Personally Feel That RCM Has Sunk The NCLT Hobby

I disagree here... I have been in a high Masters Club tier for the last number of years, and this year I've given my head a shake. It makes very, very little sense to "invest in" or "aggressively collect" what has become a mass-marketed money losing venture.

Put another way, I don't think it's wrong for coin collectors to "want" or even "expect" some form of return in the long-term (key = long-term), especially at the higher levels of the Masters Club (people with this level of disposable income / cash flow likely have good financial sense).

Don't get me wrong... I love coin collecting and the art connection. I just can't justify purchasing direct-from-the mint when losses in purchasing through this channel amount to 20%, 30%, or 50% per acquisition.




I think the RCM needs to improve on this aspect. Yes, coin collecting can be rewarding from an artistic perspective, but there needs to be a balance with finance. It makes no sense for "anyone" to continually lose money.

Since the risk (loss) / reward ratio has drastically tipped against our favour, I find myself:
1) Cutting back on "direct" purchases, relying on the secondary market for "better deals". I now consider the secondary market (dealers, ebay) as being the best method for valuing RCM products. In purchasing in this fashion, I feel that I am paying closer to "actual market value", and losses are less.

2) Dramatically cutting NCLT purchases, and focusing on other "collections" (circulation coinage, select stamps). In these other collections, the "baseline" cost is established up-front... a $1.00 stamp is always worth at least $1.00 (at least in terms of post office services).

3) Focusing on other "enjoyable investments". Since I cut back on RCM purchases, I have purchased three commercial properties with the a portion of the proceeds saved. Real estate also provides the opportunity to exercise some "artistic creativity", through renovation and staging.

4) Pursuing other "immediate reward" hobbies. Instead of sitting at my desk, unboxing coins, examining them, then re-boxing them and putting them into storage, I've been working on my collection of vintage sports cars. Time / funds spent on hobbies like this provide more "immediate" enjoyment per dollar, as I find that with the pace of RCM releases, my excitement is extremely fleeting with coins.

If the RCM does not improve on these problems, NCLT collecting will go the way of collecting "decorative plates" (everyone had a grandmother that just had to have the next collector's plate, and I don't know of one single person that continues to collect these today).

wildflower
I agree with most of your points. The only thing I wonder about are your comments regarding the second hand market. For most goods (cars, cameras, sporting goods) you are correct. However, items from the RCM are boxed and I rarely get taken out and "used" as it were, therefore the "stigma" attached to a NCLT should be less - more akin to purchasing a piece of art that has gone through many hands over the years.
As I type this though that analogy probably applies more to high end numismatics than to NCLT.

On the topic of preowned coin in general....

I wonder how many reading this thread and who are concerned about the secondary market value of NCLT also collect Circulated Coin?

Of those who have no interest in Circulated Coin whatsoever, is the reason because it's not new?

By the way, the resale value of NCLT and Circulated Coin generally leads in the same direction and while collectors of NCLT may blame RCM for the present devaluation, RCM can't be held accountable for the similar trend of Circulation Coin.

I cannot imagine anyone with "good financial sense" paying 3x melt for a non-income-producing asset in the hope of a long-term capital gain.

Any asset that sells today for less than 10x the price you paid for it in, say, 1970 has appreciated less than the same money would have appreciated in a passbook savings account (remember those?), or stocks, or bonds.

Buying new NCLT at 3x melt means that you are paying rent to own that coin. The only thing wrong with renting a coin is thinking that there is anything but a snowball's chance in a very warm place that you ever going to see that rent money again ... and, if you do, congratulations, you just broke even.

The investment meme must die!

Cheers,

/s/ ikeyPikey

The truth of the matter is, the vast majority of coins are not good investments. This is true for circulation coins and NCLT alike. Unless you are buying top quality examples of truly scarce/rare coins, it is unlikely that your collection will experience appreciable value growth. (For the record, a NCLT coin with a mintage of 4,000 - all of which are nearly perfect and immediately housed in plastic capsules before they are distributed - does not ultimately make for a scarce coin. There will always be a supply of top quality examples of such a coin - no matter what initial hype is associated with it.)

This doesn't (shouldn't) diminish the enjoyment of assembling a collection, assuming you are not out chasing the latest "hot" NCLT piece for instant ROI. A well-planned, coherent collection assembled over time is a terrific way to spend some leisure hours and experience a sense of personal accomplishment as you progress toward completion.

