Conventional wisdon has for decades been that coins are a poor investment. I'm referring of course to collector's coins, numismatic items, not the ghastly bullion coins. There are basically three separate coin markets existing side by side: the bullion market, the rare coin market, and the regular everyday market catering to us collectors who don't have thousands of dollars at our disposal. The first two can be safely ignored, bullion is discussed everywhere ad nauseum and shouldn't be a concern of collectors, rare coins are beyond the reach of most if not all of us. Rare coins will always be in high demand, there is never enough of them to satisfy even the currently soft market. There is just as much likelihood of a rare coin losing value dramatically as registering any gains.
So that leaves us with the regular coin market which you and I inhabit. Is it possible to collect coins and even acquire some with a view to their medium term investment potential? If you were to ask 100 coin dealers 99 would probably tell you no, the other 1 would be trying to offload some junk onto you as an investment. However, those 99 dealers are wrong and I am right.
In general the coin market has been going nowhere since the 1970's except where precious metal prices have forced up prices. Within that general trend there have been individual coins which have increased dramatically, and even whole series which have become popular and risen in price. If you have a large enough collection you will almost certainly be holding at least some coins which will appreciate. As a collector the increase is pretty meaningless as you are not going to break up your collection for the sake of making a few dollars. The real trick is to identify a market trend or an opportunity influenced by events outside of numismatic circles.
Several months ago I wrote at some length about coins related to The Great War rising in value as the 100th anniversary arrives in 2014. It's not too late to buy these coins up, if I'm right you make some money, if I'm wrong you have a bunch of nice coins. Focus on the issues which either feature one of the main players, Kaiser Wilhelm, Tsar Nicholas and the Archduke Ferdinand are three which spring to mind, or have a direct relationship to the conflict. German occupation issues for example.
Now, here is a new idea and the whole point of this particular post. There are currently 310 million people living in the USA and it's estimated that only 1 or at most 2% of them are active coin collectors. In other words between 3.1 and 6.2 million people pursue coin collecting to some degree. In recent years a growing number of investors and financial planners have been making a very good argument for the number being as high as 10%. They cite the TV coin shows in support of their argument, surely the networks must have identified a major audience to be giving up so much airtime to the subject. Also the internet has made information about coin collecting more readily available than ever before. In years gone by you had to join a coin club and subscribe to the excellent weekly and monthly journals to learn about the hobby. Collectors never really had a community outside of their monthly coin club meeting to talk about the hobby. Now you can chat about coins with people from all over the world. I find these arguments very plausible. Coin collecting has become more accessible to the man in the street by a magnitude of thousands.
So let's assume that the figure is closer to 10% or well on the way to it. 30 million coin collectors many of them relative newcomers. Better yet, let's be conservative and say the figure is 20 million of which half are going to collect issues from their own nation. Most new collectors start off by collecting the coins from their own country, the coins they can pick out of circulation for face value. Is it then unreasonable to estimate that 10 million people are actively collecting US coins?
For the first few years these new collectors will be busy filling up their albums with nickels, dimes and quarters, mostly from circulation before moving on to earlier coins and the harder to fill album slots. Here is where it gets interesting..... most US issues have production runs in the 100's of millions so there are plenty of coins to satisfy the demands of collectors. However any coin with a mintage of less than 10 million is going to have considerably more collectors than surviving examples in just a few years.
Since the late 1960's the US mint has produced proof versions of the circulating nickels, dimes and quarters. There are earlier issues but these usually had mintages of less than 100k and are quite expensive. However the S mint proofs from the 70's onward are ridiculously underpriced, often less than the corresponding P&D business strikes. These tend to have mintages of between 1 - 3 million, in other words there are at least 3 future collectors for each coin. Invest now or repent later.
To be even more specific, there is a single business strike dime which will be worth a whole lot more in 2020 than it is today. In 1996 the West Point mint produced 1,457,000 dimes. To put that figure in perspective the Phildelphia mint produced 1,421,163,000 in the same year and the Denver mint 1,400,300,000. Anyone wanting a complete collection of dimes is going to be chasing one of these. They are already expensive as there are not enough to meet even the current demand. Expect to pay at least $10 for an unslabbed specimen. Happily I was buying them 2 years ago for much less and I already have three.
Put a little of your coin budget into US proofs, WWI related coins and 1996W dimes and in 4 or 5 years time you can reap the profits and buy some really nice coins for your collection. Please don't cash in your pension and put it all into coins though, it may well be that I'm wrong and I don't want to have dozens of bankruptcies on my conscience. Invest only what you can truly afford.
As always, grateful investors can send beer, coins or even just a thank you note.
Investment for 2020
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Quote: torontokubaI'll have to pass. I have no space for "profit" coins. I'd rather add a new piece to the collection than have 3 proof dimes. I can't stand proofs that simply knock off a circulation coin. It's as if they're manufactured for sheep, never to get dinged or damaged. For me, this is a forced area of coin collecting. I'd rather look for a coin with a mintage under a million or under half a million, know that it is/was a circulating coin, know that many examples of this coin have been or are on their way to being destroyed, worn out, damaged, etc. These coins are out there and do not always break the bank.
1983 MW Poland 20 zł...
https://en.numista.com/catalogue/pieces2074.html
2011 Greece €1...
https://en.numista.com/catalogue/pieces6352.html
2003, 2008, 2009, 2010, 2011 (mintage was cancelled, 30,000 exist in sets only) Greece €2...
https://en.numista.com/catalogue/pieces120.html
https://en.numista.com/catalogue/pieces6353.html
Quote: elvis123I have already started this with Canadian coins, especially silver coins - buying them for important periods in time (WWI, great depression, WW2). I haven't started with world coins for this yet, but after reading this I think I will start with buying some war-time world coins. I don't really have the money or truly the interested to buy proof US coins, I am more interested in circulation coins (just like torontokuba).
Quote: neilithicI collect for pleasure, not profitI agree with all of you!
And of course...
BAAAAAAA!
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Quote: pnightingaleI think several of you are missing the point, I'm not advocating investing in coins ... even in an undeniably flat market there are opportunities to pick winners by using your common sense ... no diferent than buying a single coin with the intent of selling it for a profit ... something which will help stretch your coin buying budget then why not?My separation anxiety between myself and my coins will not let me partake.
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Quote: torontokubaPut them in the rock tumbler for a couple of hours and you will be just fine. Don't forget to hold them by the edges while wearing soft cotton gloves when taking them out though.Quote: pnightingaleI think several of you are missing the point, I'm not advocating investing in coins ... even in an undeniably flat market there are opportunities to pick winners by using your common sense ... no diferent than buying a single coin with the intent of selling it for a profit ... something which will help stretch your coin buying budget then why not?My separation anxiety between myself and my coins will not let me partake.
Non illegitimis carborundum est. Excellent advice for all coins.
Make Numismatics Great Again!
Make Numismatics Great Again!
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Quote: pnightingale... the rock tumbler ...There you go, now that's a great investment.
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