Thoughts on selling coin collection to buy PMs

bstat1020

All,

I have been kicking around the idea for a couple weeks now about selling off my key date collection to reinvest into PMs with a focus on silver and gold. This is a five figure amount I am talking about. Now I know I should have pulled the trigger on this when silver and gold were lower, but I am still thinking that it would be a good move.

I wanted to add, I am 33 years old.

What are your thoughts/opinions?

7over8

A few dealers, one very notable national dealer have been advising this for the past few years.

However, collector coins have cooled somewhat, and bullion prices are running. I guess you have to take it on a case by case basis.

Are the collector coins you are selling "generic" and are they at multi years highs? If so, probably their price movement will be steady, but at single digit returns over the next several years.

If you are in the camp on PM's where double digit returns are expected in the future.......sell and buy PM's......if not - hold.

meluaufeet

I'm not comfortable with giving advice in this matter... is there any other source of funds... IRA into paper pm's?

Keep the best half of your collection is an option.

Best to you and yours.

jmski52

collector coins have cooled somewhat, and bullion prices are running. I guess you have to take it on a case by case basis

I concur. If you proceed, do it gradually and piecemeal, and evaluate as you go. It's not bad to prune the collection from time to time anyway.

is there any other source of funds... IRA into paper pm's?

Another good point. While you may or may not get the mileage out of your coin collection that you might hope for, I would also take a serious look at any other sources.

I traded in my IRAs 2 1/2 years ago and paid the penalties with no regrets. You will pay taxes on them one day in any case. The 10% penalty can be a few day's gain or loss in the precious metals markets. My bet was to the upside.

My personal opinion is that we have fallen through the looking glass and can no longer trust what we are seeing in the world of finance and paper assets. I've collected coins and followed the precious metals markets for most of my adult life and I feel much more confident having physical possession of my own assets than not. The fact that you find yourself in this forum tells me that you have the good sense to explore your options. Good Luck.

gsa1fan

I have sold some of my common stuff at a loss. The better graded nice coins have not gotten any decent offers.

Now if you have scarce top tier low population coins you may get a acceptable offer. I have mine still for sale after more than a year.

I priced mine lower than dealers advertised prices. Most are just put up until better market.

A few collectors I considered friends REALLY low balled and made some VERY unnecessary comments about coins I had sent for viewing out of respect for their knowledge as a collector of my series.

I'm saying when I send a ms64 it was a ms64 if it had upgrade potential I'd already upgraded it.

Ton of tire kickers & upgrade/crack out guru's out there!!!

My extras & duplicates are for sale not my #1 set.

My thoughts and experiences only. Do as you wish

bstat1020

I do have 2 seperate IRAs that I have had for 10 or so years. I originally created these accounts for my daughters education once they are old enough, but that is 15 years from now. SO, I could still designate those funds for my daughters college fund but it would just be in PMs instead of an IRA. The downside is that I believe I can withdraw the funds from the IRA without a penalty if it is for education.

jmski52 - so did you transfer to paper PMs like melaufeet stated? Or it what it sounds like you did is took the check from your IRA and bought physical Pms?

derryb

You can convert a traditional IRA into a Roth IRA. It's the only way to contribute a high dollar amount at once. You will pay taxes on the amount taken from your traditional IRA (treated as income). I did this and put it into a self managed Scottrade Account with all of it going into PM and mining stocks. In the first 5 weeks I recoverd my initial tax hit and balance is still climbing.

Best to have parts of your collection sold with the cash ready to buy PMs. Does you no good to see a nice PM dip and then loose time having to liquidate some collector coins.

mrearlygold

Without knowing all the coins etc ( yes I see the link but there's not much there ), it's not prudent to say. But obviously it's a big deal to you ( otherwise you would not be "thinking" this long on it or posting the question on a message board ) so I'm inclined to say you're late. Better off to see to it to clean up your existing coins first ( are they at the top price-wise? Have they been reviewed by CAC ? ) and once you have your coins 100% the way you think they should be, then probably sit on the coins while taking some present and future earnings to purchase metals and diversify. In other words first things first.

