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ECONOZONE

What to buy?

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ECONOZONE

Hi

 

I would like to know from the people who know, what they would be buying now if they were buying.I am talking about graded coins and from a investment point of view.Also would you buy one R20 000 coin or ten R2 000 coins?Investment medium to long term.

 

Thanks Craig

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HR_COINS

I'm a newbie to coins but what little i've learnt is that dont ever consider coins an investment.

Its very risky and fluctuates a lot!

Coins are only worth what someone else is willing to pay.

 

Examples are the Mandela 2000 coins. They were hotcakes a while ago and no the value has dropped.

Also the Mandela birthday coins are another example.

 

Rather look at the true rare ZAR and union sets.

 

Maybe our veterans can give more guidance.

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eZethu Coins
I'm a newbie to coins but what little i've learnt is that dont ever consider coins an investment.

Its very risky and fluctuates a lot!

Coins are only worth what someone else is willing to pay.

 

Examples are the Mandela 2000 coins. They were hotcakes a while ago and no the value has dropped.

Also the Mandela birthday coins are another example.

 

Rather look at the true rare ZAR and union sets.

 

Maybe our veterans can give more guidance.

 

I don't qualify as either a veteran or an investment adviser (standard disclaimer applies), but had an interesting chat to a great BoBer friend of mine just last week - Kevin Russel (now if I can just get him to also join in on the forums, then he could maybe share this himself - I know he will read this:p).

 

Kevin started collecting fairly recently and is very keen and enthusiastic - so in his hunger for knowledge, he has been playing with figures of random coins over a few years to see what the catalog value growth has been. It was just a small sample so one couldn't draw conclusive proof, but it does seem to indicate the larger % growth in Unions compared to Decimals.

 

He now has a "homework" assignment to go and see (as I suspect) that the largest growth was in the higher grade coins (PROOF & UNC) vs the lower grades.

 

Arguably that is on paper only, and the ultimate test will be the market perception (that dictates the actual selling price), but still a good indication I believe.

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Guest Guest

One of the "fathers" of our hobby, Dr Frank Mitchell, who I was honoured to meet at his home in Cape Town in the 1970s said:

"My final downfall came then an old family friend showed me his collection. I listened spellbound as he introduced me to his coin portrait gallery. He allowed me to hold a Macedonian tetradrachm of Alexander the Great while he told me of his incredible exploits. My hand trembled as I studied the fine portrait of Alexander in his lion-head headdress. Two and a quarter thousand years ago he died – though only 33, the conqueror of most of the known world. Suddenly, as I studied the coin, the truth dawned – I was holding History in my hand!"

Whatever your truth, whatever you historical interest my belief is that this should be the spark that fires your passion. Whether it be a modern day Mandela piece or a Strachan token coin from the 1800s, for me, it is the magic of that coin's unique history which has fired my passion for over thirty years.

 

One of the problems I have with collecting ZAR or Union is that there are so many who have gone before and the joy of discovery through research is now replaced by studying the initiative of countless others who have gone before. For the researcher there is little joy in doing this.

 

It was this desire to find my own niche and explore its fruits that led me to token coins where every single coin issued by a business has a significant history to tell. Perhaps I should preface that comment as, sadly, so much is now being dumped into the "token coin" category on BoB to make a fool of our cherished hobby.

 

Token coins, to me, are metallic coins with a known value manufactured by private business to facilitate trade in times of shortness of coins of the realm. No private business token coin, to me, can exist after 1932 when token coins were outlawed through an act of Parliament.

 

When you add these common sense guidelines to a fascinating area of historic richness and consider how much work has still to be done exploring pieces like those issued in the Kimberley region you realise what a wonderful opportunity still exists today for a numismatist with fire in his heart.

 

That to me is where I would start my collection if I was young and just coming into this amazing hobby. To achieve what I suggest includes travelling to the places the token coins once circulated, acquiring or reading related books and documents, attempting to build up a complete collection of related numismatic pieces and then publishing your findings for the benefit of other collectors.

 

Kind regards

 

Scott Balson

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PBGold

You should never use an auction site as an indicator for investment purposes. This site is a very small part of a very large industry.

 

Use the data generated here with great care.

