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FORVM`s Classical Numismatics Discussion Board  |  Numismatic and History Discussions  |  For the New Ancient Coin Collector (Moderators: wolfgang336, cscoppa, Gavignano, Lucas H)  |  Topic: Ancient Coins as an Investment??? 0 Members and 1 Guest are viewing this topic. « previous next »
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Robert T2
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« on: October 15, 2007, 04:59:36 pm »

The recent shifts in exchange rate that have seen the Aussie dollar creep upwards on the US dollar has got me thinking about the possibility of making some larger coin purchases with a mind toward investment....

Now don't get me wrong, I love my coins. They don't moulder away in a safe. I take them out and handle them. I read everything I can on the history of the things and the period they come from (I'm partial to the Tetrarchy). But all this said, I wondered if they might also make a viable cash investment which would retain or grow in value over time... not to mention that if I can mount a convincing argument in this vein my Wife might permit me to buy more coins Wink

I'd really appreciate any views, opinions on this subject, especially on whether it is felt some specific coin types, qualities, rarities, make better investment prospects than others, or whether it makes no difference and all ancients are much the same in this regard. I guess I'd prefer to remain in my preferred area of the Tetrachy or at least Roman, but would be happy to hear suggestions to the contrary.

Many Thanks for your help.

Rob


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« Reply #1 on: October 15, 2007, 06:59:46 pm »

Whew!
Robert T2:

I suspect there will be either many or few replies to this one.

Remember I'm a newbie and all my answers are subject to replies of those with greater knowledge than I have. 

The old adage: An ancient coin is worth what someone will pay for it still and always holds. There is no universal price valuation except of the most general type for the value of a particular coin.

Particular ancient coins, exempting certain universally rare examples, wax and wane in value according to how many are available.  A rare coin today may decrease in value with the discovery of a hoard that includes numerous examples of that coin, or the sale of a large collection. Discoveries in Eastern Europe cause today's quite rare coin to become much more common, for example.

A sows ear will still be a sows ear 10 years from now.  I doubt that small late roman bronze coins of say, Constantius II will suddenly become valuable simply because there are so many of them.

You can, of course, buy quite expensive and rare coins that will fetch a lot at auction.  But there is a codicill to this and a very old one:  It takes much silver to acquire some gold.  If you indeed have the financial resources, you can acquire coins that will undoubtedly increase in value if sold because of scarcity, condition, and rarity.  But be aware that investment implies profit.  A $3000 coin that you sell for $3300 means a 10% profit.  Dandy, but you have to repeat that a lot, meaning having a lot of those $3000 coins to sell to make ah...."big profits".  Further, if you have three thousand dollars, you can buy gold bullion given present trends (this may not always be so) that you could conceivably make more profit on.  Someone on this forum said, quite wisely: The best way to make a small fortune in ancient coins is to start with a large fortune".

Investment means time.  There is no free lunch.  If as I think, you mean acquiring more coins as investments(again implying a profit), you will  have to spend a lot of time (your time is worth something even if broken down into an hourly wage) by searching yourself, or hiring someone to search for you. Otherwise you risk, to use the high-flown technical term "losing money". The price of a particular coin may be the absolute maximum for a coin. This is the "what someone will pay for it" axiom.
You will have to keep, or hire someone to keep accurate records that will show that you are indeed making a profit on your investments or a potential profit if yet unsold.  This will preclude after say 5 years selling off your coins...ahem...liquidating your assets, and pocketing a tidy sum and thinking you have realized a profit on your investment. 
Failure to do this is exactly why gambling houses never gamble and most gamblers fool themselves.
"I won ______ last week gambling.  Wow!  But the gambler never has a complete lifetime record of his "buying price" in gambling.  The pain of the money you spent back then now seems a distant memory with a large sum of cash in your pocket.  But did you make a profit overall? 