Well said, and this is an excellent definition of What's a Hobby as well.

Earlier someone also compared coin collecting to other hobbies such as Golf. Really no difference, all hobbies involve "a sense of personal accomplishment" whether it be improving ones game to 5 over par or searching for and eventually finding a 1996 gold toonie at X over melt.

And don't we know, it costs money to indiulge in hobbies.....

Great discussion here! Really interesting to hear everyone's perspectives.

Few thoughts in reply to responses:




Agree that secondary market valuation is somewhat out of the RCM's control, but... if supply were matched closer to demand, we should see relative price stabilization.

Despite society's obsession with "new", old can also be profitable and/or desired: "used" houses - another "hard asset" - typically appreciate in value (unless there is market manipulation or, just like with coins, supply exceeds demand).

Additionally, shouldn't well designed coins be "timeless", despite being minted with a date?




100% agree here! Again, well-designed coins with supply that is closely matched to demand should be just like art. Think of a work by Picasso - old, but still valuable.




Could the problem with NCLT be in this statement? Mass-minted... with dozens for sale at any given time. Many have said that the RCM pumps out coins with too high of mintage. This looks to be solid evidence.




Correct... but "economic rent" is much different than "economic loss". Example: if you purchase a Ferrari sportscar, the difference between production cost (parts, labour, etc.) and the "sticker price" is defined as economic rent. This is the price you pay for the prestige or luxury of owning a Ferrari. In most cases, economic rent with hard assets, in the long run, is amortized into the cost of ownership (the Ferrari brand still demands a premium, even in the used market).

"Economic Loss", on the other hand, is defined as the net loss you would experience the moment you drive the vehicle off of the lot. Fortunately, Ferrari has limited production runs, and the economic loss experienced through ownership is limited (provided you take car of your car).

With the RCM, it seems like everyone has started to build this assumption of immediate economic loss into their purchase price... people are simply willing to accept that immediately upon receiving a coin, it is - and "should be" - worth less. This is a tough one for me to swallow. Aside from a shiny blop of metal on the fireplace mantle, what then drives everyone's impetus to collect coins?







Agree here! When everyone is accepting and/or expecting losses on NCLT purchases you:
a) Have to purchase smart.
b) Can take advantages of awesome deals (the bar is set pretty low when everyone expects losses).

Side note: The RCM has a great gig going... over-produce coins, and flog them through the dealer network. RCM generates false "sell-outs", while liquidating all of their produced inventory. Dealers assume most of the risk on new issues... if product doesn't sell at this level, dealers are forced to discount.

Although they might generally go the same direction I think the NCLT route is much more risky. For example, if I am interested in a 1945 MS60 silver dollar I can through various means check prices over the last ten years and see if it holding its on, slightly down, or slightly up.
With NCLT one is looking often at a current coin with no track record. Like buying a mining stock from a company that has yet to drill a well.

I did buy a half ounce 2012 one cent non circulation for sentimental reasons but that is about it. I stick to the traditional circulating coins. It has nothing to do with perceived loss or gain but just that generally the yearly offerings by the Mint do not appeal to me.

I am unhappy about the alloy recovery program where so many "older" coins get taken out of circulation. Not unhappy for me as I own those, but I think it lessens the hunt for new collectors to have incentive to collect circulating coins. Almost like the mint saying "we will take that away and you can collect the stuff we make and you can pay us for it instead."

As was mentioned by many, in the end it is just a hobby. Whether I buy new stuff from the Mint this year and spent $1000 or buy old coins on ebay for the same amount in the end I have spent $1000. If I sell either the circulating or non circulation coins five or ten or fifteen years down the road and get $500, I am out $500, but hopefully I got $500 enjoyment. I do not golf or ski and people who do that generally don't at the end of the season moan and groan that they are out $500, and they do not get five years of enjoyment.

I belong to an internet photography forum where people discuss equipment and show their pictures and ask questions. People buy cameras or lenses for $1000 (and more) and sell them in 5 years for half price and upgrade or change to something else if they lose interest. They do not complain that they lost $500.

I think some of us need to change our mindset if we are collecting for the wrong reason. For most of us this is not a business, it is supposed to be for fun.