From Collector to Investor

IronmanDuke

Until now, I've been a collector - buying coins which I enjoy and no plan of liquidating (until I'm ready to check out). I'm considering putting $10k into "investment" coins, with a liquidation point of about 5 years.

The portfolio theory says "spread your investments around to reduce the risk". My observations on valuations implies that the higher value (higher grade or more rare) coins increase a greater percentage than lower grade. (I have to research this.)

Let's focus on Lincons. Five years from now is 2009 - a milestone year which should generate more interest.
If you were going to go in with $10k, would you go with one really good coin for $10k, or two good coins at $5k.

Or are Lincolns so "mainstream" that the real value upside lies in other areas?

Thanks for the advice.

boz

Two different coins. What's hot today may not be tomorrow.

LucyBop

if only we would have known to sink several k into 1999 silver proof sets when they were issued....

JrGMan2004

Why not quite a few not so rare coins that'll still sell? Or maybe 1 high grade Key date, and a lot of lower grade key and high-grade semi-keys, and varieties, like the '55 DDO? I think even spending $5k on 2 coins is not really spreading it out... if you bust on 1 and profit on the other, it evens out, and you basically lose... if both lose value, you lose... if both profit, you win... so you'd maybe have 1/3 chance of really turning a profit worth the time and investment... I say, spread it out more...

cladking

I usually avoid this type of thread but this one's too tough.

There are lots of scarce memorial cents especially among the zincs which are grossly
underappreciated. Ten 1988 mint sets will yield a couple ultra high grade Lincolns and
a few other very desirable coins. Or you can target the cents with a great deal more
effort. There are lots of collections out there with top notch older Lincolns and there aren't
going to be enough of the later issues to bring them all up to date.

dlimb2

I say spread it around...there are still some coins on the cheap...like 1998 Kennedy Matte's they are a great investment coin...buy two...then ummm lets see there are some good Frankies out there that will only go higher....many many coins from which to choose...buy low modern mintage in the highest grade, sure to never fail if you know the going price for a given issue.

merz2

As a long time Lincoln man,I've given this question some thought.Most people would say buy a key in the very best possible grade.I am not so sure as an investment,that is the way to go.If you by the very highest graded then you limit the collector base who could afford it.I would buy the keys of course,but in a mid range grade.There would be more collectors attempting to acquire it when time to sell.

JrGMan2004

Merz makes a good point... like a low MS or an XF/AU 09-S VDB might be something to think about, if you're looking at just the Lincolns... if not... then say.... VF/XF 16-D, 21, 21-D Mercs, and other key dates from similar dated series. But he's right, go for coins that will definately sell, b/c collector's will need those coins, and will be actively looking for those coins to complete sets...

mrearlygold

Early US gold.

Rgrds
TP

lava

I suggest you study the population reports and compare the rarity factor you can get for your buck. When I do this, across all types of coins, I conclude pl and dmpl morgans give the best bang for the buck. I have been tempted to get into barber halves, buffalo nickels, half cents, gold indians, state commemoratives and bust dollars, but so far, I have stayed where I thing my dollar goes the furthest -- mirrored morgans. I think you can invest where you are most comofrtable, but I would still really study the pop reports. The bidding last night during the Superior auction for the 1909-s vbd seemed pretty healthy.

dollardude

I'm also a collector, but do not advocate doing this as an investment. HOWEVER, if you insist, I agree with JrGMan2004, in that you should stick with key dates, in this order:

1. 1893-S Morgan dollar
2. 1889-CC Morgan dollar
3. 1916-D Mercury dime
4. 1909-S VDB Lincoln cent
5. 1928 Peace dollar
6. Bust dollar (any date)
7. $20 St. Gaudens double eagle (any date)
8. 1932-D Washington quarter
9. 1921 Walking liberty half dollar
10. 1872-S Seated liberty quarter

mrearlygold

You're way late on Bust dollars.

TP

Goldfinger

I agree with Merz, and I recently advised a coin investor to avoid the super rareties and the highest graded coins for this very reason.

I'm speaking as an observer; I'm not a coin dealer or an investment advisor. But if you're looking for coins that you expect to sell in five years, I don't think you want to put your money in coins that will have a limited market for re-sale. For $10,000, you can put together a nice little upper-middle class collection more likely to appreciate in value in five years than one or two rareties that may not appreciate in value much over that time.

-Jay

OnlyBuffalos

I believe the rarer and pricier the coin the greater the possible reward but also the greater the risk.