I don't mean to seem overly pessimistic, as I buy and sell a few coins myself, but I try to do it with the guidelines I've mentioned above, and it is the hardest (but most pleasurable) work I've ever done.
Hope this helps, and remember I'm a newbie.
Bruce
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Robert T2
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« Reply #2 on: October 15, 2007, 09:03:57 pm »

Many thanks Bruce, I really appreciate the advice. I especially like the adage about making a small fortune in coins by starting with a large one (hmmm I might already be on the way to realising that goal Wink).

I'm sure there's more effective and less risky investment strategies than ancient coins... I suppose I'm looking for a way to mix business and pleasure. Longer term profit based on growth in perceived value would be ideal, but it might still be viable for me if the coins remain stable in value in line with cost of living (at least in US $ terms). It does depend of course on something of a gamble, and here I'm mindful of (and agree with) your comments regarding gambling.

Right now the Aussie $ buys just over 90c US which is the highest it's been in around 25 years. For more than 20 of those years the rate has hovered around or below 70c US. Theoretically, if I bought coins now in the US and later sold them when the Aussie $ had fallen again around it's more traditional resting rate, even if their US value had remained stable I should do OK... plenty of ifs, buts and maybes.

There's also an element of forced saving.... something I'm not very good at, and (I'd like to convince myself) a diversification of investment argument.

And there's the unpleasant fact I have no spare cash for coins... but might have some for "investments" ...just hoping small round metal things count Smiley
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« Reply #3 on: October 15, 2007, 11:17:20 pm »


Right now the Aussie $ buys just over 90c US which is the highest it's been in around 25 years. For more than 20 of those years the rate has hovered around or below 70c US.

The same general exchange rate shift is also true for the Euro and the Pound - so you would also be competing against similiarly minded 'collectors' from Europe and the UK anyway.

MAlcolm
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« Reply #4 on: October 16, 2007, 05:08:27 am »

Don't forget inflation, and you have to pay a pretty big premium to the auction house when you come to sell the coins. Altogether, it hasn't, historically, been a good investment. If you got it right, you might get your money back, but I wouldn't bet on doing more than that.
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« Reply #5 on: October 16, 2007, 08:00:20 am »

Hi Robert T2,

And to second the others don't forget that the coin you buy 100 from a dealer, the same dealer will buy it 50 (70 if you are lucky) from you when you come to sell it. Given the premium you expect from the USD/Aussie rate, you just get your money back...the lucky days (not to even mention inflation).

As a collector yourself, you already know that the hobby has a cost. Would you consider horse riding or yachting as an investment ? I don't know of any investor puting money on those (as investment I mean).

Keep on collecting in a collector's way, you'll be happier..
Regards
Potator

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« Reply #6 on: October 16, 2007, 10:56:05 am »

I agree with what the others have said, and would add that I wouldn't bet on the dollar appreciating... Currencies really trade as commodities and are subject to the same dynamics of supply and demand. There are two major structural factors affecting the long term direction of the dollar - the Euro and the balooning national debt. Increasing demand for the Euro is decreasing demand for the dollar, and might be expected to continue (future additions to Euro zone, increasing Euro-based central bank reserves, increasing Euro-denominated oil sales).  Meanwhile the aging baby boomer (social security) problem looms guaranteeing that the debt isn't going away any time soon.

If you really feel like investing based on currency predictions, then you'd be better off doing so more directly since then you're more likely to profit if you are correct.  With coins you could be right on the currency prediction but still take a loss due to coin prices declining or simply due to buy/sell margins.

Ben
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« Reply #7 on: October 16, 2007, 11:22:14 am »

I agree with Robert entirely.  Auction house fees are an important element to consider, and unless you're planning on investing very heavily in extremely rare coins, don't expect this fee to be waived- ever.

I personally (though perhaps foolishly) justify my purchases on the notion that I'm not likely to lose much money, and should at least get back what I've put in, in the long run.  I figure what coins I have I'll leave to my children (if I have some) or my undergraduate university, but if the need ever arises where I have to sell them off quickly, I'll get something back.

