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Is coin collecting a rational approach to investing in metals?
August 1, 2011 5:09 AM   Subscribe

Is coin collecting a rational approach to investing in metals? Is coin collecting the funnest way to invest in metals?

Information about metals and coins on the web is all over the place - everyone is selling something.

The art and history of coins is pretty neat. Starting a collection is easy and cheap. They're potentially an interesting picture into far away lands from long ago.

But, is it really a sound way to invest and expect a return? Sticking to uncirculated coins straight from a mint seems like a logical way to avoid condition and counterfeit issues. Sure, one could buy stock in metal industry companies, but that doesn't have the same visceral sense of ownership as holding a physical asset (which is probably only a rational concern in a post-civilization-as-we-know-it world).

I'd appreciate your thoughts, experience, or recommendations to reputable sources including websites, books, and shops.
posted by GPF to Work & Money (13 answers total)
 
No.
posted by pharm at 5:14 AM on August 1, 2011 [2 favorites]


The storage costs alone are likely to kill all of your profit.
posted by devnull at 5:25 AM on August 1, 2011


Assuredly not.

Also keep in mind that "collectibles" (including all metals) are subject to U.S. tax at a rate of 28%, and not the regular capital gains rate of 15%. This is a substantial drag on returns. Plus, you have to store and secure the coins!

This is not tax, legal, or investment advice, and I am not your advisor or svengali in any capacity. Consult your own tax, legal, and investment advisors.
posted by Admiral Haddock at 5:30 AM on August 1, 2011


Sticking to uncirculated coins straight from a mint seems like a logical way to avoid condition and counterfeit issues

The way to avoid condition and counterfeit issues is to buy junk gold (at junk prices). 2nd-hand jewellery, etc. I imagine that this could be as interesting as coin collecting, in its own way.
posted by -harlequin- at 5:36 AM on August 1, 2011 [1 favorite]


Keep in mind that there are really two kinds of coins: gold (or other precious metal) bullion, which are usually fresh-from-the-mint and essentially just gold as a commodity in an easily transportable (coin) form; and collectible coins, historic coins that are interesting because they're rare, etc. The latter have a "collectible" value completely aside from whatever the value of their materials. Collectibles of any kind, coins included, are never a really sound investment (especially in the case of apocalypse).

So if you're doing this for investment (not just because you like pretty coins), you want the bullion-type coins. The U.S. Mint makes the American Buffalo (and there are other choices from other mints, like the Krugerrand from South Africa). You can also go balls in and just buy gold in bar form instead of coin form.

But as others have pointed out, there are tax issues, plus you have to be able to store this in a secure way, and in my opinion, probably not worth all the hassle.
posted by jonathanweber at 5:41 AM on August 1, 2011


Most American coins are not made with precious metals, nowadays. Yes, there is all sorts of
'specialty' mints that make 'coins' here and there, but... for actual coins made of precious metals, you have to look to roughly 1960 or before. International coins like the Kurregrand (sp?) are often named as the thing to look for in coin collecting...

but, I am not an anything, and the short answer is no.
posted by Jacen at 5:42 AM on August 1, 2011


About a year ago, Mutant said that he was only giving people gold and silver, and then he mentioned Kruggerands which are a coin (maybe not the kind you are thinking of, though).
posted by Houstonian at 5:42 AM on August 1, 2011


The art and history of coins is pretty neat. Starting a collection is easy and cheap. They're potentially an interesting picture into far away lands from long ago. and ...but that doesn't have the same visceral sense of ownership as holding a physical asset...

These are, without a doubt, awesome reasons to start a coin collection. Reasons to start a precious-metal investment stockpile? Not so much.

If you're focused on "rational" -- looking for enjoyable, visceral, and interesting is counterintuitive to a rational investment plan. Rational precious-metal investing would be to go the least effort, most cost-effective, and the highest return option, none of which are coin collecting.

However, do collect coins! For all the reasons you listed above! Stick to Kruggerands if you want to feel like you're focused on investment, but get every different year and design and display them safely and securely in your home so you can look at them all the time and marvel in wonder at the numismatic beauty of the fine craftsmanship that went into making the coins. Buying up rare and valuable coins just to leave them in a safety deposit box in case of the financial meltdown is a crime against numismatism, and you can tell Goldline I said so.

I don't have specific website, book, or shop recommendations, but coin collecting is a well-documented hobby, largely since the coins themselves are well-tracked and documented. Compare multiple sources, and try and learn how to identify coin quality yourself. You're not going to be starting collecting 19th century gold coins, so you'll have time to get accustomed to what is a good vs what is a fine. Early 20th century $5 coins would be a good place to start if you want valuable coins at a reasonable price, and they're relatively available, and easy to store.

Lastly: coins have an inherent value just for being the coin. That may or may not have significant value above and beyond the gold content. Keep that in mind with your 'investment' -- there's a big difference between the two.
posted by AzraelBrown at 5:43 AM on August 1, 2011 [2 favorites]


Coin collecting can be a great hobby, although it can get expensive.

Dealing in collectable coins can also be a reasonable form of employment for some people. You have to have a good eye, a good sense of the market, and good negotiating skills. I have a friend who did this for a while to supplement the income he earned as a social working.

Collectible coins as an investment strategy? As others have said: no.
posted by alms at 6:08 AM on August 1, 2011


There's been several threads on AskMe recently about coin collecting that might be worth a look.

Check out this thead and this comment in a related thread for starters.
posted by Georgina at 6:10 AM on August 1, 2011


No. Run, don't walk away from this idea. When my dad died, he left behind hundreds of coins from the various "mints" out there selling whatever they can think of. I looked through the invoices he hadn't bothered to get rid of, and on average he paid three to five times what we were able to get for them when we sold them. He spent thousands of dollars on them, thinking they were a great investment, but they aren't.
posted by Ghidorah at 6:30 AM on August 1, 2011 [2 favorites]


To answer your questions backward, coins are very fun to collect. They are not an investment, however, and should not be thought of as one.
posted by Gilbert at 7:27 AM on August 1, 2011


Thanks all around for weighing in. Thank you for reinforcing the notion that numismatic value and material value are very different. Coins are history and art - which is awesome.

I'm intrigued by the idea of buying junk gold -- getting a sharper eye for 2nd hand jewelry. I know a lady who will be happy to hear that. Interesting in it's own way indeed.
posted by GPF at 10:10 AM on August 1, 2011


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