Future of Collecting-My Newbie Logic

I am new to coin collecting so please forgive my ignorance on the subject, but since I just made my first purchase yesterday on an 1871 Indian Head Cent with a little corrosion on it, I wanted to see if my logic made sense to you guys. First of all, I am not starting a collection for the monetary value, but intrinsically a “collection” should be worth something, but I am not collecting coins instead of having a 401k plan. Secondly, I came into collecting as a small collection was left to my wife and I through a great grandparent passing away. Therefore, I have those coins as a start of the collection and I would like to add to it, hopefully, we would pass it on to the kids or sell the stuff for a nice retirement vacation, because we all know we cannot take it with us. Finally, I came into coin collecting as an accident, but I have collected Baseball cards for the majority of my life, so I have some collecting knowledge before the coins came along. That was the intro, so here is my thought.
Let me preface this with this, I realize that there will be new and old coins that I will want to have as I learn more about collecting, I just want to see if my logic makes sense and get opinions. I have been trying to figure out what to collect should I stick to modern coins and commemoratives or should I try to upgrade the pennies that my relative obviously took pride in. Obviously, he is not around so I have to make an educated decision on this. I feel like modern coins might be a waste of time and here is my logic in this. Let me say by modern I mean from the 1970’s to now and I will refer to older coins as coins from the 1800’s. I feel like we are always looking for value in the coins that we collect either for personal reasons or for monitary reasons. I think that we have a unique opportunity to collect“rare” 1800’s coins for a relatively cheap value compared to what the future will have to pay for. As the American population increases, we will inherently have more people interested in collecting in sports cards, coins, or cars, who knows. Although currently we might have a bit of a population recession due to the economy, the prices of these coins should be amazingly high when the population of America hits 400 million in the year 2050. It will become much harder to obtain a 1909 S-VDB to complete collections.
So predict the future here: The projections say that we will have almost 400 million people in America in another 40 years. Currently population is somewhere around 306 million. The 1909 S-VDB has minted numbers of around 480,000. At those numbers that would be roughly 1 1909 S-VDB for every 1000 persons in America. To put that in perspective of my town that I live in, out of 80,000 people, only 80 people could have complete wheat penny sets. I am using these numbers to illustrate my point. I am sure I have holes in my argument, but I would just like the discussion.
As I was thinking about all of this, it would appear that the numbers would indicate to invest money into old coins. I could have done more research, but this was just a thought.
Cheers,
Chris

 

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Interesting post. The population increasing could have significant impact. But then you also have to ask what percentage of this population increase will be middle class or above with the expendable income available to buy a 1909-S VDB? Most middle class families can't afford one now or it would be a major undertaking. Then of that percentage that could afford one, what percentage will be into coin collecting? Of that percentage, what percentage will be into collecting wheat pennies? Will the next generation continue to have interest in the hobby like there is now? Is it growing? Or will they be distracted with ever new and evolving hobbies and technologies?

A lot of questions to be answered. You may be on the right track. But I've often wondered if it could go the other way too and eventually prices go down. How many young people growing up in the next generation will never see some of these old coins because their parents sold what their grandparents handed down, years ago? Are the old coins in general spread out and spreading out more, or becoming more consolidated, belonging to fewer people because people needed to sell them for gas money?
The way costs are rising and jobs and pensions are disappearing, there may just be fewer and fewer people who can afford to get into the hobby and buy those keys everybody wants. It could force prices down actually.
I don't see an influx of 75 million illegal immigrants as having a big impact on the hobby. The exploding population isn't from middle class families having more kids. That's a fact.

One thing that will raise the value by default is inflation. The silent killer of any investment or anything we buy but few people think about. I have no doubt that in 20+ years, the dollars it takes to buy some of this stuff will increase much faster than the average guy's wages.

Check out the collector's guide to collecting and investing in rare coins. He shows what coins could have been had for in the mid 50s, 70s and present day. It's a laugh. Sure, a dollar was worth a lot more in the 50s but the prices look to have been much more affordable then, than they are now, for the high grade, keys. What used to be a couple day's pay might be a couple month's pay now.

As far as moderns, collect what you like but don't look at it as a big investment. The mintage numbers are so high with most modern stuff that there's no risk of most issues ever being in high enough to demand to be considered rare. Perfect planchets, and fine tuned minting methods are the norm also. There's no such thing as finding a rare 2008 nickel with a great strike. Early large cents is a different story.

Old rare stuff should always be in demand. Collect the modern stuff you like for the fun of it. They have some great commemoratives out.

 

I will tell you what I think, but remember it is your decision. Buy coins that you like and those that you can afford.This is important because those new people that will get us to 400 million may not like coins, you may be keeping them longer than you think. Coin collecting popularity goes up and down just like about everything else in a capitalist society. Personally I think the numbers of collectors will stay reasonably high because of the numbers we currently have. But to predict the future is a guess and nothing more.
I was reading an article yesterday about commemeratives. Not entirely, but many that were unpopular and had low mintages are now aelling at a premium compared to others. Some, such as the Indian Head Dollar were and continue to be popular. I think those that collect the spousal gold coins will someday be very glad they did.
If you want to do it as a hobby learn about it to make wise purchases, but have fun doing it.

