Top Collections Sold - Are they really profitable?
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85 posts in this topic

On 6/26/2022 at 12:23 AM, GoldFinger1969 said:

I disagree that losing 50% of one's purchase price is expected.  Maybe CB meant after inflation, opportunity cost vs. owning other assets, etc.  He'll have to clarify for us.

But most collectors are not as savvy or as smart as you, Zad....nor did they start in the time period that you did.  So the returns you have are definitely an outlier.

I think I am ahead on my 50% of my collection....down on the other half.  I have lots of commemorates for gold/silver so those are very volatile in price.

The one thing that helps is if you are smart or lucky you can make 200% or 500% or 1,000% or even more on your winners.  But you can only lose 100% (and probably less) on your losers. xD

...well buying silver under $2 per oz n gold under $40 per oz didnt hurt, n knowing, seeking counsel from, having access to no less than 63 of coin world's list of 100 most influential numismatist certainly helped, n being able to purchase coins from 20 of the greatest collections of the past 50 years was very opportunistic...but this outlier thing, i have indoor plumbing now....

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On 6/26/2022 at 12:23 AM, GoldFinger1969 said:

I disagree that losing 50% of one's purchase price is expected.  Maybe CB meant after inflation, opportunity cost vs. owning other assets, etc.  He'll have to clarify for us.

But most collectors are not as savvy or as smart as you, Zad....nor did they start in the time period that you did.  So the returns you have are definitely an outlier.

I think I am ahead on my 50% of my collection....down on the other half.  I have lots of commemorates for gold/silver so those are very volatile in price.

The one thing that helps is if you are smart or lucky you can make 200% or 500% or 1,000% or even more on your winners.  But you can only lose 100% (and probably less) on your losers. xD

...p.s....u mention silver/gold commemoratives...i own no commemoratives....

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On 6/26/2022 at 10:01 AM, zadok said:

...p.s....u mention silver/gold commemoratives...i own no commemoratives....

I own them as gold/silver bullion substitutes.  Modest premiums paid, but sometimes I paid up for a PF70 and paid well over the bullion content.  The Saint-Gaudens silver commemoratives, for instance.

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On 6/26/2022 at 9:43 AM, GoldFinger1969 said:

I own them as gold/silver bullion substitutes.  Modest premiums paid, but sometimes I paid up for a PF70 and paid well over the bullion content.  The Saint-Gaudens silver commemoratives, for instance.

I own the commems zadok left behind, both classic and modern. I even just spent $38 on a clad half dollar, the Negro Leagues half. 

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Keep in mind....even though a long holding period can help you make $$$ especially if the purchase period was in a low-price time....as you extend the time period without any dividends/income coming from the coins...the Total Return starts to decline over time.

That is why those ridiculously cheap Saint-Gaudens DE prices didn't generate such spectacular returns to the present.  After a great run caused by scarcity value (small coins) or removal of artificial price controls (gold)....many coins went up-and-down for decades after 1980.  That was the case with the Saints after a 50-year run of rising prices up to 1980.

If you purchased some of those coins in the 1930's or 1940s (or even later !) but cashed out around 1980 (admittedly a peak after a golden decade)....your return was closer to 18% a year on some of those ultra-rare Saints.

Edited by GoldFinger1969
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On 6/26/2022 at 2:18 PM, Coinbuf said:

Many, perhaps most of the members of forums like this and the PCGS forum are not your "average" collector.   Someone like yourself is not what I would consider an "average" collector, you are very much an outlier as most collectors do not buy coins with significant value and hold for four decades, that is rather rare in general.   Many things happen during four decades that preclude holding that long, divorce, illness, and other life events may force the sale of assets before a collector had planned or wanted.   To me, and what I see at most local coin shows, the average collector is the guy plugging albums with good to fine merc dimes, Lincoln cents, or similar types of coins.   So when he (or his heirs) walk into a coin shop looking to sell the collection (some will say accumulation) of albums with well circulated coins, a mini horde of mint and proof sets, and the random low grade better or key date coin, it is very possible they will see 50 cents on the dollar in return.   

Timing, composition and type of coins, and luck also play a significant role in how well a collector does when a collection is liquidated.   You say that if you sold right now you would do well, are/have you sold right now?   Because if you have/are not selling all you have is paper profit.   What was your position prior to the last few years of the very unusual bull run that the collectables market has seen?   I am willing to bet that your friend would not have realized a 200% gain had he sold in 2018, timing and luck played a big part in his sucess.   You did not say but I am guessing that a large portion of your friends collection was in gold coins, a segment of the market that has risen significantly during the past two years.   It is not hard to make a 200% gain if he bought when gold was $200-$300 an ounce and sold now when its priced at 2K an ounce.   But again some smart buying, some luck timing the market, along with a long holding period can produce such a result even after figuring in the holding and lost opportunities cost.

Composition of the collection is a factor, buying gold in the 60's, 70's all the way up to even the late 20 teens and then selling in the past year would result in some very impressive gains.   But just because a collector buys and holds is no guaranty of financial sucess.   If you had gone all in on classic commemoratives during their price run-up you would still be in the hole, way in the hole after those prices collapsed when you consider the time value and holding cost of the money tied up by those coins.   Also, if your collection was comprised mostly of mint products purchased directly from the mint you could very well be in a rather deep financial hole given the premiums the mint has (especially recently) charged and how many of those products have fared in the market after the hype dies down.   Just look at the run up and now the decline on the prices for the 2021 Morgan and Peace dollars, if you bought and sold early in the cycle you did well, if you bought and held you are essentially even now and you could end up losing money if you hold for a long time after factoring in the holding costs.

Even the grade levels of the coins in the collection can have a big impact, if you were buying MS66 Lincolns (or almost any 19th century series) when they were top pops at the time you have seen a drastic decline in your collection value due to gradeflation and the enormous explosion of MS67, 67+, and 68 coins added to the populations over the past ten+ years.   Same is true with gold coins, if you were buying common date bullion type gold coins you have the risk of your collection value falling if the price of gold were to fall.  Better date and high grade gold coins are less susceptible to spot price, but are not immune to global events, say like a new world war.

I'm happy for you and those you know that your/their collection performed well and provided a nice gain.   However what goes up can also fall and if you have not already sold there is always the possibility that your collection value could be reduced in the future.   It is easy to cherry pick this moment in time and claim victory when the coin market has seen such a significant increase in values over the past two years, and kudos to those who recognized the opportunity (I'm not one) and sold into this very strong market.   The rest of us may get lucky and see our collection value continue to rise, or we may want to kick ourselves for not getting out now.   Sadly my crystal ball is always cloudy.   But what I do know is that I am not counting on my collection's value to provide for my retirement, while I hope it provides a bit of a gain when I decide to sell I am not counting on that for my golden years.

 

...very thoughtful n insightful presentation makes good sound guidelines for the "average" collector as u mention....first of all my response was toward the OP's question bout "top" collections when sold not "average" collections...but to respond in generalities...i own no commemoratives or mint products, fools errands...nor do i collect any 20th century US coinage, virtually no rarities by my assessments...ditto morgan or peace dollars, a complete set could be acquired in one day...i have not sold any of my collections, dups yes as upgraded, in a few instances i have completed duplicate sets n held as well, in fact a couple of my duplicate sets r now number 1 registry sets since i dont care to reveal the contents of some of my primary sets,,,i consider my coins as hard assets n my stocks as paper assets read paper profits...gold comprises maybe 30% of the collection but not bullion related, rare dates in rare grades (minimal volatility due to bullion fluctuations)...i dont buy common date coins, not really collectable nor intriquing, my 19th cent collections mostly rarities in au58 grades with preference for cac beans if available...very few problem coins unless extreme raities, really like coins with 5 or less known (rare), 50 or less (scarce)...do acknowledge n support strongly concept of grade rarity....my friends collection bout 50/50 gold/silver entire collection 19th century issues...as an aside i ventured into world coinage bout 25 years ago mostly due to US coinage being so boring, followed the same basic stucture as my US sets, 19th cent coinage cept for couple countries with extreme low mintages, those sets more fun n more challenging to upgrade...numismatics a hobby n not my family's security blanket, ill let land handle that aspect, not paper profits there...dirt profits, few rocks n trees though....

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On 6/26/2022 at 2:56 PM, GoldFinger1969 said:

Keep in mind....even though a long holding period can help you make $$$ especially if the purchase period was in a low-price time....as you extend the time period without any dividends/income coming from the coins...the Total Return starts to decline over time.

That is why those ridiculously cheap Saint-Gaudens DE prices didn't generate such spectacular returns to the present.  After a great run caused by scarcity value (small coins) or removal of artificial price controls (gold)....many coins went up-and-down for decades after 1980.  That was the case with the Saints after a 50-year run of rising prices up to 1980.

If you purchased some of those coins in the 1930's or 1940s (or even later !) but cashed out around 1980 (admittedly a peak after a golden decade)....your return was closer to 18% a year on some of those ultra-rare Saints.

..."total return starts to decline over time"...true but not as drastic as a recessive stock market crash...somehow a 5% dividend on a stock that has dropped 50% isnt very sweet....

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On 6/26/2022 at 10:41 PM, zadok said:

..."total return starts to decline over time"...true but not as drastic as a recessive stock market crash...somehow a 5% dividend on a stock that has dropped 50% isnt very sweet....

Yes, but as you know, the coin market has had some doozies in the last 42 years. xD 

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On 6/27/2022 at 12:53 AM, GoldFinger1969 said:

Yes, but as you know, the coin market has had some doozies in the last 42 years. xD 

...true as well...certain segments didnt crash or take a deep dive, those that were collector oriented sort of just stayed flat in the better dates n varieties the common dates took a bit of a hit due to type coins sliding...in the 2008 crash i remember my deferred comp dropped 85% while my 19th cent coins actually increased in value...i doubled down on the deferred comp n realized 100% gain on the recoup n bought some of the better date coins that were being dumped at fire sale prices n realized bout the same gain...mostly a timing advantage n remaining solvent, liquid n cash ready...the numismatists that took a big hit were those that were over extended n deep in speculation rather than solid collecting....the biggest pitfall, in my feeble opinion, with coin collecting n realizing a positive return if/when sold is the pure collecting i.e. the compulsion of completing the series or sets, yes its an addiction, u end up saturating ur "investment" by putting 80% of ur money in common date coins that u know will not appreciate more than cpi, effectively making that money dead money n those coins have to coattail on the rare dates n variety coins...the really "smart" collector would just buy the rarities n skip the commons but those album holes keep staring u in the face n the album companies just wont make rare date albums...i once did a type set album with all rare dates, sold it shortly after completion at a significant increase but i didnt truly consider it as part of my collection more of an experiment, did the same with a first year of issue type set in very high grade, the rarities carried the set but less so than the rare date type set...the advent of certified/slabbed coins has actually eliminated the album holes u can just skip the common dates n have boxes of 20 rare coins with no voids...too much thinking this early before my tea, getting a head ache...later amigo....

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High grade seems to be the key. Mundane hole filling is the path to losing money. 

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On 6/27/2022 at 2:31 PM, VKurtB said:

High grade seems to be the key. Mundane hole filling is the path to losing money. 

But even then, even the highest-graded coins can't esacape the mid-single digits returns over most time periods.  Look at the 1933 Double Eagle and the 1908-S Norweb Saint (which David Akers said might be the most attractive of any Saint).

Edited by GoldFinger1969
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On 6/27/2022 at 1:57 PM, GoldFinger1969 said:

But even then, even the highest-graded coins can't esacape the mid-single digits returns over most time periods.  Look at the 1933 Double Eagle and the 1908-S Norweb Saint (which David Akers said might be the most attractive of any Saint).

To me, the most compelling are those with the very sharpest knife-like rims. 

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On 6/27/2022 at 3:33 PM, VKurtB said:

To me, the most compelling are those with the very sharpest knife-like rims. 

You mean Saints or coins in general ?  What exactly do you mean by "sharpest knife-like rims"....you mean no dings or dents on the rim ?  

Or are you talking the MCMVII where the fields rise up sharply to the rim ?

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On 6/27/2022 at 2:58 PM, GoldFinger1969 said:

You mean Saints or coins in general ?  What exactly do you mean by "sharpest knife-like rims"....you mean no dings or dents on the rim ?  

Or are you talking the MCMVII where the fields rise up sharply to the rim ?

I mean Saints. The MCMVII. Stunning. 

Edited by VKurtB
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On 6/27/2022 at 4:31 PM, VKurtB said:

I mean Saints. The MCMVII. Stunning. 

Outside of recent specially produced UHR and HR coins, I don't recall any other U.S. or foreign coins in the last 100 years that are HR with that special design to the rim.

Maybe some foreign coin I am not familiar with.

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On 6/27/2022 at 2:31 PM, VKurtB said:

High grade seems to be the key. Mundane hole filling is the path to losing money. 

...unless u r a dentist or in road repair...

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On 6/25/2022 at 2:03 AM, GoldFinger1969 said:

The classic coin collections that were sold in the 1970's, 1980's, and later.....were the beneficiaries of being purchased pre-WW II and then benefitted from the Baby Boom and the Coin Boom.  Some of the returns were fantastic, Eliasberg and John Jay Pittman among them. 

I estimate that JJP's return on coins was about 20% a year, which is outstanding and beats stocks and other assets over that time.  But again, Pittman benefitted from buying coins in the 1950's and 1960's....AND....focusing on gold & silver coins whose price was artificially kept low and reaped huge profits in the 1970's. 

Forget the bubble-spike prices.....if you use $20 (silver) and $500 (gold) as the 1980 price, these assets returned about 26% and 28% respectively in the 1970's.  The prices rose and fell over the next few decades and this hurt returns (no capital appreciation + no dividends).

Many insightful posts here but I'll respond to this one because you made one point i want to add to.

The collectors you used as examples bought long before the beginning of financialized collecting, prior to the 70's when coins were first widely bought as "investments" and then in the 80's when TPG first became prevalent.  If you look at the PCGS 3000 which I consider representative for most US coins, most US coinage received a two time surge from the two drivers I listed and since then have mostly flatlined.  First, a broad surge in the 70's which is reflected in Red Books of the time and then a noticeably higher quality premium from TPG.

The other point I have made before which I never see mentioned (though some agree with it somewhat) is that the price level is substantially inflated from the prices of the major asset classes.  It's what I call the asset mania.

Few now were around or had meaningful amounts of money to buy cheap in the 70's.  Somewhat more prior to or maybe right after the TPG crash but even that was over 30 years ago now.

I've looked at a lot of (mostly US) coins in the Heritage archives where some have gone up a lot in the last 20 years but it's not many proportionately to my knowledge.  Early US gold and somewhat later 19TH century British proof gold also exploded.  I recall a then ungraded 1839 British 5 Sovreign sold by Goldberg in 2004 or near it for about $25K.  In PR-62, It's a $300K coin now.  I should have "stretched" for it then but did not because I don't buy coins as "investments".

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On 6/26/2022 at 6:10 AM, zadok said:

...n knowing, seeking counsel from, having access to no less than 63 of coin world's list of 100 most influential numismatist certainly helped, n being able to purchase coins from 20 of the greatest collections of the past 50 years was very opportunistic...but this outlier thing, i have indoor plumbing now....

Your post reminds me of a prominent dealer who posts on the PCGS forum.  Having an extensive network is invaluable in both buying and selling.  For coins that are actually hard to buy, it gives access the overwhelming majority do not have.  When selling, it makes it much easier to realize (supposed) market value for coins that are otherwise illiquid.

I made good money off of my South Africa collection and I might make decent money off my pillars (assuming the asset mania doesn't crash first) but unlikely the rest.  I never bought my coins specifically with the intent of making money or else I wouldn't be a collector.

But the point you make here is a big reason I'm going to have a hard time adding to my pillar collection at reasonable prices.  I've reached the point now where there isn't much I want to buy recorded in the TPG data and the coins that I have seen in references don't come up for sale either, ever.

I will likely have to go the private sale route to acquire these coins but that won't likely happen except at a noticeable premium to "market" because of the fairly high preference and are all rare, at least in quality that isn't "dreck".  The owners almost certainly know it and have no incentive to sell at an amount I consider the likely market price.

As an example, there is one coin up for sale at a dealer site now for somewhat more than $2k which I think is probably worth about one-third of ask.  It showed up in the TPG data very recently.  I'm not paying that which means I need to wait until they offer it at auction (if someone doesn't buy it first).  

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On 6/27/2022 at 4:31 PM, VKurtB said:

I mean Saints. The MCMVII. Stunning. 

It's a unique coin among the Saint-Gauden and Double Eagle sereies -- indeed, ALL coins -- because it has a base of support that includes non-coin buyers who own it as an artistic masterpiece.

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On 7/6/2022 at 5:06 PM, World Colonial said:

The collectors you used as examples bought long before the beginning of financialized collecting, prior to the 70's when coins were first widely bought as "investments" and then in the 80's when TPG first became prevalent.  If you look at the PCGS 3000 which I consider representative for most US coins, most US coinage received a two time surge from the two drivers I listed and since then have mostly flatlined.  First, a broad surge in the 70's which is reflected in Red Books of the time and then a noticeably higher quality premium from TPG.

Yes, excellent point....I've posted the PCGS 3000 Index here a few times.

I think the investment angle was periodically mentioned after WW II as occasional error or rare coins were found by some lucky kid or adult and they made a great score.  Of course, the 1962 Morgan Silver Dollar bonanza comes to mind.

On 7/6/2022 at 5:06 PM, World Colonial said:

The other point I have made before which I never see mentioned (though some agree with it somewhat) is that the price level is substantially inflated from the prices of the major asset classes.  It's what I call the asset mania.

Not sure what you mean by this....do you mean that coins are expensive relative to other forms of wealth and it's difficult to sell those to buy coins, compared to 30 or 50 years ago ?

On 7/6/2022 at 5:27 PM, World Colonial said:

As an example, there is one coin up for sale at a dealer site now for somewhat more than $2k which I think is probably worth about one-third of ask.  It showed up in the TPG data very recently.  I'm not paying that which means I need to wait until they offer it at auction (if someone doesn't buy it first).  

Are you saying a coin is selling for 3x the expected market price ?  Maybe the printed prices are outdated or recent demand for the coin has materialized and driven up the price ?

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On 7/6/2022 at 6:38 PM, GoldFinger1969 said:

Not sure what you mean by this....do you mean that coins are expensive relative to other forms of wealth and it's difficult to sell those to buy coins, compared to 30 or 50 years ago ?

No, the rise in coin prices is a side consequence of the asset mania but not trying to get into that again.

On 7/6/2022 at 6:38 PM, GoldFinger1969 said:

Are you saying a coin is selling for 3x the expected market price ?  Maybe the printed prices are outdated or recent demand for the coin has materialized and driven up the price ?

No, there is no expected market price.  It's my estimate.  It's a non-US coin which to my knowledge has not sold publicly before in this grade and very seldom otherwise.  I bought a slightly lower graded one (now in an NGC XF-45 holder) in 2019 (I think) for $250 plus grading fee, but the coin was lost in transit earlier by the USPS when NGC returned it.  Only two decent ones I have seen in 20 years.

It's an example of coins that effectively cannot be bought normally where the likely price to actually buy it will almost guarantee a loss at resale.  It's my inference there are a lot of non-US coins like it, though low proportionately.  Many "world" coins might seem like great "investments" in theory, but it does you no good if you can't actually buy the coins.

