Sunday Morning Collection Reflection
Pedzola
Posts: 1,027 ✭✭✭✭✭
I started accumulating bullion around 2008, inspired by Ron Paul and Austrian Economics. I was in grad school at the time and didnt have a ton of money. Over the course of the next couple years as my disposable income started to increase I started thinking of bullion as a savings account. When prices crashed in 2011 I was severely underwater on all I had purchased, and turned off. Today I remain underwater on a good chunk of silver I bought back then in the 30s. Although I have sold a bunch, much of it for significant loss.
Since that 2011 crash I occassionally bought a deal here and there, but not very active purchaser, until I made the plunge into "rare" coins, which I think was about 2018.
Over the past couple of years I have purchased exclusively 20th century coins. I biult a simple type set of 1c-$1 coins of 1900-1930, but more effort on gold. I have two 8-piece type sets of 20th century gold (linked in my signature).
While buying has become a fun hunt online, selling has been another thing entirely. I have a local dealer who is fair and reliable, and I enjoy visiting frequently. But dealer buy prices are not retail (this is obvious I guess), and selling it yourself is often not cheap, easy, or fast either.
I recently sold my non-gold type set at a huge loss (~40%). Decided to focus on gold only. While some have made a lot of money with this hobby, I seem to only be able to buy high and sell low! This one hurt because I bought almost all of the coins in 2018-2019, and here in a huge surge in coin market 2020-2021 I still lost my shirt selling the set. I have about the same luck with every investment. I will never be able to retire.
So anyway I'm sitting here wondering where I go from here. I will keep an eye out for set upgrades but hesitant about high prices... did my whole 2nd type set in 2020 and I know that will come back to bite me, as I paid 50%+ more for everything than it would have cost in 2019.
I still think of my collection somewhat as a retirement account. When I hopefully do retire (~20-25 years), I am hoping that I'll be able to sell this stuff gradually to give me something to do and a bit of spending money. That is a long way off. For now I have enjoyed putting together a collection of interesting graded and bullion coins.
So I'm just thinking about my journey so far and where to go from here. Have enjoyed learning many aspects of the hobby including coin photography, have honed my eye and appreciation for quality, and have put together a couple of nice small set. My one regret is the significant financial losses . If i took up investing as a hobby in 2008 instead of coin collecting I wonder where I would be today. Lol
So anyway, thought I'd share my story. I enjoy the hunt, but I'm starting to think it might be in my best financial interest to stop buying coins.
For all the long-term collectors, what keeps you going?
Comments
Coins are a hobby, not a retirement plan.
Nothing is as expensive as free money.
@Pedzola , I had a few similar experiences and thoughts as I re-entered the coin collecting hobby years ago. My observations and advice on collecting and saving.
1) if you have bought a house or are going to buy one, get into a 15 year mortgage as soon as you can or when rates allow you to afford it. Money should go towards that before coins.
2) Max out 401k or IRA’s before putting funds into coins.
3) Unless you deal, my experience is that over time, you should expect to have your hobby cost/return +-10-20%. So it’s not really going to be a good investment retirement option.
4) I bought/acquired coins for a type set when I re-entered, as people say, selling was an eye opening and learning experience. Probably lost 30%. Realized from my work business dealings that the number of companies trying to make money off the coin collector was increasing, and that corporations are always under intense pressure to increase returns and profits (hence why stocks are a much better investment). You have wholesalers, local coin dealers, 3rd party grading companies, CAC, auction houses...all trying (and doing it) to make more money from the average collector.
5) so, what can you do to improve your chances...become knowledgeable...your ogh/CAC gold collections are awesome. I would expect that if you sell those selectively, you will do better than before.
-don’t fall in love with specific goals...chasing a registry or full set will cause you to overpay at some point to reach goals.
