Since the 1950s the supply of coins from the US Mint has been relatively steady, consistent, and plentiful. Only in the case of Half Dollars made only for Mint Sets (1970-D, 1986 P and D) have coins been unavailable from the local bank and people have stashed them away by the roll. In the 1950s, people started collecting coins by the roll. No longer was it good enough to have one really nice example of a date or mintmark, now collectors were setting aside 40 or 50 of a coin, and to this date none of them are very valuable at all. The statehood quarter program has seen this method of collecting (hoarding) become even more pronounced. Advertisements in magazines like CoinWorld and Numismatic News feature entire rolls of the new quarters as they become available, and it seems that many collectors are setting them aside in this manner again. IMHO most of these collectors are setting them aside with the thought that one day, they will sell entire sets to the public from these rolls and realize a profit, thereby paying for their coins and giving them the "pick of the litter" from those rolls in the process for their own collections. In 1999, this was my plan, but by 2004, I realized that I would make more profit at 3% in the bank and dumped the entire stock back into circulation. As most of us realize, the value of coins is not tied as much to their rarity, but to how much they are collected, and how scarce they are to come by. Millions of people collect the Statehood Quarters, yet the supply so outweighs the demand that these coins will always be available in quantity, and therefore never sell for very much above their face value. The problem with roll collecting is that because the supply is so plentiful, the coins have never become hard to come by, and their value stays constant at or near face value. In watching coin values over my time in the hobby I have never seen circulation coins of any real value after the 1940s beyond their melted value. If roll collecting started in the 1950s, is this consistent with this decrease in value? Can the demand for rolls of coins push the mintage numbers up so far that these coins will never be unavailable to the average collector? Or is it just a product of the modern US Mint, that they have out-supplied (yes, I made up that word) the hobby? Should collectors looking to store value in their collections look for things other than the "flavor of the month" coins and buy items that are seemingly unpopular (i.e.- the Jackie Robinson $5 gold coin) in order to have something that is in short supply at some point in the future? I welcome your opinions.
Mike: I couldn't agree more about your 'flavor of the month' comment. Look for the one that is currently out of favor, say seated dimes, and you will do far better.
I think you are correct in the sense that hoarding has caused many coins to be common in high grades. A great example is the 1950-D Jefferson Nickel. That coin has the lowest mintage of all Jefferson's and yet it seems to be more common in MS grades than in circulated grades because it was hoarded in mass quantity when it was new. But, another factor about business strikes in the last 50 years is they have been minted in such a quantity that none of them are rare anyway. So, hoarding has helped but the quantity has been so great in production that many of them haven't circulated anyway. As far as collection non "flavor of the month" coins, I think you are right. One coin I was thinking about a while back was a AGE, I can't remember what year it was but one of them was minted in a smaller number than the others...it was a 1/2oz or maybe a 1/4oz. I'll have to look it up.
Richie, part of my point was that I believe that the hoarding has caused the demand by the Federal Reserve to go up, thereby increasing the mintages. In the case of rolls of quarters, if the demand was for rolls rather than single units, then the mintage may be inflated by as much as 40 times what was actually demanded, and THAT has made the quantity available so huge as to negate ANY collector value.
Except, there are many years that aren't known for hoarding. It's true that the state quarters have been hoarded like there is no tomorrow...but what about quarters from the 1970s and 1980s. They were all produced by the half billions or so. I know that's not at the same level as the state quarter...but from a collector stand point it over saturated the market. That's why you can pick up a high grade quarter from those years cheap. I have no doubt that some were still hoarded...because that's what people do, but the hoarding was certainly done at a much lower rate...yet these coins are still common in MS. I think hoarding does have an affect on minting. That's why about 1.7 billion business strike 1998 quarters were minted and in 1999 they minted 4.2 billion total combined of all 5 business strike designs (both of these are gross approximates). But, at 1.7 billion total...1998 quarters will never hold much of a premium either.
I think that's probably one of the best ways to go. If you accumulate coins that are both unpopular and relatively scarce, they may be very underpriced compared to what collectors in the future will be willing to pay.
I seriously doubt that hoarding has had any affect on mintages. The number of coins hoarded is minute compared to the total mintages (possibly not in the case of the State Quarter series). I don't see the connection between hoarding and lower book values. The lower book values are due to higher mintage numbers (mainly). If anything the minuscule amount of hoarded coins has probably helped the hobby as it allows young numismatics to build fairly high quality sets at a lower entry price. Once hooked on the hobby it would seem to me they would gravitate to some of the harder sets that contain the true values. As to what "investors" should collect... I have no idea. Investing in coins has never been that profitable... Collecting on the other hand is an entirely different story. If you collect a coin because you like it then it doesn't matter what the book value of the coin goes to. You've got a coin you like... with the possibility that it will rise in value. I think the whole "investing" in coins thing is way overrated and over emphasized. While the concept of collecting is way underrated and under emphasized. Just me.
