Investment

slipgate

Investment is a term used very loosely.

I think a lot of us use this term to justify collecting coins. "They are an 'investment' and I will be able to sell them some day." Does the value of your coins double every 7 years? Almost certainly not. I'd be lucky to get 1/2 of what I paid for mine over the past 10 years.

So, "investment"? Perhaps, but certainly not a good one and definately one that has a proven historical track record of not making any money at all, and in fact, losing money.

of course you can buy low and quickly sell high, but this is not an "investment", it is simply a business. Investing to me is some place to put my assets that will not only keep up with inflation but also increase in value relative to the economy.

Is that coin you paid $2500 for 7 years ago now worth $5000? Can you sell it for what it is "worth"? There is a big difference between "paper value" and actual value. If you had to move it and it is "worth" $5000, would you be lucky to get $2000 for it?

Let's stop fooling ourselves, for the vast majority of coin collectors, calling our purchases an "investment" may help us to sleep at night, but it is a hobby, and an expensive one at that, which has very little chance of every making us any profit, let alone even allowing us to break even.

ricko

Well stated, and largely true. It is also true that high level, rare coins, are investments and will make significant profits - however, that is not the market in which 98% of us participate. If one truly understands how much is lost by holding inventory (when money could be better invested elsewhere), compounded by actual realized price vs. cost, then coins as an investment are a very poor medium. Cheers, RickO

Justacommeman

I've spent most of my money on women, booze and coins...........the rest I just wasted.

I've never kept my coins on the investment side of the portfolio ledger. However, it is somewhat a store of value. Not fungible and swiftly convertible, but a store of value regardless. They will never go to zero which is actually more then you can say about some "actual" investment vehicles.

Stocks have been an unworthy investment over the past seven years. Matter of fact what has doublde over the last seven years? Precious metals and commodities come to mind. Not much else, right? If you bought a house five to seven years ago you could be down 50% or more on what some consider your biggest investment. I've never subscribed to that axiom, but most do so I'm in the minority.

I love coins for what they are. A collectible/hobby. I enjoy they heck out of it.

MJ

crypto79

I agree somewhat; Investment potential is about two things, a two way market and margins at resale. On those two aspects coins fair better than most hobbies and they do seem to outpace inflation for the most part. While those being said, as with any investment there are more bad than good ones out there and since 1 out of 2 of the people alive are in the bottom half of human intelligence there is a lot of money to be lost.

Steve27

I'm not disagreeing with you, but the term "investment" has been misused for as long as I can remember. How many times have you heard " a car is the second largest investment you will make...." When the last time a car, purchased for transportation, actually appreciated in value? As for coin collections, the dealers who advertise in the major news papers and magazines would have you believe coins are a good investment and not just a hobby, so it's hard to fault anyone who feels that way after they have been bombarded with all the misleading advertising.

ambro51

I dont look at the dollars and cents aspect of coin collecting very much. It is what it is. wholesale/retail spreads exist in everything. Like Stewart Blay once said, to this effect, most collectors sell their coins too quickly to enjoy appreciation of value.

And yes that is very true.

What I can tell you is that I will have one Kick Azz collection in ten, twenty years...if I keep my pace up. Buying, learning, creating interesting collections and buying nice pieces, I dont think anyone can go wrong. IF IF IF IF....the normal condition of our civilization continues.

If not for coins, my darling wife and I would take this excess cash and promptly urinate it away on eating out, Mercedes Benzes, vacations, useless things for the house......

so now I buy nice coins and when the time comes to actually NEED that cash, hopefully the accumulation of nice coins will be there for me.

Thankfully I got my money OUT of the market back in 2007 before it all went south, or I would have been sitting there at the computer terminal day trading trying to get the numbers GREEN again until I lost every blooming cent.

Bear

Overall, I have not made money on my coins, however in various emmergency situations

the coins proved a ready source of cash that might have been wasted if not for the purchase

of coins.It has definitely not been an investment for me, but served as an emergency cash reserve.

