Investment Coins

[trout]

Buy a high grade raw coin, get it slabbed, and sell it at a huge mark up. In the current market this is a sure fire way to make a profit and it carries very little risk.
 
Where can I buy these high grade, risk free coins?

A lot of us can and do find some exceptional coins at bargain basement prices.

It isn't easy and it doesn’t happen too obtain but it can be done.

I would imagine getting a high value coin certified will improve the saleability/price of a coin but you would have to justify the costs (about $50 per coin) of slabbing a coin for sale.

It is amazing how many "Run of the Mill" coins are slabbed these days
And the ONLY thing inflating the price of these is the sellers adding the cost of the slabbing to the otherwise low value coins.

In theory is IS possible to find high value coins at low cost and get them certified to make a profit on them But in practice this is quite a rare occurrence.

[MobOfRoos]

It is amazing how many "Run of the Mill" coins are slabbed these days

We all saw that AU55 1946 Penny going for an absurd price

http://www.australian-coins.net/showthread.php?tid=242&highlight=1946

but I'll stop :dead_horse:

Walter is right about factoring in inflation. It is something we have to do ourselves to decide whether it is a good investment or not.

[Mister T]

Percentage return figures don't ever factor in inflation. Why then should you factor it in for coins?

Take for example, a number of ways of investing money:

A particular apartment appreciated by 3% pa in value and had a net rental return of 3% pa, so a total of 6% profit.

A bank term deposit paid 6% pa.

A particular coin appreciated by 8% pa, but there was 4% inflation, and you have to factor it in as you say, so it really only appreciated by 4% pa.

So the coin made a 4% return pa, the other two options paid 6%, yet the coin had the most return, how is that possible?

Yeah okay I get what you're saying.
I don't think it's totally correct to just do a straight percentage growth calculation on a $400 1930 penny in 1966 and an $18000 1930 penny today though as it may not be clear to everyone that inflation played a part in the increased dollar value. I don't know if there's a better way of representing such information though. In that example there would have been potential for investment as such a 1930 penny would be worth more now even with inflation but it doesn't tell the full story.

[trout]

Yeah okay I get what you're saying.
 I don't think it's totally correct to just do a straight percentage growth calculation on a $400 1930 penny in 1966 and an $18000 1930 penny today though as it may not be clear to everyone that inflation played a part in the increased dollar value. I don't know if there's a better way of representing such information though. In that example there would have been potential for investment as such a 1930 penny would be worth more now even with inflation but it doesn't tell the full story.

The "Collectabillity Factor" on certain coins in my opinion is the biggest factor to consider.
Also the hobby may have grown over the last couple of decades and there are more collectors out there that want the coins.
All the "Low Mintage  " coins will become scarce as more collectors get into this hobby especialy in the top grades.

All you have to do is work out which coins are going to be the "Must Have" for newer collectors :good:

[Fr45h3R]

Do you mean the claims of 1000% increases that don't account for inflation?

I think just these claims in general are cause for concern.
The numbers may be correct but to the uneducated it makes it sound so easy to make the big dollars. It will always be a case of buyer beware.

It is amazing how many "Run of the Mill" coins are slabbed these days

One thing to remember is that any pre-decimal coin these days, is over 50 years old give or take a few years, and have been out of circulation for around this period as well. Whilst the occasional roll or hoard may surface, even so called "run of the mill" coins may be quite difficult to acquire in true uncirculated and original condition.

In theory is IS possible to find high value coins at low cost and get them certified to make a profit on them But in practice this is quite a rare occurrence.

From the open market like ebay it can be done. But i think the losses balance out any wins quite quickly.
And even wins may become losses, for example if the coins achieves a 'details' grade from third party grading.

[wwwww]

Percentage return figures don't ever factor in inflation. Why then should you factor it in for coins?

Take for example, a number of ways of investing money:

A particular apartment appreciated by 3% pa in value and had a net rental return of 3% pa, so a total of 6% profit.

A bank term deposit paid 6% pa.

A particular coin appreciated by 8% pa, but there was 4% inflation, and you have to factor it in as you say, so it really only appreciated by 4% pa.

So the coin made a 4% return pa, the other two options paid 6%, yet the coin had the most return, how is that possible?

