Are coins a good inflation hedge?

Every time the dollar sinks against the Euro, gold, oil and food go up. This weak dollar policy is creating (or will create) an inflation that we have not seen the likes of in our generation. Do you think rare coins will rise fast enough to offset this inflation, or do you think the buyers will disappear at the sight of higher rare coin prices?
Rick Snow, Eagle Eye Rare Coins, Inc.Check out my new web site:
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Comments
is the one in my back yard and I keep it
neatly trimmed at all times.
Camelot
In the long run, many marginal coins will get melted which could cause rarities in current common stuff. That could mean that current modern 70's will shoot up in value 10 or 20 years from now.
"Live long and prosper"
My "How I Started" columns
Do you own those that will be included in this very small percentage?
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<< <i>The only hedge I have found that works,
is the one in my back yard and I keep it
neatly trimmed at all times. >>
...................................
I believe that was not caused by inflation, but rather the Carter/Volker "cure" - high interest and tight credit. I don't think that applies today, and hopefully, not in the future. Also I think the overgrading of coins contributed to the mess of the early 1980's.
This will be good for the evironment and save you money....!!!!
<< <i>Take a look at the highs of the eighties and see how far they can fall.
I believe that was not caused by inflation, but rather the Carter/Volker "cure" - high interest and tight credit. I don't think that applies today, and hopefully, not in the future. Also I think the overgrading of coins contributed to the mess of the early 1980's. >>
Boy I don't get that. You don't thin high interest rates and tight credit isn't coming? It's going to be a repeat in my mind and maybe blowing the 80's away by far. Interest rates are near zero and credit is over extended there's not much place else it can go...........
<< <i>Coin collecting is suppose to be a hobby where people come together and enjoy thier common intrest!!! Coin collecting in IMHO isn't something you do to make money... TOO many collectors,, let me correct myself,, not collectors, have missed the point!! The hobby is for fun first and formost. You want to make some extra money get a part time job >>
And to quote a one time poster who so eloquently stated:
"IF YOU BUY WHAT YOU LIKE, AT A PRICE YOU CAN AFFORD AT THE TIME, THEN THINGS WILL BE EASIER
IF YOU BUY WHAT OTHER PEOPLE LIKE, BORROW TO FUND IT AND EXPECT MULTIPLES OF RETURN, THEN YOU ARE LIKELY TO BE UNHAPPY
BONGO SAY NEARLY EVERYTHING DEPRECIATES OVER TIME.BONGO WOULD NOT PAY $500 FOR A SILVER BELL THIS XMAS AND EXPECT IT TO BE WORTH $550 NEXT YEAR. BUT BONGO KNOW A SILVER BELL IS NOT OLD COIN.
OR IS IT.
BONGO MAYBE NOT SURPRISED THAT OLD COIN IS LIKE ANY OTHER LIMITED NON ESSENTIAL COMMODITY AND SUBJECT TO THE WHIMS OF TASTE AND MARKET.
PUT THE COIN IN BOOK AND ENJOY IT.
IF IT IS WORTH MORE WHEN YOU COME TO SELL IT, WELL DONE
IF NOT, THEN YOU HAVE HAD ENJOYMENT OUT OF IT."
REMEMBER THAT OLD COIN IS ONLY WORTH FEW DOLLARS IN PHYSICAL MATERIAL VALUE - THIS IS WHY VALUE IS AN ESOTERIC CONCEPT IN MANY WAYS AND IT MAY BE VULGAR TO ASSIGN ANY MONETARY VALUE TO OLD COIN
UNLESS YOU ARE A RUSSIAN OLIGARCH OR CHINESE SHODDY GOODS FACTORY OWNER
In the past 6 months and going forward, carefully selected "gem" quality classic coins will outperform inflation. We have a stage of inflation to get through over 1-5 years before we have to worry about a deflationary cycle in coins. Imo key dates will get whacked like anything else that was inflated during this up-cycle.