 

Often people will say that an item has lost value simply because it has sold for less on Bob than a few months earlier. These are very dangerous statements as that self same item could have sold for a lot more 'in the real world', the seller just wasn't bothered to phone around.

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alloway65

If your want to class coins as an “investment”, then as with any investment portfolio, spread you risk over a number of diverse items...in this case coins. Think of the resale market you are aiming at in advance and plan on this basis! If you buy one coin at say R20 000.00 then the resale market (affordability) will be much smaller than if you had bought say ten coins at R2 000.00 each. The growth of any investment is not linear but it helps look at the issue price of your purchase(s), and what you intend to pay for the items at any given point in time. This can give you a guide as to the items increasing popularity or lack thereof. I tend to be contrarian with my investment approach....buy when everyone is selling....and sell when everyone is buying. We are in a recession so in principle it is a time to buy......but at a price you think is good value.

Good luck

David

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ThomasMueller
Hi

 

I am talking about graded coins and from a investment point of view.Also would you buy one R20 000 coin or ten R2 000 coins?Investment medium to long term.

 

Thanks Craig

 

I am located in Germany and would like to communicate my point of view:

 

"The growth of any investment is not linear". YES. Old German coins were very cheap after WWII until the early 1960s. Then they suddenly multiplicated in value, some of them increased ten-fold in a decade. It took more than 30 years, with Germany`s economic struggle after reunification, when these coins decreased in value.

 

In the past decade Russian coins were "hot". But who knows, what these coins may be worth in the next decades?

 

I am a buyer of rare Chinese coins, especially in original boxes and with certificate. Many of my coins have doubled or trippled in the past years. I am not giving an investment advice, but I think they are a good investment for the next decade.

 

Regards rubio

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ECONOZONE

Thanks for all the great replies.Craig

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ThomasMueller

Hello,

 

I want to add a followup:

 

Chinese coins are going more and more valuable:

 

1986 China 5 Yuan Year of Peace w/case & cert. Proof bei eBay.de: Asia (endet 07.04.10 04:15:06 MESZ)

 

Early Chinese coins have very low mintage and were mainly sold to Western countries. Now the Chinese coins are buying there coins back!

 

Thanks to "helicopter" Ben Bernanke there is too much $$$ especially in Asia which is seeking investment and profit!

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johangou

my view is to go for scarse coins with low mintage. somewhere along the line in the future there will be a new collector looking for a 1965 1c Afr or a 1965 R1 VIP. In 2004 I bought an expensive coinset for R6000. It was a VIP set. Then I went above book and bought another for R9000. Now I am glad. Always start with an expensive coin. Dont be lulled into buying 10 coins at R2000. You may not get the R20 000 coin again. In 2005 somebody wanted to sell a 1926 1/4d to me for R125 000. I bought a lot of cheaper coins. But please if you start buying expensive coins you must know what you buy. The Mandela hype was an example and people sit with coins bought at R100000 and more worth absolutely nothing now. MINTAGE is the answer.

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ECONOZONE

Thanks once again Craig

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xsiandreas

I would go for low mintage union in high grades, since I think they are undervalued. Always buy the highest grade you can afford. Cheers Andreas

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geejay50
my view is to go for scarse coins with low mintage. somewhere along the line in the future there will be a new collector looking for a 1965 1c Afr or a 1965 R1 VIP. In 2004 I bought an expensive coinset for R6000. It was a VIP set. Then I went above book and bought another for R9000. Now I am glad. Always start with an expensive coin. Dont be lulled into buying 10 coins at R2000. You may not get the R20 000 coin again. In 2005 somebody wanted to sell a 1926 1/4d to me for R125 000. I bought a lot of cheaper coins. But please if you start buying expensive coins you must know what you buy. The Mandela hype was an example and people sit with coins bought at R100000 and more worth absolutely nothing now. MINTAGE is the answer.

 

I agree with you Johan, Mintage is very important but so is the story line and that is far more difficult to gauge and needs a wider knowledge. Intrinsic metal and size of coin are also important. I notice that for the same scarcity, a gold coin will fetch more than silver and then a bronze coin.The ZAR group just have that "minority people , back against the wall" attraction that swings sentiment and money in their direction whatever the George V and Token Pundits may say.