Perhaps you should consider investing heavily in mutual funds and spending the profits from that on coins.  They're fairly safe, and as long as you don't freak out when the market fluctuates and hold on for the ride, you'll make between 6%-11% on a five year investment.  That could equal a whole bunch of coins depending on the amount you invest!

NJM
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Robert T2
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« Reply #8 on: October 17, 2007, 09:34:35 pm »

Thanks to all who replied for your advice on this. Much appreciated.

Seems everyone's of like mind on the limitations of coins for investment which to my mind is pretty convincing... it's rare I find such concord of views.

I think then, like Molinari, I'll have to justify future (more modest) purchases on the notion I'm at least unlikely to lose too much money if I have to sell.

But this still leaves a question I began with which is are there types, qualities or rarities of coin, which are more likely to retain their value than others...?

cheers,

Rob



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« Reply #9 on: October 17, 2007, 09:55:48 pm »

Hi

You can make a lot of money on ancient coins, just ask the dealers!

You may have to spend 10-20 years building up a reputation though and avoid losing it int he meantime Smiley

Brdgs

Alex
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« Reply #10 on: October 17, 2007, 11:31:16 pm »


But this still leaves a question I began with which is are there types, qualities or rarities of coin, which are more likely to retain their value than others...?


For the most part, coins will retain their values.  As long as you dont buy coins in the middle of a frenzy (ie after a blockbuster movie about Commodus comes out, don't buy coins of Commodus for a while), you should be fine.  You always run the risk of hoards being discovered, in which case prices plummet, especially for rare coins, but this is not all that common of an event.  Good coins that I imagine will generally keep their values are eternally popular coins like the Athenian Owls - but even those, it seems, have suffered a recent price drop due to more finds.  In the long run, though, they will not lose value. 
Coins that might continue to go up in value for a while are Byzantine gold coins.  On the other hand, they might not.  They've been going up over the past decade.  So it's really all a guessing game.  The best way is to buy the coins for their historical/artistic/personal value, not for profit or investment.
~Zach
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« Reply #11 on: October 18, 2007, 03:09:46 am »

Parthian coins have been climbing a lot in value in the last few years, especially nice silver drachms and tetradrachms.
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« Reply #12 on: October 18, 2007, 05:57:48 am »

I've got my money in the "Common Greek Bronze Market", which is due to explode any day now!

Seriously, though, I'm still amazed at how inexpensive some nice examples of common bronze coins are, and I do expect them to rise as the American ancient coin market grows.

NJM
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« Reply #13 on: October 18, 2007, 09:19:16 am »

Ancient coins should be a hobby not an investment.

That said, there are ways to invest in ancient coins that pay a high return.  The minimum investment required is high.   I am not referring to collecting but rather buying large hoards and collections which are then immediatly offered for sale.  Opportunities for this type of investment are periodically available through FORVM.   
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« Reply #14 on: October 18, 2007, 09:34:35 am »

This is not the first thread on the subject where I participated.
Now I shall try to advocate an idea that the question
"Ancient Coins as an Investment???"
has no sense at all.

It is supposed that the investor has an access to  markets where he can by and sell to make profits.  
There are several markets, or better to say, venues, where you can buy  and, eventually, sells
the anient coins.

So, suppose that you have an investment plan. What interest rate do you expect?  

Where do you want to buy?   It seems that shops are excluded.
The prices on regular auctions are quite high and the transaction costs are 15-20%. Professionals are quite active
at regular auctions because they are looking for profits based on their networks (clients) and reputation.  If you
 have no shop, you should not expect the same margin.  Of course, you can try your chances on ebay. Again,  
looking for a margin you always will be in a less favorate situation comparatively to a  professional dealer.

Where, you want to sell? It was observed in a previous threads that dealers rarely proposed  to get back the coins they sold
for more that 50% of their selling price and often are not willing to get coins back at all. Auctions are interested at the high end
coins. So, again eBay...
In other words, the perspectives of investments are reduced to a hard everyday work of a small dealer.  
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« Reply #15 on: October 18, 2007, 09:57:38 am »

In other words, the perspecpectives of investments are reduced to a hard everyday work of a small dealer. 