Great coins have been great inflation hedges long term. Look back to the mid-70's where gem quality coins of sufficient rarity are up 50X. It's when we don't have inflationary pressures over a shorter period (or can export our inflation overseas as we did from 1982-2006) in the economy when they don't do well. But 50X over 35 years seems a pretty good inflation hedge (10% compounded). You didn't get that return by buying QVC/HSN stuff or circ 1958 wheat cents either. 99% of the coins for sale do not qualify as great coins either. The hard part is finding that 1% and sticking with them through thick and thin.
roadrunner
<< <i>Coin collecting is suppose to be a hobby where people come together and enjoy thier common intrest!!! Coin collecting in IMHO isn't something you do to make money... TOO many collectors,, let me correct myself,, not collectors, have missed the point!! The hobby is for fun first and formost. You want to make some extra money get a part time job >>
The nice thing about coins is you get to have your cake and eat it too - retiring on one's set is a job well done. So there's nothing wrong with using one's collection as a hedge against inflation or even a means to an end.
<< <i>Coins, in general, are not and have not been a good inflation hedge; however, key dates have kept up or exceeded the inflation rate. >>
I agree. The Key dates are the key to beating inflation!
Is the the "1804 dollar/1894-s dime" catagory....or does it go down to top pop early lincolns in the five figure range?
<< <i>Coin collecting is suppose to be a hobby where people come together and enjoy thier common intrest!!! Coin collecting in IMHO isn't something you do to make money... TOO many collectors,, let me correct myself,, not collectors, have missed the point!! The hobby is for fun first and formost. You want to make some extra money get a part time job >>
If a collector buys a $1000 coin for his collection, it should be both fun AND profitable. When using hard earned money to buy coins, every single collector is automatically concerned about making a profit, or at the very least, hoping these purchases hold their value.
I'll never understand comments that completely dismiss the profit aspect of coin collecting. If you are collecting common Lincoln Memorial cents or State quarters from change, then yes, it is pure enjoyment and nothing else. On the other hand, if my goal is to put together a complete gem set of 1909-1958 Lincolns, I am just as concerned about profit as I am about enjoyment.
Does that mean that if the economy tanks people will behave similarly? Who knows, but I think the internet will be the big diversion.
<< <i>
<< <i>Coin collecting is suppose to be a hobby where people come together and enjoy thier common intrest!!! Coin collecting in IMHO isn't something you do to make money... TOO many collectors,, let me correct myself,, not collectors, have missed the point!! The hobby is for fun first and formost. You want to make some extra money get a part time job >>
If a collector buys a $1000 coin for his collection, it should be both fun AND profitable. When using hard earned money to buy coins, every single collector is automatically concerned about making a profit, or at the very least, hoping these purchases hold their value.
I'll never understand comments that completely dismiss the profit aspect of coin collecting. If you are collecting common Lincoln Memorial cents or State quarters from change, then yes, it is pure enjoyment and nothing else. On the other hand, if my goal is to put together a complete gem set of 1909-1958 Lincolns, I am just as concerned about profit as I am about enjoyment. >>
He is 100% correct. If I spent $10-$20 per month on coins, its a hobby. If I spend $2,000 on a single coin, it becomes much more than JUST a hobby.
<< <i>
<< <i>
<< <i>Coin collecting is suppose to be a hobby where people come together and enjoy thier common intrest!!! Coin collecting in IMHO isn't something you do to make money... TOO many collectors,, let me correct myself,, not collectors, have missed the point!! The hobby is for fun first and formost. You want to make some extra money get a part time job >>
If a collector buys a $1000 coin for his collection, it should be both fun AND profitable. When using hard earned money to buy coins, every single collector is automatically concerned about making a profit, or at the very least, hoping these purchases hold their value.
I'll never understand comments that completely dismiss the profit aspect of coin collecting. If you are collecting common Lincoln Memorial cents or State quarters from change, then yes, it is pure enjoyment and nothing else. On the other hand, if my goal is to put together a complete gem set of 1909-1958 Lincolns, I am just as concerned about profit as I am about enjoyment. >>
He is 100% correct. If I spent $10-$20 per month on coins, its a hobby. If I spend $2,000 on a single coin, it becomes much more than JUST a hobby. >>
I guess that depends on your income bracket. Maybe one should look for an affordable hobby within coins instead of taking a crap shoot that a coin will take them to retirement. Sounds like the "invest in coins" hype to me.
