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.
Updated January 26, 2011 and originally published December 19, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.