As featured in The Wall Street Journal, Money Magazine, and more!
     

Coin Collecting Is Dead

This article was written by in Coin Collecting. 11 comments.


My memory may be fuzzy when I think back to when I was five or six years old, but one thing that stands out is my grandmother’s house in Queens, New York. She had a coffee grinder full of pennies, and I’d enjoy looking through this collection, placing the best-looking coin of each date and mint mark into blue coin folders.

Somehow, after moving to and from college in later years, the folder containing the oldest and most rate of these coins disappeared, and when I have the chance, I occasionally look through coins to try to rebuild this collection. I’ve also started collecting other coins.

Coin collecting is said to be the “hobby of kings.” It’s a gateway to history. It’s even possible for the hobby to be profitable, but it doesn’t look like that will ever be the case for me. If anyone is making money from coin collections and collectors, it’s the professional dealers who get special pricing favors from other dealers and sell to the public for profit. Dealers can also sell the public’s collections as brokers or buy coins directly for customers, another source of revenue. The individual collector is at a disadvantage.

The U.S. Mint has been involved in the collecting market almost one hundred years. What makes a coin worth more than its face value (or in some cases, melt value) is its rarity and condition. A century ago, there were few collectors and the Mint produced much lower numbers in terms of coin volume. The Mint produced coins to suit the needs for circulation, but as coin collecting grew in popularity, the Mint saw it as an avenue of profit, creating new coins designed just for collectors and encouraging the industry.

Today, the Mint produces more coins and enough collectors keep everything made by the Mint in pristine condition. No new coin will ever be rare again unless the Mint produces something with an extremely limited run. And if the Mint were to do this, collectors would snap up the issue, the coins would not be placed into wide circulation, and the few specimens will be kept in “mint” condition.

Every year I buy a set of proof coins from the Mint, showcasing the designs in the Mint’s own packaging. The Mint produces so many of these and collectors keep almost all of them perfect condition. There is little likelihood of these sets ever being worth much more than the purchase price, and in many cases, the street value could actually be lower than the purchase price. I am not looking for profit right now, just the satisfaction of building a collection that I could, possibly, one day share with someone.

Modern coins offer little for the collector concerned with earning a living from the coin collecting industry, but old coins, produced when the Mint kept volumes low enough for circulation and before every type of coin was automatically saved in pristine collection, can be profitable. Dealing with old coins is more like dealing with works of art. A small number of specimens go from auction house to auction house, increasing in price, while a larger number of old and rare coins at auction don’t sell at all. The prices of these rare and most profitable specimens are out of range for the casual collector.

Nevertheless, the idea of coin collecting has a public transfixed with the possibility of making a fortune or creating a legacy of monetary value to share within the family. The Mint will be happy to feed that perception as it continued to profit significantly from investors who buy any new product (or repackaging of an existing project) for the sake of completeness. The latest new product from the Mint, a Limited Edition Silver Proof Set which includes fewer coins than the already existing annual silver proof set, is a good example of how the Mint uses repackaging to create demand among collectors. There is nothing unique about these coins, only the packaging, of which only 50,000 will be produced.

Moves like this will stimulate some demand, but it will most likely dry out quickly. The coins themselves are minted in such numbers they will never be rare and almost the entire population of coins will be in perfect condition for hundreds of years.

For the non-professional, non-dealer collector looking to use coin collecting as a way to build wealth, modern coins will offer no such assistance. Even focusing on old coins has limited results because collectors have now preserved what could possibly exist in the marketplace. And every so often, the Mint throws the industry for a loop by releasing into the public a collection of coins held in a vault somewhere, making what was formerly a rare coin just one of many. This is what happened with certain old dollar coins (called Morgan dollars, after the designed of the image on the coins). The Mint released bags of coins formerly thought to be rare. With the coins no longer rare, the price plummeted. With the market easily manipulated by the Mint, you can never be sure how the value of your coins will be sustained over the long-term.

Despite the volatile market and likelihood for loss rather than profit, coin collecting can still be fun and educational. Every collector has a story about how he or she started or about a younger person they’ve inspired to learn about history through sharing love for the hobby. From a financial and business perspective, casually collecting modern coins is dead, but some of the better aspects of the hobby continue to live on.

Flickr

Published or updated December 11, 2012. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,485
Rank: Platinum
About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar krantcents

Although I am not a coin collector I saved my Dad’s Indian Head (circa late 1800s) penny collection. I save foreign coins when i travel as well. When I was a kid, I collected stamps. I started when I was traveling overseas (10 y.o.) and enjoyed it for a while. I think I was trying to capture the memories of traveling.

