THE NUMISMATIST: Tips and Tricks for Investing in Numismatics

MrEureka · December 22, 2019 4:22PM

This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

BryceM · December 22, 2019 4:25PM

Hmmmm. Didn't read that one yet. Sounds frightening.

MasonG · December 22, 2019 4:28PM

A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

bidask · December 22, 2019 4:45PM

@MrEureka said:
This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

Why would MS 65's depreciate faster than 60's ?

And which series are you thinking about when you make this statement?

Coinstartled · December 22, 2019 5:02PM

Recheck the date. Maybe it is the Jan 2004 edition.

291fifth · December 22, 2019 5:11PM

Collecting ... yes.

Investing ... no.

MrEureka · December 22, 2019 5:22PM

@bidask said:

@MrEureka said:
This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

Why would MS 65's depreciate faster than 60's ?

And which series are you thinking about when you make this statement?

It's true in almost all markets, and it's perfectly logical. The things that go up the most in bull markets come back down the hardest when the market reverses. If you want specific examples, look at the price history for generic proof type in 1978-81 and commems in 1986-92.

Smudge · December 22, 2019 5:22PM

It’s my hobby. I don’t invest in my hobby. Edit to add there much worse hobbies as far as losing money is concerned. Horses come to mind.

jmlanzaf · December 22, 2019 5:24PM

@bidask said:

@MrEureka said:
This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

Why would MS 65's depreciate faster than 60's ?

And which series are you thinking about when you make this statement?

Happens all the time. The premium is higher and tends to shrink faster because the others are closer to the floor.

Look at 20th century gold. Morgan dollars. Merc dimes. To name a few.

Also, never take investment advice from a publication dedicated to selling a specific product. I'd bet Model Train Monthly has articles about investing in model trains.

MrEureka · December 22, 2019 5:25PM

One of the reasons gems go up the most in bull markets is that more investors are playing, and investors are typically steered into gems.

MrEureka · December 22, 2019 5:30PM

Regardless, if an investor thinks that the coin market is heading higher, it would be smarter to invest in top quality coins. Average quality coins are almost never a good investment.

MrEureka · December 22, 2019 5:43PM

Thinking about rare coin investors, there aren't many of them around these days. Probably mostly because the transparency of our market has cut profit margins to the extent that little money can be spent on marketing and salesmen. So like it or not, investors may never return in any meaningful way.

savitale · December 22, 2019 6:45PM

Though the most sage advice might be "Don't invest in coins", I think that recent history has shown that high-grade coins with exceptional eye appeal have done OK, so the article's advice is basically sound if you are committed to coins as an investment.

It doesn't seem to get mentioned a lot, but a major investment downside to lower priced coins is the transaction costs. When collectors sell they typically want to do it quickly, which means either an auction house or selling to a dealer. Beautiful, high grade coins are sought by auction houses and you can probably negotiate 105% of hammer or more. Dealers want them too and they can turn them on smaller margins. For average stuff (the MS60 material in this article) that will sit in a dealer's inventory for a year or more, you'll get offered 10% back of Greysheet or they'll go for wholesale at an internet-only auction.

So, don't invest in coins.

DCW · December 22, 2019 7:01PM

Man, you guys are a bowl of cherries tonight.

Baley · December 22, 2019 7:16PM

@MrEureka said:
One of the reasons gems go up the most in bull markets is that more investors are playing, and investors are typically steered into gems.

The book Mercenary's Guide to Investing in Coin Market said MS64 and up.... if you can't afford bust dimes, buy seated. If seated too high, then Barber or Merc or Roosevelts.

I'd much rather have a Fine bust dime than a gem Roosie though.

Zoins · December 22, 2019 7:22PM

@MrEureka said:
This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

There's a lot of context missing from this. If 70s are even available, you're probably looking at NCLT ultra-moderns where 65s and 60s won't be worth much. When 70s aren't available, like for many classics, something like Seated Dollars and generic gold are very different.

Insider2 · December 22, 2019 8:51PM

@MrEureka said:
This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

I'm glad I didn't bring that investing article up.

dpoole · December 22, 2019 8:53PM

Buying "the best you can afford" doesn't mean that "the best you can afford" isn't crap.