With coins, strict adherence to quality, timing,duration of ownership, price paid and intuitive understanding of collector moods

and preferences . Also, knowledge of dealers and the best ones for specific coins are all necessary

for a successful management of ones collection, if a profit is a desired outcome.




Most of us collect for fun and do not think thru a business plan, to buy and market out collections. Still it represents a certain

store of value even if the value is somewhat reduced.

RB1026

Excellent post. I have collected many different things for the past 35+ years and have generally found collectibles as a whole to be a mediocre to poor "investment". I've made a killing on some items, lost money on others, and broken even a lot of the time when it came to selling. They are, however, a fantastic pastime. Nothing in life besides my family gives me more enjoyment than collecting. Therefore, the financial repercussions are secondary to me. I guess that's what makes me a passionate "collector".

One constant has always been the hucksters who hawk coins and collectibles as a marvelous "hedge against inflation" and a "superior investment vehicle". The faces of these folks change but they persist in preying upon new customers who often lose lots of money long term and leave the hobby to never return. This is a sad reality to numismatics as well as many other collecting fields.

That said, those of us who have been around the block see coins for what they are. Collect what you like, buy the best coins you can afford within your means, learn all you can about your area of interest, network with your fellow collectors, and they are an investment in your happiness if not your financial portfolio.

llafoe

<< <i>I've spent most of my money on women, booze and coins...........the rest I just wasted. >>



The biggest difference between women and coins is - once you get rid of your coins, you stop paying for them; the same can't be said for women!

fishcooker

Fortunately, 10 years ago I invested in a collection of rolls of silver eagles.

Unfortunately, I also invested in 2001 silver proof sets.

golfer72

Agreed that many times they are not a good investment. Cash however is losing its value almost every day. Other than gold though please show me what keeps up with inflation and doubles every 7 years. I am waiting for you response.

llafoe

<< <i>Agreed that many times they are not a good investment. Cash however is losing its value almost every day. Other than gold though please show me what keeps up with inflation and doubles every 7 years. I am waiting for you response. >>



My waistline!

jmski52

I've been investing heavily in Modern Bullion for about 11 years. Prior to then, I collected it.

My experience investing in coins is somewhat different than the OP's.

dbcoin

my experience is also different. I have made 2X-4X on many coins purchased since 2005 and sold recently. Some other coins I made only a few bucks, but as bear aptly said, it was a ready source of cash. the later coins were a good learning experience (don't buy problem coins)

I guess it depends on what you collect

COALPORTER

"I'd be lucky to get 1/2 of what I paid for mine over the past 10 years. "

This indicated that you make real poor picks. You should be able to get 1/2 money back the next day. Over the last 10 years you could make a ton by just collecting at or near the bullion value. IMO, you would have to make real poor chioces not to profit in 10 years.

CoinMaster1229

I have been investing in coins for 30 years. I keep records of what I pay for coins when I purchase them. I basically Collect Morgan Dollars, Mercury Dimes,Modern Commemoratives, proof & mint sets ect... I am a sucker for what ever the mint sells !!! Of the coins I have sold over the years I have always made a profit or I don`t sell them.
Recently I went over all the coins I still have and added up how much everything that I still own has cost me. $ 160,976.05 to be exact!! much more than i would have guessed. Now the big question is how much is it worth? so I started checking Ebay`s recent sales for all of my items to judge how much I could likely get if I sold today. With the recent spike in Gold & Silver prices, everything I have made of of Gold or Silver is in the green. I could not find recent sales on Ebay for all the Items I own so I used the PCGS Price Guide -10%..... for the rest. After many hours the final tally.
Value to day is $303,197.50.....
Not bad! but I am aware that if metal prices tank, my profits could evaporate in a hurry. My last thought is what if put the money into fixed interest investments over the last 30 years, Wow thats a little over 5K per year. Were would i be today?

