Where have I heard that before ?

The conclusion that a reasonable person should draw is just what the title of the article says -

Coins are Not Investments; They are Assets and Collectibles to Be Enjoyed

What your comments are suggesting is that because there are exceptions to the rule that the rule is not true. But that is not the case at all. Exceptions do not disprove the rule because they are in fact exceptions. Just about any rule, no matter what the subject matter is, has exceptions. But that doesn't mean the rule isn't true.

But I will agree that there should be 1 more word in that title to help stem the tide of arguments and disagreements with the premise of the article. It should read - Coins Are Not Good Investments .............

Think of it like this. If you buy a hundred coins and then at some point in the future you sell those hundred coins and you lose money on 90 of them, sell them for less than you paid for them. And you make money on 10 of them. And that happens consistently, time after time after time.

What is the rule ?

A reasonable person would deduct that the rule is that you will lose money on coins, that coins are not a good investment.

Now a person who wants to believe that coins are good investments will point to the exceptions and say that the rule is not true. But the very idea of an investment is that you will gain monetarily from it, that you will show a profit. That is what makes it an investment. But if you know in advance that 9 out of 10 times that you are going to lose money on a coin you buy, how can any reasonable person look at that coin and say it is an investment ?

That is what the author is trying to say. And he is trying to say that because the statement is true and it has been proven true time after time after time. 9 out of 10, maybe even more, collectors lose money when their coins are eventually sold.

What I find somewhat interesting is that no one seems to have noticed, or at least not commented on, a particular 2 sentences in that article -

"I strongly agree that far too many coin dealers and other involved in selling U.S. coins make exaggerated claims about the future price potential of the items they are selling. This was, in fact, at the heart of recent lawsuits stemming from hard sale tactics by certain coin companies that resulted in multi-million dollar settlements and new FTC regulations on coin buying last year."

Now this is what happened after the coin market craze of the late '80s. Many people had been hyping coins as investments and making outrageous claims in the '80s. And the coin market reached truly lofty heights, that it has never since even come close to approaching again, only to fall off a cliff and drop just as fast as someone who did fall off a cliff. Once that happened lawsuits sprung up all over the place, settlements were paid, and coin dealers were forbidden from using words like investment when trying to sell their wares.

Well, it's happening again.

If you wish to know what those new FTC rules are in regard to coins click on this link -

http://business.ftc.gov/documents/bus27-complying-telemarketing-sales-rule

- once on that page hit Ctrl+F on your keyboard and type in the words - investment opportunity - in the dialogue box that pops up. Then scroll through all 5 of the listings.

 

Kinda sorta but not really. Coin dealers are no different than any other business. They buy at wholesale, and they sell, or try to sell, at retail. If you sell vegetables, furniture, clothes, whatever - that is how you make your living.

Now I said try to sell at retail above because probably 80% or more of all coins that a dealer sells are sold to another dealer. So rather obviously most of his coins are sold at wholesale - not retail. So in that regard your comments are accurate. But if a guy is selling vegetables to make his living, you wouldn't say that he was investing in vegetables. You would say he bought and sold vegetables.

The point is you can't equate collectors to coin dealers because they are not the same thing. Even when a collector buys a coin saying to himself if I hold onto this for 10 or 20 years I can sell it and make a profit - they are not the same thing. No coin dealer buys a coin telling himself he's going to hold onto to it for 10 years before he sells it. If he did, he'd quickly be out of business.

Coin dealers buy coins because they plan to sell them right away, they often have the coin already sold even before they buy it. Collectors do not do this. Collectors buy a coin with the intention of that coin staying in their collection for years if not decades.

Any coin dealer out there worth his salt knows for an absolute fact that the majority of all collectors will lose money on their coins. That is after all what keeps coin dealers in business. And that is where the problem with using the term "investment" arises if and when a dealer uses the term investment when he is trying to sell a coin to a collector.

And investment implies that you are going to get a return on your principle, that you will make money on the deal. So when a coin dealer uses the term investment to hype his wares and help him make a sale to a collector, knowing full well before he ever says a word that the collector is going to lose money on that coin 9 out 10 times, then that dealer is intentionally misleading his customer in order to make the sale by saying that the coin would be a great investment.

That is the problem. That is exactly why the FTC and the courts have stepped in numerous times over the years to curb the activity of unscrupulous coin dealers. That is why when coin dealers use the term investment in their sales pitches that the authorities take a long, hard look at them.

 

Assuming you mean did I keep any coins from my collection - no, not 1 coin. When I sold my last collection I sold everything. And I was never a dealer.

It has been my experience that very few dealers are collectors. They may have been at one time, but once they become dealers they stop being collectors because they soon discover that they can't afford to be collectors anymore. Nor do they need to be for their desire is satisfied merely by owning the coins for a short time, meaning until they sell them.

In that regard being a coin dealer can be thought of as being the ultimate form of collector. You get to see and own coins that you otherwise would probably have never been able to afford because the only reason you can afford them is because you know you have them sold.