BillDugan1959 · December 22, 2019 9:03PM

'The Numismatist' is consciously trying to look 'less scholarly' and 'more commercial'. Running pages of price guides, fer chrissakes. As if the membership couldn't get this information in a dozen places elsewhere.

Nobody on N. Cascade Ave. in Colorado Springs knows which end is up. Pathetic.

And here dummie me just sent in my dues again. Forty second time. Embarrassing.

Kkathyl · December 22, 2019 9:10PM

@jmlanzaf said:

@bidask said:

@MrEureka said:
This month's issue included a list of "Tips and Tricks for Investing in Numismatics".

One was as follows:

"Acquire the best quality and rarest coins you can afford. This might not mean buying 70's, but keep in mind that MS-65 specimens will appreciate more rapidly than MS-60's."

What they didn't mention is that in a bear market 65's will DEPRECIATE faster than 60's.

They also didn't mention that nobody has a crystal ball, including whoever wrote the piece, but that much should be obvious enough.

Why would MS 65's depreciate faster than 60's ?

And which series are you thinking about when you make this statement?

Happens all the time. The premium is higher and tends to shrink faster because the others are closer to the floor.

Look at 20th century gold. Morgan dollars. Merc dimes. To name a few.

Also, never take investment advice from a publication dedicated to selling a specific product. I'd bet Model Train Monthly has articles about investing in model trains.

Bingo. Just like investment brokers saying to get out of one product as it goes down then promote another new product. Meanwhile they short market as you sell off and your just gave them your money.

TradesWithChops · December 22, 2019 10:07PM

I'd highly recommend not spending all of your available capital ("as much as you can afford") on coins. There are other quality of life factors than metals rotting in vaults.

jmlanzaf · December 22, 2019 10:29PM

@TradesWithChops said:
I'd highly recommend not spending all of your available capital ("as much as you can afford") on coins. There are other quality of life factors than metals rotting in vaults.

Dessicant prevents rot.

Lakesammman · December 22, 2019 10:31PM

I would suggest investing in Swedish type coins - what you got, Andy??

thefinn · December 22, 2019 11:22PM

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

CoinJunkie · December 23, 2019 1:36AM

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Zoins · December 23, 2019 2:11AM

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Transaction fees also need to be taken into account. For example, when Buyer Premiums are significant, it's important to compare net sale value to cost basis, not gross sale value.

jmlanzaf · December 23, 2019 4:02AM

@Zoins said:

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Transaction fees also need to be taken into account. For example, when Buyer Premiums are significant, it's important to compare net sale value to cost basis, not gross sale value.

I would argue that you also need to consider opportunity costs. A coin that you paid $100 for and sold it 20 years later for $125 is not a winner.

Zoins · December 23, 2019 4:28AM

@jmlanzaf said:

@Zoins said:

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Transaction fees also need to be taken into account. For example, when Buyer Premiums are significant, it's important to compare net sale value to cost basis, not gross sale value.

I would argue that you also need to consider opportunity costs. A coin that you paid $100 for and sold it 20 years later for $125 is not a winner.

To make this an opportunity cost argument, it’s important to highlight what the opportunity is, for example Amazon stock or a different coin like a cherry pick.

topstuf · December 23, 2019 7:13AM

A "How To Get Rich" article on anything will usually excite any publication.

MasonG · December 23, 2019 7:36AM

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

I did ask how much he's made.

thefinn · December 23, 2019 8:45AM

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

I still have the item, I am not paying interest on it, haven't lost anything. Now, if I have fiat currency, then that is a different story.

Coinosaurus · December 23, 2019 8:59AM

The occasional article may be OK, but in general I'd prefer to not see the ANA pushing this kind of approach to numismatics. Certain dealers & auction houses promote this angle enough for the whole industry.

Cougar1978 · December 23, 2019 8:59AM

If the bids in the sheet aren’t going up it becomes a sch c tax shelter (loss) at best.

bidask · December 23, 2019 9:04AM

@Coinosaurus said:
The occasional article may be OK, but in general I'd prefer to not see the ANA pushing this kind of approach to numismatics. Certain dealers & auction houses promote this angle enough for the whole industry.

