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 Replies: 20 / Views: 3,468 |
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Valued Member
United States
397 Posts |
I have been collecting coins for a little over 2 years now as a way to build a non-stock funded retirement account. Granted I have a IRA/401k, however I want to work on something that I directly control and is in something physical. Unfortunately I don't have substantial income to put towards investing in coins, so I have had to develop a way to add to my portfolio without spending significant amounts of my own disposable income on buying coins. So, what I decided on doing was to learn how to value coins, market and then sell. It's a pretty simple method : *Find people who want to sell
*Offer 75% of estimated value
*Flip 75% of the coins I feel have the least potential
*Keep the remaining 25% in value and add it to my collection.I've been doing this for 2 years now and have managed to put together a decent collection (In my mind). My goal has been to develop a diverse portfolio of coins and balance them all between gold, silver & numismatic value. Unfortunately I haven't been able to locate too many gold sellers outside of jewelry (Although I'm in talks right now with someone who has about half a ounce worth of gold coins). Right now I've got about a 50/50 portfolio between silver & numismatic value. My costs for everything have been negligible due to constantly flipping over and over again. I don't know what my actual cost is offhand but it's less than $2,000 I would estimate. For key dates, so far I've been able to acquire a 1922-No D, 1928 Peace and a 1921 Peace dollar. I've also been able to cherry pick from about 200 or so morgan/peace dollars that I've bought/sold. I've been able to keep around 40 of them with the majority being BU/AU specimens. On top of the dollars I've also saved back the vast majority of older coins I run into. Mercury dimes, Barber dimes & halves. My thinking is that older coins will likely have much better appreciation than anything newer (And in the long term, be much more stable/profitable than junk silver). I've also been able to get ahold of over a dozen ASEs, some being NGC/PCGS early 80s/90s MS69s. I'm trying to continually be careful not to overpay for coins, but then not be so amazingly low on what I offer that I turn people off and get a bad rep. I am at the point now I could liquidate some of my stash and go with higher graded key date coins, however my thought is that if I have a wider base of coins, I won't have to worry about high end coins depreciating (Which I've seen some examples of). Recently, I attended a large coin auction with thousands of really awesome coins. After participating and buying a few coins, I talked to the auctioneer and asked him how he managed such a good auction. He told me that the owner of all the coins had contacted him to come assess and buy out his collection. He had collected over the course of 10 to 20 years (Starting in the early 70s or so) and spent a total of $25,000. He wanted the auctioneer to buy him out and double his money at $50,000. The auctioneer knew the collection was worth quite a bit more than that so held a standard auction. The coin collection sold and brought the man around $350,000 all total. I'd love to be able to build up a collection like that, and feel that I could do well especially since I'm starting off at a relatively young age (25) as this man started off in his mid 50s. So, what are your thoughts on this strategy? I could be making money by just simple flipping, but I would't be saving anything back. Edited by schockergd
12/27/2012 6:01 pm
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Moderator
 United States
14463 Posts |
<------- this is my opinion. Some coins do increase in value, either from metallic content, supply v/s demand, or quality. But I am not sure coins make a good investment. As you get much older, coins that you collect today will probably increase in value simply due to time. But on the same note, will the increase due to time out pace inflation  Bullion will probably increase in value over time as metals get less common. There is only so much gold/silver/platinum on Earth. If you are really interested in investing for the long term, you may need to speak with a professional. |
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Valued Member
United States
386 Posts |
Other members will offer some good advice on this, but I want to congratulate you. You're at a good age to build something spectacular without having to try and spend everything you earn in a short period of time. I'd say stay in this for the long run. Personally, I like a mixture of coins and bullion. And I like to collect mint state, graded coins. Maybe you just want to amass value, but I say don't forget to enjoy the hobby--the beauty and the history of coins. Enjoy the trip, what you can learn, the people who share your passion, and own what gives you pleasure.
Don't adverise to everyone you know about your activities and keep your collection in a secure location, in a bank vault, for example.
Edited by blackjack
12/27/2012 7:12 pm
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Bedrock of the Community
13014 Posts |
While I agree coins are a risky investment in the sense of the value increasing, I think you do have an advantage right now with the economy being bad. What I mean is prices are down from where they were a few years ago, so if all that happens is the economy bounces back the prices should rise. The only thing I would say though is for the ASEs and modern non circulating coins I dont see 69s gaining any value in our lifetimes. They sell for a little over raw and are very abundant. 70s are the ones that have the best chance of increasing unless the series is really rare. But even then just look at the price different between the raw 2011 ASE set and the 69 graded one, its not much if anything |
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Valued Member
 United States
397 Posts |
Quote:While I agree coins are a risky investment in the sense of the value increasing, I think you do have an advantage right now with the economy being bad. What I mean is prices are down from where they were a few years ago, so if all that happens is the economy bounces back the prices should rise. The only thing I would say though is for the ASEs and modern non circulating coins I dont see 69s gaining any value in our lifetimes. They sell for a little over raw and are very abundant. 70s are the ones that have the best chance of increasing unless the series is really rare. But even then just look at the price different between the raw 2011 ASE set and the 69 graded one, its not much if anything Not sure if I mentioned it , but I'm only dealing with older (1996 and before) ASEs, not any in the past 10 years. I've noticed locally that the resale value on them is tremendous. I sold several at a auction recently well above $100. I agree though on recent ASEs and value, I don't see much of a reason in collecting them outside of bullion value. |
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Pillar of the Community
Canada
3692 Posts |
Do your best to encourage younger people to become collectors, for they will be your market when you retire. If you can fit it into your inventory, sell paraphenalia like albums, tubes, and 2x2 flips, etc. Your plan only works if more people start collecting old coins the way you do.
