To start collecting or not?

Hi,

first post here, apologies for the many things I will have done wrong, please be kind… :-)

I am a real newbie, not sure if I'll be a coin collector, its a bit uncertain, therefore this post:

My Great-Great Uncle had twenty-five 20 DM Gold Reichmarks in his estate, his legacy got divided and subdivided, and I ended up with 5 of them. My father collected a few silver dollars (Canadians) and a gathering of other coins (commemorative 5 and 10 DM coins), including a gaggle of 999 silver medals (coins without denomination). In the 70s, I collected German coins (about a hundred 1, 2, 5 10 and 50 Pfennig pieces from 1948 Bank Deutscher Länder plus about another 100 5 and 10 DM silvercoins. When my father passed away, he bequeathed ½ of these and his stamp collection (1950s-2000 with a few before) to me. The coins and the stamps were his way to make me inherit some thing, and I like the idea. In a way, historical coins are not really ‘mine’, I just hold them for others coming after me.

I have no great sentimental value for the stamps and wanted to sell them and buy a nice coin for it. I also wanted to sell the lower-value coins and buy something nicer for this, so that offspring have an inherited collection of coins, but not that consists of 100s of pretty much worthless coins. On the stamps, I found no market for them at all. about a dozen stamp shops and stamp auction houses looked at them and said “nope, sorry, go away”. The harshest comment was from a grumpy stamp seller suggesting that if I wanted to have a nice memory of the stamps, I should use them to start a bonfire, make a spitroast and remember forever how nice that one tasted. 

My efforts to sell the lower-value coins was unsuccessful as well. I was told:

- the 5 and 10 DM commemorative pieces can go to a German Bank and they'll give me face value for it. So no appreciation over 50 years.

- the Bank Deutscher Länder are probably worth their weight (copper etc)

- the medals have been sold to a coin dealer for their silver weight

I still like the idea of (starting) a coin collection, but it seems the market has completely dropped out of stamps, and unless you have stamps already worth a lot, you'd be trading in a community that is gradually dying out, so that the idea of stamps as a way to preserve value for later generations is gone. 

Here my two questions:

1. why should I buy coins as a value maintaining thing for later generations? If I can't sell the lower-value ones, and if stamps have lost that value-maintaining thing and are being traded amongst a diminishing number of people, is there anything that would be different in collecting and preserving coins? Is the coin market like whiskey where the value probably increases over time but in either ‘case’ only the good barrels are worth hanging on to? Is the coin market like a second-hand car market with old and cheap bangers going to Peru or are scrapped and sold with some models gaining ‘oldtimer status’ that holds their value? 

If the economic value of coins are not at all preserved, I might as well put money in a savings book and offsprings can buy themselves whatever they want. And of course, I ‘appreciate’ the emotional, historical, cultural value of old coins, and do enjoy the beauty of coins. I'm neither a brute, a thug nor an imbecile. 

2. If there is a market for higher-value coins that means their value is probably preserved over, say, the next 30-50 years, then what would that market be? 

• if it is bullion and such likes (bars, Krügerrands, Sovereigns etc), is their value not very dependent on the current raw material prices? Prices for precious metals are very high today, and I probably would be better off to buy later.
• I don't think it is in commemorative coins, as their price is again very closely linked to the prices of their underlying metals.

So my idea would be to start a collection of historical gold coins, say Gold Dukats or coins of the German Kaiserreich, average value say £700-1500. They look good, have some history to them and their price is not as dependent on current metal prices. But that would only come after somebody has assured me that there is value-preservation in some coin collecting segments.

I hope I have not completely spoken out of terms and have not offended anybody. (I donated the stamps to a local stamp collector who will sieve them and pass them to his mates. He agreed that collecting stamps has no value preservation anymore, but he enjoys it and that's good enough. I gave the stamps (1000?) to him with a happy heart. Made his and my day). But if somebody could share reflections on coin collecting and its long-term economic impact, I'd be delighted. More so if you culd bring an economic argument to this historical pastime.

Many thanks!

Walter

Hi!

