If you’re thinking about getting into coin collecting, you might be wondering whether coins will be a good investment. It’s a smart question to consider if you’re going to be spending some of your own hard-earned money.
There are many factors involved in the value of coins and what happens to that value over time. I’m going to review as much detail as possible to help answer these pressing questions.
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Do collectible coins increase in value?
Coins have a collector’s value and the value of the metals contained in them, such as gold and silver.
For collector’s coins with negligible precious metal content, the value comes down to rarity, demand, and condition. Assuming you store your coins properly and maintain their condition, there is generally appreciation in the value of collector’s coins.
Whether you can make a profit compared with what you paid depends on if you got a good deal initially or paid a significant markup.
The amount of surviving coins in top condition tends to diminish with time as they get lost, melted, or become unavailable. This can increase the rarity and value of remaining available coins.
While I make this statement generally and many have had some success, it is a gamble that still depends on many factors, including the specific coin and condition. No matter what, collector’s coins are only worth what someone is willing to pay, and this can be quite variable.
Coin value appreciation usually takes a long time—at least a decade or more.
All in all, coins can be a good investment, but don’t count on them to pay your kid’s college tuition or to be a failsafe if you need to liquidate fast. I recommend coin collecting first and foremost as a hobby, and if there is money to be made within that, it can be considered a bonus.
Do rare coins increase in value?
If making money is a concern for your coin collecting, rare coins are the way to do it. They are harder to come by so the right person can be willing to pay a premium price.
Rarity typically but not always goes along with higher demand.
When you hear examples of people making tons of money from their coins, it is due to rarity.
Do old coins increase in value?
Old coins that are very common may not appreciate as much as those where rarity plays a bigger factor. Still, it can be hard to predict what might happen as sometimes the market can shift unexpectedly.
For example, in the 1980s when silver prices were soaring, many silver coins were melted for their bullion value, decreasing the availability of some silver coins.
Old coins that are well maintained have survivability in their favor, meaning there should be less of them over time.
Are gold coins a good investment?
The price of gold fluctuates widely. If you wish to invest in gold as your primary purpose, you might consider buying gold ingots (bars) rather than gold coins.
With gold coins, you are still betting on the price of gold but paying extra for the time and artistry that goes into creating the coin.
However, if you are a coin collector considering whether to include gold coins in your collection, you might consider adding them when gold prices are low. That way, the coin’s intrinsic value will at least increase if gold prices go up.
A collector will be able to appreciate gold coins for their artistic and historical value while potentially having a solid investment in addition.
Are uncirculated coins a good investment?
Whether uncirculated coins are a good investment really depends on the amount of uncirculated coins available for the given type, year, and mint mark. For some coins, the uncirculated coins aren’t that much different in price from the circulated versions because so many uncirculated coins are held by collectors.
You’ll need to do more specific research to understand the rarity of a particular uncirculated coin. This will help tell you whether you are getting a good deal and might expect to make a profit in the future.
As far as modern uncirculated sets that can be purchased from the U.S. mint, the market for these has been soft for the past couple decades, and they are not widely expected to be a good investment.
These sets have not recently fetched much more than the currency’s face value. However, they can still have sentimental value for collectors so there’s nothing saying you shouldn’t own or enjoy them.
Coins that have increased in value over time
Are there examples of coin collectors making big profits over time? You bet!
In 2013, a 1796 B-2 Quarter, from the first year a quarter was ever minted in the U.S., sold at auction for $1.5 million. The collector had purchased the coin for $100 in the 1930s.
In total, the 102-year-old collector’s 1,800 coins sold for over $23 million. He had spent around $7,500 building the collection over his lifetime.
In 1947, a man found a 1943 copper penny in his lunch change and knew it was something special. He held onto it his entire life, keeping it in a safe, and it sold for over $200,000 at auction in 2019.
The 1943 copper penny is known to be the most famous error coin, because pennies that year were supposed to be made of zinc-coated steel. Only a few are known to exist.
These are just a couple of examples, but you’ll surely hear a lot more if you hang around collectors for very long or ask around in coin forums.
What factors could increase the value of a given coin?
To summarize, if the value of a metal within a coin increases, that will affect the intrinsic or melt value of a coin.
Aside from this, coin value comes down to demand, rarity, and condition. If you have a rare coin in top condition, maintaining it over time gives you a good chance its value will hold or even mature.
The economy’s general state can also affect whether there will be a good market for selling rare coins. When the economy is booming, more people will have liquid and disposable assets that they can spend on rare coins, benefiting collectors looking to sell.
Tips to increase the value of your collection
To increase the chances of your next coin acquisitions being a solid investment over time, try these tips:
1. Purchase coins of types with fewer available
As we’ve discussed, rare coins are going to be the best bets for retaining or increasing in value.
Look for “key dates” in a series. These will be the most in-demand and likely to fetch higher prices due to limited availability.
As a bonus, they can also make your collection more special while you own it. This is one of the reasons many seasoned collectors recommend saving up for a few higher-value coin purchases rather than many smaller coin purchases.
2. Use proper storage
Make sure you’re investing in quality, archival storage materials that will maintain the condition of your coins over a long time. Don’t risk your investment by not protecting your coins adequately.
For rare and valuable coins, consider having them encapsulated and certified if they are not already.
3. Pay a good price at purchase
Make sure you’re buying what you think you are when purchasing coins, because small variations in grade can make a big difference in price. Become knowledgeable in grading and inspect coins yourself.
Purchase from a trusted dealer, and buy certified coins when it comes to rare and valuable coins.
Consider buying coin lots at wholesale, flea markets, or estate sales to look for a hidden valuable coin. It may be a longshot, but you never know what you might find.
Educate yourself on coin prices so you know you’re getting a good deal. Don’t be afraid to make an offer as dealers may accept less than asking price.
4. Hold onto coins for a long time
The whole idea is that the price of your coins will mature over time, hopefully higher than the rate of inflation. The coin collecting industry seems strong so with any luck, this trend will continue.
Keep your coins in a safe place, stored securely, so they may make you money on resale or bring some good fortune to a future generation.
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Enjoy your hobby
As a reminder, if coin collecting is your hobby, it should be fun! Of course, you’ll want to make sure your money is spent wisely, but don’t forget to enjoy yourself along the way.
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