Should I buy numismatic or valuable coins? It is a common question that has been asked when you talk about valuable old coins. Collecting vintage and valuable coins can be an enjoyable hobby and offer a beautiful souvenir for a lot of collectors that are interested in certain periods in history.
But the term numismatics complicates everything. A numismatic coin is an extravagant or a fancy term for rare or valuable coins that have a value exceeding that of the metals that are made of. A common question always arises all the time when we are talking about numismatic coins like:
Is this kind of investment good for portfolio strategy?
Are these things a good investment?
What are the things you need to look for when you are considering of starting numismatics beyond being a hobby?
Unfortunately for a lot of investors who are just starting with this kind of business losing money is not a surprise. Most of those cases, gold price increases while the process of the coins was controlled or held. The question is, “How can investors lose money on rare and valuable coins?
Why their prices are not rising along with the price of gold? In this article, we will talk about the risks most investors take when they spend money on numismatics like collecting medals, coinage and rare currencies as well as the things you need to watch out for
Risk #1: There will be times you will overpay for an item
The markup price on numismatic coins is a lot higher compared to what you will pay for a standard bullion coin. Premiums can cost around 25% to 1,000%. Premiums for rare, old gold coins are higher because they are well, rare. But that is not the real problem.
The reasons why these investors overpay are because the value of rare items is very subjective. The premiums for numismatics are based on the condition, the rarity, the historical significance as well as the demand on the item. Different people value items in different ways. T
here are magazines or annual publications that list the prices of numismatic items, but the items are sometimes not what the actual price when sold. There are times that publications will have two different prices for the same item. It is why a lot of investors have lost a lot of money in this industry, even if the price of gold is rising. If you overpaid in your coins, it would take a considerable surge in demand before you can make any profit.
Risk #2: You do not know enough about numismatist
Buying old collectible gold coinage allows you to have a part of the history in your hands. That is a good reason to be starting this kind of business. But having something with historical value does not mean they are a good financial bet. Just like collecting sports cards, artwork or comic books, if you do not know anything about the market, it is tough to tell if you are making a profit on your investment or not.
The United States Federal Trade Commission issued a report in 2011 that is still very relevant in today’s world. It says in the first paragraph of the report that if you are thinking about owning and buying it as an investment the FTC or the Federal Trade Commission, the agency that protects consumer rights, has three words for all investors:
DO A LOT OF RESEARCH. In fact, the Federal Trade Commission says that there is not an investor who can afford not to spend a lot of time researching about the things they were trying to invest in. Invest about the people or agency that assesses them and the dealers or individuals that sells them.
If you want to know everything about numismatics, it can be an enjoyable hobby as well as a good source of income. If you are not willing to learn about the numismatic market, a lot of experienced investors will tell you that you are very vulnerable to losing a lot of money in this business.
Here is one good hint that rare old valuable coins are a very dangerous investment. Current United States law forbids people to own collectible. If numismatic items are considered a good and safe investment, they should be allowed in retirement accounts. If you want to learn more about numismatics, you can visit https://en.wikipedia.org/wiki/Numismatics.
On the other hand, a lot of bullion coins are allowed for retirement accounts. You need to keep in mind that collectors and not by investors drive this industry. It is not to say that investors do not participate in this business or profit cannot be made. But a traditional buyer is someone who wants a particular coin or item for their collection. If that does not describe you, we recommend avoiding rare numismatic items.