If it isnt an investment.....
Gazes
Posts: 2,315 ✭✭✭✭✭
Certainly one of the most common pieces of advice on this forum is that you should not buy a coin or coins as an investment. Honestly, I am not sure anyone argues that coins offer a better return than stocks.
So here is my question----why do people buy five figure coins? Or 6 figure coins or more? Let me rule out two responses: 1) someone worth hundreds of millions doesnt think twice and 2) they are showoffs. I rule out #1 because there really arent many collectors worth hundreds of millions. Yes---some but 99% are not. Yet 5 figure coins selll routinely. 2) they want to show off----again maybe some. But the overwhelming majority of high end collectors are not on the registry or these forums. Even when some famous collections are sold they are done anonymously---clearly not in it for the "fame".
Someone may argue they are foolish. Yet most coin collectors I know are pretty intelligent. They enjoy history, are good at their jobs, etc. Some have written on these boards even if they had extra money they would never buy an expensive coin because they could always make more in stocks. Certainly most high end collectors know this----its not some top secret information.
I wrote this thread because i have read 1000 times never to invest in coins yet high priced coins sell routinely. Maybe we should applaud these purchasers since despite knowing the appreciation limitation of the money they spent they do so anyway because they really love coins.
Comments
There are collectors at all levels, from whales to phytoplankton. They eat at different volumes and store at different capacity. Pretty simple really!
My two cents:
Because the joy that the purchase, ownership, opportunity to examine and show the coin and talk about the coin, exceeds (is viewed favorably towards) the eventual cost. I would think most people buying these type of coins understand the likely residual value or opportunity for appreciation and they are comfortable with that cost versus other options.
Comparisons might be owning that coin versus purchasing tickets , a hotel, airfare etc to see a Super Bowl. I have looked many times at doing this, but could never justify the $5k plus total cost. Yet many people do it.
What about the person that joins an exclusive country club to golf, or the person that eats at a $200+/person restaurant. Many could argue that there are lower cost options or better investments.
The joy/benefit outways the cost.
On a smaller scale, I think it’s prudent to buy $100-$500 coins/tokens once or twice a month and drink cheap beer or wine, versus not buying the coins and drinking $200 bottles of wine or high end scotch. I get more enjoyment out of owning the coins than I would drinking the high end alcohol (my taste isn’t sophisticated enough to enjoy it). Yet for many others the joy of drinking the scotch either with friends or talking about the taste with friends, easily justifies the cost.
So once again, the person buying views that the benefits to them justify the cost.
Not sure this is what you were expecting, but it’s my thoughts.
I think there are a lot more wealthy collectors than you realize for the high end coin market (to me that would be 10K and up). And plenty of people who just have a lot of “spare cash” lying around. But I’d say the majority of the 5 figure coin buyers are from people who have only that one 5 figure coins and the rest are 4 figure or less.
TurtleCat Gold Dollars
Different people have different motives, but I think most people who buy a five figure coin enjoy the hobby, the history, the beauty.
I do think people expect their collections to represent some degree of “store of value” - albeit a possibly leaky one, and certainly not an investment.
My guess would be that it's the collector in them. They want the nicest coin, or one that fits best into their collection and if it happens to be 5 or 6 figures then so be it if they can afford it.
Collector, occasional seller
Because:
They can; and
They want to.
The first item above includes having money and/or other ways to make an acquisition.
The second item above includes an unlimited number of factors that motivate one to make the acquisition.
Stocks aren't always in a bull market, and sometimes PMs and coins are. People may also just want to diversify. As others have pointed out, many people just like to own nice coins and have the excess capital to afford it.
For the same reasons they buy two, three and four figure coins.
How else do you hold history in your hand?
Beauty, rarity, historical significance...it matters.
We are all speculating. We'd know better if we had a conversation with those who have recently purchased 5+ figure coins. This sounds like a good angle and idea for a numismatics journalist to pursue -- to interview a few such buyers and write about such anecdotal evidence.
Hint, Hint - I assume there are some such journalists reading this board.
My strategy is about collecting what I intend to keep, not investing in what I plan to sell.