<< <i>
<< <i>
<< <i>Coin collecting is suppose to be a hobby where people come together and enjoy thier common intrest!!! Coin collecting in IMHO isn't something you do to make money... TOO many collectors,, let me correct myself,, not collectors, have missed the point!! The hobby is for fun first and formost. You want to make some extra money get a part time job >>
If a collector buys a $1000 coin for his collection, it should be both fun AND profitable. When using hard earned money to buy coins, every single collector is automatically concerned about making a profit, or at the very least, hoping these purchases hold their value.
I'll never understand comments that completely dismiss the profit aspect of coin collecting. If you are collecting common Lincoln Memorial cents or State quarters from change, then yes, it is pure enjoyment and nothing else. On the other hand, if my goal is to put together a complete gem set of 1909-1958 Lincolns, I am just as concerned about profit as I am about enjoyment. >>
He is 100% correct. If I spent $10-$20 per month on coins, its a hobby. If I spend $2,000 on a single coin, it becomes much more than JUST a hobby. >>
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Wondercoin
But I'm positive that Gold and Silver are an even better inflation hedge.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Edited to add: Over the past 30 years gold and silver have been a mediocre infation hedge, including periods in which those metal declined in value while prices generally increased. The only way to stay ahead of inflation is to increase your personal earnings at a rate higher than inflation. If you think that gold and silver will magically protect your net worth in the long term, lots of luck.
CG
Not at all. You are missing my point. I NEVER buy a coin for my personal collection and think "this coin will be worth 5 times what I paid someday". But when I do shell out the big bucks for a nice coin, i'd like to think it will remain somewhat near that value for years to come. A coin and a washer look alot alike....but you wont catch me buying a washer for 2k.
<< <i>Logically, rare coins should be about as good an inflation hedge as residential real estate. >>
Can you pick up residential real estate and move it overseas?
When inflation is HIGH (not during the years 1980 to 2000) investing in Gold IS a good inflation hedge.
Why do all the 'anti-gold' people bring up the last '30 years' argument???
OF COURSE the years of 1980 to 2000 was absolutely horrible for PM's!!
But you have to go further back than this.
The years of 1960 to 1980 was horrible for Stocks. Does anybody remember this?
You've got to look at the larger trends.
PM's and the Dow (stocks) are at opposite ends of the balance. When one is up, the other is down.
Too many people have short memories.
Most financial advisers who are 40 years and younger agree with 'CalGold's' post. They just don't see the benefits of owning Precious Metals because they can only see as far back to 1980.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
If i was it would be in gold bullion bought at melt. Gold will keep up, rare silver coins will suffer.
I have rent property and 1/2 are suffering and 1/2 are doing better in this economy do to the local natural gas and a few hail storms.
NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"
<< <i>I guess that depends on your income bracket. Maybe one should look for an affordable hobby within coins instead of taking a crap shoot that a coin will take them to retirement. Sounds like the "invest in coins" hype to me. >>
Affordable? Like what, a complete date set of circulated Roosevelt Dimes? Do you want me to die of boredom? Maybe I should collect shirt buttons in every color of the rainbow. Red, blue, orange and yes, the elusive eggshell white circa 1951. Come on man, get out of the kiddie pool!
Coin collecting is a serious hobby that requires serious money. And as in all aspects of collecting, there is hype and there is a financial reality that often results in big profits.
<< <i>Most financial advisers who are 40 years and younger agree with 'CalGold's' post. They just don't see the benefits of owning Precious Metals because they can only see as far back to 1980. >>
Well 28 years is a prettly long time to hold an investment. One can argue that the best hedge against inflation would have been buying Manhattan for $24 and holding it for 380 years. The problem is that at some point in time you mayl need to tap into your investments and if that point in time is when precious metal prices or rare coin prices are down, all of the long term graphs in the world won't do you much good. The gold bugs tend to ride the bull markets in gold to the top, and then right back down to the next trough.
Coins may go up in value over time not because time adds value, but because economic growth and demographic growth increase the purchasing capacity of people and the number of people who may decide to collect them. But in hard times, when people have lower disposable incomes, there is no reason why coins should rise in value.
CG
Is the the "1804 dollar/1894-s dime" catagory....or does it go down to top pop early lincolns in the five figure range?
I would probably not pick the 1804 dollar but might pick the 1894-s dime. They have probably met the 50X increase rule since the early 1970's. But getting another 50X increase in 35 years might be a stretch next time around.
