Are high end MS coins always the better investment

Wisconsin

Hello all,

I know most of here collect coins for the pure enjoyment of it, but are high end coins always the better investment?

I know everyone always says to buy the best coin you can afford. Is this always true?? Should you buy high end mint state coins, or will some XF-AU coins perform just as well??

I personally like XF-AU coins, as well as mint state. I have to say I love to collect coins but always in the back of my head try to figure the investment angle also, and I was just wondering if historically the high end coins were always the better investment??

Your opinions are appreciated.

BillJones

I would say that coins that are very attractive for the grade, which fall into the $500 to $2,500 "collector friendly" range are the best buys. I'd say that "PQ" coins that are at the last grade BEFORE prices get to really high levels are attractive buys too. For example if a coin sells for $500 in MS-64 and $5,000 in MS-64, many collectors will find a really nice MS-64 an attractive buy and worth a reasonable premium over the normal selling price.

supercoin

I'm too worn out from the recent thread on the Registry forum.

Reg thread on coins as an investment

mr1931S

my $.02 worth....

buy the best you can afford...but don't spend "too much" for anything...there's always another coin out there...you're typically never looking at the only surviving example of anything in any grade...

be careful not to buy "junk" touted as numismatic rarities or scarcities...

so-called "collector" coins,if trying to assemble a series set...go with original vf's and higher as your pocketbook allows...original coins in vf-xf in the earlier series are scarce...dealers that know
collecting "for the joy that it is to collectors" know this...a carefully assembled complete set of Indian cents,for example,in original vf-xf is a joy to behold and it's hard to lose money when it comes time to sell to a knowledgeable dealer or another collector...

if going for a nice type set,there is nothing wrong with original au's...they can be obtained at a fraction of the price of say MS 65...the dealer will look at a coin and make an assessment of how long he will have to hold the coin before finding a buyer at his necessary asking price so he can make some profit so he and his loved ones can eat...that consideration often overrides his consideration of how nice and superb the coins you are offering him are...

a successful old-time coin dealer once told me,"never pay more for a coin than a dealer would pay."



original vf,xf,au coins are a good investment...don't let anyone tell you different...

DesertLizard

Coins are not an investment.

Look at the price of a $20 Saint Gaudens 1914-D in MS65, the price has not budged in almost 8 years.

If something has gone up it probably has little upside left.

Buy coins you like not for appreciation.

merz2

Bill Jones is right.A PQ coin no matter what the grade will not go down in value.There are collectors for all the grades.As far as which coins will go up in value,we'd all like to know that answer.

CalGold

The real issue is liquidity. Buying circulated coins is not a good idea if the collector base wants MS.

XF and AU bust halves may be popular items. but that is because the price is widely affordable and there is a big price jump to MS.

XF, AU or even low grade MS (60-62) coins in other series will be difficult to resell because high grade MS (63 and up) coins are readily available at widely affordable prices, such that the collector base is focused on those coins. Eg. common date Morgans in XF are basically bullion coins; collectors want high grade MS (64 or better). Try to sell an XF 1884-O to a dealer and he will look at the spot silver price and pay accordingly. at best. Even a gem common date coin may be hard to sell to a dealer if he is sitting on a bunch in inventory and it's a slow moving item.

And remember, anytime you have to buy retail and sell wholesale, you start with your investment underwater. So a coin has to appreciate generally 15-20% for you to break even on a resale. And that does not take into account storage costs and the time value of money.



CG

coynclecter

Coins are a hard asset like real estate. When things are hot the high end is the first to go up and goes up the highest. Then when things change the high end is the first to come down and crashes the farthest. Best to buy in the middle range so that even in a down market they are still affordable.

But the real answer has been given... buy what you like (but don't pay an extreme amount for any grade). A common coin in a high grade is still a common coin to most collectors.

braddick

Oh, oh. After reading all the sound advice here, I now realize I'm going about this all the wrong way.
But, I guess as long as I'm having fun. . .

coinguy1

Wisconsin,

It's about buying the right coin AND paying the right/fair price. You can buy the world's greatest coin (for investment or otherwise) but if you pay too much, your "investment" can be a bad one.

For instance, let's say you buy a coin today that lists at $400 in the Coin Dealer Newsletter. For purposes of this example, the listed price goes up to $500 in three years' time. On paper, that coin has appreciated 25% in three years. But notice, I haven't yet mentioned the price you paid for the coin. If you paid $400 and can sell it for $500, great, you will have made $100 or 25%. But, If you paid $500 and can only get $500 you have made nothing on your "investment".

If you buy a coin from a dealer, even a perfectly wonderful/fair one, you are usually, immediately in the hole for the difference between wholesale and retail (that spread varies from dealer to dealer and from coin to coin). And, if you overpay (pay more than a fair retail price) you're in the hole even further.

I'm not saying that you should worry more about what you pay for coins than you do about what coins to buy, just that the cost can be critical as well. That said, if you buy a coin that appreciates by 50% in a few years' time, if you overpaid by 10% or so, it might not be a big deal. But, what if the coin doesn't appreciate at all and/or, what if you overpaid by 50%? Just a few things to consider.

CalGold

Mark,

It seems to me that determining the "right price" and not paying "too much" for a thinly traded coin can be a daunting task for the non-professional. It seems that there is a "price range" rather than a "price" for many coins that are not "commodity items."

There also seems to be something of a pricing paradox in auction sales. Since the winning bidder has paid more than all the competing buyers were willing to pay, has he paid too much?

CG

DaveG

Also, Dave Bowers' says "Buy the best you understand" That is, if you can't tell the difference between an MS-64 and an MS-67 (perhaps an extreme example), then don't pay a premium for the MS-67.