rhedden

The OP's assessment agrees with the opinion of a majority of collectors. However, rare coins have proven to be an excellent investment for me and many other experienced collectors during the strong market of the past 10 years. I am certain I made a higher return on my money by "investing" in coins during that period than what I could have done that with traditional investments during the same time frame. Yes, I have cashed some of them out and realized a big gain after deducting seller's fees. Of course, unlike the majority of collectors on this board, I collect early copper and rare Bust / Seated coins, not the average material found at coin shows. I am also very good at realizing big capital gains from time to time (CHERRYPICKING), which wipes out any mistakes I make along the way. I also know how to minimize fees when selling, and know when and where to sell them, after 25 years+ of collecting. I think numismatics "investments" are what you make of them. Overpay for common coins, and you'll get what you deserve in the end- a big loss. Educate yourself, stick to truly rare material, and learn how to sell- and the sky is the limit.

johnny9434

cold beer and hot woman (and a few coins ), the rest of the money i just wasted on umm bills and the sorts. ( as stated above )

RedTiger

For the recent past, silver bullion, gold bullion, key dates and early type have done well. What will do well in the future is unknown. No matter what categories or series do well, those buying collector coins at retail and selling at wholesale are going to have a difficult time making money.

For collector coins, there are three factors that will predict success:
Grading skill, dealer connections, market knowledge

If a person is above average in all three they will almost certainly do well. If a person is below average in all three, they are almost sure to do poorly. Grading skill is self explanatory, and in my experience a good bit of that is raw talent. Each person tends to have an upper limit where training can get them. A person with a gifted eye is always going to have an edge over those with average or below average eyes. Dealer connections and also collector connections give access to nicer coins at nicer prices. Without that, a person is going to struggle. With that, a person will be able to buy coins and sell coins at much better prices than the average person, and that edge will be enormous in terms of investment return over time. Market knowledge is where a lot of would be investors focus their attention, and their focus tends to be wrong, in that they look for hot tips or hot series, or a dealer's recommendation. Where it is useful is is understanding real world pricing relative to the price guides, and also relative demand and availability in terms of what coins in what grades are really tough to find and which are only priced high and available all the time.

yellowkid

Car dealers likes to refer to your potential purchase as an "investment." (except Bill)

BAJJERFAN

A car dealer is someone who can follow you into a revolving door and come out ahead of you. The only two things you need to remind them of are: I can pay list price anywhere and all you add to the price of the car is cost since it really isn't worth any more than the manufacturer is willing to sell it for.

PQueue

MJ - Well stated!

CoinMaster1229 - "PCGS Price Guide -10%..... for the rest" seems optimistic.

slipgate

<< <i>MJ - Well stated!

CoinMaster1229 - "PCGS Price Guide -10%..... for the rest" seems optimistic. >>



if I could get "price guide - 10%" I would no longer be a coin collector.

Lakesammman

If I could convince the IRS that I didn't make any money on coins, I would be a happy man.

Amigo

I've enjoyed reading the comments.

I've been collecting for over 40 years. I've done well all in all financially. I pretty much know where I stand because I follow the real world values closely and have sold a lot of coins from time to time. However, it can't compare to all the enormous fun I've had doing it. I started with my Father and older brother, now have done a lot of deals with my 2 kids. I have more neat coins than I ever dreamed about as a Child. It hasn't been by far my best investment, but it's been one of my more enjoyable.

Too bad the OP didn't start a poll so that we could see the percentages of those that thought they are ahead vs those behind on coin "investments". Perhaps with 10% past 100% returns overall, something like that.

pf70collector

Bullion collectibles(proof and mint state) are not bad if you can buy them at the mint issued price and also make 70s from them. 2008W 1/4 AGE MS is the king of the series. Wish I would have stocked up but only bought one and it made PCGS 70. In my permanent collection.

heavymetal

My coin collection is, to quote Sam Spade, "the stuff dreams are made of." When I start to wonder if my wife and I will have enough money to do this or that, I add up the PCGS price guide values in my head and say, "I can always sell coin X". I never actually sell anything other than doubles of something, but the option is there. God willing, my children will get my collection intact and then they can dream of the collection's total value. Luckily for me, I've collected US Mint issued gold, silver, and platinum bullion items since 1998 direct from the Mint, so some of the "dream value" can actually be realized. Hm

hchcoin

For collector coins, there are three factors that will predict success:
Grading skill, dealer connections, market knowledge

