If you were a novice investor in coins, what would you do?

[Leothelion]

Hi Everyone

This thought popped into my head as I was reading Dena's post about the Wall street article, "Investors Flock to Coins Amid Rising Metal Prices". and I got a chuckle out of it, by the way! But if you were one of these novice investors who didn't have a clue about buying coins, what do you think would be the very first thing this guy will do before venturing into this area of investing?

Would he talk with his broker?

Seek advice from a friend who might collect coins?

Go to a local coin shop and discuss such prospects with the owner there?

Or take the wife and kids to a coin show and buy, buy and buy?

Look up some info on the internet?

Which brings me to another realm of thinking?

Have you ever found yourself standing, sitting in the midst of stupity when witnessing someone else blowing their money on worthless junk? And on top of all that, you really wanted to say something to save this person but you couldn't because after some thought you realize that you're not going to say anything because you know the guy will need to find out for himself, somehow, that he's an insufficiently_thoughtful_person! But then again, maybe I'm the insufficiently_thoughtful_person!

When I made that trip to Pittsburgh to see The Nevadaman's collection sell I was taken back quite a bit on the prices the bidders paid for those many low end coins and many of those coins have yet to show up in the registries, I might add! Do some of these novice investors really do a internet search or take the advice from their brokers or get leads to these big auction houses to buy coins. If they find themselves bidding by internet do they get taken for the ride of their lives when they see other bidders and coins skyrocketing before their eyes and they end up joining in that way?

The hobby of coin collecting doesn't really reach the public in ways of interest most collectors of today have. Sure there are coin magizines and periodicals such as Coin World and the Numismatic New and the coin shops and shows! But it usually takes something else to reach the public and it's usually when collecting coins reaches a larger vein of publicity and gold will do that! The publicity for the search of the 1913 Liberty nickel did that and so does the redesigning of our paper money and coins. And the 50 state commemorative quarters, how much public interest has been generated through that program. Each little world out there has its own congregation of people, once they get word, the flock will usually follow! When that larger congregation gets wind of that Wall Street article what's going to really happen with the coin hobby? We've already seen tons of coins dumped on the market through all these auctions this past year or so! Is there going to be some kind of climaxual explosion of buying just before the bottom falls out of everything?

The billions we've have spent on Iraq and Afganistan has already thrown millions out of work and gas is still hovering around $2.00 a gal. When does all this take it's toll on everyone, if it hasn't happened to many already. When does it all end?

 

A lot of what I wrote probably won't make sense with alot of you folks but I'll just throw it out there anyway and see what provoking thoughts it might trigger!

 

Leo

[Oldtrader3]

Leo: I hope that this time around, investors are a little smarter about buying coins than they were in 1989. In 1989 I watched a lot of "MS65" Morgans and Gold come back into the market and go into TPG, MS63 or MS64 holders resulting in heavy losses for hasty investors.

 

Between the internet, coin books and local dealers, there is a lot of knowledge that can be acquired with a little expense and some time spent wisely. However knowing human nature, there are always those trend followers who will stampede into the newest investment scheme with no prior preparation. As always, those investors will end up buying high and selling low.

[Leothelion]

OT3

And there's not one thang anybody can do about it!

I wonder if Wall Steet will print an article for me?

 

Leo

[Hoot]

You ask some good questions and make some good points, Leo. Most appears rhetorical, but I'll comment on a few...

 

I think that this coin bubble will shrink eventually, after all the U.S. Mint programs subside or become disenchanting to the wider audience. Many people involved with "collecting" nowadays are not die-hard collectors at heart and are truly just hoarders. Even fewer attemt to educate themselves. When they finally get bored with hoarding their coins, there will be a lot of left-over junk for the market to absorb. Much of the material that you referred to that's been dumped on tthe market in the last 2 years will fit that category as well. In the end, I think there will be a bunch of disappointed folks.

 

The WSJ article will make a bigger mess of all of that, but in the end, true collectors who wait patiently for matters to subside will benefit, just as they did when the market broke after '89. So, I'd say it's time to regroup and take care of other things, rather than trying to build collections at unreasonable prices.

 

And also, like others said in the WSJ thread, the "coin investors" got a lot of nonsensical advice.

 

Hoot

[jom]

Have you ever found yourself standing, sitting in the midst of stupity when witnessing someone else blowing their money on worthless junk? And on top of all that, you really wanted to say something to save this person but you couldn't because after some thought you realize that you're not going to say anything because you know the guy will need to find out for himself, somehow, that he's an insufficiently_thoughtful_person! But then again, maybe I'm the insufficiently_thoughtful_person!

 

Well, I did have this experience some months ago. At the end of last year I sold off the Saints I had on Ebay. The nicest piece I had (MS66 23-D) was sold to someone here locally. I told her I'd meet up with her to give her the coin so as to save time/postage. It was clear after talking with her a few minutes she was a novice with a load of cash. (Her hubby was a dentist and she had her own business). I tried like hec to tell her she was getting into a very difficult "realm" (shark tank actually). Explaining to her the pitfalls.

