As a young boy, I was fascinated with old coins. I remember riding my bike to the coin shop and spending hours searching through thousands of coins, looking for that perfect coin to purchase with my meager funds. I was told countless times that the coins will be worth much more in future.
Years later, I discovered the less pleasant side of coin collecting–selling your coins back to a coin dealer. I still remember the time that I returned to the same dealer who had sold me the coins and found out that the value of the coins had in fact gone up. I was happy until the reality hit me in the face. The coin dealer would only pay me a fraction of the coins’ value. Unable to find a better offer, I returned to the coin dealer and sold the coins back for LESS than what I had originally paid SEVERAL years earlier. Who won in this deal I ask? I understand that it is a business for them and that they need to make money, but it sure is frustrating when they lie to a kid about the value of a coin when buying and then when you return a few days later and see the same coin you sold to the dealer listed for three times the value quoted when you sold it to them and realize that you have been taken.
Fast forward several more years. It had been a long time since I had considered myself a coin collector, but for old times sake I decided to stop by a coin shop and look at the coins. Now, with money in my pockets, I could actually afford some of my favorite coins. I think that my childhood memories got the best of me that day as I walked out of the store with several coins, some silver one ounce rounds and a coin price guide that the dealer said reflect the prices that dealers will pay to buy the coins.
After a week, the nostalgia wore off and I couldn’t believe I had a couple hundred dollars tied up in coins that just sat there in a plastic sleeve. I decided to return the coins but was doomed to repeat the same stupid experience from my past. Unlike regular stores, where merchandise can be returned, coin dealers DO NOT accept returns, they only buy coins. I was shocked to learn that the dealer had lied to me about the price guide, because the dealers apparently use a different price list that paid even less than what was listed in the book that dealer had convinced me to buy. The only exception was the silver bullion, which they buy back at silver spot minus a certain percent. Eventually, I sold the coins on eBay for less than what I paid but more than what I would have received from the coin dealers.
If you are even remotely thinking about buying coins as an investment, think again. You will probably be better off leaving the money in a low interest earning bank account than you are to invest in coins. Coin dealers are great at talking up the supposed benefits of coin collecting, but for most collectors the investing mistake is realized after it is too late. At this point in my life I consider many coin shops to be nothing more than a specialty pawn shops. I have chosen to steer clear of these financial predators.
It is true some highly sought after coins can become quite valuable but they are the exception and not the rule! Moreover, the coins that are coveted change. What was very valuable yesterday could be less desirable in the future. Unlike investing in a company in which you can actually see the value of the company rise or fall depending on their performance, coins and bullion values fluctuate strictly off of supply and demand. You have no control over prices and no true way to know whether the value of gold and silver bullion will go up or down. Trading in bullion is essentially speculative gambling and not investing. It is the house or the coin dealers and brokers who ultimately make the bulk of the money.
I know I have been pretty harsh on coins and that does not mean you shouldn’t buy any. I still have a few coins just because I think they are a cool piece of history. What I am really getting at is that I do not consider them a wise investment and would never recommend them as a worthwhile investment.