Yeah okay I get what you're saying.
I don't think it's totally correct to just do a straight percentage growth calculation on a $400 1930 penny in 1966 and an $18000 1930 penny today though as it may not be clear to everyone that inflation played a part in the increased dollar value. I don't know if there's a better way of representing such information though. In that example there would have been potential for investment as such a 1930 penny would be worth more now even with inflation but it doesn't tell the full story.

Your figures are measured in dollars, so your growth must be measured against dollars, i.e. your 1930 penny appreciated to 4500% against the AUD over 46 years, or 20% pa. It is unreasonable and to some degree deceptive to measure growth against anything other than what the figures are quoted in.

If your figures are measured by other means, then it is reasonable to to measure growth by those means. E.g. if you say the 1930 penny was worth 3 weeks of average wages in Australia, and now it is worth 12 weeks, therefore it appreciated 3% pa against the average Australian income over the past 46 years.

Neither statement is more reasonable than the other, but saying it went from $400 to $18000, therefore the growth was 3% pa would be deceptive.

Remember every value is measured relative to something else. If you valued the growth of the 1930 penny against the Zimbabwe dollar, then it grew many million percent but if you measure it against gold, then it went down. When you factor in inflation, you're really measuring performance against the index which your inflation figure is drawn from.

[trout]

This arrived today for a total cost of $16.52.
[attachment=487][attachment=488]
[attachment=489][attachment=490]

[drakesterling]

Yeah okay I get what you're saying.
I don't think it's totally correct to just do a straight percentage growth calculation on a $400 1930 penny in 1966 and an $18000 1930 penny today though as it may not be clear to everyone that inflation played a part in the increased dollar value. I don't know if there's a better way of representing such information though. In that example there would have been potential for investment as such a 1930 penny would be worth more now even with inflation but it doesn't tell the full story.

The simplest way to compare returns is using "CAGR" - or compound annual growth rate. Most investments in the investment world are measured with this metric, so an annual return in coins of a certain amount can be compared (more or less) to the same figure in equities, real estate, and so on.

CAGR is a measure of average annual growth in an investments price, taking into account the fact that last year’s return will add to the return of this year, which will add to the return next year, and so on. There are websites that explain this far better than I can.

Ignore inflation. If you factor inflation into your calculation, then you can’t compare your calculation with the returns of other asset classes (which don’t factor inflation). There are other reasons why inflation is not factored, but we don’t need to get into them here.

So, using your 1930 penny example: If it was worth $400 in 1966 and you could realise $18k for it 46 years later in 2012, then the annual return is 8.6%pa compounded annually. This says that your coin appreciated in value on average 8.6% each year in the last 46 years.

Now, if you compare 8.6% to the return of bank deposits, equities, real estate, gold, and other investments over that time, you can compare how this particular coin has performed against these other investments. For example, banks are paying interest around 4 - 5%pa at the moment.

I'm sorry to make this complicated, but doing the calculation is the most effective and (more importantly) comparable way to calculate returns in coins.

[trout]

There have been all sorts of comparisons with gold, silver, real estate etc and all sorts of formulas.
Who really gives a rats, at the end of the day if your coin can match or better inflation then it is a far better investment than leaving cash in the bank.
If you buy a coin and just leave it alone, Most times it will at least keep up with inflation.
I guarantee you if you leave cash in the bank for a long period of time and leave it alone it will dwindle away to nothing due to bank charges etc

[wwwww]

So, using your 1930 penny example: If it was worth $400 in 1966 and you could realise $18k for it 46 years later in 2012, then the annual return is 8.6%pa compounded annually. This says that your coin appreciated in value on average 8.6% each year in the last 46 years.

You're right, how on earth did I get 20%?

For everyone's information, the calculation is 18000/400 for the total % increase (4500%). Then to convert that to an annual compounded increase, put it to the power of 1/years. So 45^(1/46) = 1.0862 which is the increase per year, or 8.62%

[stevo1962]

One method I use to collect high grade coins at lower prices is to buy from outside Australia (mostly from UK and USA) as there is less competition and occasionally picking up good raw coins for 1/2 and sometimes 1/4 of the price that I could buy them in Australia for.Slabbed coins generally cost a bit more but the bargains are out there and with the USA hanging over the fiscal cliff there are likely to be more of these bargains coming out of the woodwork although if you look hard enough there are still plenty of bargains to be had in Australia but it takes time to find them