-keep 2-3 interests going...when one interest becomes super popular, zig over to the other less popular on...ie if you’re going to accumulate, be a little bit of a contrarian...for example...right now, I am having trouble finding nice gold coins, at prices I can justify and feel are fair, and also finding that the CWT’s are a hot market too. So I am considering doing other things such as currency, golf, home projects where maybe there are better deals.
-keep a lower cost interest. I collect CWT’s. Many i got raw for <$100. The hunt, learning and enjoyment is the same as for high dollar coins.
-if you are trying to make some money, don’t fall in love with your entire collection. My lessons learned years ago...plus a lot of dumb luck...had me divert from my type set into generic (spot type) old gold coins and silver bars. I would pick up any silver bars or rounds that were different. It gave me enjoyment and I liked it and the collection of silver...BUT, in November when silver hit almost $30, I sold half of what I had for a 50% profit ( over 4 -5 years was probably an average of a 10-15% return) not bad. I sold the other half (except for 3 bars I love and want for memories) the other day...spot +$2...so once again, I took my profits...
-how did I get spot +$2, my last piece of advice...develop a relationship with a few good dealers. Make sure that it is a mutually beneficial 2 way relationship. My dealers make some money off of me, but never on both sides of the transaction. They can either buy or sell to me for a reasonable profit, but not on both sides. Be honest with them, my dealer was out of all physical silver, I asked what he was paying and if he would buy over spot. He said yes because he wanted some for his inventory. I could have tried to sell for spot plus $5/6 myself, but that’s too much work for me. So develop a relationship. Many dealers I know, hope that you will give them the opportunity to buy the nicer coins they sell you. If they felt it was good inventory once they will again. But remember, they need a business reason why to treat you better economically...you can’t expect that type of relationship based on a random transaction or two, where you haggle like crazy.
I hope this helps.
Enjoy the journey.
Interesting thread. Totally agree: if you want to make money with coins, try selling the ones you purchased. As for the OP, can be eye opening.
My current "Box of 20"
I've found this to be true and agree 100%:
I don't want to accumulate a pile of "junk" or "stuff", but if I only bought one "special" coin a year, I wouldn't enjoy the hobby nearly as much as I do now.
Sometimes I like just going through ebay, finding something cool in a series I'm currently interested in, and just tagging it and/or watching what it goes for. Sort of "catch and release" hunting.
Thank you for posting. Definitely food for thought.
I think all collectors need to be a little careful of putting too much on the investment side of the thought process. Unless our other obligations are met (little or no carried consumer debt, mortgage in order, 401k or IRA's funded, etc.) it's a slippery slope we can find ourselves on otherwise.
I think back to a conversation I had with a very honest dealer / mentor from years ago.
It was along the lines of how much can you afford to lose. He opined that there are a lot of hobbies have little to no chance at recovery of almost any of the money spent.
His question then became pointed. Can you afford to lose 50%?
I thought, well that would really suck. I mean I could, but no, that wasn't what I wanted to do.
He continued, that this was the difference between me paying retail when I wanted the coin and him paying wholesale when I needed to sell the coin, for probably 80% ore more of the buyers of probably 80% or more of the stuff out there.
Even with the advent of the TPG's and the market that became more liquid via the internet, I don't think the premise has changed much.
The difference he said was knowledge and patience. He continued on that special coins don't trade that way, but that often you still have to be patient selling even when you have coins with great desirability, and that it just isn't easy to make money. Learning to grade, learning what defines special in the consensus of the collecting public, and learning how to be patient and understand pricing better was also important. As in business, if you buy or sell right, the rest becomes a lot easier, but no guarantees.
I'm glad you posted this morning, as it forced me to think about those conversations again.
I need to remember to stick with coins that are closer to the special side, and try not to get in a hurry and overpay on a regular basis.
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
"Buy what you like" .....works for me. Anyone who criticizes you for what you buy is way off base and should not be debated with. You don't need to justify your self to anybody else. Be happy. Profit/Loss, for me, is not the foremost guiding factor.
I never want my hobby to keep me up at night. Keeping the collection small and in proper proportion to my net worth is my approach. I also don't expect to make money when selling. Then it's all joy - isn't that the purpose of a hobby?
