Are Coins/Notes Really A Good Investment?

In the true sense of investing there is money to be made if you are prepared to hold onto a single coin/banknote. If you have the cash to buy a proof sovereign, proof pre-1955 penny or 20 through 1000 pound banknote they will always go up in value over time because they are rare and will always be in demand (unfortunately collectors like myself can only dream of owning coins like those). Other coins will generally go up in price (with the exception of decimal coin/notes, which go up or down, it really depends which issue you are looking at), pre-decimal coins over time (10-30 year period) always go up in price.

Wiser folks than me have said that the easiest way to make a small fortune selling coins is to start off with a large one.

Here are three tips to make money in coins:

1. As with all "investments" (or, more properly, "speculations"), the trick to making profits is to buy low, and sell high. Coin dealers make their profits by buying coins at 50% to 75% of their "book value", then selling them for book value or more. If you're buying coins at book and selling them at book, you'll never make any money.

2. Wait it out for the long haul. Six years is nowhere near long enough to guarantee a good return. As MoR said, guaranteed profits for rare coins (and I mean the true classic rarities, not the flash-in-the-pan fashions of modern mint products) only come about after decades. In that sense, coins typically offer less of a return than other long-term investment strategies (such as the share market), but still better than inflation and with less risk of a sudden collapse just when you want to sell.

3. Choose your sale market carefully. That dude sold his genuine 1930 penny on ebay? Seriously? With all the fake 1930 pennies on ebay these days? I tell everyone I can meet to avoid ebay like the plague unless they really know their coins, especially when buying and selling high-ticket items. Some things with a very small niche market, such as rare medals or tokens, might do better on ebay than in a brick-and-mortar auction because ebay reaches a wider audience, but the truly high value stuff benefits the most from the guarantees, checks and balances a reputable auction house can deliver.

IMHO, there is little profit to be made in decimal currency. As has been said by others, it is the love of the hobby that keeps me going. My grandkids might make a healthy profit some time down the track, unless I go skiing first. LOL

Those who collect (not just coins) because of an interest in the items often amass a collection that has appreciated in value -but they usually don't want to sell up.
Those who collect as an investment only are often disappointed. The only ones making money from these collections are dealers and advisers who are "helping" to build the collection.

My advice is collect as a hobby and, if it turns out to be a good investment too. then that is nice.

Jeff

It's a long run game. You need keep those babies at least for 10 years above before you will be able to see profit.

totally agree

If some time in the future I break even or if I never sell my coins I'll still consider that I am ahead because of the pleasure they have given me.

Having said that I'm sure we would all agree that part of the please of coin collecting is tracking down that rare item, getting a great deal on a key date or just watching your collection appreciate in value.

I agree though that coin collecting as an investment is a long term proposition.

I have been collecting coins for over 40 years and I have been investing in coins for about 8 years. So I am both a coin collector and a coin investor. Although the two roles may overlap sometimes (probably by chance rather than design), in my opinion, the two roles are quite different. It is someting like buying real estate ... the house that you buy as an investment may be very different than the house you buy as a family home. In fact, you may never consider living in the investment property (a 3 apartment fixer upper). Back to coins. As a coin collector, I collect what I like within my financial ability to purchase. As an investor, after some study and analysis, I buy what has the potential to increase in value (similar to investing in stocks). During 2003 and 2004, I purchased large quantities of silver coins at just over bullion value. I did not care about the condition of the coins because I just wanted silver. Why silver? I bought silver because after careful analysis, I believed that it was a good investment. On average, I paid between $5.00 and $6.00 per ounce. Last fall, I sold nearly 3000 ounces of those coins. When a new coin is minted, I may buy it because I like something about the coin as a collector and if it increases in value that is a bonus. If I sincerely believe it has serious investment potential, as a coin investor, I purchase hundreds of the same coin. Like the stock maket, sometimes I get it right and sometimes I don't. The advantage of buying coins in large quantities (except silver or gold) is that you can almost always get you initial investmest back if you sell them (no guarantees).