RedTiger, I think you are missing one, "negotiation skills". I have stated this before in many threads, the better you are at negotiating when you buy and sell, the better off you will be financially. Some people call it haggling, some call it negotiating, I call it getting the best deal I can. Most dealers I know are better at negotiating than the average Joe and that is why the average Joe seems to over pay when they buy and under price when they sell. I think that if collectors want to treat their coins as investments, they should improve their negotiating skills along with grading skills and coin knowledge.

For example, if collector Joe buys a coin for $100 and sells it for $100 - They made nothing. If I can negotiate and get the same coin for $90 and sell it for $100, I made $10. My return is 10/90 or 11.11% if I hold the coin for a year. Now most people think the $10 is not that important. I disagree, if I can get the coin for $90 I have a much better chance making 11.11% on my "investment" than the average Joe. So many people just pay the sticker price or ask, "Is that your best price"? To me, that is not the best way to "invest" in a coin. You are not negotiating.

I have also heard the argument that if I try and negotiate then dealers won't want to sell me their better coins. If I am an investor, I don't want their better coins if it means I have to over pay for them. I want the coins I can make money on. As an investor, I would rather buy a cleaned, ugly and beat up coin for a huge discount that I can make money on rather than buy a perfect coin that I can only sell for a loss. As a collector, I want the original, beautiful, no problem coin even if it means I may have to over pay for it. It is hard to be both a collector and an investor at the same time.

Every time I try to sell a dealer a nice coin, they negotiate like crazy with me. They tell me the grey sheet is not accurate, the market is soft, they point out the rim dings and the nicks, they tell me the color is off, they say it is cleaned, they tell me the TPG is wrong, etc. etc. etc. This is negotiation at its best. They are negotiating with me when I sell. Why shouldn't I negotiatie with them when I buy?

I understand some people don't like to haggle but then don't complain about not making any money after you try to sell your collection. You are acting like a collector, not an investor. If you are in it as a collector, don't worry so much about the investment aspect and just enjoy your hobby.

scottgardener

A house is often seen as an investment, even if it's not a particularly efficient one. Even ignoring the recent housing market crash, houses have expensive upkeep and considerable realty fees when buying or selling. Mortgages accrue interest, and thus most people end up paying a lot more for a house than the negotiated price. And yet, a house is still a better deal than renting an apartment at half the rate, in which you are accumulating nothing. Buying more house than you need, though, is a loss of money that could be invested in something else with better return.

The return from coins depends on the time frame and the coins themselves. Lately the precious metals market has gotten so crazy that generic circulated commons in the bin can be seen as an investment. Bought last year around this time, one could have realized perhaps a 150% return. But, it's a pretty risky market, and when it crashes, it'll be messy. It's best to think of coins as a hedge instead of a principal investment, unless you're already wealthy and need to focus more on keeping it than getting it.

bidask

If most of us lose money how come most of us have continued in the hobby so long?

And no way my kids or my wife or going to inherit my coins.

Just like I have fun buying them I am going to have fun selling them.

Every goddamn last one of them.

Then my wife and kids can suffer and take the cash when I am gone.

JustMe2

<< <i>I dont look at the dollars and cents aspect of coin collecting very much. It is what it is. wholesale/retail spreads exist in everything. Like Stewart Blay once said, to this effect, most collectors sell their coins too quickly to enjoy appreciation of value.

And yes that is very true.

What I can tell you is that I will have one Kick Azz collection in ten, twenty years...if I keep my pace up. Buying, learning, creating interesting collections and buying nice pieces, I dont think anyone can go wrong. IF IF IF IF....the normal condition of our civilization continues.

If not for coins, my darling wife and I would take this excess cash and promptly urinate it away on eating out, Mercedes Benzes, vacations, useless things for the house......

so now I buy nice coins and when the time comes to actually NEED that cash, hopefully the accumulation of nice coins will be there for me.