"Got a flaming heart, can't get my fill"
Excellent thoughtful responses here, appreciate it. And yes I have 401k and mortgage in order, so I am not spending on coins as a singular investment. I can "afford to lose" but am not wealthy, so there is an aspect of opportunity cost. Should I have so much in coins or put my $$ to work elsewhere?
I have other hobbies that don't have an investment aspect. Having a lot of $$ in a coin collection is different than a few bucks in my bass guitar!
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I do not consider my coins an investment. I purchased them as a hobby and because I liked them. Now, compare that to drinking beer (or whiskey or wine), you piss away your 'investment' within hours. The same with an expensive dinner - well, almost the same. Now, someday, if I sell...or if my wife does after I die, there will be some amount of money recouped. Better than drinking/eating. As to PM stacking.... I am way, way ahead on that front. Cheers, RickO
I used to spend $120 per month playing golf, another $120 on beer, wine, liquor and bar tabs, and then another $120 per month on smoking cigarettes and cigars, these represented my vices, oh yes, I cussed some. I had a heart attack at 36 years old from working 90 hours a week in my wife and my Mom n Pops store and smoking. Didn't mention the coffee. I quit them all after the illness and decided to get back in coin fun. Not investing, but for fun. If I make a bad purchase for value's sake, it is still a coin I like and enjoy. Some people have made a really good living at this and many have lost it all. But those of us who have been around collecting and selling for 50 years have solely made it an enjoyable pastime. I wish all a Blessed life and try not to let your hobby and pastime be a thorn in your side. Enjoy life for it is fleetiing.
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
Patriotism is supporting your country all the time, and your government when it deserves it.....Mark Twain
I think you’ll be fine with your gold type sets. Especially if your a long term hold on them. Did you get bored building the type set? That seems to be my problem. If it’s not gold, I have a hard time keeping focused on it. Like you, stacking PMs gravitated me to coins. Can’t take the stacker out of the collector I suppose.
MY GOLD TYPE SET https://pcgs.com/setregistry/type-sets/complete-type-sets/gold-type-set-12-piece-circulation-strikes-1839-1933/publishedset/321940
It was never an investment. Its a hobby. You would be better doing the stock market conservatively for the long haul if you want money.
WS
You're doing very well with your 8 piece gold sets.
I'd go for the 12 & forget about the CAC/OGH set for now.
I think that would be three $1dollar coins plus a $3 princess
The only thing I have done well on is gold. (as in breaking even
)
The rising price compensated for a couple of mistakes I made and kept me from loosing money on transaction fees.
My Saint Set
I view coin collecting as a hobby, and not totally as an investment. With coins, you will have at least something to show for it - even parking lot finds are worth at least face value. You can't say the same for some other hobbies.
I've stayed far away from the Ron Paul mold of thinking (you heard it at lot a coin shows past) and have stuck with simple index funds and some other investments over the past few decades and it has paid off well.
It's all about completing sets for me, it's like the Pokémon phrase, "gotta catch them all!", even though you never will.
10-4,
My Instagram picturesErik
My registry sets
Coins are not an investment. As my signature line says, I am a "Hobbyist & Collector (not an investor)." The way I look at it is; it's like putting money away so you don't spend it on something else. It may go up and it may go down, but it will always be there. @ricko put it best, it's money your not pissing or crapping away.
By the way, that's a nice gold set you have there.
Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
Successful transactions: Shrub68 (Jim), MWallace (Mike)
Regarding retirement in 20-25 years, here's my advice:
1) Only spend 90% of what you earn (net). This includes your coin budget.
2) Invest the remaining 10% in the stock market (if you don't have the skill or inclination to pick stocks, just buy SPY).
3) Don't carry debt other than a mortgage or a car loan.
3a) Be a sensible shopper and live within your means. Whenever possible, buy things at a discount.
