Collector Coins, Worth The Investment?

I have a few collector coins, but don't go for anything from the Perth Mint. My main area of interest is building a collection of coins taken from circulation in the best condition I can find.

Not real easy to do at present, with new coins being pretty badly dinged by the time I get hold of them. for some reason, the security companies in Qld have stopped making up rolls & issue coins in small plastic bags & the coins just get knocked around too much.

I also collect errors so I manage to keep myself fairly well occupied searching coins every week.

The main thing is to collect for your own enjoymnent & what you can afford.

I have collections of several other countries, NZ, USA, Canada, Fiji, PNG, Singapore to name the main ones. These are nowhere near complete, I just add to them when I can, swap if I see an offer that I think will expand what I have etc...

It's all up to individual taste. It'd be pretty boring if everyone collected exactly the same things.

I will weigh in by saying that the above information is very correct, but I will add to it by saying that (in my opinion) Investing in coins in nearly any capacity is not good investing.

Here's why: I believe that when investing, the investor should be able to determine their return on investment to a relatively high degree (relative to risk). If that can't be accomplished, then the term is speculating.

If I said that I had an investment in coins that I paid $5000 for and 10 years later they are worth $9000, would you say that was a good investment? What if I said the same thing for $1 million that grew to be worth 1.8 million in 10 years? Is one portfolio better than the other? Well, they both return about 6.05% per year over that 10 year period. If your coins do that, that is pretty good. Difficult to do much better, although I'm not saying it can't be done. With very rare coins it may be possible, but I'm still betting it would be difficult.

As an investor, what you have to look at is both risk and return. The first step is to determine what is the "Risk Free" rate? That is generally the current yield on Government Bonds, because that is generally assumed to be as risk free as you can get. In order to not get the promised return on Australian Gov't Bonds, something very very wrong would need to be taking place. Right now the yield on Australian Gov't Bonds is around 6%. ANZ has a term deposit that is paying 8% currently and that is very low risk.

So what is the better move? A virtually risk free 6% or quite a risky 6%? (Keep in mind that when you sell a large portfolio of coins, auctioneers can take up to 20% or so in commissions and fees, so your 6% is reduced immediately to around 4%)

Coins are actually quite risky. They can be lost or stolen, damaged or mishandled, but in my book, what makes them quite risky as an investment vehicle is that how do you measure accurately their future value? To do that you would need to analyse collector sentiment, and that is very very difficult to do very far into the future, with any degree of accuracy.

Businesses have financial statements you can analyse. Real Estate has rental prices that you can calculate against purchase price to determine your return, and with government bonds and bank term deposits, yields and returns are known with near certainty up front.

I believe people who buy coins are either collectors, speculators, or some of both, but virtually never true investors. Speculating is fine if you can bear the risk, but a reasonable return on speculation should be 100%, 200%, 300% per year, not 6%, and that is very very very difficult to achieve with coins.

I could go on further, but I'm sure that I have made my point. I love coins and buy way to many and often spend more than I should. I love the art, the history and so much more. I really love the fact that when I buy a coin, it almost never is worth less than what I paid for it. I can't say that about much else that I buy.

My advise to anyone would be, buy what you like to look at and what you can afford. If they happen to increase at higher than normal rates, well then, that just makes them nicer to look at.

Probably the most informaive posts I have ever read on a forum thx all contributors

G'day Helloman,
the first problem with the moderns is that they are over-produced.
The excess are "sold" to a distributor, in order to inflate sales.
The intrinsic value of the metal is quite small, compared to the price at issue.
And it is not clear where demand is going to spring from, with the passing years.
These so-called coins are just another species of "collector's items": after the initial issue, the market price is determined by finding someone more gullible than the original purchaser. If any significant after-market developed, you can bet that the suppliers would increase the volume of supply, to maxi,ize their own profit.

Peter in Oz

These gold coins go out the door in a flash because of the way the mint sells them. Instead of offering them to their regular loyal customers, they let first come, first serve policies apply. Supposedly, only one coin per person right? Wrong. You, your wife, kids, uncle etc. etc. whomever you want to put down on the order form, provided they are different names, addresses etc can score you more than one coin. Just have a look through completed sales on ebay to see how many sellers have sold more than one of these coins. The only one I have ever bought was the scout one, as I used to be a scout. I ordered on line, which was so busy, I thought my order hadn't gone through as I kept getting an error message. Turns out I ordered 3 of them. Did any one at the mint say this was not allowed? NO. I had to call THEM and tell them to cancel 2 of the orders and refund my money.

Why do they sell out so fast? Because people realise that the collectors will pay to have these coins if they collect this type. I saw a buy it now on ebay the day after these became available for over $500. Are they a good investment then? Only if you consider fleecing a true collector to make a quick buck an investment. As to what they will be worth in the future is anyone's guess. As with most issues of this type, they seem to enjoy a period of relatively high prices compared to issue price soon after they sell out, then settle down to a more reasonable, stable price which doesn't seem to move much. After all, there isn't much gold in the coin to begin with.

very well said.

Amongst such good advice and elders all I can offer is the opinion of a newbie to the current Coin World ie - 2008/9 - decimals look great to me with nowhere to go but up, I stick to UNC, regular circulated varieties with low mintages i.e 1972 5c, 1971 20c, 66 cards, nice mint sets (I don't bother with proofs)and historical sets like the black changeover wallet from the Reserve bank in 66. I buy stuff locally and from USA, UK etc on ebay and never get emotional. Multiple (3) or more accounts is the go for investing or trading back what you don't want here.
Of course I love the mule and the Wavy, the more I learn I see they are the genuine article - though I believe it is ony future generations that will seriously benefit.Decimal rarities that never underwent a 'sale' are a way safer dig. I've also seen that "Investment is for quality pre-decimals" - all else is speculation (at the moment) which is highlighted in a reply above - do Super funds recognise either Wavy or Mule yet? We can only hang on here! Viva Decimals and I reckon they are beautiful too - way above other comparable Nations!