Coins as small investment?

Hi, my Coin Talk friends. I enjoy all the posts on here very much. It is fun to read people's threads and comments. Here is my question...

I was thinking of moving on to just collecting slabbed "key" silver coin dates. For example, an XF 1916-D Mercury dime, a VF 1893 S Morgan and rare CC dates, XF-AU 1921 PDS Walking Liberty halves, an F graded 1916 standing Liberty, key Barber halves in at least XF, and some nice late 1700s to early 1800s U.S. dollar coins in the $3-4 thousand range.

I would to keep these at least 20 years (which would be 3 years after I can retire). I know virtually all of you have said in other posts that coins shouldn't be investments unless they are ones that are worth so much no one in this forum could afford them.

But what about these selections for investment purposes as well as being cool to have them? Held onto for 15-20 years? All honest feedback is appreciated.

 

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Honestly-
If it were me spending THAT kind of $$...
I would look to buy some property instead,
rather it be just some small lots here and there, or a couple acres out in the sticks.
Just my 2 cents.

Those would be some cool coins to own btw!

 

Check what the prices of those coins were 20 years ago, not that it is the best indicator, but it is a very good one.

 

Your approach might be successful. But are you willing to accept negative returns? There are no guarantees in life.

 

Well, I wanted to pick ultra rare ones so that they wouldn't lose money over time. I didnt think ultra keys would ever be losers.

 

There's some in there that very likely would produce a good return if you did with top coins right now as in premium for the grade. If you were do that I would go with PCGS CAC coins that really jump out even if they cost a more right now. Of course you get the added benefit of being able to enjoy them for decades as well.

I would stay away from "keys" like the 16-D merc though. Like the S VDB the 16 D is plentiful in almost every grade at all times, the internet and the TPGs have really exposed the myth of some of these key dates that were really hoarded and marketed as rare. Right now these types still enjoy a consumer base that grew up thinking they were something special, but 20 years from now there will be a lot of collectors who came up viewing them as over hyped

 

@GDJMSP might be able to provide some insight.

 

They should do well - they're always in demand. I sold some coins an elderly gentleman friend of mine bought back in the 70's. He knew nothing about what he was buying, which is the biggest mistake, but the dealer, an honest man, told him he would do best to buy complete sets. He made a bit or broke even on a lot of the stuff (some of the coins had been cleaned, which wasn't as critical then as now), but he did very well on the keys. He has a 1916-D Merc dime I offered raw to dealers at XF-45 money that they passed on. So I sent it to PCGS and it came back AU-50, so they paid me $1200 more than my initial offering. In AG-F it is not hard to find.
So, I would say that if you are going to do this, get the best coin for the grade with great eye appeal. Don't get them in grades below VF-30.

 

An investment — to me — is something I buy because it will be able to be sold later at a profit, will provide a stable source of income, or both. Collectible coins don’t fit any of those categories for me. They are for fun.

If you have the disposable income to pursue such a collection, then have at it. You’re right, it would be a mighty cool collection.

But I wouldn’t use any of my investment money to pursue the plan.

That’s my two cents.

 

Here's an interesting link pertaining to your question. http://www.us-coin-values-advisor.com/rare-coin-values-index.html

 

I have to admit, I did think about putting some investment money elsewhere, including property. But I have always dreamed of owning these key acquisitions, and I finally earn enough where I can pick up one to two of those key dates in the $5-6 thousand range a year. I have 8 keys in mind I would love to have.

 

If you'd love to have them (there's a difference between wanting to get something and wanting to have it), and you can afford them, go for it! I'd expect them to retain value better than lesser coins.

Having said that, though, that "rare coins value index" going back to 2000 isn't a good indicator for the coins you're looking at. It's based on the value of 87 coins; in their current listing, the total value is about $852K. That's almost $10000 per coin average, and over half that value comes from the first nine coins on the list, whose values range from $80K to $35K. Coins in that range appear to outperform the ones you're discussing.