Thankfully I got my money OUT of the market back in 2007 before it all went south, or I would have been sitting there at the computer terminal day trading trying to get the numbers GREEN again until I lost every blooming cent. >>



Defiantly not an investment. But it is a way to tie up money that is not easy to get to. On the stock side never sold anything from 2007 to now and have more then I did in 2007. Market time is not for me.

JustMe2

<< <i>Agreed that many times they are not a good investment. Cash however is losing its value almost every day. Other than gold though please show me what keeps up with inflation and doubles every 7 years. I am waiting for you response. >>



Historically gold has been a terrible investment. Stocks have a great historical track record and a very low cost/sell and no storage fee.

fishcooker

If only I were historical, then stocks would be fine.

MidLifeCrisis

<< <i>I've spent most of my money on women, booze and coins...........the rest I just wasted.

I've never kept my coins on the investment side of the portfolio ledger. However, it is somewhat a store of value. Not fungible and swiftly convertible, but a store of value regardless. They will never go to zero which is actually more then you can say about some "actual" investment vehicles.

Stocks have been an unworthy investment over the past seven years. Matter of fact what has doublde over the last seven years? Precious metals and commodities come to mind. Not much else, right? If you bought a house five to seven years ago you could be down 50% or more on what some consider your biggest investment. I've never subscribed to that axiom, but most do so I'm in the minority.

I love coins for what they are. A collectible/hobby. I enjoy they heck out of it.

MJ >>


Spot on. DITTO!

lkeigwin

I've lost less money on coins in the past six years than I have on real estate and stock.
Lance.

TahoeDale

slipgate,

Agree 110% with your thoughts that coin collecting. esp. at the level of most collectors, is not a game for profit, but enjoyment and knowledge.

But, every one of the serious long time collectors, who invest 100's of thousands of dollars, some millions, have made substantial profits when their collections are sold.

To name a few recent sales that could be said to be quite profitable for the owners: New York Connosieurs collection sold in March 06; the early copper collections sold by Goldbergs in 2010; Steve Duckor's Barber halves sold in 2010;

No collection that I put together has lost money, but I did break even on classic commems. But I didn't buy the rarities( 68's) that have made for the big bucks.

In the last 9 years, most retirement funds have broken even. Rare coins have increased 2 to 3 fold.

But, it will take the right coins to make the difference between a small loss and a large gain.

BigE

I,ve made money on almost all the coins I have owned. I think one of the most important things to remember is to put money in the areas where you have control, to be able to cash in or out at any time because there is a strong market. Hopefullly in an area of the hobby that interests you. You also have to be able to sell your coins,either yourself or thru a good dealer who you enjoy. Its a one way street if you only buy! My biggest mistake was early commems, I thought the price level was perfect for a large jump given the low mintages and the affordability/availability of high grade and nothing ever seemed to pop. Maybe I was way too early, I hope so. 10 years is a long time to wait!-----------BigE

coinsarefun

<< <i>Overall, I have not made money on my coins, however in various emmergency situations

the coins proved a ready source of cash that might have been wasted if not for the purchase

of coins.It has definitely not been an investment for me, but served as an emergency cash reserve.

With coins, strict adherence to quality, timing,duration of ownership, price paid and intuitive understanding of collector moods

and preferences . Also, knowledge of dealers and the best ones for specific coins are all necessary

for a successful management of ones collection, if a profit is a desired outcome.








What bear said........!



Most of us collect for fun and do not think thru a business plan, to buy and market out collections. Still it represents a certain

store of value even if the value is somewhat reduced. >>

MrEureka

I think that if your focus is on ROI, and if you're reasonably expert at the field, it's reasonable to expect a 5-10% annual return in the long run. Otherwise, it's pretty easy to lose money.

dbcoin

<< <i>Historically gold has been a terrible investment. Stocks have a great historical track record and a very low cost/sell and no storage fee. >>



Stop watching CNBC