To answer your two questions:
1. The lower value coins (like the contemporary circulating ones, commemorative issues) will never be expensive. Those are produced in hundreds of millions per year. You can collect them, sure. I do and I think most people in this site does as well. But this is a hobby and I don't expect to get more money out of it in a couple of decades if I want to sell them.
Your whiskey example doesn't really hold up for coins. You can buy pretty decent roman coins from about 15-20$ on ebay. If their value didn't go up in 2000 years than the value of the contemporary ones will not go either.
If your main concern is to pass wealth down to the next generations, numismatics may not be the ideal tool for that.
2. That being said, I think that if that's your main focus, bullions are not a bad choice.

Yes, their value is dependent on the price of the raw material but at least that guarantees that someone will buy them 20-30-50 years later at least at that price.
Focusing on the rarity on the other hand is quite subjective. I mean if you buy a rare gold coin, you pay for the metal content + the numismatic value (rarity and condition). Which is fine but if you want to sell it in the future at the same price, you need to find a buyer who is willing to pay for both. Personally, I don't think that would be a problem in the future, but if you're afraid of that, don't go too far in that direction.
There are other common gold coins beside Sovereigns and Krugerrands, for example the Latin Monetary Union gold coins. Those were circulating coins in the late 19th-early 20 centuries, so they were minted in high numbers, so their value mostly comes from their material not their numismatic value. A lot of them doesn't cost much more than melt price and there is a wide variety of them. You can build up a quite decent collection of those, which would be more interersting than like 20 Krugerrands with the same design. Also you can be assured that even in the worst case scenario, you can sell those around the current gold value relatively easily.

Really appreciate your thoughts on my rambling, including the roman coin example!

I'm sure you are right that coins or similar collections are not the way to go if it is about increasing or at least stabilising the value of a legacy. Makes sense.

I probably also overstated the value-appreciation I seem to seek from coins. I'm looking for a way to pass some value on, if this were limited to monetary values, I'd speculate on investment markets (and buy some of these outer-mongolian high-tech IPOs that everybody keeps talking about 😉 ) But I like the idea that my ancestors bought gold coins not merely as an emergency backstop but a continuation of their earlier lives in the future. I enjoy the idea of holding something a roman farmer or Senator could have carried around to buy food a few millennia ago. It connects me to lives in past times, which is why I think coin collecting is a nice pasttime. Decades ago, my father volunteered in an archeological dig in a Wurt (very old elevated structures to build houses on to avoid tidal flooding (https://www.alaturka.info/en/germany/lower-saxony/5995-warften-wurten-or-hallig-ancient-mounds-on-north-sea)) in North Germany and the Archeologist allowed him to keep two roman coins he found. I like thinking about their passage from Rome to far-flung North  Germany with centuries of non-use and their current stasis in a drawer. I won't sell them, no matter what.

My experience with lower-value coins and with stamps suggests that at least the lower value ones are not working as a way to pass on economic value as well as emotional values. You seem to imply that the experience would have been very similar if I had not bought say 100 5DM coins but 1 500DM coin and that the idea of people a century ago to buy valuable coins as an emotional and financially sound legacy is no longer, if it ever was? 

I like your idea of earlier Latin American Coins, although Potosi has always left a bitter taste for me. If coin prices are the raw material price plus collectable value, I should either buy coins with less collectable value (ie Bullion) or buy historical higher value coins in the hope that the ‘collectable value’ will not crash as it has with stamps? Is there a place where I can find out historical prices of old coins? Say how much was this one traded for in 1900, 1950, 2000 https://en.numista.com/catalogue/pieces159510.html?

Thank you for your kind consideration.

Walter

Sorry, I wasn't clear about my suggestion. I haven't got much experience with latin american coins, I meant Latin Monetary Union. 🙂 These guys basically: https://lmucoins.com/

What I meant that there are a lot of french, belgian, italian, spanish, swiss, etc. gold coins with a similar design and weight, that were in circulation in large numbers at the late 19th-early 20th century up until WWI. Because these are common and minted in millions or tens of millions per year, plus because a lot of them are worn of the circulation, their numismatic value is usually not so great. At least for the later ones. But they're still gold coins, so at least they have bullion value. And also because there are a lot of types of them, you can make a quite diverse collection.

