∑ Quality (not necessarily grade)
∑ Capital depletion.
Iíll offer some opinion on each of these topics in coming articles.
Letís also state up front that most coins are not good investments. This is why itís crucial to analyze each purchase intended to result in your profit. The above six criteria should separate the collectible from the investible.
Letís consider the first of these six: ďValueĒ.
If I buy a coin for $1,000 today and sell it two years from now for $2,000, by most any reckoning Ė thatís a good investment. Yes, of course devaluation of fiat currencies, costs of ownership, capital depletion and the like all cut into profits, as with most any type of conventional investment. Purchasing a coin for $1,000 and resulting in a decidedly profitable sale is a good ďvalueĒ.
If I buy a coin for $10 and sell it for $20, Iíve achieved equivalent results with much less of my capital tied up. I bet you expected my nose in the air about needing to roll big dice. Not at all! If youíre a coin collector, then youíd danged well better ENJOY coins first, profit from them second. If you arenít much on coins but are intrigued by profit, then you may well NOT do as well financially as would the collector / collector-investor. The ultimate market for a collectible is its collector base. Those immersed and appreciative of ďcoinĒ come to intuitively understand what attracts other collectors. Collectors generally do better in profit taking than do the pure detached investor Ė commentary after commentary has established this for decades.
Said another way: Collectors tend to profit by being numismatically versed. Profiteers tend not if they are numismatically ignorant. Iíll dig deeper in a future article.
Value is THE KEY. Experts (in any field) can and do sniff out value effectively. Either know what youíre doing or enlist someone who does. In other words, good value transactions are achieved more often and to more profit by those who recognize which coins pass the muster in terms of quality, demand, rarity and scarcity, while not squandering capital on those coins deficient in these attributes.
To place some meat on these bones, hereís a coin in my collection that I think is a very good value. 10C 1843 PCGS EF45 CAC
Itís old. Itís scarce (approx. 400 survivors for this issue). Itís genuine. Itís certified by one of the two foremost grading services. Stickered by CAC (added marketplace value), itís quite attractive and high end for its grade. At my purchase price of not much over $100, I have high confidence that other collectors will be interested when Iím ready to sell and that Iíll make a profit.
You donít have to spend big bucks to secure good value!