The ol arbitrage pitch is used by lots of telemarketers who see it as a good way to make a commission where a commission didn't exist before. Salesman at Blanchard, and places like that use that pitch a lot.

By the way, I'm not necessarily saying that it's ONLY used by telemarketers or unscrupulous sales people.

Watch your money or as Ben Franklin would say, Mind your business. Nobody else will.

jmski52

so did you transfer to paper PMs like melaufeet stated? Or it what it sounds like you did is took the check from your IRA and bought physical Pms?

They've made it unnecessarily complicated and expensive to create a "gold ira" so I wasn't even tempted to go that route. I simply cashed out, paid the taxes, paid the penalty, and bought Mint stuff. I did the same with my fiancee's retirement funds. I could have bought regular bullion, but as Miles says in another thread, "the Mint has been good to me". Results may vary.

I have an MBA in finance. I used to be in awe of the money managers who ran big funds, the sophisticated models they used to value stocks and such. That was 20 years ago. It's not the same world that I grew up in or was educated in. I had to take direct responsibility for my financial assets because the fee paid 3rd party management system simply doesn't make sense to me these days. It's too risky, and corrupt as well.

jmski52

You can convert a traditional IRA into a Roth IRA. It's the only way to contribute a high dollar amount at once. You will pay taxes on the amount taken from your traditional IRA (treated as income). I did this and put it into a self managed Scottrade Account with all of it going into PM and mining stocks.

This is a reasonably good approach, although I opted to liquidate even my Roth IRA as well. Again, the tax issue is a moot point (my view) because you will pay taxes on gains no matter what. I considered doing exactly what derryb suggested with my Roth IRA, but I was uneasy about keeping anything in paper at the time. I'm still considering a Scottrade account for a speculative PM position in either ETFs or gold stocks, but not as part of a retirement allocation. Each person has his own level of risk tolerance, and I opted for zero tolerance, so far.

jmski52

Without knowing all the coins etc ( yes I see the link but there's not much there ), it's not prudent to say. But obviously it's a big deal to you ( otherwise you would not be "thinking" this long on it or posting the question on a message board ) so I'm inclined to say you're late. Better off to see to it to clean up your existing coins first ( are they at the top price-wise? Have they been reviewed by CAC ? ) and once you have your coins 100% the way you think they should be, then probably sit on the coins while taking some present and future earnings to purchase metals and diversify. In other words first things first.

More good advice, although I'm not sure how late it is. It's certainly not early, but I don't know how late. Never too late to pay attention and make adjustments. Try to buy the dips all you want, but a regular schedule of investing and cost-averaging is safer if you stick to your guns.

bstat1020

The IRAs that I hold are ROTH IRAs

bstat1020

<< <i>Without knowing all the coins etc ( yes I see the link but there's not much there ), it's not prudent to say. But obviously it's a big deal to you ( otherwise you would not be "thinking" this long on it or posting the question on a message board ) so I'm inclined to say you're late. Better off to see to it to clean up your existing coins first ( are they at the top price-wise? Have they been reviewed by CAC ? ) and once you have your coins 100% the way you think they should be, then probably sit on the coins while taking some present and future earnings to purchase metals and diversify. In other words first things first.

The ol arbitrage pitch is used by lots of telemarketers who see it as a good way to make a commission where a commission didn't exist before. Salesman at Blanchard, and places like that use that pitch a lot.

By the way, I'm not necessarily saying that it's ONLY used by telemarketers or unscrupulous sales people.

Watch your money or as Ben Franklin would say, Mind your business. Nobody else will. >>



The link is not update and not by any means all the collection I am referring to. If that was it, you are right, I would not be thinking about this. Thanks.

derryb

Although all equities are "paper," some of them, unlike GLD and SLV, are backed 100% with physical holdings (such as PHYS and CEF). For those that don't want the headache of following the mining companies there are some good ETFs such GDX, GDXJ and SIL that do all the homework for you. There are a lot of ETF selections for many other things including shorting (and double, triple shorting} markets. When the treasury bond bubble finally explodes TBT is a good place to be.