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Bedrock of the Community
13014 Posts |
Quote:
Not sure if I mentioned it , but I'm only dealing with older (1996 and before) ASEs, not any in the past 10 years. I've noticed locally that the resale value on them is tremendous. I sold several at a auction recently well above $100. I might have missed that part. 69s are great for the older ones, a lot of them 69 is the highest graded so its basically the same as a 70 for the newer ones and probably rarer actually. I would get those given the opportunity at the right price all day long |
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Valued Member
United States
397 Posts |
In my mind all of the new graded ASE coins are gimmicks. The older ones have value due to mintage. I regularly set aside a percentage of all coins I get to give away to kids to encourage collecting. I have given away dozens of ihps, buffalos, V nickels and the like. |
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Pillar of the Community
United States
3789 Posts |
Hey there! Welcome to the community! I would like to offer what has worked for me, tho I haven't flipped and not interested in flipping. But if you are looking for an increase in coins for profit I hope I can give you some pointers, based on what has worked for me as a collector and which, I was NOT looking for an increase. One of the simple and easier ways to get some gains on your coins is to buy proof silver and gold coins. In some aspects you can cut out the middle man when you buy these coins direct from the government mint. The first place then I suggest is buy PROOF Silver eagles and gold proof eagles and just sit on them. Does the Mint have a mark up on these? Is the price way higher than spot? YES! However you have no middle man, no dealer costs. You can buy these and just sit on them, salt them away. I have done this with US Mint gold and silver eagles proofs, I have done this with Royal Mint proof Britannia's and South African Mint Proof krugs. I just sit on them for a couple years, salt them away and they catch a premium as time goes on. If you chose to do bullion coins, you need something that again, will give you cushion over the spot metal price. So if you buy American silver eagles, buy a whole roll and sit on it. Buy China Pandas but buy a whole sheet, and sit on it. Same with Maple Leafs, just sit on a whole roll. Remember, you are going to need some sort of cushion in whatever you buy. Some other points * stay away from graded coins * use ebay to look for deals on auctions, you are going to find desperate sellers as the price of silver and gold go down. * stay to close to proof, limited mintage coins * make sure that the bulk of your purchases are coins where there is liquidity, so you can get out faster. * be patient, some of these coins are going to take several years to show value. * not all coins will move, some wont, stay focused. *don't get too wide on your focus so that you can follow prices and market trends and patterns much closer. These are just my suggestions, not gospel. Its what has worked for me, without even knowing it. I stopped collecting in 2004 and I was blown away at the premiums my proof coins gained and sheets and rolls that I was collecting since I came back. finally, remember that there is risk in EVERYTING that involves making money. Count on volatile pricing. count on a sudden drop in interest in coins and precious metals, sentiment could drop like a rock. Have some sort of plan that if you need to liquidate and take modest losses instead of waiting and watching the losses pile up. STAY LIQUID, I cant stress that enough. I hope that helps! |
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Valued Member
United States
397 Posts |
Out of curiosity, how much of the value on your proof coins is numismatic, and how much is based on bullion spot increases?
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Pillar of the Community
United States
3843 Posts |
Quote:
It's a pretty simple method :
*Find people who want to sell
*Offer 75% of estimated value
*Flip 75% of the coins I feel have the least potential
*Keep the remaining 25% in value and add it to my collection.
*** my Two Cents *** The only 'problem' I see with this strategy is that if you are buying collections from the general public you will be inundated with a lot of lower end junk and extremely common coins that are hard to flip and thus tend to accumulate unsold in your inventory thus reducing your liquidity and profit margins. This is fine if you are hoarding coins that have most of their value in their precious metal composition but for the numismatic component of your stategy you might want to consider getting into higher end/rarer items and focus on quality over quanity even if you have to buy from other dealers. Over the past decade or so the top of the numismatic market has been where exponential growth has been found while common material has seen modest gains (largely related to precious metal spikes) or has seen losses in many series. Personally I don't look at coin collecting as an investment, I hope my purchases retain most of their value but I'm not expecting any significant financial gain. The collector that you mentioned in your story must have had a very good eye for quality, shrewd business savvy, as well as a lot of luck in seeing his collection appreciate in excess of 1000%. |
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Pillar of the Community
United States
919 Posts |
I'm not a day trader in stocks or coins. I wish you luck.
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Valued Member
United States
67 Posts |
i was thinking about doing something like this. However, I believe that I want 1000 pounds of silver in my safe and get it for free(roll hunting or horse trading like you mentioned above) I farm and I have no 401k or IRA. I am basing everything on silver/gold content though except for wheats and nickels cause I like to hoard those coins.
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Valued Member
United States
306 Posts |
Theoretically I think you have got a good plan and it looks like you've been able to save quite a bit for "free." I practice a similar method of buying/selling to keep remaining coins as 'profit.' However, I have not actively sought sellers outside of fleamarkets/sales/auctions. Though not mentioned, but hopefully a part of your strategy involves the highest level of professionalism and honesty that you can practice. Build a good reputation for yourself and you should continue to do well, and hopefully, better with time.
And, hey, how can you post this thread without pictures?! :)
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Bedrock of the Community
United States
20753 Posts |
I guess anything is worth a try to get rich or make a decent nest egg for retirement. However, try to remember that coins, stamps, Hot Wheel cars, Beenie Babies and many other items that are or were ment to be for fun, fade with time. So far coins have been steady but that too could end. Being a coin dealer that sells presently is smart. but to think it will go on forever, not to good. Good luck.
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New Member
Singapore
12 Posts |
I'm new to coins, but here's what I think. You already do well with your strategy, so continue what works for you. The "professionals" can sometimes be the worst to ask for advice.
I would certainly love to accumulate coins to pass them to my kids.
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Replies: 20 / Views: 3,468 |
Posted 12/27/2012 7:09 pm
