Coin Collecting as an Investment...

[darthsidious]

I've been casually interested in numismatics as a kid. Recently, I've been curious about collecting coins for profit. My question is, is it reasonable for an amtuer like myself to make money that way, and if so, whar are some pitfalls to avoid. Knowing ATOT, I'm sure some of you are avid collectors, and I'd be glad toget some advice.

 

[DougK62]

I don't think you can go wrong with purchasing old coins that are already valuable.

 

[MrBond]

In "The Only Investment Guide You'll Ever Need", Andrew Tobias says that any sorts of collections as investments (stamps, coins, etc) are a bad idea.

 

[bctbct]

You probably lack the ability to properly grade coins. A tiny flaw not visible by the naked eye can significantly change the value on rarer coins.

 

[SuperNaruto]

read the collectors forums...

i only buy a few coins a year off the mint.. the biggest year was the buffalos..

bought 3 unc, 3 proof, 3 2 coin set.. they were like 39 each for the single and i think 60 for the 2 coin set..

UNC sells around 200, proof around 250, 2 coin set ~350-400..

there are some other coin that increase fast.. just need to look for them..

 

[So]

Invest in land or stocks, not stamped metal that is valued by how many times the stamp was used.

 

[marincounty]

I made some money in the '80's on chinese panda gold coins. I did take a $200-300 hit on one coin that had a tiny blemish which grew over time, so examine them carefully.
I wouldn't really expect to make much, but it's fun to hold shiny things.

 

[K1052]

Originally posted by: So
Invest in land or stocks, not stamped metal that is valued by how many times the stamp was used.

yep

I accumulate a small amount of physical precious metals in coin form (typically US silver eagles or Canadian silver maple leafs) as a hedge. Straight bullion bars or rounds would be slightly cheaper but the coinage is more recognizable and less suspect to fraud should I need use of it.

 

[kranky]

An "amateur" can make money but I have found the people who really enjoy coins end up doing better than people who are only in it for the money.

There are three major risks:
1. Not getting what you paid for. Grading is everything! But even professionally graded coins have high-end and low-end coins for the grade. If you buy low end coins, they can be tough to sell. How do you avoid that? Do business with the right dealer who will not sell you crap. Now if you buy stuff right from the mint, that is less of a concern, but you are limited in what you can buy. And if you buy "raw" coins (not graded by a professional service), you are really playing with fire unless you know what you're doing.
2. Paying too much. Even if you buy a properly graded coin, if you pay too much it will take a long time until you can sell for a profit.
3. Not getting full value when selling. If you sell to a dealer, you know you're not going to get as much as if you sold to another collector - the dealer has to make a profit to stay in business. If you can take good photos and list coins on ebay with good, honest descriptions, you can minimize this problem.

The place to start is to read "Coin Collector's Survival Manual" by Scott Travers.

 

[GasX]

Like anything, it is buy low sell high. Do you think you will be able to find coins that are underpriced or due to appreciate? If so, you might want to do this.

My advice would be to make it a hobby not an investment scheme.

 

[bctbct]

oh, and dont buy coins that are marketed as collectibles.

 

[DaveSimmons]

If you learn the value of them, you might make some money hunting garage sales for undervalued coins. That's still a hobby though, since you'd probably make more per hour with a decent job.

For investing your savings, stock index mutual funds or ETFs are a much better choice.