When cost equals "COOL" reason can fly out the window.
Many people see coins (and bullion) as a store of wealth or a form of "insurance". Many people like to have physical assets they can touch and hold (including myself) in addition to seeing numbers in a bank account or brokerage account.
While that IS true, my own personal behavior is to buy modestly priced coins , if they're neat, and then STREETTTCCHHH
if I see something irresistible.
After obsessing over pop reports, price guides & registry sets, I'm guessing there are less than 100 collectors with million dollar budgets that collect saints.
Other than having fewer holes in their collections, they are exactly the same.
Out of almost 8 billion people in the world, that's a pretty small number.
My Saint Set
I think this is true. No one at my income level is putting 5 figure coins in a safe waiting for appreciation (hopefully). And as much as I love some 5 figure coins, I would never buy one because it is too significant an "investment" for me. [See what I did there!
]
I'm sure that most coin collectors from one figure to five figure hope for appreciation. I'm sure many of them think it's an investment. Some, contrary to the OP's thesis, probably do think they are better than stocks. They LOVE coins.
To truly view coins as an investment, you would have to dispassionately look at coins. What collector can? And if you love classic commems and classic commems suck as an investment, are you really going to not buy what you love and buy an Elephant token that you don't care about for 4 or 5 figures because you think it'll go up?
Even if coins were a "good investment", they are unlikely to be a good investment for a coin collector except by accident. WE buy what we like. Hawaiian commems are legitimately rare. [And don't give me the survivorship argument. There were only ever 10,000 of them and there are 20,000 Mint state 1909-S VDB in PCGS plastic alone.] But Hawaiian commems have been a horrible investment. So if you like commems, you did horribly. If you like proof classic gold, you probably did okay, but by the lucky happenstance that you liked what increased.
I would be very surprised if there are too many people who do it just to diversify rather than because they like coins. I'm sure there are one or two who have no interest in the coins. However, I would be very very very surprised if 99+% of people who claim to be doing it as an investment aren't coin people.
I assume phytoplankton collect parking lot errors.
10,000 of something that has relatively low demand doesn't constitute rare. You can buy one anytime you like.
I assumed it would go without saying that people who don't like coins probably wouldn't be buying them as a diversification asset.
(They might buy GLD if they were bullish on PMs.) The discussion would seem to be about whether people who like coins would pull the trigger on expensive ones vs. putting that money into more classical investments with higher growth expectations. My point was that if the outlook for stocks is poor, the outlook for PMs is good, and/or they're overweighted to stocks, they'd be more inclined to do so.
Well, "rare" in the context of US coins. Scarce?
As a coin dealer friend of mine used to say, "coins aren't rare, dude". I was more interested in the comparison to the much more common S-VDB, 16-D dime, 55 DDO etc. There are very few "rare" coins other than conditional rarities or varieties. Most types and most date/mint mark combinations are quite common including most "key dates".
I use the “diversify” term to justify my coin purchases
That's between you and your wife...or financial advisor.
To be honest, I collect for all of the above reasons. Everyone has good points.
So I think we're still back to people only buying coins because they like coins, however they rationalize it.
There are a great many people with millions in disposable income. Most of them are quiet people leading outwardly normal lives. There are 1.5 million people in the US with a net worth over $10 million. There are 35,000 with a net worth over $100 million.
If 1% of those in the highest group collect coins, that's still 350 people, each with the responsibility of somehow spending the $800,000 they earn each month in interest and dividends. It's not so hard to imagine how and why the coins all find new homes.
I think it's safe to say that if any collectible tangible assets, including but not limited to coins, make up more than a very nominal percentage of one's total investable assets, then the person likes to own the Things more than they would enjoy higher, safer returns on alternative "paper and electronic" financial investments.
The utility of enjoying coins, fine art, antiques, cards and comics, watches, guns, (and the list goes on...) exceeds the less aesthetically pleasing returns on stocks and binds, and is relatively compact and passive, without the hassle and care and work of things like small businesses and rental property.
It makes a lot of sense for someone established with a large diversified investment portfolio to consider adding quality 5 figure and up coins to their holdings.
