Risks of Investing in Coins
In general, coins do not make a very good investment medium. Solid collector coins, such as VF coins from the 1700’s and 1800’s, other than Morgan dollars, do retain their value quite well, and gain a bit of value hedging against inflation. Date rarity is more important than condition rarity for maintaining value. If you expect heavy inflation, these kinds of coins can keep you from losing money about as effectively as a good savings account, savings bonds or Treasury bonds. Remember though, that there may be substantial brokerage fees between buying and selling coins that can really eat into your potential profit. See our sections on selling coins and buying coins for the details.
Ultra-high grade or ultra-rare coins in the $20,000+ range (and some cheaper silver dollars) are termed “investor” coins. That’s because they fluctuate in price more frequently than those coins with a substantial long-term collector basis for true value. Some people have made a lot of money on this stuff. Mostly coin dealers. Condition rarity can also put a coin into the “investor” realm. Be very careful about ultra-high grade (MS-68+) modern coinage, it can go up and down rapidly as well.
If you don’t know a lot about coins, you will probably lose money investing in the rare coin market. Stick with more traditional investment mediums until you know more about the rare coin market.
My advice is to collect coins for fun. Learn about them. Never buy an expensive coin you don’t know a lot about. Don’t buy coins over the phone. Don’t buy coins from advertisements you get in the mail with your bills. Finally, be wary of coin and bullion dealers who hock their wares as a “good investment”.
If you learn a lot about coins, and exercise good judgement, then you probably won’t lose too much money enjoying the Hobby of Kings.
If you have questions, please Contact Us and we will be glad to help.