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Bullion for numismatics? Cash for numismatics?
ranshdow
Posts: 1,442 ✭✭✭✭
A while back, someone posed a hypothetical looking for opinions- sell a bunch of gold bullion to buy some low pop rarity with the proceeds. At the time I somewhat flippantly said "NO". Now I myself am considering that very thing.
Say there was an auction coming up with some coins in your favorite series that were of interest to you. Say you pre-viewed them, they passed inspection, and your friendly gold specialist were to also give them his blessing (*very* hypothetical, here). You decide to bid on one or two, but say the coins in question are 2-3x as expensive as anything else you own in this arena.
Your plan is to pay in cash, which you can manage easily, but with money meant for non-immediate purposes. Your compromise is to pay yourself back by selling an equivalent amount of gold bullion- 3, 4, 5 oz., whatever it takes to balance the books. If you had these options available to you, what would you do?
1) Don't bid/buy at this level until you had absolutely unallocated money available for it.
2) Bid, and pay yourself back with gold bullion sales.
3) Bid, pay with cash, hold the bullion and don't look back.
I'm particularly looking for rationales here.
Say there was an auction coming up with some coins in your favorite series that were of interest to you. Say you pre-viewed them, they passed inspection, and your friendly gold specialist were to also give them his blessing (*very* hypothetical, here). You decide to bid on one or two, but say the coins in question are 2-3x as expensive as anything else you own in this arena.
Your plan is to pay in cash, which you can manage easily, but with money meant for non-immediate purposes. Your compromise is to pay yourself back by selling an equivalent amount of gold bullion- 3, 4, 5 oz., whatever it takes to balance the books. If you had these options available to you, what would you do?
1) Don't bid/buy at this level until you had absolutely unallocated money available for it.
2) Bid, and pay yourself back with gold bullion sales.
3) Bid, pay with cash, hold the bullion and don't look back.
I'm particularly looking for rationales here.
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<< <i>A while back, someone posed a hypothetical looking for opinions- sell a bunch of gold bullion to buy some low pop rarity with the proceeds. At the time I somewhat flippantly said "NO". Now I myself am considering that very thing.
Say there was an auction coming up with some coins in your favorite series that were of interest to you. Say you pre-viewed them, they passed inspection, and your friendly gold specialist were to also give them his blessing (*very* hypothetical, here). You decide to bid on one or two, but say the coins in question are 2-3x as expensive as anything else you own in this arena.
Your plan is to pay in cash, which you can manage easily, but with money meant for non-immediate purposes. Your compromise is to pay yourself back by selling an equivalent amount of gold bullion- 3, 4, 5 oz., whatever it takes to balance the books. If you had these options available to you, what would you do?
1) Don't bid/buy at this level until you had absolutely unallocated money available for it.
2) Bid, and pay yourself back with gold bullion sales.
3) Bid, pay with cash, hold the bullion and don't look back.
I'm particularly looking for rationales here. >>
I am not sure how to phrase it, but here goes:
If there is an excellent opportunity, and you can afford it (very subjective, I know), you should marshall whatever resources you have to comfortably do so. If you are not comfortable, chances are, you should not be buying it.
"Further, if you had made the decision 1 year ago today to purchase the numismatic coin using your gold bullion, the numismatic coin would have needed to rise in price more than 26% to simply keep up with the rising value of the bullion during that same period (and past performance does not guarantee future results or some boilerplate language like that)."
Wondercoin
<< <i>How about this added sentence to RYK's comment....
"Further, if you had made the decision 1 year ago today to purchase the numismatic coin using your gold bullion, the numismatic coin would have needed to rise in price more than 26% to simply keep up with the rising value of the bullion during that same period (and past performance does not guarantee future results or some boilerplate language like that)."
Wondercoin >>
How about this added to Wondercoin's statement...
"Furthermore, past performance is no guarantee or indication of future performance."
I would certainly not take the money out of the "buy a new car in three years fund" or the "replace the roof in five years fund".
Check out the Southern Gold Society
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Bullion is very pricey right now.
Some nice coins seem like they are very fairly priced.
I've been letting go of bullion for the last year or so. Picked up some pretty nice 19th century type that basically cost me 20-30 cents on the dollar because I paid for it with my bullion profits.
Some coins are cheaper now than they have been in a long time. This will not last forever.
JMHO
"And still furthermore, sometimes, particularly when there is a historically cyclical nature to past performance, recent past performance can be inversely correlated with future performance"
Liberty: Parent of Science & Industry
<< <i>"Furthermore, past performance is no guarantee or indication of future performance."
