Determining the Right Grade to Buy for Investor Value.

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I think that some key coins can be analyzed similar to how a stock is analyzed, as a commodity I agree that it may not be an exact fit. The thing is though none of know for sure what these coins will do, thus to give advice as though we are the ones that only have the answers is not fair, even to someone that is just starting out.

I think some people that say don't invest in coins say that because their coins have not done well, so they assume that everyone else has done as poorly.

Some have done extremely well, most have done average, and some have done terribly.

(I think we can agree that even the most knowledgeable have been burned on coins in the past.)

There is also more than one way to purchase coins and right now as i said I am not sure what that way is with older key date coins. I have done very well with modern coins lately and few think modern coins are a good investment.

That is why I think they have done so well, as none of those people bought them so the mintages are historically low.

As far as analyzing a coins series goes you can look at the market cap of the series, ratios such as total coin population to series keys, price of set to bullion value, etc.

Using this you can gauge how a key coin compares in terms of key coin appreciation potential.

I am not saying anyone here is wrong in what they are saying, only I am not sure who is right at this time. It is true you want to buy at the right time and sell at the right time, but what BnB wants to know is if now is the right time to buy and what to buy?

I say based on the charts now is not the time to buy high premium coins but we will see.

PS I don't think BnB is really buying rare coins but is buying semi-key coins. Rare coins that are truly rare I can't say any of this applies as they trade on a whole other level.

PSS This is also not to say that coin collecting is not a good thing. I have a general coin collection that I enjoy but I don't look at it as an investment other than in enjoyment. However if one is to approach coins as an investment that is also possible.

 

Well, you are assuming one is buying at premiums.

And yes, most do..

But for ones who wait and find good fair prices, researching the past price history of their respective grading (pcgs and ncg) is a very smart thing to do in my humble opinion.

 

Hopefully these charts or ones like it were made available back in '88 because I would have clearly saw that resistance in price was a big factor into it's big correction. The price however is in an uptrend, slow but surely and I see no reason that coins aren't a good investment for the future. Of course more specifically, the right coins are a good investment for the future.

Yes you can lose, but you can also win.. The fun is trying to get the probabilities up high enough so you are right more times than not with the coins and grades you buy.

 

I agree. In the beginning I was very open to learning what to buy but now, I have mostly semi-key date coins which is fine.. They are commonly traded but were not commonly minted.

Truly rare coins(like the one you found in your grandpa's cigar box) are obviously the best way to go.. But not everyone is fortunate enough to be in that situation. For the most of us, at least speaking from an investment standpoint, the key dates or semi key dates are where I believe the money is at long term.

Don't think I just advocate buying coins for money appreciation, sure that's my #1 reason but there are a lot of #2 and #3 reasons I own coins.. I love holding onto history and knowing that I'm making money while doing it.

 

Aside from those charts Doug, do you have any other graphs or statistics you can post that show me more detail about this decline?

 

You are correct in one regard - researching the past price history of their respective grading is a very smart thing. In fact, it's mandatory.

But there's more to the picture. Let's contrast a rare coin price vs. a commodity - for instance, a share of stock.

Anyone can look up the fixed price of a share of stock. Today the price of Stock X is $72 / share.

Are all shares of Stock X the same price ? Yes. Why ? Because all shares aare exactly the same*.

That is not true of rare coins.

Let's pick an 1876-CC 20c in MS64. If we look at all sales, we find a wide variance in price.

So I will challenge the investors out there - can you tell me why the realized prices vary so much ? As an instructive thought exercise, list the reasons why rare coin prices are so variable (in direct contrast to stock prices). I'm certain Mike, Mark, and Doug can, but I'll ask you guys to hold off.



* For the purposes of this discussion, let's ignore the difference between common stock and preferred stock.

 

Not all coins are equal. Shares in stock are.
Shares in stock appear as numbers on a screen.
Coins are physical commodities that people hold, feel, and see real time.