If you are interested in investing in Lincolns, learn all you can about demand and supply. There are many Lincolns which are very difficult to find and thus could be considered for investment. One such example is the 1913-S in MS64 Red. Low population and has increased in value under most market conditions. Lincolns have been popular for a long time and will likely remain so for at least the near term.

It is no secret that coins that are popular stand a better chance of increasing in value. Sleeper coin types tend to sleep for a long time and may never awaken even though they are rare. Some event or promotion may awaken a dead series but I wouldn't bet on that happening.

In an area I am more familiar with, Buffalo nickels from San Francisco and Denver in PCGS holders from the period 1917 through 1929 in true XF or AU condition have never been more in demand. Any mint marked buffalo date in this period is very difficult to obtain and very easy to sell. The challenge is to find coins with decent strikes that have not been "enhanced". The sheets do not reflect the current prices of these dates. Coins fully struck for some dates can bring double "ask" prices and more.

It is a fact that PCGS coins typically sell for more money. There are still quite a few coins in non-PCGS holders that can cross at the same grade into a PCGS holder so don't automatically pass on a non-PCGS coin if the price is attractive. But to successfully do this you must know the PCGS grading standards for the particular coin. Look at lots of coins, ask lots of questions, and be patient. You can find good "investment" material.

WACoinGuy

I'm not a coin investor either, but I'd think you'd get more diversity by having a mixture of more expensive coins and less expensive coins. Say, one coin for $3,000, three coins that are $1,000 a piece, and 12 coins that are $250 a piece. Gives you much more diversity and no one coin will trash your investment if it goes down in value. Plus, you'd end up with a nice set of 16 coins that you'll hopefully get some enjoyment out of for the next five years.

WACoinGuy

Come to think of it, putting together a set might naturally follow this breakdown -- the key date would be most expensive, followed by the semi-keys, and the more common dates would fill it out. A nice set of 19th century liberty nickels would probably work...

IronmanDuke

Wow! This is some really solid advice. (I hope not too much learned "the hard way".) I appreciate everyone's selfless sharing. Thanks...

ER

<< <i>You're way late on Bust dollars.

TP >>


Maybe a little, but I think they're still on the way up, and have ways to go. JMO.

mrearlygold

<< <i>

<< <i>You're way late on Bust dollars.

TP >>


Maybe a little, but I think they're still on the way up, and have ways to go. JMO. >>




That's what's great about this business. Buy what you like. I recommended Bust dollars for years and years. Now I go the other way.

For awhile anyway.

TP

Aethelred

I really hate to see you sink your money into a red-hot coin market that I believe might be near a high point. I think you would do better with an S&P Index fund.

mrearlygold

Nah

TP

MrEureka

The best returns in Lincolns may prove to be circ semi-keys. They could easily double and virtually nobody would notice.

dollardude

<< I really hate to see you sink your money into a red-hot coin market that I believe might be near a high point. I think you would do better with an S&P Index fund. >>

Wow, FINALLY someone agrees with me. I just had to jump back in and say "thank you"! I don't recommend coins as an investment. I'll stick with my good growth-stock mutual funds and paid-for real estate. Here is an MSN Money article on a very good S&P index fund (my favorite one, and the world's largest): Vanguard 500 Index Fund (Investor Shares). With the economy starting to rebound, I see coins, precious metals, artwork, and the like going down in value in favor of equities and real estate.

Here's another thought I had. IF you insist on investing in coins, consider bust halves. At our last coin club meeting, a local dealer spoke about the market. He said that key dates were strong (like I mentioned earlier). However, he also said that bust halves were a sleeper that could potentially see a large upswing. IF you insist on investing in coins, I would diversify and only make it 5% or less of your total portfolio.

Baley

If you like Lincolns, buy a Lincoln, I'm sure you could get a top-pop or close to it.

But with $10,000 to spend I'd spread it around a little, with between 5 and 15 coins, each valued at about $500 to $2000.

Some ideas might include MS64 or PR64 or better Barber or Seated coins, VF or better Draped Bust coins (half cents and cents, and half dimes through dollar), Choice to Gem Gold coins (the Indians and the Saint are nice), an early copper or colonial, and maybe pick a favorite classic commem, a proof Walker or Indian cent or Mercury dime. Choose eye appealing coins and you'll probably make some money in the 5 to 10 year time frame.

With a few coins, you'd get diversification and still have liquidity. Too many coins and they become more difficult to sell when the time comes (and if it's for investments, the time could come, whenever)

at the same time too few or just one coin and all your capital is in one vehicle, which is nice if it goes way up but kind of sucks if it happens to go down for some reason.