coin investment... really?

I've been thinking about the differences of 'coin collectors' vs. 'coin investors', and I found myself wondering just how many of these people who consider themselves as investors really are.

Most people know just how expensive numismatics can be, in general. Sure, it starts out innocent enough - but before you know it, the hobby can become a very addictive, and expensive, way to pass the time.

I wonder how many people justify this point by telling themselves 'I'm not spending the money... coins appreciate in value. It's an investment.' Of course, there is a flaw to that logic. In general, coin collecting is costly. But this doesn't necessarily stop people from using the idea of value accrual as justification to break the ice, and make the tougher earlier purchases.

 

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I'm going to waste money on something.... Might as well be money....if you had to you could spend it.

 

Coin collecting as a hobby monetarily is a great investment. Once you factor in the value of the alternative use of the money one spends on their collection - most should come out way ahead. Unless it becomes an obsessions and one skips that dinner and a movie one time too many and ends up divorced or something.

 

Sometimes I wonder just how many of these people who consider themselves collectors really are. I think many people collect coins hopeing for some sort of financial return over time. If every coin purchased was somehow guaranteed to become totally worthless, what percentage of collectors would stick with the hobby? My personal view is that collecting coins is the equivalent of owning or holding a foreign currency. It protects against potential dollar depreciation, and is much more fun than a money market fund. Coin prices are somewhat cyclical, but if you look at a blue book from the 1960s, it becomes apparent that the trend in values is definitely up. Inflation is relentless in the long run, and today's prices will seem cheap someday. But I agree that it's no slam-dunk and easy to get carried away.

 

It's just a matter of supply and demand. When there is temporarily demand, people will get illusion that coins are in hot demand and therefore valuable. But when prices go too high and sellers start to sell heavily, then the "image" of valuableness of such coins will go down. Frankly speaking, when you get coins that are minted in terms of hundreds of thousands, unless there was some heavy meltdown or some millionaire that bought almost all of the stocks available, there is no appearent reason why coins have to be worth so much. (p.s. that applies to very modern coinage only)

There is a reason why coins from 200 or even 100 years ago are worth more than now because people couldn't care less or couldn't afford to. Right now when you get so many "collectors" who think they can make fast money with this, they might be better off being in a graveyard. Seriously with mintages going over 100,000 easily in this century, and with collectors knowing what's the best way to keep coins in the best conditions, implying that such coins will not diminish over time unless some major events occur.

Why should people think coins have to be worth so much anyways? It's just some ridicious hypes. Honestly to a collector, investors are his / her worst enemies, where they try to profit as much as possible. What is supposed to be a "fun" hobby goes to an expensive hobby.

I understand that there are some rare coins that might deserve a lot more attention, but when you get "middlemen" involved, everything just becomes too expensive. I have a lot more sympathy for people who try their best to collect what they can with their meager income against "investors" who can possibly buy every single coin in this world.

 

I have a very simple rationalization on the topic - I just will not buy a coin that I don't think I could immediately resell for a profit, whether I plan on keeping it or not. That allows me to feel like I'm doing something to build value while the reality is, I'm just addicted to shiny coins.

 

SuperDave -- good plan, both financially and psycologically. I sort of do the same thing by buying gold and silver coins when I can find them below the spot price of the metal.

 

You make us sound so filthy!

 

I think that a percentage of coin collectors may have the thought line that I have in that most hobbies you spend your money and thats it, its gone. However with the coins there will always be a value to the coin, bullion at least, and there is a chance that if bought wisely the collector or heir may ,and I stress may, get some return on the coin if a need to sell arises.

 

I don't know, it's just so much fun gettin' the little round buggers. Placing an order, waiting eagerly for the mail, pulling them out and studying the details, pouring over the stock at the local shops, chatting with fellow collectors, knocking about on CoinTalk... I think I'm getting a very good return on my investment.

 

If you sell your collection, say, 50 years from now for the same as what you paid for it, then I would say you were a pure collector.

 

In my beginning years (I know, I'm still in my beginning years) of collecting coins, I purchased a small bag of canadian large cents at an auction for a buck - I guess nobody else wanted them. They were all in Fine or better condition, although they were stored loose. Now, I look in a book and it says that I made a wise purchase, because each one's book value exceeded the price I paid combined... This does not make me appreciate the coins more.

I don't think a collector needs to be absolutely unconcerned with the value of their collection. Most collectors, if not all - a vast majority, would like to see their coins appreciate in value. I think that's just how most of us are wired. Maybe we are all a little bit of both to various degrees.

Some part of me may wish that I could also say that I have only purchased coins that I could later sell for more than I paid, but I know for a fact that I have made several purchases (most of which I would make again) knowing upfront that I would never be able to sell for what I paid. I don't know that I have ever purchased a coin with resale in mind.

 

I see a real danger in what people believe things should, or rather, *HAVE TO* rise over time. Give me a break, if I were a retard and see coins for the first time, I would just say they are a chunk of metals. When you get people trying to understand that it is the art of the coins that make it valuable, then you might get some apperication. Then when you try to add in mintmarks etc, when so much of the rest of the coin looks almost the same, I tell you, most people will go tired over it.

I guess one of the classic examples are the half dollars where people just hoard them up thinking that they are rare since they are "scarce", not to be seen in circulation. And when that happens, people think they have hit the jackpot investment. Not.

Seriously, I don't understand the point of this. To me, I can say my coins are worth a lot to me and could be worth absolutely ZERO to you. It can be possible. Suppose if I pull out overstriked coins to show around, a lot of people, if not most collectors wouldn't even touch overstriked coins because of their crudeness and ugliness. Of course you have your opinions and I have mine.

The overall point is that one shouldn't be calculating everything in terms of investment. Hearing the word investment just makes me go really sick and just makes coin collecting worth more than it's trouble. Didn't the coin crash market taught people a good lesson of people who hoarded a lot of "common" coins?

 

I turn over three-quarters of what I buy, probably because I'm still a newbie and there's a shiny new object around every corner. I'm still fascinated by Morgans but seem to find myself buying Barbers these days.

Seriously, though, I practice strict discipline about the price I'm willing to pay, I know Ebay/Yahoo/etc backwards and I'm an accomplished sniper. I will not pay any more than Greysheet Ask for a coin I buy with resale in mind. The only coin I paid retail money for is the one pictured as my avatar, and I didn't know better then. I am extremely careful about researching potential sellers and purchases - for any new mintage I look into I go back through Heritage's entire archive for grade and value. For all that I only end up buying 10% of the coins I'd be willing to buy if the price were right.

Although the majority of what I resell only nets me 10-15% (that will improve as the graphic quality of my auctions improves and my record lengthens), I double and triple my investment regularly. There are, of course, money-losers but those generate repeat buyers because they got a great deal.

There's no doubt in my mind that I could make a living doing this, given about $25k in seed money. The thought has crossed my mind.

 

That's a very good operation you have going, probably better than most coin dealers.

 

I am afraid that I buy coins because I like them, by this I mean the art work involved the history of them, you can hold a Roman coin or a Morgan and wonder who else has held it how did it end up in a ditch in wherever. To me coins are magical, you might laugh or even mock but next time you hold a 100 year old coin just stop and think LOL

De Orc

 

Yeah, but I'm against the availability limit - I succeed in buying almost every_single_coin that meets my strict criteria. In order to do more volume, I'd have to alter my practice towards more mainstream coin dealing.

I'd suspect that many (maybe most) coin dealers, even successful ones, aren't particularly great businessmen. There's (IMO) a sizable niche to be filled in selling coins.