There are 20th century dated coins and even moderns I would put on the list. But being a 19th century type of guy, that's where most of my choices would come from (1792-1916). One would have to gravitate towards sleeper rarities. And this is probably not the time to be getting in. The last time to get in comfortably was from 1993-2003 (1995-1999 was best). One example of a great coin would be a fully original gem 1837 RE half (no rub, full luster). I'd also toss in each major type of half such as 1854-55 arrows, 1873-74 arrows, and 1853 A+R. 60-70% or more of the "gems" in holders are messed with. Those don't have the same potential. An honest gem 1848 seated quarter or 1857-0 half would be other good long term bets. I like orig bust dimes and quarters in gem if all there. Obviously all of these choices are big money. Killer 62's, 63's and 64's might also have good potential but not 50X worth. The key is still buying when the market is down and then holding. Do your own research to find what is generally not available even though the pops or price guides state otherwise. You have to be able to buy those coins when they do pop up.
roadrunner
Properly stacked, coins can make a nice shrubbery.
<< <i>Depends which coins. Moderns 70's will fall to their intrinsic value. Vintage coins will hold their value. The really high priced stuff over $25k will not be affected. Truly rare vintage or modern will hold their value.
In the long run, many marginal coins will get melted which could cause rarities in current common stuff. That could mean that current modern 70's will shoot up in value 10 or 20 years from now. >>
I've been hearing this a long time but the fact is that moderns just
keep going up. This especially applies to world moderns since they
weren't saved either and now there are growing numbers of people
who want them. The best thing is that moderns are a little overlooked
everywhere so there is still room for lots of growth.
Fighting trends and demographics can be a very risky undertaking even
in the most inflationary enviroment. I'd stick with legitimately rare clas-
sics, unc moderns (US & world), and bullion as an inflation hedge. As a
bet on a solid and properous future I'd bet mostly on US moderns and
silver. This would be especially numismatic silver which can be purchased
at something less than double melt. This means a lot of old foreign sil-
ver, unc foreign silver, and nice low grade older and gem newer US sil-
ver.
Older US coins are a hoot to collect and most collectors will probably be
fine in them but generally the long term trend is probably going to work
against you. There are millions of new collectors but there's some doubt
that their aggregate demand will be sufficient to absorb all th collections
of the baby boomers at current prices.
Of course thee's no way to be certain and there are shorter term trends
which are much less influenced by the long term ones.
<< <i>If we enter a bonafide depression accompanied by large scale loss of jobs and homes, rare coins will suffer. Remember that a depression will affect many millionaires in the same way it will affect the "little" guys, so I dont think even great rarities will be immune. Gold and silver bullion coins will outperform all other fields of numismatics, as their intrinsic values will steadily rise as the fiat system looses faith from the masses. >>
"Modern" coins actually did extremely well in the great depression. It was at this time that
Coin collecting became a hobby of the masses. Somehow they even managed to set enough
coins aside that all the coins from 1934 to 1965 are readily available.
<< <i>
Boy I don't get that. You don't thin high interest rates and tight credit isn't coming? It's going to be a repeat in my mind and maybe blowing the 80's away by far. Interest rates are near zero and credit is over extended there's not much place else it can go........... >>
We may well have 20% interest rates but if we do then it's a safe bet inflation will be 40%.
"Seu cabra da peste,
"Sou Mangueira......."
I like hobbies.
may well prove to be a good storehouse of value
during times of economic stress. At least, that is
where I have placed my money.
Camelot
<< <i>I personally believe, that high quality rare coins
may well prove to be a good storehouse of value
during times of economic stress. At least, that is
where I have placed my money. >>
So does this mean you will sell them if things get rough or simply use them as collateral?
The name is LEE!
John, the main ways you can make big money in numismatics are the "bigger fool theory" with big ticket items -- the guy selling you the item doesn't really know what he has --, or buy big ticket items, hold them for awhile and guess right. If you have enough people and have deep pockets, you can also collude, buy up a particular series / grade of coin, hype it to death and hope you find suckers, excuse me, I mean buyers.
"Seu cabra da peste,
"Sou Mangueira......."
Its just a hobby I had, which I developed into a business, and has proven to be a delight in many ways.