Not responding to jetshack, but using his comment as a platform: And I don't see the connection between book values and collecting. Are we talking about collecting here, or investing? Or even speculation? People collect in a hobby because they enjoy an aspect of that hobby and the item(s) they collect. People invest in a market or item(s) because they see a possible capital gain from such. Collecting is not investing. There may be certain aspects of each that cross over from each other, but collecting and investing are entirely different monsters...so which are all really referring to? Ruining investing or ruining collecting?
Some of your premises are flawed. First of all saving coins in new condition went out of style in the mid-'60's. The reason for the low prices isn't that the coins are common it's because collectors are scarce. If you don't believe it just try to find a roll of 1969 quarters. Even though there are no collectors eating these up they still aren't available because vir- tually none whatsoever were saved. Even though vast quantities of the states coins are being set aside far more are being hoarded from circulation in circulated condition than are being saved in original rolls. Many of these circulated coins are still being spent and then rehoarded. They don't truly circulate but over time most will become more worn. Collecting coins is never really bad for the hobby. It certainly can be bad for investors when they overpay for coins such as was going on in the mid-'60's when extremely common coins were percieved as po- tentially valuable in the near future or in the late-'80's when investors were buying common gem Morgan dollars for $750 because there was no where to go but higher. So long as the coins are cheap people aren't going to be able to hurt themselves with them. So long as they are scarce there is always the potential that hey go higher.
I think that hoarding/investing hurts the hobby mainly in recent issues. Otherwise, explain to me how the 1999 Silver Proof set is through the roof. And don't give me the crap about end of the millenia, first year of state quarters, etc. You have people who have many more than they need. Same probably goes for the 2001-S Sac Proof, 1999 SBA Proof, a lot of the silver MS-6x Roosevelts, and so on. Basically, it's cheaper and more realistic to hoard the current stuff as it comes out. At some point, you get your price (if at all) and you sell, thus diluting the market and eventually lowering prices. Could I see a show of hands of how many people have rolls of the recent year Lincolns? Prez Dollars? What - you doing it for the heck of it? Just so some of your unused closet space gets used? I can't imagine that anyone is STARTING to hoard the 1999 Silver Proof sets now! Same goes for the paper money collectors. Many people can hoard $1 star notes all day long, but the boys start getting separated from the men when you start talking about saving $20's and $50's! Long and short, there are many, many people trying to make a buck out of this. Some will, most probably won't. But it's the human spirit, people will keep trying no matter what the odds. Oh and just to be inclusive, I'm also talking about those that are saving 'em for the grandkids - result is the same.
ruining collecting through the absence of value in the item collected. In order for an item to be traded, it has to have some value. This value in turn drives collectors in three basic ways: a) setting a price for which the items can be obtained, b) setting a value for which collectors can then trade the items for, and c) bringing new collectors into the hobby. None of these have anything to do with investing, they have to do with providing a supply of items to be collected and dispersing them throughout the hobby.
Oddly, pocket, the 1999 Silver Proof Set kind of proves out my point. The set was not made available in quantity in 1999 to anyone. The Mint limited purchases to 2 sets per address with NO bulk sales. Since the dealers couldn't obtain the sets in quantity, the only source of them was to buy them from private collectors, and that meant paying over the issue price for them. The 2000 Silver sets were available in bulk, and judging by the sales of the 99s, dealers stocked up on these, buying way more than they needed. So much so that to this day dealers still have them on hand and they are available at or below issue price.
I think is true 99% of the time, there are however a few well known examples. One being the 1950-D Jefferson Nickel which had about 2.6million minted. This coin was known to be produced in small numbers at the time and as a result it was hoarded. This is why you can get a high grade example for around $20 despite the low mintage. Some even claim that circulated examples are rarer than MS examples...although I personally doubt that. Another example is the 1909-S VDB Lincoln cent. Because it was a first year issue, it was hoarded. Now, the mintage was so low it is still extremely valuable. But, look at rare Lincoln's from a bit later...when the series wasn't new anymore and no longer commonly hoarded. The 1914-D (which has roughly 3x the mintage of the 09-S VDB) has very interesting value trends when you compare the two coins. The 1909-S VDB is more valuable in low grades because the mintage number is quite a bit lower. But, look at the MS grade values. The 1914-D is quite a bit more valuable in MS grades than the 1909-S VDB. One of the main reasons is people didn't save new Lincoln's in large quantities in 1914...the series was 5 years old and no longer interesting like it was when it first was released. So, the supply of MS 1909-S VDB Lincoln's is higher than that of 1914-D. Now, other than a few examples...I don't believe hoarding has made any difference with business strike coins. Certainly not since 1950. "Collector" coins are a little different (1999 silver proof set, 2001-S proof sac, 1999 proof SBA, ect) are harder to come by than you would really expect. They have been hoarded by collectors. Combine that with the low mintage and that has greatly affected the price.
Yes you are correct. And sadly I am part of the cause. I have a TON of westward journey nickels stashed.