I agree

MrEureka · December 23, 2019 9:59AM

@TradesWithChops said:
I'd highly recommend not spending all of your available capital ("as much as you can afford") on coins. There are other quality of life factors than metals rotting in vaults.

Good advice, but way too late.

jmlanzaf · December 23, 2019 10:00AM

@Zoins said:

@jmlanzaf said:

@Zoins said:

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Transaction fees also need to be taken into account. For example, when Buyer Premiums are significant, it's important to compare net sale value to cost basis, not gross sale value.

I would argue that you also need to consider opportunity costs. A coin that you paid $100 for and sold it 20 years later for $125 is not a winner.

To make this an opportunity cost argument, it’s important to highlight what the opportunity is, for example Amazon stock or a different coin like a cherry pick.

You would never use Amazon coin or a different coin as the reference. Either bond index or stock index, typically. You could also just use an annual inflation rate of 2% to show that over 20 years to show that the currency devalued 48% over those 20 years making the $125 equivalent to about $65 in constant dollars.

Zoins · December 23, 2019 10:21AM

@jmlanzaf said:

@Zoins said:

@jmlanzaf said:

@Zoins said:

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Transaction fees also need to be taken into account. For example, when Buyer Premiums are significant, it's important to compare net sale value to cost basis, not gross sale value.

I would argue that you also need to consider opportunity costs. A coin that you paid $100 for and sold it 20 years later for $125 is not a winner.

To make this an opportunity cost argument, it’s important to highlight what the opportunity is, for example Amazon stock or a different coin like a cherry pick.

You would never use Amazon coin or a different coin as the reference. Either bond index or stock index, typically. You could also just use an annual inflation rate of 2% to show that over 20 years to show that the currency devalued 48% over those 20 years making the $125 equivalent to about $65 in constant dollars.

You would, and should, use Amazon if you were selling Amazon stock to buy the coin

jmlanzaf · December 23, 2019 10:21AM

@Zoins said:

@jmlanzaf said:

@Zoins said:

@jmlanzaf said:

@Zoins said:

@CoinJunkie said:

@thefinn said:

@MasonG said:
A couple of question come to mind... How much money does the author have invested in coins and how much has he made on his investments?

You only make or lose money when you sell.

A common misconception. You realize a loss (or gain) when you sell. But if the current market value of an investment is lower than your cost basis, you have in fact lost money. That's not to say you won't make it back in the future. It's also not to say you will.

Transaction fees also need to be taken into account. For example, when Buyer Premiums are significant, it's important to compare net sale value to cost basis, not gross sale value.

I would argue that you also need to consider opportunity costs. A coin that you paid $100 for and sold it 20 years later for $125 is not a winner.

To make this an opportunity cost argument, it’s important to highlight what the opportunity is, for example Amazon stock or a different coin like a cherry pick.

You would never use Amazon coin or a different coin as the reference. Either bond index or stock index, typically. You could also just use an annual inflation rate of 2% to show that over 20 years to show that the currency devalued 48% over those 20 years making the $125 equivalent to about $65 in constant dollars.

You would, and should, use Amazon if you were selling Amazon stock to buy the coin

LOL. Touche'

topstuf · December 23, 2019 10:31AM

Spend it ALL on coins. You can always sweep floors for ham n eggs.

BryceM · December 23, 2019 10:53AM

My only concern here is that very few people have a working knowledge of investments and the concept of opportunity cost. I recently did the math when I sold a double eagle with a gold CAC sticker. I patted myself on the back for making a couple hundred bucks on the deal....... Then I looked at what my $1800 would have done if I put into an index fund instead. During the same hold period, I'd have made $400, not $200.

I did enjoy owning the coin for a while, but the actual rent was a little higher than I thought it was....... and that's one of the ones I made money on.

Just this morning I looked up the end-of-year dividends that my retirement accounts are earning. Happy, happy. Free money! I look in my SDB all the time. I keep hoping a couple of double-eagles will get together in the dark and produce a new quarter eagle. No luck yet.

THE NUMISMATIST: Tips and Tricks for Investing in Numismatics

Comments

Leave a Comment