If you are saying that most of the profit small dealers makes comes from "everyday hard work," how right your are! 
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« Reply #16 on: November 10, 2007, 10:08:48 am »

I'm new to the forum, but I would say that you definately can consider rare coins an investment, though I wouldn't consider it a main portion of your overall investment portfolio.  This goes for all rare coins, modern or ancient.

One of the big problems with ancient coins is easy market entry for the amatuer collector because of the daunting complexity of the choice of coins and no widely accepted 3rd party guaranty service to ensure you're not buying fakes or problem coins.  Just a looking at these forum boards shows problem coins being sold by even the most reputable of dealers (by accident, I'm sure).  How can an amateur be expected to spot these coins when the top dealers miss them sometimes?  It's a barrier to entry.  I suspect that if there is a grading service that can actually gain the acceptance of the ancient coin market, then you can actually sell in any open market to buyers that can buy with confidence.   Even if you crack it out later, the certification is sort of like real estate title insurance during the transaction ensuring the buyer is getting what they think they are.  The cost of certification is will be much less than a 30-40% sellers + buyer premiums at an auction house which acts as the guarantee service today.

The internet has helped immensely with wonderful resources like this forum.  This has undoubtedly grown the hobby, and consequently, the profit potential of these as an investment.

My dad started collecting ancient coins in the 1960's & 1970's, buying from Joel Malter originally.  He was paying $10 for denari that I buy today for $200-$300.  I always enjoy unconvential investments that I can enjoy in the meantime and I personally believe coin collecting in general can fill that need. 

Provided, you buy good coins in the first place.
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« Reply #17 on: November 10, 2007, 10:52:05 am »

It is interesting to know for which price you plan to sell your 200$-300$...
You claim can be interpreted as in 10 years the portfolio of high end
ancient coins doubles its value. It may be true. However, this requires
a lot of rather qualified work.
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« Reply #18 on: November 10, 2007, 11:14:09 am »

My brief opinion: Investment is a good thing. Investment in coins can even be a good thing. However, in my opinion the (for lack of a better world) culture of rare coin investment is anathema to collecting. In my experience, investors often don't even care about the coins they buy and sell and, in the case of modern coins, really just buy plastic with a price tag on it.

I recall one time I was trying to explain to an investor why I collect ancients - history, rarity, etc - but he simply couldn't wrap his head around it. All he could reply was "you should buy high-end Morgan dollars. you should buy high-end Morgan dollars. you should buy high-end Morgan dollars. you should buy high-end Morgan dollars." (It doesn't rank high on my "favorite conversations" list!)

We all want to sell our coins for my than we buy them - that's enough investment for me.
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« Reply #19 on: November 10, 2007, 09:09:13 pm »

I guess my point is that my dad's coins are worth 20-30 times what they were 30-40 years ago, not just double.  When I say investment, I don't mean purely for investment sake.

With rare coins, it is a hobby you can enjoy for decades and run a pretty good chance that you are not throwing your money away.  If you take your time and buy great coins, my personal belief is that you will have something to show for it many years down the road.  If you just want to pursue it as a hobby, that's great too.  I personally like the fact that when I buy a fascinating yet quality ancient coin, I actually have something of value.

It's not like they're making them anymore.  Well, maybe some of the East Europeans are...
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« Reply #20 on: November 10, 2007, 10:48:05 pm »

Quote from: carthago on November 10, 2007, 09:09:13 pm
I guess my point is that my dad's coins are worth 20-30 times what they were 30-40 years ago, not just double.  When I say investment, I don't mean purely for investment sake.
Sorry, but I wrote "doubles in ten years", so  the multiplier in 40 years will be 16.
On the other hand, on your dad's coins, probably, you can find, tags 10$ but also with higher pricess, so 10$ is just
a mythical, colloquial, figure. I started collecting recently and already purchased  many  rare coins
for prices below 20$. This is still feasible but one should be a professional to be present on such a market.
I observed that in European  numismatique shops there is a flow of elderly persons who wants to sell
old coins. The prices suggested by dealers are simply ridiculous.
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« Reply #21 on: November 11, 2007, 12:24:40 am »

Quote from: carthago on November 10, 2007, 09:09:13 pm
When I say investment, I don't mean purely for investment sake.

