Investment Coins

October 30, 2008

I dont ever intend for this weblog to become a means of distributing investment advice. I am simply not qualified nor experienced enough to comment on the investment potential of coins. However, if you are looking to invest in coins then I suggest the following:

  • Educate yourself as much as possible. An educated investor is a better investor than the ignorant investor. Education should involve some knowledge of coin grading, some knowledge of the coins you are investing in, and certainly knowledge of the market for the coins you are investing in. A coin dealer may tell you a certain coin rarely comes on the market, dont just accept this, do your reasearch. A quick internet search of past auction results may tell you that what you have been told is not entirely accurate.
  • Dont take anyone's word for granted. I would no more invest no questions asked in a coin based on the advice of a coin dealer than I would buy shares in a company based solely on the advice of a stock broker. In both cases there are vested interests, the coin dealer wants to make a margin on the coins they are selling and the broker wants their commission.
  • Dont make the mistake of mixing your hobby and your investments. Your hobby will lead you to making purchasing decisions using criteria other than financial ones.
  • Understand the concept of market supply and demand. Ideally you want to invest in coins that are in short supply and in high demand. So in the Australian market for example, low grade 1930 pennies are a high value and rare coin but at any one time there are usually several available to purchase so perhaps potential capital growth is limited. Conversely, some high grade Australian varieties are in very short supply but they are also in very limited demand, so again perhaps capital growth is limited.

If you're interested in reading more about investing in coins there's a very good article about investing in coins on this site. Remember though, educate yourself, be cautious, and remember that it's your money so look after it!

Posted by mnemtsas at October 30, 2008 8:06 AM
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