Personally, I'm an XF-AU kind of guy, because I like a coin that has actually done what it was intended to do - that is, be spent (but not too spent!)

onthespot

I am brand new to marbles, but not new to "hoss tradin'" (Have not held a regular job for four years.) The best investment I have found is to talk to the person with the coins, John Q public, not a dealer, and find out what else they want/need at that particular time, and if you have if or can find it (in the garage of someone who doesn't need it and is sick of storing it) you can sometimes work a heck of a deal all the way around, everyone's happy, and no one feels ripped. Works for me!

MastaHanky

<< There also seems to be something of a pricing paradox in auction sales. Since the winning bidder has paid more than all the competing buyers were willing to pay, has he paid too much? >>

There is no paradox. Worth is a relative number. The item is worth more to the winning bidder than all of the other bidders, otherwise, they would have bid higher.

coinguy1

CG,

You raise an excellent point when you say

<< <i>It seems to me that determining the "right price" and not paying "too much" for a thinly traded coin can be a daunting task for the non-professional. It seems that there is a "price range" rather than a "price" for many coins that are not "commodity items." >>



The "daunting task" you refer to can apply to dealers/professionals, as well, if the coin is very thinly traded and/or so exceptional/different, that useful comparisons to other examples aren't possible. Sorry, that was a long sentence!

There are, however, plenty of coins around, where determining the "right price" is possible. It takes some study, research, and/or discussions with trustworthy dealers and/or collectors.

Your other point, about the paradox in being the high bidder in a public auction, is equally well taken! However, there are a lot of factors that can account for such purchases still being "right". That might make for a good thread of its own, but I'm too tired tonight.

CalGold

Masta H,

I agree that there is a lot of subjectivity involved, but I was focusing on "market price" and resale value rather than "worth" to a particular individual. The high bidder may not be able to resell the coin for more than the next to the highest bid, since no one else was willing to pay the winning price.

Now in a "perfect market", a common coin that is part of a popular series should never sell for more or less than the "market price" (barring a buyer getting carried away with "auction fever"), since any one interested in buying that coin can buy the "same thing" from a dealer for the market price. But in the case of a rare or thinnly traded coin, the market may be defined to a significant degree by those present at the auction. That is why auction results are used as price discovery tools.

Dave G,

I like that quote from Bowers.

CG

relayer

Better than what?

Unless you are comparing it to roulette, the answer is no.

ANACONDA

"always" is a problem.

adrian

coinguy1

Adrian, is that really you? The "length" of your post makes me ask that question.


However brief it was, you made a valid point, though.

CalGold

Hey Mark, from your previous post, I thought you had retired for the evening.

A thread on buying at auction would be interesting.

So would a thread on a day in the life of a coin dealer. Just what do you guys do from 9 to 5?

CG

coinguy1

CG,

I had a quick dinner and couldn't resist replying to some more posts. What I USED TO DO from "9 to 5" (actually, from 6:30 to 5:00) is a different answer than what I've BEEN DOING from "9 to 5, since I started posting to this board!

Please remind me and I will try to discuss the "buying at auction" and "a day in the life of a coin dealer" subjects some time.

Wisconsin

So what I am gathering here is that coin grade really is not the issue as an investment. It really is an issue of what to pay and when and where to buy and sell. I do think the market for high end coins is driven a lot by speculators and investors, while the average dollar coins seem more stable because of being supported by a large group of collectors. To a certain extent that is why I feel better with circs., you are not as depending on cyles as much when it comes time to sell. The other thing with being a collector is that when a coin or cycle is hot, you don't want to sell your favorite coin just because you may never get this much ever again. I think most collectors buy coins and when they feel the time is right to quit collecting, they sell them all regardless of where the market may be at that time.

I think the ability of a person to sell is extra coins on ebay or yahoo realy helps to. You really don't have to deal with paying retail and then wholesaling it to a dealer later. Of course this brings back what others have said, you have to be in at the right price, or you still won't find a retail customer for that amount.

I don't know how to justify the right price. I and others have bought coins for way over book price. If a coin has a greysheet ask of $1200 and this is a super perfect example and rare , is paying $1600 right?? I do agree that PQ coins should definately have a premium, but how can you calculate the amount of the premium. You can factor rarity of the issue, etc, but it all comes down to a personal judgement call, and that can be tricky.

Fairlaneman

I'm a little suprised that no one has mentioned the Blue Sheet vs Gray Sheet price spread relationship between a coin. It seems the Higher the grade of the coin the bigger the spread thus adding to the risk that a high end coin just might fall in price quicker than its lower grade counter part. Some coins, because of thier demand, do not fall into this catagory but many have been seen in the series I collect that do. Is the spread caused because of low demand or is it just because the coin does not trade enough times too have a true picture of relative value between the sheets ?

As far as the best investment. If you are not willing to hold the coins for a lengthy amount of time it seems to be a crap shoot at best.

Ken

supercoin

Holding a coin short-term is of course a poor investment, assuming you are buying/selling a fully valued coin from/to a dealer. The spread a dealer needs to stay in business will eat up any profit.

But even holding long-term, I contend that -- contrary to conventional wisdom -- the longer you hold a coin, the worse it is likely to perform compared to a more traditional investment. Many coins that look like a great investment are not once you put it in a spreadsheet and see what the annual return is.

Here's the link again to the thread debating that .

I think probably the best way for a collector to make money is to become an expert in his series, and cherry-pick exceptional examples or scarce varieties. Most dealers are generalists, and a dedicated specialist collector can out-pick them every time.

shirohniichan

Buy coins you like not for appreciation.

How can you like coins if you don't appreciate them?

RLinn

<< <i>Buy coins you like not for appreciation. How can you like coins if you don't appreciate them? >>

and how can they appreciate if no one likes them?