With rare coins, it is a hobby you can enjoy for decades and run a pretty good chance that you are not throwing your money away. 

Thanks Carthago, these words probably best reflect what I'm looking for with coin investment.
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« Reply #22 on: November 11, 2007, 01:25:34 am »

Claim: if one does not work hard and take care about prices  paid,
there a good chances that fifty percent of your money, from the point of view of invetsment,
will be thrown away. On the other hand, this 50% are paid to enjoy ancient coin collecting.
This hobby is an expensive one!
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« Reply #23 on: November 12, 2007, 09:55:48 pm »

Numerianus is exactly right.  Though a newbie(3 years now) to ancient coins, I am no newbie to commerce.   THERE IS NO FREE LUNCH!   To invest, or acquire coins for sale takes many, many hours of your time, to list just  one "overhead-cost" factor. Or, you can hire someone (read pay them) to do it for you.  Either way you pay, because if even just a hobby, your time is worth something in monetary terms.
If you are not independently wealthy, and if so why not just collect-you must spend a lot of time going to coin shows, developing sources of coins, scouring the internet, reading, reading, reading, to become knowledgeable enough to know what's real and valuable and what's not-and what's real and what is not.
Investment means to make a profit.  If you cannot reach back 10 years and know exactly what you paid for that coin(including your airfare to say, Berlin to that coin show and the dinner you bought that high-end coin dealer) then you have no idea whether you made any money not.  Read "have a chance to realize your investment".
Though we read about someone who bought a coin, kept it for years then sold it for way more than he/she spent going through Grandmamma's coin jar, those are the winning the lottery type examples.
It won't happen to you. Or at least think that way.
If you want to invest, invest in something else.  Gold bullion if you have the cash.  Right now anyway.
If you really just want to make a profit on auction sites, actually selling something like clothing, or electronics is a better way. 
"But I just want to sell enough ancient coins to pay for my hobby."
Still a profit deal.  If you spend more for coins than you make selling them, you are simply collecting a variety of coins, some to be sold some not, and have paid perhaps less than a pure collector (who might sell women's clothing on the auction sites for the  real profit  money that he/she uses to buy coins.)
In one way I'm reminded of panning for gold.  I grew up in the richest gold-mining area of the U.S. until the California gold rush, and have panned for gold intermittently since a teen.  If one considers the work involved, compared to the return, I have always lost money.  And like finding bargains in ancient coins for resale at a profit, it is/was the hardest work I have ever done.
I've done much better at ancient coins, but invest?  Invest in selling gold bullion and sell  faux handbags on ebay. There's more money in both.   Please see my ebay sales in ancient coins. Help me lose money a dollar at a time.   I'm a pessimist, but never said I was a good one. Wink
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« Reply #24 on: November 13, 2007, 02:54:42 pm »

I must thanks all the respondents to my original post on this, though I'm a little surprised by the degree of conviction expressed by many regarding the rightness or more commonly wrongness on ancient coins as an investment.

I've pondered this and it seems to revolve around very specific perceptions about what "investment" means. Investment for Profit I understand, but didn't think was the only way to look at this, or at least not purely in monetary terms. The "profit" could perhaps be the enjoyment that collecting provides on top of a collecting practice that at least didn't lose any monetary value. This was more my objective from the start. I know I am enjoying and will continue enjoy this hobby, and if I could collect in such a way that the monetary value of my collection was at least maintained over time then I would regard it as an Investment where my enjoyment from the collection process could be regarded as pure profit.

cheers,

Rob

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