $250. For you to break even the selling price would have to increase by 27.8% to $1,278. That's a very tall order.

As you see, the fees to buy and sell coins quickly eat up your profits (or add to your losses).

Fees to buy and sell stocks are much cheaper than this if you use discount brokers. If you know what you are doing buying and selling stocks you can make money and keep more of your profits by using discount brokers.

Realtors around here typically charge 6% commission. When home prices were rising most people did not balk at that fee because it came out of the increase in the value of their home. They were happy as long as there was money left over after the Real Estate agent's fee was taken out. My, how times have changed!

Now that home prices have leveled off or, in some cases, dropped, more people are taking notice at how large a fee 6% of the sales price really is. Someone that bought a home a year ago and has to sell today (say because they got transferred) is competing against many, many other homes that are on the market. Around here a lot of the homes on the market are foreclosures (which drive down the value of other homes in the area). The seller that paid $300,000 a year ago may have to accept $270,000 for his house - and pay the Realtor a commission of over $16,000. OUCH! All of a sudden that 6% became real money. (In this example the seller would take a loss of almost $50,000 on the house. So much for a guaranteed profit on a house.)

The same thing can happen with coins. If you buy coins and the market goes down the selling fees only add insult to injury after you take a loss on the coin itself.

Think long and hard before deciding to buy coins as an investment.

 

That is right on.

When the market goes south as it's starting to do, the first thing you notice is that a lot of people start selling. Business has really picked up on the "open" or "for sale" areas of the forums I frequent.

Next prices that sellers ask will go down because they aren't selling. What is curious is that the catalog or redbook or whatever prices won't drop or if they do, it'll be with a year or more lag. Everything looks fine on paper, but just try to sell something.

Finally the number of sellers dwindles and so does active interest. Once again, published prices don't go down or go down very little. Your coins are supposedly still "worth" $x dollars, but good luck finding a buyer. Go on e-bay and check stamp or sports card auctions. The seller will note that Catalog Value is $20 and they'll be happy and click their heels together if they get $5.

What's my point? Researching the past may not be very helpful and can actually delude you. People and organizations who publish price guides have no interest in dropping valuations. And THAT is about all you have to research if you want to look into anything before the Internet.

Statehood quarters and increased interest in coin collecting came at about the same time as many people started to be on the Internet. It'll be interesting to see how the Internet and e-bay and all the other Internet alternatives ride out the upcoming ups and downs of the coin market.

As has been said in previous posts and threads, do NOT invest in coins.

 

Good synopsis, Hobo. Let me add just one thing. You want to make money in this game, consistently, and over the long-run? Be a TPG or an auctioneer. Their commissions are the only "sure things" in this game...

 

I really don't understand the idea that you can't make money on coins unless you are an insider/ dealer, and it is so hard find buyers, and huge commissions at auctions, doom gloom, et cetera

This is absurd.... OK I will agree if you try to sell a hundred dollar coin through Heritage or DLRC, you are probably to lose money. I will also agree that coins are harder to liquidate than stocks, but that doesn't really prove coins are bad investments.

Also just because so many people lose money doesn't prove anything either. That is like saying mutual funds are bad investments. The real fact is some are bad, and other are good. Coins are the same deal, some are bad, and some are good. Usually it is the investor or the choice that represents the origin of the bad deal. If you have a "collection" of lack luster coins who do you blame??

I am not a dealer, I am not an insider, but I buy what I think are good deals. I don't "win" on everything, and I don't sell everything quickly, but I do make money. Call it whatever you want, but the point is you can make money, and you can make good investments.

Sometimes I win online auctions on coins for great deals. For instance I recently bought 2 NGC MS62 Quarter Eagles one 1927 & the other 1929 both for $300. After BP the price ended up being $350 each. You can look up the auction history on DLRC if you think I am making this up. I sold them to a dealer for 400 each. He charges pcgs / ngc list prices for these coins. I made $100 total, and he will be make $100 on each coin as the price in both price guides is $500 for these. People who lose money are the ones who walk into the coin shop, and pay that list price. It could be years before they could make any profit, and yes they would lose money if they auctioned them off. FYI I think I was the lone bidder on these coins, and I know for sure the reserve was lowered because they just wanted to sell the coins.

Even though the proceeds are small, I just reinvest over and over again... buying and selling. Some stuff I keep, sometimes I take chances, sometimes I lose, but as I increase my collection I also increase the quality of coins I buy. This has made it easier and easier over time to sell my coins. People will pay money for nice stuff.

I do not sell anything on Ebay. I sell locally, and advertise on the internet. I am getting lots of repeats.

IT IS WHAT YOU MAKE IT!

 

Just go back to 1916 , get rolls of dimes , 16-D , better yet go back to to 1798 , bring back the best examples of any coin , bring back about 50 coins , instannt multi millionare .
Really buy coins because you like them don't expect to make money and just enjoy your coins , you just might break even , not bad for all the pleasure they give .:smile:hatch::hammer:
rzage

 

You can make money on anything if you can buy it below its actual value and sell it for full value. Coins are no exception.

It becomes much harder to make a profit when you pay full price for an item. Then you have to count on the market moving up (or finding a sucker). The key to making a profit is not overpaying when you buy. (As some say, you make your profit when you buy.)

I think it would be very difficult for a novice coin collector to be able to cherrypick undervalued coins and turn them for a profit. That's just my observation. I'm sure there are plenty of exceptions.

 

well stated and an excellent way of thinking

 

greetings and welcome!
i need to say little as most points have been given...tho you and hobo throw me off w/ statistical info and formulae. me simple coin collector..no speak good english (nor math).
please consider the historical and cultural value of coins over and above $. i have both made and lost money on coins. so have most of the experrt numismatists in the world, whether they will admit it or not.
if you are looking for a return on investment, diversify. if you desperately NEED to "invest" in cons..buy yourself an 1804 silver $ and hold onto it for 10 yrs or so...not being a wank, but i guess the adage is the same as stocks..."buy low, sell high....if it doesn't go up, don't buy it."
buy coins to enjoy the hobby. if you like art or antiques or even hubcaps, then buy the best youi can afford and be sure to appreciate what you buy. life is temporal, so if you wish something historical..buy what intrigues you.
the first purchase you should make should be david bowers' book ....experts guide to collecting and investing in rare coins. knowledge learned and applied is your best investment.
please read and study and PLEASE keep an open mind to the experts' advice available here.
welcome again and my very best wishes,
steve

 

I think you are exactly right. Metal prices have moved up a lot over the past 7 years, and this might have made investing in coins look easier than it really is. This trend might very well continue, but in that case the "profit" is really just capturing the price inflation from the devaluation of the dollar. That doesn't make it bad, but it makes it different from normal business profits.

 

mostly good advice all around. Investing in coins is exceptionally challenging and there are numerous pitfalls to avoid. The biggest problem is that coins are not fungible and appeal is an extremely important aspect of a knowlegable buyer offering on a coin. So to buy a coin properly you cannot simply shop for the best price because you will end up with a bunch of low quality coins that underperform when you try to sell them. You have to be a competent grader (even when buying slabbed coins) if you expect to be able to sell them for proper value down the road. As counterintuitive as it is it is common for the coins that sell for a premium to be the ones with the best chance to make an investor money.

That said, I strongly advise that novice coin people refrain from considering numismatics an investment vehicle until they are very familiar with the process and have developed their coin buying and selling skills through practice. There are just too many mistakes to be made, and beginners routinely make them.