Public perception and the coin industry set the values of coin price individually per coin and per grade.

The public also sets the price in stock, well, actually, in theory they're suppose to but the billionaires and ceo's are really the ones moving price in most companies traded on a stock exchange.

Their are differences..

I never compare coins to stock trading, I compare them to commodities trading if anything.. and although you can't directly treat coins like a commodities trader would treat his/her commodities, you can use strategic principals learned from being a trader and use it over in coins no problem.. But, just like in commodities, the market may turn against you. However, if you are good enough at valuing areas of price using past histories of price action that were likely oversold or bounced off at, there's a very high chance you will win instead of lose.

In 5 years, let's see how all of my coins do. Then we'll see who was right in this and who was not right.

 

He's not saying to actually throw it away, you understand...

 

The folks that make the Greysheet produce and sell graph books for each coin series which graph the Greysheet price history of each coin back to the 1970s or 1980s I think. I saw them and checked them out at the last Long Beach show. They were pretty cool, but didn't see the need to buy any of them.

I recommend that BNB stop by the CDN (Greysheet) table at Long Beach this week and check out the graphs as I'm guessing they would be right up his alley! :thumb:

 

There are a bunch of reply's here, not sure if anyone has said this, but I am not coins for the investment. I buy them because I want to buy them. It's like there is a story with every coin. I fully expect not to ever sell my coins. If so I would have sold them years ago. I started this as a kid, so there is a sentimental value to the collection. When I look at my Lincolns I remember pulling them out of coin rolls as a kid. So I am happy with so so returns. I also look at it like this. Sometimes when I find my self with $400 extra cash, I use to go to best Buy and get a boy toy. Now I take that same $400 and buy coinds, knowing that years from now that 400 will be worth more and I will also have something to cherish. If it was an IPOD or something like that, it will be gone or broke in 5 years.

 

good thinking. Those toys will be outdated in months. Enjoy your hobby!

 

Personally, I look for coins that have value to me. Luckily, that approach has also made me some money.

I suppose I could make a lot more money if I followed some logical investment strategy...but that makes my head hurt. :headbang:

There's nothing more beautiful than a top-of-the-line early copper :thumb:. A PQ uncirculated reverse "wreath" is mesmerizing :bigeyes:...and not a bad investment, either.

 

You can do all of that and still lose. The only way this can work is if you have enough numismatic skill to know why two coins slabbed at the same grade by the same grading company sell for different prices. Most of the time it won't be because the lower priced coin is a bargain. It will be because of a grading error, eye appeal or some other reason not readily apparent to the casual collector [of which I am one].

And diversification by purchasing a lot of different coins is likely to work out about as well as diversification by purchasing a lot of different internet stocks in 1999.

I think there are only three ways to really "invest" in coins.
1) to become a dealer so the bid/ask spread works in your favor
2) to put in the time it takes to become very very skilled at numismatics in order to purchase genuinely rare and beautiful coins in the highest price brackets -- or to hire someone with that skill to buy it for you
3) to stick to purchasing coins that sell relatively close to their underlying bullion value

 

i think there are many ways to invest in coins, the question is which will be the best way.

Is it better to buy an 85 CC morgan today or to have bought in 50 years ago? Will those coins appreciate going forward as well as they did in the past?

What are the best coins to purchase today for appreciation over the next 30 years?

30 years ago was 1979, what were the coins to purchase in 1979?

There is also the theory that most collectors now are becoming type collectors, so evaluating coins by type is different that evaluating them by series.

Which type coins are the best buys today?

How are today's mint releases comparing to past decades historically?

Are all of today's mint releases really only bullion?

Were old coins always considered old?

A blind squirrel could have purchased bullion 5 years ago and doubled or tripled his money. Could the blind squirrel do that again today?

 

Old advice is probably still the best advice...

"Buy the highest quality key date coins you can afford"

...and for the rest of us that have bills to pay...