If someone is buying $10k and up coins and their net worth is under, say $50k, well they probably really love coins, and risk, and don't mind spending significant opportunity cost that could, probably, grow in value much faster than a coin over the long run.
Liberty: Parent of Science & Industry
Depends on your income but some things should be considered investments/collectibles. It's non sens all this love and never consider the investment aspect of ones hobbies.
Coin collecting interests: Latin America
Sports: NFL & NHL
Similar to art and antiques in many respects for some collectors. It makes them happy to acquire, possess and admire the coins and they can afford the price. Investing in stocks etc. and realizing a profit provides its own type of enjoyment. If somebody can buy coins they love and turn a reasonable profit on them at the end of the day it is just a double win. Worst case scenario, the coins depreciate and the owner ends up paying a price for having been their steward. There is value in the years of enjoyment, so it isn’t a pure loss (unless the collector made a mistake and purchased coins he/she dislikes).
Ask @tradedollarnut between his own purchases and through his association with Legend and the collector base they serve he seems to be in the best position to know/answer.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
If a collectors buys a coin for his/her collection it is a collector that just made an investment.
If an investor buys a coin for his/her portfolio it is an investor that just made a collection.
I like my eggs over easy.
Hey, with being in the class of phytoplankton, I'm fine with having an authentic parking lot 1909 S VDB details...
Paper money eventually returns to its intrinsic value. Zero. Voltaire. Ebay coinbowlllc
Coins are an investment for some people. don’t let the people on here tell you otherwise.
diversification and insurance.
honestly, the only thing I could sell in April last year was coins.
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Personally, I look at any hobby as something that gives me pleasure and that can be mentally engaging/stimulating. Some of my hobbies are essentially burning money i.e. flying, golf... others may not be for investment purposes per se, but at least they hold some of their value, or may potentially be profitable at some point i.e vintage guitars and coins.
Prestige. They want to have smoething to show off and brag about. They could just be collectors at a different level then the average collector. They just like them. They may want to resell them to another collector who wants to remain anonymous. They feel their money is safe and don't want to gamble it on the stock market. Not everyone makes money on the stock market.
collectors are nuts it's madness to spend real money on crusty metal bits
I'd get the same satisfaction from a 1924 saint as I would a 1933 for way less.
Some people prefer rarity, I prefer commoninity.
Are they really this stupid, or are they destroying the dollar on purpose?
You don't have to be a millionaire to be able to afford a five-figure coin.
One way I've been able to get five-figure coins over the years is to trade up for them. Buy less expensive coins and hold onto them. Build a collection even. Then trade some or all of them toward a more expensive coin. Repeat the process.
As for whether or not they are an investment...of course they are, strictly speaking. You may lose money or make money when it's time to sell. But you should factor in how much your enjoyment in owning them is worth. That's a return on your investment that should not be ignored.
But it really comes down to your viewpoint. I don't view my coins as investments. I accept that I may take a loss if I have to sell. On the other hand, I have other things that I do think of as investments. I don't get near as much enjoyment from owning them, but I do get peace of mind.
So were beanie babies... they just aren't a good investment.
A lto of buyers buy as inves> @jmlanzaf said:
Speak for yourself. We’re not all beanie babies!😉
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Lol. Damn autocorrect
I buy because with two primary underlying motives:
So yes. Investment plays an important role in coin collecting for me. I know that some of my decisions will pay off an others may not. I hope to come out of in on the other end with some profit and enjoyment.
My Saint Set
Because you want and need it complete your collection.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
"Look up, old boy, and see what you get." -William Bonney.
How do you define a budget? Someone might be fully invested in the stock market with lots of dollars but he/she is cash poor unless they liquidate positions.
As for me if I lost my entire coin collection
( which is fairly substantial at least for me) as in 0 , nada, total write off ... I would still have earned income and securities investments to live on .
In other words buying coins has always been a hobby and if lose money , oh well, it’s a tax loss against other gains 😊
And I ❤️ coins 🤓
After all it’s just stuff .
I give away money. I collect money.
I don’t love money . I do love the Lord God.