The only way to make serious money in coins these days is to cherrypick or get TPG upgrades. If you just want to enjoy collecting, buy coins you find genuinely appealing and don't expect to make (much) money in the process.
Hard lessons, nothing is guaranteed except the old standbys taxes and death. Part of the problem you have experienced is you bought and sold in a very short timeframe. Buying retail means that you have to hold and hope price appreciation surpasses your buy price, selling soon after buying can in many cases result in a loss. It can and does in many (most) collectable coin buys take five years or more for a selling price to catch back up to a retail buy price. Overall your comments are not in alignment, you talk about holding for retirement yet your selling in under three years. Perhaps you need to address this thought process before you consider any more purchases. And of course it sounds like your timing was just some bad luck also, this happens to everyone just ask those that bought classic commemorative coins right before those prices crashed.
You also may be under some misguided advice. Very often here you see advice like "collectors should stretch for coins"; or "great coins are not cheap and cheap coins are not great". That last one is a tremendous fallacy imo as there are many inexpensive coins that can bring great joy of ownership; but that is just my opinion. While this advice can work for some coins and for some collectors, in certain situations it can also cause some collectors to way overpay. That is not to say that the above advice is not without merit, it is valid and helpful for the right situations. Remember that this board is not and does not represent the vast mainstream of collectors, folks here are dealers and many are very wealthy collectors with just a sprinkling of average Joes. If you don't fit into one of those two categories (I don't) advice like this can cause you to overpay for the wrong coins. Dealers will love you when you stretch to buy and even more when you come back to sell, its a business that only works if they buy low and sell high; obviously this translates to you buying high and selling low. I have no doubt that I'll receive lots of flack for this last statements, comments along the lines of I hate dealers or that I'm just jealous. Flame away boys.
We all have choices as to where we spend our disposable income, some items or activities will have nothing but memories left after the purchase. Golfing around the world, $1,000 bottles of wine or whisky that are sipped on the veranda each evening, these things leave great memories but put nothing back into the bank account. Coins and bullion at least do store some value, even if its less than we might like at times.
All that I've written is around coins, bullion is a totally different game and you have to understand that market and be able to pull the trigger on the dips and sell on the spikes. Bullion is more like day trading and is not for the faint of heart.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
Nice sets and solid coins in those sets. Your photography looks good too. Many good points have been made already. Enjoy the hobby and don't get caught up in the competition with the Registry. Date and mint mark runs are difficult to unload. The Registry Showcase allows for any type of set you can dream up. Buy that special coin that occasionally comes your way and move out the ones that you lose interest in. The net out of pocket goes down significantly when you sell one to buy one and you will most likely build a nicer collection.
Back when the price of Gold was released by the Government I started buying 1 Krugerand per month or sometimes one per payday. About the time Gold started climbing, my wife got deathly sick and I paid the Hospital bills with the sale of all the Krugerands. Since I had only paid close to spot, I did very well on the sale. Should have held them longer, because I sold around $500.00 an ounce, but needed the money right then. If I was going to start over, would always stay with something that had some intrinsic metal Value, (90% Silver, Gold etc) and just hang on for the long run.
But for my retirement, I invested and still do, in Tax Liens which the County pays me 1.3333 % per MONTH (16% per year) in interest here in Pima County, Arizona. Some states allow Tax Liens, some don't but since you have the time to go before retirement, go buy a book on ebay called "THE 16% SOLUTION" for less than $25.00. I bought this book about 20 years ago and it has paid off very well. Some states pay higher interest than others, but here I redlined the City and only invest in areas where I would want to live. Takes me about 10 hours a month to maintain the system, but suppliments my retirement very nicely. $$$$$
Do it, you won't be sorry!
If you want more info, PM or email me.
Bruce
Coins are not meant to be an investment. Yes, some collectors do very well when they sell their collection but most will probably lose money. Coin collecting is a hobby. If you have some discretionary income use a very small percentage of it and buy some coins that you will derive pleasure from. And for the overwhelming majority of us don’t borrow money to buy coins.