ETF database

For those that aren't familiar with ETFs they are a lot like mutual funds but don't carry all the fees and are listed on the exchanges just like other equities. This makes trading them convenient and inexpensive.

The good thing about a self managed IRA on-line account (traditional or ROTH) is that there is no tax due everytime you sell. You can trade in and out all day long without year-end tax paperwork. The only tax paperwork at the end of the year involves cash put into and cash taken out of the account. And if its a ROTH all the gains are tax free when you start withdrawing cash from the account at age 59 1/2. Anyone currently contributing or planning to contribute to an IRA should definitely make it a ROTH IRA. You can have more than one IRA and both kinds at the same time. Pay your taxes on the money going in and pay no taxes on it coming out. Just the opposite with a regular IRA. So, if you meet your goal of good gains you will pay much less in taxes with the ROTH.

yellowkid

What is five figures, $13,000 or $85,000 ? If towards the low end I'd leave it alone, you'll probably end up getting whipsawed. Towards the high end? Take a third or so, of course your "worst" stuff and go for the PM's. Like JMSKI52 said, cleaning house once in awhile is good for you, good for the collection.

HalfStrike

Go for the bling bling.

meluaufeet

I should have been clear... I was referring to paper pm's as in Central Fund of Canada (CEF). There are many options in paper, and I mentioned it since some people don't want to take the penalty hit ( that doesn't bother me ), and can just move funds within an IRA with just a few clicks of a mouse.

CEF is a passive foreign investment which if done right is a better vehicle in a taxable account because of tax implications. For that reason some people like to hold GLD in IRA's since its taxed as a collectible anyway. Personally I've been getting out of GLD (and my IRA for that matter ). GLD just gets more expensive to hold the longer you hold it (you can go back and track the spread between spot and share price over time).

To be sure I hold 'more' in physical than paper... but paper is liquid... and I can sell it and get funds to a checking account without leaving the comfort of home.

But one needs to make a decision that allows them to sleep at night... that's a personal decision... which is why I'm not comfortable about giving advice. I hope what I've said doesn't constitutute such,as it was not intended to be.

derryb

<< <i>The IRAs that I hold are ROTH IRAs >>


Your goal should be to get as much of your money as you can into the ROTH. This can be done with annual contributions (limited by law) or unlimited (or partial) rollover from a traditional IRA with the rollover amount being treated as taxable income in the year it is rolled over. As I stated above I was able to recover this tax hit with gains in the ROTH in a very short period of time. Any further gains in your collection just mean more taxes.

A wise and knowledgeable investor can make a lot of tax free money with a ROTH. Wisdom and knowledge come from research and experience. The research is free and at your fingertips. Gaining experience sometimes costs you a bundle.

bstat1020

<< <i>What is five figures, $13,000 or $85,000 ? If towards the low end I'd leave it alone, you'll probably end up getting whipsawed. Towards the high end? Take a third or so, of course your "worst" stuff and go for the PM's. Like JMSKI52 said, cleaning house once in awhile is good for you, good for the collection. >>



I am in the middle of the road of those two figures at around 35K.

jmski52

Two more excellent points, worth considering:

1) And if its a ROTH all the gains are tax free when you start withdrawing cash from the account at age 59 1/2. Anyone currently contributing or planning to contribute to an IRA should definitely make it a ROTH IRA.

(jmski comment - unless you need the cash before you turn 59 1/2, and that's a few decades away for your kids, so anything can happen before then.)

2) paper is liquid... and I can sell it and get funds to a checking account without leaving the comfort of home

(jmski comment - liquid is a very good thing sometimes.)

I dunno, maybe for a child I would even go so far as to buy a GDX or a GDXJ in a Roth and then sit on it for a pre-determined length of time and then re-evaluate. I don't have any reservation about picking a sure thing longterm winner. (I'm reasonably sure that GDX and GDXJ qualify.) One caveat - it might be hard to resist the temptation to start trading in such an account (low fees & instant access). Trading is ok if you can afford to lose a position, but this isn't one of those situations as I understand it.

