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In the long run will a bullion collection outperform a coin collection?
Jsayre
Posts: 227 ✭✭
Let's say we start at age 25, in your opinion if I were to collect bullion such as gold and silver compared to a numismatic collection what would outperform the other? Now keep in mind that the same amount of time, passion, devotion, study, and money are involved in each. I am not talking about a pro collector of either just a hobbiest(sp?) that spends their discretionary time and money devoted to their hobby with the hopes of a future monetary gain. Personally I like coins because of the history but I would love to have a hoard of PM's like some of you do. 50/50 is also an option.
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Counterfeits will become nearly impossible to detect, which will cause all but the most dedicated collectors to leave the hobby. Cutting the number of collectors by 60%, 70%, maybe 80% will cause a complete collapse in coin values on par with what happened to stamps over the last 20 years.
Bullion can be faked, too, but you can drill a hole in a bar or do a scratch test on an eagle without ruining its gold value. You can't do that with a 1909 SVDB.
That doesn't mean metals are necessarily a good "investment". They are now and for the foreseeable future a store of wealth.
But to answer your question, I believe bullion will outperform coins.
--Severian the Lame
When it becomes impossible to know whether a coin is a fake or not, people who collect for money investment will leave in droves, and for the guy who likes building a collection to hold a piece of history, what fun is it if there's a high probability the coin you hold was minted yesterday with no way of knowing? Part of the joy of any coin is to wonder about all the people who carried it, how it was circulated, etc. Take that away and the most important part, for me, the mystique is ruined forever.
What happened to the autograph market will happen to coins, it's only a matter of time.
Collectors paying full retail price and selling at wholesale will do well to break even, much less make any profit.
As a "name brand" the Mint might have overplayed their hand with $100 fancy boxes (in economic hard times, to boot!) that many people will simply throw away or try to sell. Now that the Mint's premiums have been raised to unconscionably high levels, it may be that foreign bullion and private bars will begin to dominate the market for bullion. That's the good thing about competition and alternative choices.
I knew it would happen.
While silver outperformed most rare coins from 1970 to 1980, and the majority of them over the past 35-40 years, the future is another story. My gut feel says silver will outperform the general coin market over the next 3-5 years, after that, anyone's guess.
The demise of US coins as collectibles has been called for ever since stamps went by the wayside. Other nations around the world that have histories going back far longer than the US still are going strong in coins. The Chinese are up and coming in that regard. I'd say if the US finds a way to keep inflation from being baked into the currency (unlikely), then maybe people will gravitate away from tangible/collectible assets (art, furniture, coins, antiques, etc.) as one of the few means to preserve their wealth and history. Until you find a way to crush all collectibles, rare coins will still be around. Note that boom to collect has accelerated with the ever-increasing amounts of inflation and fiat.
roadrunner
Realize that I'm a box of 20 subscriber though I do have a lot of other "stuff" like my Kennedy half dansco and an ASE dansco and a few shoe boxes of "stuff". My stuff is just that, stuff. Relatively worthless except to someone that likes to keep old coins like worn out indian cents and a merc dime vf, king george stuff, vf worn half cents and large cents...just stuff. That stuff will never be worth anything but I like to collect it none the less and they are excellent bait to try and get my grand children interested. Maybe if they get really interested then I'll show them the good stuff, in about 15 years.
I also have my box of 20 that somehow has started growing into two boxes of 20 (I need to trim the herd) but my first box of 20 is my coin collection. They are all gold and range from 1834 to 1909, from $3's to $20's. The prize is a '52 O au double eagle that I really get a kick out of looking at and letting me spin my mind back to the previous holders of that coin, drinking at the bordello and listening to the paddle wheels toot their horn as the echo bounces off of the trees and into the dense fog along the Mississippi (see, you just can't help it). Those are my prizes and they are worth much more than any bullion value, even if I wanted to sell them. These coins will always out perform bullion. I love them.
Bullion is more liquid. I get stuff offered to me from time to time and I buy it sometimes but I usually buy something like the buffalo fractional set or the uhr or a set of eagles or one of the commems when I'm particularly flush. That stuff is liquid and I treat it as such. If gold goes to some outrageous number or if I get in a cash crunch...they are bullion and they are out the door. I don't love them.