Coins can be an investment, or it can be a hobby or a combo of both.
The excuse that it is not an investment is bs, dealers make a living off of it a la investment so why can't collectors.
I also agree that coins are a better store of value/cash than blowing it on food, drink, play and women....errr forget the women part lol.
So that means you have to buy smart, with long term horizons and be ready to be married to each and every coin you buy because with your luck you will. Also quality over quantity, many have a ridiculous amount of coins in their collection which can cause a storage problem, a logistics problem, a divestiture problem and a further money problem.
Keep the collection small, keep it rare, keep it the highest quality you can afford and buy what you really love in case you have to marry it.
And lastly timing is everything, so be ready to sell or hold at any moment and have the ability to hold through tough times whether world or personal.
My humble opinion only. Stocks are a much better tool for long-term investing (and you would be considered long-term). Coin collecting is a fun hobby, but don't expect to make much money on selling them unless they are truly rare, and you sell them through a reliable auction house.
My OmniCoin Collection
My BankNoteBank Collection
Tom, formerly in Albuquerque, NM.
I might lose money on newer coins I’ve purchased if/when I try to sell them, but most of the coins in my long term collection were from 2005-2010 when I first got serious about coin collecting and was in a coin club that put on coin shows. During that time I was buying coins and selling them too on eBay and overstock.com and I had a special coin bank account. I was using the profit from the ones I was selling to buy the ones for my long term coin collection. My wife was keeping track of the money spent versus what we made in the auctions and we were averaging 100% profit in the auctions. What really helped was that my wife was secretary of the coin club in charge of the coin shows and the dealers treated us like we were dealers and they would let us cherry pick their inventory and sell to us at dealer rates. We had to move and didn’t manage to get to have that same kind of relationship with the dealers on the other side of the country where we ended up at, so ever since we’ve just just been regular collectors and have just been buying a few coins here and there. But since we got most of our long term collection the way we did it, I don’t think we will do too bad if/when we sell off the long term collection. Because we sold coins and learned real quick what the coins could be resold for I think we didn’t make too many big mistakes on our long term collection in terms of money spent.
Mr_Spud
More great comments. I have definitely learned a lot in the few years I've been doing this, especially in that transition from "anything made of metal" to "registry set." My preferences / aesthetic have evolved and I am definitely avoiding buying coins that are less than 100% of what I'm looking for. (I.e. something I will want to sell in 6 months). I am definitely guilty of not being patient sometimes.
We will see what comes next for me. I think I will pare back my spending and try to be more selective. Maybe I will branch out and buy some bitcoin, but watch out because if I buy any it means the whole thing will collapse to zero. Lol
And since this is a coin forum I'll share some of my favorites:
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Think of coins as a hobby where your return isn't a total loss, but it's not going to compare to any other standard investment like stocks and will often be negative. I think of it as having a nice car where you will enjoy it, you can sell it for a non-zero value, but for the most part, will take a substantial loss on sale.
I'd keep retirement funds separate. Any positive return from coins should be considered a bonus, but for the most part, expect a loss.
Now there are ways to treat coins as an investment and a business, but this requires being very disciplined on those goals and not collecting "for fun".
Hang in there.
Coins have treated me very well for over 40 years. You obviously are interested in and get enjoyment from numismatics.
Your current sets show you have developed great taste. You have paid a bit of a price for the education.
Specialize. Learn. Be patient. Attend shows and auction lot viewings when they come back. Hold for a few years unless you want to deal.
When no longer fun take a break or quit. And you might come back if so ...
My 1866 Philly Mint Set
Nothing much to add, but debt can be a longterm handicap.
You are a net saver and diversified... you will do well.
When silver is in the teens dollar cost average if that is still an interest.
BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out
Weren’t you the one just asking how to liquidate without a plan due to a divorce? Not a knock just makes your paragraph hard to follow
11.5$ Southern Dollars, The little “Big Easy” set