When it comes to coin collecting, every investor will have their own personal set of motivations and reasons for investing. Not every coin collector is a numismatic, (someone who studies coins from a historical, social or artistic point of view) but they will all have their own set of criteria that determine which coins they wish to invest in.
The motives of a coin collector can vary from being a hobby, for sentimental value or as an investment. The type of coins purchased will differ for each of these types of collectors.
Coins are bought by certain collectors because the commemorative event or the specific year they were produced may bare a nostalgic value to them. It may represent the year of marriage or birth, or signify a specific event such as the Olympics or a sovereign’s anniversary. Most of the World’s commemorative coins were produced from the 1960s onward, and have a distinct design with reference to the occasion on which they were issued. Collectors are often not concerned with the resale value it is just a coin that may mean something to them and that they just want to own. They tend to be expensive as they require a high cost of production and usually include a presentation box.
Hobby collectors may be interested in specific dates or releases, where a substantial premium will be added for their uniqueness or appeal. They may be purchasing so as to complete a set or just because they appreciate the coin for its beauty. Often hobby collectors buy proofs or sets of proofs that may come in a display pack of limited issue, these often have an additional premium which they will find difficult to recoup when they come to sell.Shop Collectible Coins
For other collectors, coins are very much an investment. These types of collectors look at coins primarily as a way of making money and hope to profit from particularly rare or hard-to-source coins. Often these investors will methodically research particular dates or mintmarks of rare coins in order to find some defining characteristic that makes them of value. Perhaps there weren’t many coins minted one year? Or there may be a coin has a slight defect left over from the minting process that makes it unique or of higher value.
Some investors also like to focus on a particular sub-category of coins such as Lincoln cents or Victorian sovereigns. This is partly because investors like to collect complete sets of coins and also because by narrowing their focus to concentrate on a particular area of coins, they can research them in far greater depth.
That’s not all
Some investors look at ancient or very rare coins that bare much larger premiums, up to 200% higher than its intrinsic gold value. The term ‘numismatic coin’ is given to those worth a substantial premium over their simple gold value due to rarity and history. These coins can be bought at auction or from specialist numismatic coin dealers. Investing in rare and ancient coins is a much riskier investment as the coins are less liquid and their perceived value may be very different from their market value. We do not recommend investing into ancient or numismatic coins unless the purchaser has experience of this market and can afford to potentially wait some time for the right buyer. Gold coins minted pre 1800 and those sold at premiums that exceed 180% of the intrinsic gold value may also be subject to VAT, whereas newer coins (which meet a certain criteria) are exempt.In the USA pre-1933 gold is very popular as it’s non reportable and non conviscatable.
Image source: Money Metals