"And still furthermore, sometimes, particularly when there is a historically cyclical nature to past performance, recent past performance can be inversely correlated with future performance" >>
"And even, further, furthermore, desiring a coin today, for numismatic purposes, does not guarantee or indicate that you will appreciate its numismatic qualities in the future."
With all of the unspoken disclaimers, it's amazing anyone ever buys anything.
Liberty: Parent of Science & Industry
The rare exception to the answer might be a once in a decade kind of opportunity. This supposes a person has the numismatic knowledge and experience to discern a rare opportunity from a run of the mill auction. If it is a run of the mill auction that typically occurs once a year or even every other year (90% to 99% of auctions fit that description, depending on series of interest) pass.
<< <i>The answer is 1. Buy coins with hobby money. >>
It gets more complicated. Is bullion purchased with hobby money? What about First Spouse bullion? What about Mercanti-slabbed bullion? Can one swap out of one of the above and into a Dahlonega $5 without violating any sacred covenant? I think that is what the OP is asking.
I only buy coins I can afford and, for me, bullion is a collectible, not an investment, so I'd sell the bullion and buy the coin.
Yes. Very important point. If it comes out of the bullion, it would not exceed my comfort zone, because the bullion honestly is hobby money to me. I never saw it as a savings vehicle- a hedge maybe but it's always represented a relatively small portion of my net worth and I've never relied on it as a reserve- but money is money and it did count for something, just as my coins do. This is a recent change in my perspective on the bullion, however, and it's what's led me to consider this idea in the first place.
The other key point is that the bullion is in a profit position *now*. Who knows whether bullion will outperform in future, or select numismatics will. I have no crystal ball. But I'm wired in a way that makes it natural for me to buy things that seem cheap and sell things that seem dear. I think this may be one of those examples.
I would certainly not take the money out of the "buy a new car in three years fund" or the "replace the roof in five years fund"
The car will be paid off by early July and the roof.... well I'm a renter.
Now, Red Tiger:
If it is a run of the mill auction that typically occurs once a year or even every other year (90% to 99% of auctions fit that description, depending on series of interest) pass.
Bingo. And that's what might kill it for me. I'd be extremely irritated with myself if I dropped bank on yet another widget. And I'm not sure yet if I could tell the difference without professional advice.
Thanks everyone! This was very helpful.
<< <i>
<< <i>The answer is 1. Buy coins with hobby money. >>
It gets more complicated. Is bullion purchased with hobby money? What about First Spouse bullion? What about Mercanti-slabbed bullion? Can one swap out of one of the above and into a Dahlonega $5 without violating any sacred covenant? I think that is what the OP is asking. >>
It is not complicated. If a mistake was made in the first place, that some ultra modern bullion coins were purchased with important money, it is best to get out, not replace it with coins that tend to have even lower liquidity and likely even wider bid/ask and retail/wholesale spreads.
Non-hobby bullion purchases as described above tend to fall into three categories:
* investment - in which case the answer is no. Would a rational person with other investments sell them to pursue a hobby? How might folks respond to this question: I'm thinking of selling my investments in stocks or bonds to buy hobby coins? Are you kidding me? I might grant an exception for the top 10% of collectors that are well versed in numismatic investments and also have superior grading skill, superior market knowledge, and superior access to coins. If a person is in that top top group, they rarely will ask these kinds of questions. A lot of folks like to point to Pittman, but he was literally a one in a million talent, with one in a million passion, grading skill, and access, far far above the average collector.
* insurance against black swan financial events - answer is clearly no. No rational person would cancel their insurance to pursue a hobby.
* flipping - in which case the coins should have probably already been sold, and the person might be closer to a part time dealer than a collector. This circumstance might warrant a positive answer. However, the numismatic coins up for auction should probably be coins that the person is thinking of flipping, so the money stays in that category.
The Oregon is lovely, but the question remains ... is it wise to swap bullion for numismatic pieces? Of course, that is a function of the price needed to be paid for the Oregon. We of course know what the bullion is worth every moment of every day. I am personally not comfortable with the answer ... "sell however much bullion is needed to pay for the Oregon" when you are an Oregon collector and a great coin comes up. Should one sell $25,000 in bullion for that coin? How about $50,000 in bullion? For that matter, what about $250,000 in bullion for that Oregon if a collector likes the Oregon? Wait, the seller of the Oregon wanted "$1,000,000 in bullion"? You get my point. We are missing vital information to make an assessment on a case by case basis based upon the facts of each case.
Just my 2 cents
Wondercoin