Holding physical removes most of the above complications.

meluaufeet

<< <i>The IRAs that I hold are ROTH IRAs >>



I did not see this until after I posted... most of my comments were based on the basic IRA.

jmski52 comments are more relevant to your situation. I'll reserve my comments on this thread from here as jmski52 and derryb got your back.

Peace... and its very cool that you're thinking ahead for your kids...

derryb

<< <i>Two more excellent points, worth considering:

1) And if its a ROTH all the gains are tax free when you start withdrawing cash from the account at age 59 1/2. Anyone currently contributing or planning to contribute to an IRA should definitely make it a ROTH IRA.

(jmski comment - unless you need the cash before you turn 59 1/2, and that's a few decades away for your kids, so anything can happen before then.)

2) paper is liquid... and I can sell it and get funds to a checking account without leaving the comfort of home

(jmski comment - liquid is a very good thing sometimes.)

I dunno, maybe for a child I would even go so far as to buy a GDX or a GDXJ in a Roth and then sit on it for a pre-determined length of time and then re-evaluate. I don't have any reservation about picking a sure thing longterm winner. (I'm reasonably sure that GDX and GDXJ qualify.) One caveat - it might be hard to resist the temptation to start trading in such an account (low fees & instant access). Trading is ok if you can afford to lose a position, but this isn't one of those situations as I understand it.

Holding physical removes most of the above complications. >>



My personal taste is to maximize profits on the ups and downs. This means selling high, buying low as opposed to just holding. If it's physical there are costs to sell and deliver. If it's equities the only cost is the $7 flat fee I pay to Scotttrade. My long term holdings are physical while my "available for trading at any time" are my equities and my pool account at Kitco. With both physical and equities I can enjoy the security of a solid long term investment and still maximize profits with easy (and cheap) ins and outs in the market.

JeremyDie1

<< <i>The good thing about a self managed IRA on-line account (traditional or ROTH) is that there is no tax due everytime you sell. You can trade in and out all day long without year-end tax paperwork. The only tax paperwork at the end of the year involves cash put into and cash taken out of the account. And if its a ROTH all the gains are tax free when you start withdrawing cash from the account at age 59 1/2. Anyone currently contributing or planning to contribute to an IRA should definitely make it a ROTH IRA. You can have more than one IRA and both kinds at the same time. Pay your taxes on the money going in and pay no taxes on it coming out. Just the opposite with a regular IRA. So, if you meet your goal of good gains you will pay much less in taxes with the ROTH. >>



Sorry to get off track, but is there a income limit to qualify for a roth? Or can anyone now transfer into a roth ira, regardless of how much you make?

secondrepublic

<< <i> A wise and knowledgeable investor can make a lot of tax free money with a ROTH. >>



Mathematically, there's no benefit to being in a Roth versus a regular IRA (or 401(k) plan).

Assuming a tax rate of 30%.... if you pay taxes up front on $10,000 and put the remaining $7,000 in a Roth IRA (or 401(k) plan)... after 20 years of 7% annual returns you'll have $27,088 in "after tax money".

If you put the $10,000 tax free into a regular IRA (or 401(k) plan)... after 20 years of 7% annual returns you'll have $38,697... and after paying your 30% in taxes.... you'll have exactly the same amount -- $27,088 in "after tax money".

(Yes, I was also surprised when a friend with an MBA and finance background explained this to me).

pf70collector

Sold all my classics this year and moved into more Modern Collector Bullion, though the majority of my collection has always been moderns anyway. At least the bullion value will somewhat be retained in them. I was thinking about going the other way -buying more classics but changed my mind.

JeremyDie1

<< <i>

<< <i> A wise and knowledgeable investor can make a lot of tax free money with a ROTH. >>



Mathematically, there's no benefit to being in a Roth versus a regular IRA (or 401(k) plan).

Assuming a tax rate of 30%.... if you pay taxes up front on $10,000 and put the remaining $7,000 in a Roth IRA (or 401(k) plan)... after 20 years of 7% annual returns you'll have $27,088 in "after tax money".