 

I agree with Mr.CoinLover, buy what you like and can afford. Sure, I'd like to get those 1909s to help finish my dad's Lincoln books, but they seem to go at a premium.
I do like AU/BU coins, but my budget doesn't really allow much to spend on coins lately.
I think collecting is mainly going to matter on wages/economy as time goes on. I dont know about others, but I've been finding very nice cents in maybe close to AU condition like from a collection? lately in my pocket change.

 

Looking out into the future, my guess is that the population will be larger but poorer than today. So I think coin values will track inflation with some rising much more and others lagging behind; but with no real intrinsic growth in value as a group. Now, inspite of what anyone else tells you, keeping up with inflation is pretty good performance since most investments don't. The "winners" in the future will most likely be coins that are relatively unrecognized today, and therefore relatively bargain priced. I have my own ideas about this, and everyone needs to investigate the coin market and decide for themselves what to collect based on interest and estimated future value. Some coins seem to be perpetually popular like morgan dollars. Others rise and fall with whatever the latest fashion is, or what promoters are pushing. That's part of what makes coin collecting interesting and challenging at the same time.

 

Interesting thread.

I also believe that some of those "keys" won't be going up that much in value because they are not rare or difficult to find. In fact, many of the more expensive lincolns come to mind, the 16D merc, etc. And as others have said, people may have less money, not more money in the future.

Who knows? As another thread suggests, maybe people will just focus on State quarters. Heck, if you want one of each, a roll of each, the proofs and maybe a couple with Elvis painted on the front - that will keep you busy for months and months.

One thing that I think is going to become more popular are the "one coin per year" sets. Rather than having 500 Kennedys or Barbers, you just do one per year.

Anyhooo, who knows. Most of my money goes into G/AG silver coins so at least I have the silver value and other coins I can get for a small premium over face value. And then I buy the occasional Eye Candy Coin to give myself a treat.

 

prices rise and fall, but over the course of time, the trend is that key dates increase in value. the problem is when that increase isn't realized in a significant way until after you've died

don't forget that the rarity is more of factor of demand and available grade than it is of production numbers. i collect some high grade stuff that has low mintage figures, but it seems i'm the only one collecting them - i'll have the market cornered in 10 years, mhuhahaha!

 

I would posit that population increases in the US may not be the boon for coin scarcity that one thinks, and I state this mainly because of cultural shifts going on in the country. The sectors of the population where demography indicates significant growth are not sectors of the population that revere US antiquity. As such, collecting historical US coins is likely to have little appeal to them. I would argue that anti-nationalist sentiment (on the rise) and coin collecting are inversely related.

 

Fenton,
You hit on a point that I was going to hit on in my original post, but I did not want to sound like someone who had an agenda to pass on or make someone think something about me that was not true. Of course, we are all communicating by typed words and we cannot see someone's body language or inflection of their voice, so we have to take their typed words at face value. Anyway, I wanted to point out demographics or the American society going forward. Will that have an ultimate impact on the collecting society? I do not know, and I would agree that American heritage might be a large part of coin collecting. I am sure some people here collect other countires coins, but the feeling of collecting American coins because we are Americans might bring up a different passion of collecting. I am sure overall the coin collecting industry will not fall in the tank, but I agree with your assesment. I do not think questioning the future demographics of our country is a wrong avenue to look at. Thanks for everyone who responded, I enjoy these types of conversations.
Cheers,
Chris Kampmann

 

Here's your population growth. 9:35, well worth your time.

http://www.youtube.com/watch?v=Y0GCkRp4H4k&feature=related

Notice where he says the initial population 'should' be by 2030. It's lower than where we're at now.

The original population is in slight decline. The explosion of growth is by people who will fly their own flag over an American one U.S. soil and want to destroy American heritage. Chances are, they won't be spending their $$ on coins or getting educated on U.S. history.

People are welcome to criticize me for not being as PC as others here but I've watched enough video footage on the news to where I don't feel guilty about stating obvious facts anymore.

 

Well Vess everyone is allowed an opinion and we can disagree.

As for the topic of moderns I think one thing people keep forgetting about is that the survivability of those MIGHT be in large numbers. If silver spike to 500 dollars watch and see how many ASE's get sold. I don't expect something like that to happen, but you never know. The question that comes to my mind is the early 1800's - how many of those have actually survived? How many problem free coins? It is really a toss-up.

As for the 1871 with a little corrosion - take care of it and it will not get worse. I believe I read yesterday you paid $20 - which is good price in my opinion. I know one expert says "No price is too cheap for a problem coin" - but not everybody can afford to spend hundreds of dollars on one coin. As others have said collect what you like - and enjoy. I can go to the local coins store and look at every coin around.

