This is an important question to answer if you are serious in being a numismatist.
A true coin collector is one who collects coins for their beauty, inherent and acquired value (numismatic value), rarity and enjoyment of the hobby. They admire the designs and images imprinted on the coins, and they derive much satisfaction in knowing that they have completed a set. They are interested in the coin’s history and how, who and when they were made. But while they do enjoy collecting for these reasons, most collectors also have profit as part of their agenda. However, if your overwhelming reason for collecting is that of making a profit and stacking up gold and silver for financial gain in the hope that the coins will go up in value and, thus, earn you a handsome profit, then you are an investor. If you have such a goal in mind, then it will be best for you to just buy bullion instead of collective coins because then you wouldn’t have to pay high commissions for their acquisition.
But bear in mind that whatever you are, whether a collector or an investor, it is essential that you get your coins in your possession and never let any company keep them for you. The company may go belly up and you could be left holding a worthless paper document. Store your coins where you can be sure they are safe like in a safety deposit box of a bank.
Coin Collecting As Investment
You may be interested in coin collecting as an investment opportunity. This does not take away anything from what coin collecting really is, as even serious collectors have profit still going on in the back of their minds. There is an ongoing trend where financial advisers are encouraging their clients to keep like 10% of their investments in precious or rare coins with high numismatic value. Their advice: “Buy the highest quality, rarest coins you can afford.”
If you are currently considering such an investment, you can go directly to the US Mint where you can purchase US Coins or World Coins.
Coin collecting is slowly spreading around the world. In the US and Canada, the hobby has already reached its maturity and you can find many clubs catering to this hobby. They have the means to spread and perpetuate it to make sure that coin collecting will continue in the years to come. Elsewhere in the world, like in Australia and some European countries, the hobby is fast gaining followers and has a potential for a wider and vigorous coin collecting community owing to their fast growing economy and a long coinage history. People there are beginning to take note of the prospective value of these coins and are making steps to buy them cheap.
Risks of investing in coins
Coin collecting is indeed a rewarding hobby – it gives the satisfaction that follows having what you have longed for and sometimes, if the times are right, it is also a profitable financially. However, as with any investment, there are risks involved when you invest in coins. As a coin collector you must understand and be prepared for taking such inherent risks.
One common danger is getting counterfeit and altered coins. Even in the early years of coin collecting, this had already become a problem. Counterfeiters use various techniques, and some have created coins which are almost like the real thing. They can make common coins appear to be valuable collector coins by adding a mintmark. While there are important grading and authentication services available that could give certify the authenticity of coins, in their absence you must know how to identify and separate genuine coins from their counterfeit versions.
Coins have grades. You need to determine if the coin is correctly graded to determine if the price is fair. Overgrading is quite common, but with certified coins and bullion coins this problem is reduced. Bear in mind, however, that a service which authenticates coins is only giving out an opinion regarding what they think is authentic, and it is typical to find coins reasonably graded and certified by one service as being overgraded in the opinion of another.
Since certain coins are made of precious metals such as gold and silver, their prices are subject to the rise and fall of commodities. When gold and silver prices rise in the market, the coin’s value increases too; correspondingly, their prices drop too if the metal prices in the market fall.
Then there is also the risk of loss by fire or theft, especially if you keep your collection with you at home. Storing them in a bank vault may reduce this risk but doing so will necessitate an added expense.
Where to find collectible coins?
There are many places where you can obtain and purchase your first set of collectible coins.
The information highway has opened up a lot of avenues toward finding anything anywhere in the world. The internet is a veritable source of things you want and need in life. From pets to luggage, you can find them available for sale, swapping or simply for giving away because people have no need for the article anymore. As for finding coins, the internet is a bottomless pit of information where you can find and buy the coins your heart’s desire. While this may be one way of collecting, you could still have an adventure trying to find coins the old fashioned way. You can use your legs instead of your fingers to find coins.
Whether you choose to get information about coins and buy through the internet (this could be the easiest way), or buy coins through the mail; you should be careful about the dealer’s shop and their coin grading system. Make sure that they have a reliable return policy in case the coins you buy are not to your liking.
Other coin collectors are also a good source of coins. The classified ads in your local paper could produce a list of collectors looking to buy, sell or trade coins.
It is quite often that flea markets, craft stores and especially antique stores are selling coins that may not be aware of their true value. You can sometimes haggle for a better deal on old coins, especially if the owner doesn’t quite know what he is selling.
Auctions are an excellent source of the rarest and most expensive coins, so if you are a beginner and don’t want to spend too much at this point, this may not be the source for you. Coins are sold through bidding and, of course, the highest bidder wins. Take note that prices in these auctions are usually much higher than prices for similar coins in other places. Before you go to one of these, be sure to check prices in shops, mail order or other collectors and compare them with the going prices in the auction. You will do best if you limit your bids so you can avoid paying too high a price.
Another excellent place to find coins are Coins shows. Even if you are not going to buy, they will allow you to look around and check out several dealers at once. There is usually a great variety and quality of coins available in shows, and since there are many to choose from you could get better prices.
You can also purchase coin sets directly from a coin mint.