If you put the $10,000 tax free into a regular IRA (or 401(k) plan)... after 20 years of 7% annual returns you'll have $38,697... and after paying your 30% in taxes.... you'll have exactly the same amount -- $27,088 in "after tax money".

(Yes, I was also surprised when a friend with an MBA and finance background explained this to me). >>



I would pay the taxes now if you assume you will go higher in the tax bracket.

MilesWaits

Personally, I have never had the opportunity to know the difference on classics vs. modern bullion.

I began collecting/stacking on September 12, 2001.

The world was my chesnut. I knew nothing and loved damn near everything I saw.

I did differentiate between non PM and PM. I decided I preferred PM content and as close to spot as possible, within reason (i.e. Buffaloes).

I see the merit of closing out the Classic position and "taking delivery" of pure bullion. I see Nachbar continues to push that option.

Yet, I get much more of a well-rounded and practical rather than theory based philosophy from these boards over CW ads.

So when people like Jmski say they passed on an IRA and went into bullion, I listen and appreciate our similarities in thought/philosophy.

You came to the right place to ask the question; yet, in the end, it is your gamble and your sleep that counts.

Keep on asking! Then tell us what you decided.

Miles

MMR

This is precisely what I am doing. Get out of what you can afford to lose from your collection now. Keep the coins that really make you happy if you think you can afford it. Buy bullion until you have no more money to spend, and then keep spending every paycheck. Also keep about $2000 in cash for emergencies in case the banks close. It is coming real soon...

bstat1020

I am leaning towards "trimming" my collector coins down to a core group, selling anything I do not deem "worthy", and reinvesting that money into PMs.

I also hold a 401K that I currently defer 15% of my weekly pay check into, I am going to reduce that to 10% and reinvest this money into PMs.

My ROTH IRAs and union pension I am going to leave alone and let it ride while checking on it every couple years or so.

Thanks and look for me to be buying up some PMs in the future.

Thanks all.
Bstat

derryb

<< <i>

<< <i>The good thing about a self managed IRA on-line account (traditional or ROTH) is that there is no tax due everytime you sell. You can trade in and out all day long without year-end tax paperwork. The only tax paperwork at the end of the year involves cash put into and cash taken out of the account. And if its a ROTH all the gains are tax free when you start withdrawing cash from the account at age 59 1/2. Anyone currently contributing or planning to contribute to an IRA should definitely make it a ROTH IRA. You can have more than one IRA and both kinds at the same time. Pay your taxes on the money going in and pay no taxes on it coming out. Just the opposite with a regular IRA. So, if you meet your goal of good gains you will pay much less in taxes with the ROTH. >>



Sorry to get off track, but is there a income limit to qualify for a roth? Or can anyone now transfer into a roth ira, regardless of how much you make? >>



Income limit was lifted effective 2010.

derryb

<< <i>

<< <i>

<< <i> A wise and knowledgeable investor can make a lot of tax free money with a ROTH. >>



Mathematically, there's no benefit to being in a Roth versus a regular IRA (or 401(k) plan).

Assuming a tax rate of 30%.... if you pay taxes up front on $10,000 and put the remaining $7,000 in a Roth IRA (or 401(k) plan)... after 20 years of 7% annual returns you'll have $27,088 in "after tax money".

If you put the $10,000 tax free into a regular IRA (or 401(k) plan)... after 20 years of 7% annual returns you'll have $38,697... and after paying your 30% in taxes.... you'll have exactly the same amount -- $27,088 in "after tax money".

(Yes, I was also surprised when a friend with an MBA and finance background explained this to me). >>



I would pay the taxes now if you assume you will go higher in the tax bracket. >>



BINGO. Tax breaks are the advantage of the ROTH. And even if your annual gross income is lower due to retirement, do you really think there is any other way to fund our government's growing expenses other than to raise future income tax rates through the roof? Britain is a good case in point.

In my own personal experience, just this year I converted a $40,000 traditional IRA to a ROTH, paid the 8K in taxes with a quarterly IRS payment and in less than two months recovered my 8K in the ROTH with good trades. I'm now sitting on a Roth with a 57k balance that will never be taxed again (under current tax law). Anything I can grow that into will never be taxed. It's the same as working a job and getting to keep all of your paycheck.