 

I checked up on her a few months later using her Ebay name and it turns out she went and dropped big bucks on some Saints the next couple of months. They were some big-time better dated Saints from the 20s. UNFORTUNATELY, they were ALL NTC graded. By the time I checked the sales the pictures had been removed but if you've ever seen NTC graded coins you can pretty much be sure she probably got screwed as she was paying typical money for the "grade" listed on the holder...as far as I could tell.

 

I tried my best...what can you do?

 

jom

[CarlWohlforth]

I just sold a Saint in 65 I had Un-Sold to the same fellow. (My wife gave me a hard time when I told her I told this fellow he should buy a house or gold mining stocks, or even gold bullion, if he really wanted to invest for the reasons he put forth.) He wanted to buy my Saint. He had done his homework and if I could prove my Saint really was in a sonically sealed PCGS holder by sending him the photo he was on board.

 

Bubble? Not yet. Will it be a bubble if non-collector people invest in coins? Probably. But once un-informed people start buying indiscriminately the bubble will start inflating. That process may be starting now. I, for one, won't -- and can't afford -- to buy TV advertising.

 

Anyway if the bubble is inflating it will take some time to inflate. The coin market is not liquid like other markets. I have other reasons to sell so, perhaps, my timing is lucky.

[Oldtrader3]

Jom: I see all these NTC graded gold coins being sold on Ebay for NGC/PCGS money and wonder how knowledgeable the people buying them are. The sharks are already circling!!

 

I have been looking at $2.5 Indians lately which are very challenging coins to grade. Many dealers even have problems grading them properly. However, this has not stopped pricing from increasing on Indian gold lately and it is buyer beware at present levels! Indian gold coins that sold in the Frog Run auction went for very high prices.

[jom]

....wonder how knowledgeable the people buying them are. The sharks are already circling!!

 

I think after my little story you know this answer.

 

And..yes...the sharks have been circling for sometime...they've never really gone away have they?

 

jom

[michael]

coins are NOT AN INVESTMENT even if you are a seasoned advanced collector with loads of discretionary income

 

and of course i am sure some do really well but it still does not change the fact that coins ARE NOT AN INVESTMENT

 

combine coins with the word novice and you got big trouble

 

i guess for me in answer to this question i would say go to las vegas at least you will get some excitement and might get lucky and have a nice few days in the fun and sun

 

michael

[jom]

Correct Michael! The reason coins (or bullion for that matter) are not good investments is that they do not provide the possibility of cash flow. They only provide a possible capital gain. Good investments provide BOTH. Yeah, I know...not all stock or real estate give both but they have the potential to. Coin can NEVER provide cash flow.

 

Plus, coins do not have the tax breaks on capital appreciation does for stocks and other investments. AND there is a high commission costs involved with coins.

 

IMO, this all equals BAD IDEA. Coins should be collected for pleasure ONLY.

 

jom

[EZ_E]

Jom, much respect to you for trying to educate the e-bayer. But, it's like Leo mentioned, should I speak up or remain quiet? Generally, most feedback, however well-intentioned, is not received well. Most likely if one were to make helpful comments to newbies then they would be offended because it hurts their delicate since of pride. Still, most people would holler out if someone was about to step into a deep pit regardless of how well the information was received.

 

p.s. Leo, is "climaxual" an actual adjective like "climatic"? Well, if it ain't a word then it should be one.

[Hoot]

combine coins with the word novice and you got big trouble

 

Very funny and very true!!!

 

is "climaxual" an actual adjective like "climatic"?

 

Nope. The word is "climactic," which indicates a climax; an active form of the adverb "climactically." I wish sometimes I wasn't so anal, but since YOU brought it up, Victor...

 

Hoot

[Leothelion]

combine coins with the word novice and you got big trouble

 

Very funny and very true!!!

 

is "climaxual" an actual adjective like "climatic"?

 

Nope. The word is "climactic," which indicates a climax; an active form of the adverb "climactically." I wish sometimes I wasn't so anal, but since YOU brought it up, Victor...

 

Hoot

 

I was building on the word "climax' and added -ual! I have a one year subscription of that visual thesaurus but I thought you guys might enjoy my new word!

 

Leo

[EZ_E]

Nope. The word is "climactic," which indicates a climax; an active form of the adverb "climactically." I wish sometimes I wasn't so anal, but since YOU brought it up, Victor...

 

Hoot

 

Well, I'm glad that you give a hoot, Hoot. (OK, Arch, where's the owl icon?)

[Hoot]

combine coins with the word novice and you got big trouble

 

Very funny and very true!!!

 

is "climaxual" an actual adjective like "climatic"?

 

Nope. The word is "climactic," which indicates a climax; an active form of the adverb "climactically." I wish sometimes I wasn't so anal, but since YOU brought it up, Victor...

 

Hoot

 

I did like your word, Leo! I thought it's the stuff new forms of English are made of!

 

Hoot

 

I was building on the word "climax' and added -ual! I have a one year subscription of that visual thesaurus but I thought you guys might enjoy my new word!

 

Leo