A Guide to Getting Starting in Coin Collecting
Coin Collection: A Lucrative Hobby and Investment
People have collected coins since the tokens gained enough age or unique features to warrant investment. These numismatists have historically valued their collections from an intellectual and hobbyist standpoint.
But in more recent years, coin speculators have made significant profits by buying and selling these tokens at the right time. The world of numismatics holds many hidden gems that savvy or lucky collectors can exploit.
Here’s how the hobby of coin collecting turned lucrative.
Arkaio Nomisma, CC BY-SA 4.0, via Wikimedia Commons
The History and Evolution of Coin Collection
Humans have hoarded coins for their precious metals since Lydians introduced them thousands of years ago. The small size and stackability of coins make them an ideal way to store value.
While some of these hoarders may have kept their stashes for artistic or sentimental reasons, our first recorded instance comes from The Lives of the Twelve Caesars by Suetonius. Historians record emperor Augustus’s habit of presenting exotic or ancient coins to friends at festivals.
The late Middle Ages saw the scholar Francesco Petrarca rise as one of the first avid coin collectors. Francesco sought ancient Roman currency and loved identifying the emperors etched in the metal. Following his example, Renaissance aristocrats adopted numismatics as a fad.
It wasn’t until the 17th and 18th centuries that a growing middle class could participate on a large scale. By 2016, the number of American Numismatics Association (ANA) members approached 25,000. This transition from a nobility-centered avocation to mass popularity led numismatics from being called ‘The Hobby of Kings’ to ‘The King of Hobbies.’
The Basics of Investing in Coins
In 2021, a piece of copper used as the prototype for American currency sold for $840,000. Experts expected the proto-coin to sell for between $350,000 and $500,000.
While an exceptional example, this copper piece illustrates numismatic’s volatile ability to turn shocking profits. Seeing coins’ potential value, investors have put significant time and resources into finding hidden gems.
Investors in numismatics typically seek the following coin types:
- Commemorative Coins: Coins the U.S. Mint produces in limited numbers to honor a person or event.
- Ancient Coins: Coins that pass a threshold for age.
- Error Coins: Coins the mint produced with distinct defects.
All these tokens share the attribute of rarity. Rarity gives coins their value, and most currency that has few existing copies will net a substantial sum.
To sell or buy rare coins, serious collectors either deal exclusively with known professionals or visit a specialized auction that helps vet participants.
Image by Mike McBey via flickr
The Market for Coin Collecting
A coin’s value fluctuates depending on the market. As more people participate in coin collecting, the market grows, increasing demand for individual tokens. Speculators who foresee numismatic interest expansion may purchase coins with the expectation of selling for a profit later.
Coins are not completely immune to economic trends. During a recession, when people have less money to spend, demand for all types of collectibles, including coins, may decline. However, rare coins that have been well-preserved and have a high numismatic value may still be in demand, even during a recession.
Gold and silver bullion coins are both considered to be investment grade coins, but they do have different market dynamics. Gold bullion coins are typically more expensive than silver bullion coins, and their value is more closely correlated with the price of gold. Silver bullion coins are often used as a hedge against inflation, and their value can be more volatile than gold bullion coins.
Billjones94, CC BY-SA 4.0, via Wikimedia Commons
Steps to Start Coin Collecting for Investment
New numismatists should immerse themselves in the community before making significant purchases. The U.S. Coin Forum is a fantastic resource to find people with similar interests. And coin shows like the World’s Fair of Money demonstrate the ins and outs of experienced transactions.
The U.S. Mint makes a catalog that advertises a diverse stock of coins. Overseers label tokens with limited release dates, so investors can plan future exclusive purchases.
The ANA notes its 300-member coin clubs in a directory. Novice numismatists can discover local affiliated groups by telling this directory their location and interests.
For those looking for rare coins that still function as a common currency, try banks. These institutions sell rolls that are the easiest way to buy bulk piles.
Image via Royal Mint
Storing Your Coin Collection
For numismatists who prefer easy access to their collections, home storage is a popular option. However, it is important to take precautions to protect your coins from damage. This includes wearing soft cotton gloves when handling coins, storing them in a safe place away from moisture and heat, and using coin holders to protect them from scratches.
Banks are a less accessible but more secure means of storage. Many facilities have the tools to house collections in specialized plastic holders within safe deposit boxes.
Regardless of storage location, insurance is a good idea. Most banks won’t fully compensate owners if their collection is damaged or stolen.
Viiticus, CC BY-SA 4.0, via Wikimedia Commons
Potential Risks and Challenges
Numismatic investors are particularly vulnerable to scams since they frequently seek coins they know little about. Wise investors must do research before pursuing specific tokens.
Coin grading services are professional institutions that employ experts to estimate a token’s quality. Users of the Sheldon Scale evaluate the coin’s luster and wear, then assign a descriptor ranging from poor to mint state and a number between 1 and 70.
Experienced collectors understand that grading can be somewhat subjective and therefore, they learn to independently verify a grader’s assessment. The Official ANA Grading Standards for United States Coins is an excellent resource to develop this ability.
No service can reliably grade the coin market. So, anyone who wants to speculate on demand developments must saturate themselves in numismatics. Failing to understand a shifting market can turn a surefire investment into wasted money.
Penny Pinchers Auctions brings reputable buyers and sellers together from across the globe. Our consistent dedication to ensuring coin transactions’ validity and security makes us the number one option for experts and novices. Visit our site today to start your numismatic journey.
Key Takeaways
Coin collecting originated as a hobby driven by historical or aesthetic interest, but has evolved into a potential investment opportunity. The value of coins, particularly rare ones, can be leveraged in specialized auctions. However, as the market is fluctuating, novice numismatists should seek guidance from a robust community and ensure their collections are insured. Adequate preparation is key to navigating the challenges of numismatic investments.