Reply to this comment

avatar Luke Landes ♦127,485 (Platinum)

I’d like to have more coins from the 1800s. They’re just practically impossible to find in circulation these days. I was lucky enough to find a buffalo nickel some months ago. I think I may have only one Indian Head cent.

Reply to this comment

avatar Ceecee ♦53 (Newbie)

I think a lot of coins are worth more for their melt value…..especially old silver coins. It is sad to see them melted down, but if people need the cash, they need the cash. When I was a cashier I used to look through the coins when it was slow—–I’d trade for bicentennial quarters and wheat pennies…….and silver quarters, but they were rare by then.

Reply to this comment

avatar jim

I’ve enjoyed coin collecting as a hobby. I was never too serious. I didn’t expect to make any money at it and it was mostly just fun as a hobby.

Reply to this comment

avatar AverageJoe

I still hear about coin collecting from time to time, but stamp collecting is the one that seems to be dead. I haven’t met someone who collects stamps in ages.

Reply to this comment

avatar javi ♦80 (Newbie)

When I was young, I too, collected coins. I loved going through my change and trying to find something unique. Now I grumble whenever I I have to carry change.

Reply to this comment

avatar Lance @ Money Life and More

Joe… what is a stamp?

I think coin collecting is now just for something people enjoy. I wouldn’t ever try to make a profit out of it. If you enjoy collecting the coins though it is still fun, just not profitable.

Reply to this comment

avatar Ornella @ Moneylicious

I wonder if sticker collecting as a kid has an value? LOL. I don’t know of anyone who collected coins. But I think my grandfather collected stamps. It was interesting to see the differnt types of stamps from other countries.

Reply to this comment

avatar Juggler314

Hey Luke,

Why not try and draw some broader conclusions from an article like this. It’s not coin collecting – it’s *any* sort of collecting once it becomes mainstream. I got into baseball card collecting in the craze of the late 1980′s – so I now have 40,000 cards sitting around that are nearly worthless. The USPS produces huge runs of “collector series” stamps – and good chunks of those never go unsold.

The interesting thing here is that this really just ties into market inefficiencies. A small market lends itself to inefficiency very easily. Thus money can be made. Once this happens though – the market will correct – by increasing the size of the produced goods.

The stock market works this way a lot too – you can profit off some interesting quirks – but only so long as those quirks are secret – thus the rush to ever faster and more voluminous flash trading these days. That market too is about to crash – you can only extract so much free money out of the system before it just wont take it anymore:)

So the real trick is to find something early, keep it mint, and hope it later becomes a collectible market. I was lucky enough to be into “Magic: The Gathering” cards early on. I now have several thousand dollars worth of them laying around and I really didn’t even try – that’s just what’s leftover from actually playing and trading the game!

Reply to this comment

avatar AMB

Hi, I’m a coin collector and a Gen-X’er, so I’m not one of the elderly, who used coins almost all the time in his youth. Yes, I’m part of the generation where credit and debit cards became the norm in the US, and seeing discarded pennies on the street is common. So, this may mean that coin collecting is dead or dying. Since, I’m a coin collector, then you’d expect me to say that it is sooooooo totally not!!! I don’t mean that. I’m a coin collector of old coins, almost purely for their historical and artistic value. I’m not looking for investments. I personally think that collecting ancient, medieval and early-modern coins can connect you to the time and place. When and where the particular old coin in my hand today was made and had its life makes me feel like I’m almost in another world that is long gone by. And these coins do not have to be so expensive at all. I totally accept lesser-condition coins which are naturally cheaper, just as long as that the condition is not too low. However, there is indeed a dying element to coin collecting, and that is brought forward by way too many modern coins today. Despite coins having less usage in business transactions today, the number of coin types only increased. Here in the US, there are many kinds of US coins to “collect”, plus many more coins, only meant to be collected (non-circulating commemorative coins). I think that this overproduction of coins, plus the overemphasis on precious-metal investment is the real culprit in the hampering of coin collecting. And let’s not forget too much emphasis on the highest of the high condition of coins. Where’s the history and the feeling that a perfect-condition coin had a life of its own? Answer: this pristine coin had no life! Personally I think the US mints way too many coins. Cutting out some non-everyday coins will only help coin collecting, not hurt it. I only wish that the number of coins, particularly the “circulating coins” we don’t see, will be eliminated; and that the number of commemorative coins will be minted in less amounts and in less types. Not only will coin collecting be helped, but coins in general will be looked upon as real money again, albeit small change only, but both can live on.

Reply to this comment

avatar Peter

The demographics are certainly older in the USA. There’s a great deal of interest in gold and silver coins in the US, despite the recent decline in values. The biggest growth I’m seeing is from younger people in Europe. I think it has something to do with all the countries who dumped their own currency for the Euro.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: