Tuesday, January 10, 2012

Coin Collecting/Investing

Mike Davis had an interesting article in Numismatic News regarding the difference between coin collecting and investing.  Coin World also recently published their rare coin index which shows a 4.98% increase in the index.

My own feelings are somewhere in the middle.  I typically buy coins that are interesting to me.  I also expect price appreciation in the coins I buy.  I don’t weigh the expected price appreciation of coins versus other potential investments such as stocks, bonds, or commodities.  Nor do I consider the liquidity of purchases.  My current interest is in capped bust half dollars.  I have purchased a few of these coins.  I have also limited my purchases to non-mint state coins which will not appreciate as well as mint state coins.

In terms of portfolio management, my net coin holdings are less than 1% of my financial holdings and an even smaller percentage of holdings including other real property.  Further, I would be hard pressed to pay over a $1000 for a coin, while I routinely have stock holdings above that threshold.

However my investing strategy is similar to my collecting strategy.  If I find a company interesting, I will look at whether it is publicly traded and then consider whether it is accurately priced.  If it is trading below my expectation, I will often purchase a small stake in the company.

Davis’ article also critiques the US Mint, which certainly is operating very differently today than it has in most of its history.  In fact it would cost nearly $23,500 to purchase all issues from the US Mint in 2011.  I only purchased 5 issues from the US Mint and that was unusual for me as I found the commemoratives particularly compelling.  I agree with several points of the critique and will curtail my purchases of proof sets in the future.  I will also make a point of getting rolls of coins from my bank to bring into circulation and possibly even find collectible coins.

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