THANK YOU so much for your time and insights!

W

😀WELCOME!!

Welcome to Numista, BrexitSufferer007 (interesting handle, but that's probably for discussion over a beer 🙂).

We are not an easily offended bunch out here, especially if you demonstrate that you'll put some effort into a post, as you've done.

I'll pick up on one of SGreg85's thoughtful comments, and agree that numismatics may not be the best place to invest with your goals.  In addition to the inability to predict which segments might go up and which are more likely to go down, the individuals who will inherit the coins may have no interest whatsoever in numismatics or the history with which they are intertwined.  My kids don't.  

If passing along something with guaranteed value increase over 30-50 years is the goal, i'd stick to financial vehicles or gold (including gold coins that are primarily tied to bullion price, which as pointed out above is very many types).  Though “past performance is not an indicator of future returns,”  the S&P 500 is up over 1000% since 1995 and over 3000% since 1975.  Gold is up over 500% since 1995 and over 1000% since 1975.  Even if you spend double the precious metal value for a gold coin, but it goes up 500%, you (or your next generation) would still be ahead.

Hi,

and thanks for the welcome from a fellow Walter…!

Discussing Brexit is just incompatible with sobriety… Happy to have a beer over it, ideally in Blighty 😉

I try to not offend people, generally, but my post could have easily be misunderstood as a generic gripe against the hobby, and I empathise with collectors.  OK, I get it, collecting coins is not the value-enhancing pasttime it used to be and the market seems to have dropped out of the lower value coins altogether. Fair enough. Should not prevent anybody frrom collecting.

Family members in decades and centuries ago had to flee incoming armed people again and again (I know from church book entries and family saga going back until before the 30-year war), and the idea of having a stack of something valuable must have appealed them in as much as it would today in some places of the World. As said, I also like the idea of coins linking the collector to history making where we come from and where we go to much more connected. And transitionary.

But turning this question around, which segment of coin collection would have least variability in economic values for the future?

• Roman, Greek, Karolingian coins have not changed much over time, so they are unlikely to suffer going out of fashion, but there is always another Metal detectorist striking it lucky with a Frome Hoard or a Jersey Coin Hoard.
• More recent prices of coins in past currencies (Dukats, Thaler, Reichsmark, French Livres, Pieces of Eight etc) are composed of the metal and the collectors' value. I speculate that the overall price of these coins have gone up primarily because of the metal price while the collector's value may have suffered from fewer people willing to trade in a gradually shrinking market. The market does not shrink because fewer coins are around but because fewer collectors are willing to pay much beyond metal price?
• Coins of small denomination with historical value (my swastika-inflicted 1, 2, 5 and 50 Pfennig pieces). I suspect their trade price rises and falls with the fashion associated with that historical area, so that would rule it out as speculative. I also would disagree with the ethics of banking for Fascism becoming popular, so that's a no for the value-creating aspect 
• Mass produced commemorative coins of low initial value (the 5 DM pieces). Evidently, not a value-maintaining strategy
• traded coins with high metal value. This seems to be the main recommendation here, and it makes sense as the value of the coin is largely its metal value and the collectors' value is an option. But the idea of buying 20 Krügerrands is just not my idea of ‘collecting’, and if value preservation is the only thing, maybe I should buy land. Also, prescious metals have risen in price on the last 10 years or so for other factors: greater affluence in Asia that saw demand grow, greater political instability that made people buy into these and growth in the use of these metals in manufacturing. I have hopes (despite what Americans recently voted in) that the future will begin to look better again and this purchasing strategy would suggest I should wait two/three years for the world to look better and the prices to fall.

So the group least affected by price variations over time are the first two and the last one? If so, I think I'd go for "Gold Dukats in the Hanse Cities" or Karolingian coins (the more I hear the more I'm impressed by Karl Der Große but the coins are invariable quite ugly (to me)). Or wait for better times to buy bullion coins?

And is there anywhere that reports or records how cheaply or expensively coins are traded? N#159899  this one started 270+ years ago, and it is popular enough that it must have been traded quite a few times?

Many thanks for your time and kind consideration,

Walter