So, bullion and a coin collection, from my point of view are two different things.
Coin ON!
<< <i>In my opinon, after collecting for 30+ years: coins will fail as an "investment" within the next 5 years. 10, tops.
Counterfeits will become nearly impossible to detect, which will cause all but the most dedicated collectors to leave the hobby. Cutting the number of collectors by 60%, 70%, maybe 80% will cause a complete collapse in coin values on par with what happened to stamps over the last 20 years.
Bullion can be faked, too, but you can drill a hole in a bar or do a scratch test on an eagle without ruining its gold value. You can't do that with a 1909 SVDB.
That doesn't mean metals are necessarily a good "investment". They are now and for the foreseeable future a store of wealth.
But to answer your question, I believe bullion will outperform coins. >>
I think there is a chance that you could be right, I sure hope you are not though. It really bums me out that the one thing that I have enjoyed for most of my life (58 years old) could be ruined. There must be some way to prevent this from happening. Are the TPG services on top of this, is anything being done. I am not a big ticket collector and collect for the history and so forth but who wants to collect coins if no one can tell if they are fake or not. Are most other collectibles doomed by high tech. and greed or will this be just another bump in the road?
<< <i>Let's say we start at age 25, in your opinion if I were to collect bullion such as gold and silver compared to a numismatic collection what would outperform the other? Now keep in mind that the same amount of time, passion, devotion, study, and money are involved in each. I am not talking about a pro collector of either just a hobbiest(sp?) that spends their discretionary time and money devoted to their hobby with the hopes of a future monetary gain. Personally I like coins because of the history but I would love to have a hoard of PM's like some of you do. 50/50 is also an option. >>
It is easy enough to answer this question by looking at coin prices over the past fifty years and see some coins drastically outperformed bullion over the years.
If someone wants bullion but also the chance of numismatic appreciation then they need to look at the modern key coins being created over the past few years and purchase those as close to spot prices as possible. In 40 years which would be retirement age I think some of these modern coins will sell for many multiples to spot prices.
Even though I have gold it's in the form of some classic gold which I won't sell unless things just go crazy, I get laid off, or I'm about to retire. Really when people say coins aren't an investment the reason being is your money is tied up to long to retain it's buying power.
<< <i>
I think there is a chance that you could be right, I sure hope you are not though. It really bums me out that the one thing that I have enjoyed for most of my life (58 years old) could be ruined. There must be some way to prevent this from happening. Are the TPG services on top of this, is anything being done. I am not a big ticket collector and collect for the history and so forth but who wants to collect coins if no one can tell if they are fake or not. Are most other collectibles doomed by high tech. and greed or will this be just another bump in the road? >>
You hit the nail on the head. The vast majority of coin collectors collect coins. That's the essence of our hobby. And if you can't tell the difference between a coin struck 200 years ago with considerable sweat and toil in Philadelphia at the dawn of our nation and one struck in three weeks ago in Shijiazhuang then FedExed to Chicago, why bother? And why put hundreds or thousands of dollars into those coins when neither you nor the experts can tell them apart? More importantly, the more collectors who realize this is happening, the more will leave the hobby. When and if that switch finally clicks, it won't be a stampede out of the hobby. It will be like the rapture: *POOF*. Everyone will be gone in an instant.
It makes me sick, too, but I'm afraid it's the fact. And this same fate is being suffered by just about every area of collectibles. Antique toys, pottery, coins. But remember it's not just collectibles. It's anything of value. Clothes, purses, watches, DVDs, software, and the most frightening: medicine. It's all being faked on a scale almost unimaginable by the average American.
I've wracked my brain about what the TPGs can do to stop it. An online registry, with point of purchase scanning, detailing complete up-to-the minute sales history *might* make a dent. *Might*. But I doubt it. And it's not being done now. Will it ever be? I don't know. And it all goes back to faith and trust in the hobby. Even if half of all collectors participate aggressively in an online registry, RFID-chip, internet-based tracking system (which would be impossible), you've still got 50% who won't participate or can't. There goes the foundation of the hobby.
--Severian the Lame