With a traditional IRA your effort to make wise investments is rewarded with more taxes. I'll take the ROTH any day of the week.

secondrepublic

<< <i>I'm now sitting on a Roth with a 57k balance that will never be taxed again (under current tax law). Anything I can grow that into will never be taxed. >>



That's just an assumption... I wouldn't be so sure that 15, 20 years down the road, the government won't impose a surtax on Roths. In fact, if these things grow big enough overall, I'd almost wager on it.

keepdachange

I sold all my coins over the last year and converted the funds to pm's and have yet to regret it

MMR

<< <i>I sold all my coins over the last year and converted the funds to pm's and have yet to regret it >>



I think you did the right thing. I personally have some pieces that I hate to part with... I don't know how you did it. LOL. I wish I could.

derryb

<< <i>

<< <i>I'm now sitting on a Roth with a 57k balance that will never be taxed again (under current tax law). Anything I can grow that into will never be taxed. >>



That's just an assumption... I wouldn't be so sure that 15, 20 years down the road, the government won't impose a surtax on Roths. In fact, if these things grow big enough overall, I'd almost wager on it. >>



see: (under current tax law).

Another plus with a ROTH is that anytime after 5 years of opening the account, any and all contributions can be withdrawn penalty and tax free (You already paid taxes on the contributions).

morgantype

Oh joy!

I sold off all of my high grade key Morgan dollars and moved them into PMs this year as well - bought in on the dip to 1160 over the summer - all 1/10 ouncers - my basic thought process was this:

"hey, I like the idea of completing a set rather than completing the set in the higher grades (i.e. regular circulated coins VF/XF vs. MS 63 - 65 coins). SO why don't I sell the super high graded stuff, invest it in PMs and when I pursue the numismatic side of my coin obsession I will do so with just regular ol' "collector coins". It will be more fun, easier to complete a set, and not have so much money tied up in MS coins. I reserved my "high grade" collecting to building my 7070, since I enjoy completing this set in high grade coins.

They always say each to their own, and this is my "own".

So I say go for it, I think if you are asking the question and spending time ruminating on the idea, it means that you will be more comfortable if you made the change.

Happy Collecting!!

RedHerring

Richard Nachbar wants to talk to you.

If you do it: I would wait for silver to drop back to $20 (which I believe it will in the next 6-8 months) and go all in on silver. Silver seems to have more upside at this point. $30 silver is not that far away, and my thinking is it will be here before $2000 gold.

My opinions only of course.

JoesMaName

My 2 cents says it depends - If a large percentage of your liquidity is in your collection I'd sell at least half its worth, if not - you're still young and if you enjoy your collection I'd hold on to it, as you may be selling low to buy high. One way or another though I'd recommend holding at lest 20% in PMs.

guitarwes

so, did you save up enough money for a 1/2 oz or 1 oz coin to get the lower premium, or did you buy a smaller factional with every paycheck as you could?

derryb

<< <i>Richard Nachbar wants to talk to you.

If you do it: I would wait for silver to drop back to $20 (which I believe it will in the next 6-8 months) and go all in on silver. Silver seems to have more upside at this point. $30 silver is not that far away, and my thinking is it will be here before $2000 gold.

My opinions only of course. >>


Excellent opinion/advice!

percyb

<< <i>All,

I have been kicking around the idea for a couple weeks now about selling off my key date collection to reinvest into PMs with a focus on silver and gold. This is a five figure amount I am talking about. Now I know I should have pulled the trigger on this when silver and gold were lower, but I am still thinking that it would be a good move.

I wanted to add, I am 33 years old.

What are your thoughts/opinions? >>



Don't sell your key dates. I'd simply add silver and gold bullion to your existing collection. Key dates have a way of escalating quickly.

mhammerman

"Don't sell your key dates. I'd simply add silver and gold bullion to your existing collection. Key dates have a way of escalating quickly."

I agree.