PS - I don't like the font you selected.

 

What about the age of collectors? Seems to me to be the older crowd (don't flame me, I am just referencing what I see at a typical coin show). Will the market be flooded with their collections that are sold instead of kept by the next generation....but who knows an inherited collection could spark a new collector who may be able to afford that S-VDB that their father or grandfather never could.

The pop growth argument is a start, but as you peel back the onion...it gets complicated.

I guess that means collect what you like...and speculate if your retirement is already in good hands.

 

Thanks for the interesting responses. I think that there is definitely an onion theory that needs to be explored and my intentions weren't necessarily to peel back the whole onion and to try and find an answer for the whole theory. But, in the end where will collecting end up? Modern coins will have to be in MS70 condition to have an increase in future value. This is something that happened to sports card collecting many years back. Actually a few things happened that changed sports card collecting. As the market became infused with 30 (estimated) types of card sets every year, the ability for everyone to collect the same set became almost impossible. Rookie cards became serial numbered (i.e. Tom Brady's highly sought after RC card has only 1,250 prints). The grading companies became the source of the highly sought after cards. i.e. A Beckett graded 10 is the same as a PCGS MS70. The value of the cards was based off the grade of the card, but coins are a bit different. Coins are circulated at much higher numbers than sports cards, A set of cards can have over 300 players in a set where coins have a few different mints where they are created. That is why I started thinking so hard about what to collect. If you merely look at the numbers then it would be obvious that you should collect older coins based of things that have already talked about in this post. Inflation, population increases etc....., but what if you collected MS70 "Modern" coins the numbers might end up being similar. This is why I use the sports card system as an example. I do not know what you guys think, but I appreciate the honesty and the candor of the responses and educated responses really help me out personally. Hopefully other people are finding this interesting too.

 

One question for the OP -- How did your logic work out for baseball cards and why will coins be any different?

 

I hate to see anyone buy any modern coin for "investment". I know this isn't really what you're talking about but when this consideration is a big part of the reason most people are buying something collectible then the market is speculative. All speculative collectibles markets eventually collapse. I have too much of a vested interest in the modern markets to want to see any speculation and this will probably never change.

Any collectible makes a really bad speculation but I don't care about the markets for old coins. I like old coins and don't want to see people get hurt if something collapses but I just don't care about the market for them. ...at all.

Be this as it may, the point is that the biggest gaining coins for the last twenty years are all moderns. I believe this will become more prevalent in the future, not less. You can buy the highly sought after 19th century "rarities" or you can scarcer moderns for a fraction of the price. As more people become nostalgic for the coins they used when they were young this is more and more going to mean clad coins which have been in use for more than two generations now.

There's still a stigma with collecting clad coinage but every year there are more young collectors who don't see this stigma.

 

Have you taken into account the survival rate of the 1909 s vdb? I would argue that of the 484,000 less than 75% of that mintage remains for collectors.

 

BQCoins,
Yes, I did think about the survival rate, but I was unsuccessful at finding an accurate count of what might have made it through to have actual numbers. I was trying to use those numbers as a purely speculative and best case scenario. As we know, the 1909 S-VDB was a low mintage already, less what might have not made it through that time. What you are saying is that just a little over 100,000 S-VDB's might have made it to collectors hand and are safely in collections. This would make older coins even more valuable than in my previous hypothesis. It is very interesting.

 

I 100% agree and am among those collectors. I'll pay good money for my pre-state Washington Quarter clads because I just enjoy them. Knowing that others do adds to the interest and the enjoyment.

The sky could fall out any day, basing anything around that could lead to a pretty miserable existance lol!

 

Those of you who want to go on the side lines and talk more about the US population, and such issues, please take it to the PRWE Forum.

This is about coins, not about the future of the US population.

Speedy

 

Going back to basics -- the key is supply and demand. The "supply" is what coin dealers and speculators stash away (not always correlated with mintage) and the "demand" is related to how many coin collectors want to buy it.

When I was a kid in the late 60's/early 70's, I collected purely out of pocket change. I kinda stopped in the mid-1970's, but always stashed away silver coins -- which was almost irrelevant because I almost never ever saw one.

Now I'm back into collecting (on a small scale) and one of the things I learned is that: even though you almost never see something in change, doesn't mean it's rare at all. How often do you see wheat cents? At yet you can get bags of 5000 wheat cents for $300 (0.06 per penny). Half the Merc Dimes in G condition are only worth $1 to $2, which is pretty low considering that the melt value is almost $1. The point is that while I used to think wheat cents or Merc dimes (or "fill in your example here") in circulated condition were rare . . . the supply is quite plentiful.

So, I'm thinking if Merc Dimes are so easily obtainable now, even though the silver content is 8-9 times the face value and even though they stopped making them 64 years ago . . . well, I just don't see much increase in value on the horizon . . . except, of course, as people noted, those uber-key dates or AU/BU coins, etc. But you have to really know the market well to play high stakes like that. IMHO.