I like collecting coins, but I’m not an avid hobbyist. Every year, if I am not given a gift of the standard Proof and Silver Proof sets of coins from the U.S. Mint, I’ll buy them for myself. It’s not an investment so much as a small hobby.
Last month, Mighty Bargain Hunter pointed out that collecting coins is useless for preserving wealth, but I don’t completely agree. The Mint will continue to change the metallic composition of coins as materials become more expensive or rare, making any coins other than the current composition slightly more valuable. Over time, the number of coins in circulation from any particular year will only decrease, automatically making the existence rare.
No one can guarantee which metals will be valuable generations from now, but chances are the value of current coins will go up. Yet, circulated coins may not be the way to go. Here’s an anecdote:
The other night, a few guests of my father were discussing this topic around dinner. Just a few years ago, this guest bought a limited edition set from the Mint commemorating the Olympics. The Mint keeps production of these sets to a low number, which aids in their perceived value. Recently, he was able to sell the set on eBay for a 300% profit.
The act of selling takes the fun out of collecting. What if his family kept the commemorative set for three or four generations? By then, physical money might very well be a thing of the past aside from collectors’ items.
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Flexo,
Essentially I agree with your standpoint that coin s can be a money making investment. About 5 percent of my portfolio is in silver or gold bullion and the prices of both commodies have increased recently.
Not only can you profit from the increase in value in the underlying metal, the coins are asthetically pleasing, and are fun to look at and talk about.
Best,
James
I’ve got to agree with you Flexo, though Coins aren’t a great investment they aren’t likely to drop in value. A perfectly preserved (mint set) will definitely increase in value over a period of years. Imagine if your great grandfather gave you a collection of mint condition coins from the 1850s? They’d be worth a great deal of money right now.
The only real issue here is using coins as a true investment, they won’t go up in value in the short term. If you buy coins when you’re say 20 they’ll be worth something significant only when you’re ready to retire.
The problem with investing in coins now is that everyone is doing it. Unopened mint sets are all over the place. In fact, I regularly buy them for LESS than face value on Ebay.
That being said, I do collect them. And like others, the value of the silver and gold has made my collection somewhat resemble an investment. But I do it not for the profit, but because I like the hunt for a particular coin.
Investing in coins is only worth it if you are ready to wait a couple of decades, until the value goes up. But then at the same time, you have the inflation eat up your money in such a long time.
I don’t think we’ll ever see an age where physical money goes away. As long as there is crime there will always be physical money. It’s much more difficult to track, if not impossible. Not only that, but not all transactions happen via check, credit card, etc. What about trying to buy or sell things at a garage sale? You know you’re not going to pay with an ATM card, and a check may not be acceptable.
I’ve been collecting coins for some time now, and in fact I am starting to sell off some of my holdings. The thing I don’t like about selling coins is that, as collectibles, it’s a crapshoot to get what they are “worth,” specially since most of my collection is ungraded. I like dealing with precious metals now. An ounce is an ounce and the prices are easier determined.
http://1sttimeinvestor.blogspot.com/2006/10/selling-precious-metals.html
As a kid I made the mistake of polishing all of my coin collection. That devalued them. But they were shiny!