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Posted (edited)

I love it when you guys talk dirty.... LoL  I love the insight.  I am driving a Vega and you are talking Corvettes. I collect Nickels and you guys have Double Eagles but in the end if you go by % and hole filling I have to say it is almost a necessity if you want a complete set .I am always on the hunt for that hard to find coin at the bottom price.  I sometimes look at a coin I purchased and said what was I thinking it is only listed for $20 in a holder and then I look up what I paid for it and it was $3 in a holder. So I feel that if the percentage is acceptable the hole filling is a must for a collector weather it be Dimes or Dollars.  

Edited by J P Mashoke
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I spent all nite, way past the midnight hour, poring over these comments and slowly realized only a few members would truly understand and/or appreciate the point I would attempt to make. It's a new day. Let me give it a shot...

Firstly, I own a "top" collection, under P's auspices. [For that matter  so does the member at post position #2, though I believe his overall presentation is by far superior.] The gentleman who chose N to showcase his wares, as I had predicted, has the current and all-time best collection ever compiled and exhibited publicly--and his collection is two coins short of completion.

I cannot help but feel, however, that all this talk about money and investments has corrupted the spirit of coin collecting which I maintain [to at least one member's amusement] is nothing more than a behavioral trait much like OCD, which the folks who produce the DSM-5 have yet to acknowledge.

Here is the reason why why all the conjecturing, posturing and defensive assertions are inapplicable to me:  I do not smoke, I do not drink, I do not use drugs save for the medications prescribed for me. I would still come out way ahead of the pack, if I gave every coin I now own away free. Only you know if you may be a winner too if you can summon the courage to exercise a little humility and honesty and do your own calculations using a sheet of paper and a No. 2 pencil.  🐓  

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Posted (edited)
On 7/6/2022 at 7:24 PM, J P Mashoke said:

I am driving a Vega and you are talking Corvettes. I collect Nickels and you guys have Double Eagles but in the end if you go by % and hole filling I have to say it is almost a necessity if you want a complete set .I am always on the hunt for that hard to find coin at the bottom price. 

I buy a DE on average every few years.  Tough to come up with thousands of dollars unless I kick-*** in the stock market.

I guess you could say I get a new DE a bit more frequently as I've had Corvettes (once ! xD ).

My goal is to get a new Corvette with Double Eagles in it. xD

Edited by GoldFinger1969
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On 7/7/2022 at 11:16 AM, Quintus Arrius said:

I cannot help but feel, however, that all this talk about money and investments has corrupted the spirit of coin collecting which I maintain [to at least one member's amusement] is nothing more than a behavioral trait much like OCD, which the folks who produce the DSM-5 have yet to acknowledge.

I've written extensively on this subject, including this extract from your post.

In the past, I have estimated that the majority of US collectors (probably a noticeable majority) have annual budgets of $500 or less.  It's not "fact" or "scientific", it's an inference based upon what I read on coin forums (mostly dealer accounts buying from walk-ins) and my assumptions of what most (US) collectors are usually actually buying: US mint and proof sets, US moderns, low priced 20th century US classics, and low priced world coinage.  I consider these collectors predominantly recreational.  

My guess is that many forum members dispute this characterization because of differing definitions of "collector".  Think about it though.  If someone spends up to $500 per year, depending upon how often they sell, they can still spend a low five figures over a lifetime, like $10K or $20K.  I don't believe most spend that, not even close.

Second, for most others, since the amounts they spend are "substantial", it's not necessarily a recreational expense.  I don't think it's mostly for "investment" either but they still intend to get most or all of their money back at resale.

Why do I believe this?

Predominantly because I don't believe they really find what they are buying that interesting as a collectible at the prices they presumably or potentially pay.  It's collector specific but this is the sentiment I overwhelmingly read from all sources; myopic loss aversion.

The inflated price level due to financialized collecting has inflated the prices of what are mostly ordinary coins above what it represents as a collectible.  This applies far more to US coinage but also to many world and ancients too.

It's gotten to the point (years ago) where a collection won't include a high proportion of coin designs or series without a "substantial" outlay.  I'm not just referring to rare and scarce or gold either, but what are or used to be "collector" coins.

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