Also have a look at the PCGS3000 index, which is a lot broader, including both very high-end coins (six figures) and lower-end (two figures), but probably still weighted toward coins more expensive than the ones you listed. Here it is, starting from 1970:



That giant bubble centered on 1989 reflected a big scheme to get collectible coins into IRA portfolios; the market crashed when the law changed. Ignoring that distortion, though, if you came into the market any time after the mid-1980s, this index wouldn't have treated you especially well. (As in "you wouldn't have kept ahead of inflation".)

 

Wow. I see what you guys are saying about being cautious having these high end Coins as investments.

I guess the other issue I would have to think about is to whom would I sell them to later? I imagine the market is micro small for $5-6 thousand dollar coins? I imagine a few hundred thousand people collect coins, but I bet only a few hundred or even less would be in the market to pay for the ones I am talking about.

 

The index’s are a terrible measurement. They’re entirely to broad and more importantly they include things like classic commens which have been sliding longer than a lot of collectors have been alive.

Then there’s the whole issue of looking at everything instead of specifics. Plenty has done well in that time other things have done bad and others have done fine as long as the over hyped shady dealer rip off period a few decades ago is ignored.

 

By classic commemoratives, do you mean half dollars from like the late 1800s up to the 1950s ending with the carver half?

Or is there a different kind you are referring to?

 

A key date coin is a low mintage in a given type. I.E. 1916-D for Mercury Dimes or a 1928 Peace Dollar. Given the key date of a series you will find that in higher grades they are plentiful but in lower grades they are harder to find. Add in the price of the coin and who is collecting what and in what grade, a buyer is not always readily available. Know what you are doing before you take that leap. Coins are more of a collection than an investment but they can be both.

 

That’s the series yes. Some of the top ones or the greatly toned ones have done well but the rest have really been sliding for a long time especially the less popular designs.

If you had come in and been like I don’t care about coins at all I just want to make money off them buying some and selling them later I’d have said there’s better places to put your money. But it sounds like you want to build your dream collection and hopefully make some money off it in a few decades which is completely different and there’s nothing wrong with doing that.

 

Good, instructive examples, but it's a bit more complicated than that.

The 1916-D dime is plentiful in low grades (you can find multiple examples at any tiny show, and most dealers have at least a couple); it's just expensive. That's because Mercury dimes are a popular series to collect, and have been for decades, so demand is high. I'd guess that it's popular because everybody has always handled dimes in change, and most dates in the series are cheap to obtain in fairly nice condition, so it's easy to get started.

Lincoln cents are an even more extreme example. Nearly every kid used to get started with Lincoln cents, and most could be found for one cent apiece. That meant many thousands, perhaps millions of collectors just needed those "few key dates" to complete their collections -- and the S VDB is the king of the Lincoln key dates. But they are common, in the same sense as the 1916-D dime, only more so. They're everywhere; they're just really expensive, because demand is high.

The 1928 Peace dollar is a sort of counterexample. It's scarce, but there just aren't as many Peace collectors. Its mintage was lower than the S VDB, and its surviving population is much smaller by all estimates -- but the 1928 dollar is cheaper than the S VDB in every grade below Gem, and its value has dropped significantly over the last five or ten years, especially in lower grades.

At another extreme, look at the First Spouse gold series. The highest mintage in the series was 10,000 coins, many of them had mintages below 4,000 -- and no one cares. They're all in high mint or proof state, they're extremely rare, and they trade close to melt value.

 

Investment value would be determined by a future market. I’m new to this forum and only speak from personal observation. Are younger folks as intrigued with collecting these days? I hope so. These pieces of history we are temporary caretakers for need to be passed on to caring generations. I have bags of no date buffalos that I pass out to kids all the time hoping to keep interest sparked. But I also find a lot more “old” money in my pocket change than I did only a few years ago. Rare date coinage as a long term investment I believe is a risky pursuit.

 

Coins are not a good investment. They are a fun place to park money you don't need. I would say that buying nice quality key dates to hold long term, is a safe place to park money. You could make that same money grow more with other investments.