 

If coins can go down in value, it is sobering to see how much old Gold standards like Retirement Annuities can drop when pay out comes.I put R50,000 away in an RA (offshore based) 10 years ago and received only R44,000 in payout this year!!!. If I had bought an MS Veldpond with the money then, I would have multiplied my money 8 to 10 times in the same period.The retrospectoscope sees very cleary though!!

 

Geejay

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ThomasMueller

Natura prestige sets or stock funds

 

Please look at this collection of Natura Prestige set:

 

NATURA

 

The owner of these beautiful sets is making money with selling Fidelity funds!

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jwither

Its easy to make comparisons such as those here when a market, in this instance SA coins, has been in a long term rise for about a decade or maybe even more. I can tell you that though I do not know who they are, there are plenty of people who have badly overpaid for what they own. Not all, but many. And they will not be known until the proverbial tide has gone back out into the ocean when prices decline or stagnate for a long period of time which they will.

 

The last period of stagnation in US coins happened from about 1987 to the mid to late 1990's. The prices of US coins for the most overpriced crashed from 1987 to 1990 and for many others just went nowhere. No market is immune to this and in the instance of South Africa coins, it is susceptible to wild price swings because since many of the coins are scarce, the trading is thin and it only takes the addition or removal of a few collectors to make a big difference.

 

I disagree that it is necessary to buy expensive coins to make good money. I buy relatively cheap coins, have them graded and sell them for many multiples of my cost. Sometimes I have done this in a month (about the time it takes to receive the coin and have it graded) and other times over several years. An example of such a coin is late last year, I bought a 1940 penny that later graded MS-63 RD. I was able to buy it real cheap because I must have been the only one who both saw it and recognized its value, And I have not done this once or twice, but dozens of times.

 

The reason this did not work with the cheaper examples given here is because the coins in question were NOT scarce and were the subject of excessive or rampant speculation. Anyone participating in that is basically part of a ponzi schme where the last ones to own the item will be the ones who lose the money.

 

Now of course, because the coins are cheap what I am describing is not going to provide enough profit to provide for a full retirement or anything like that. But my risk is low because I do not necessarily keep the coins for very long and I never pay a lot of money for any single coin, so if I am wrong, I will not lose a lot of money.

 

Buying these more expensive coins carries the opportunity for greater absolute gains, but not greater proportional gains. Its simply the law of large numbers and the fact that everyone who pursues them knows the current value of an expensive coin to some degree but this is not true for less expensive ones. And that is why more money proportionately can be made with them.

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ThomasMueller

"No market is immune to this and in the instance of South Africa coins, it is susceptible to wild price swings because since many of the coins are scarce, the trading is thin and it only takes the addition or removal of a few collectors to make a big difference."

 

When buying coins as an invesment I would only buy coins from the US, China or Euro coins. These are the three big coin markets in the world. The advantage of some rare and expensive coins isn´t that you make more profit, but you will find a buyer straight ahead.

Examples: 2 Euros Monaco 2007 Grace Kelly or 10 Yuan 1983 Panda. Dealers are sure that they can sell them the same day...

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jwither

Perhaps your reply is not comprehensive because you were brief, but what you wrote is not representative at all of the viable options out there.

 

First, let me say that no coin is an "investment" by my definition. All of them are speculations. People buy "investments" more often that not to rationalize their actions. If they thought of something as a speculation, many people would exhibit different financial behaviour.

 

In terms of which markets are viable "investments", Australia, Canada and Russia are easily the equivalent of either China and are more liquid than almost every Euro country unless by Euro, you are literally referring to just the Euro currency coins. And if this is the case, then you would be excluding the UK which is more of an "investment" market than every other but maybe one, being only second after the US.

 

The examples you gave are for modern coins which are not representaive of the "investment" market. Though there are some which are bought for "investment" purposes, most buyers do not buy those types of coins at all. The predominant buyers of that material are new collectors. More experienced collectors buy "classics". Examples of "classics" include Queen Victoria for the UK, 19th century issues from the United States and ZAR from South Africa.

 

Here are my informal ranking on the depth of each "investment" market". This is my SUBJECTIVE assessment based upon both the prices realized, popularity of modern Mint issues and the material generally available for sale.

 

United States

United Kingdom

Canada

Germany

Russia

Australia

France

China

Japan

 

The other attribute that must be considered is that there are for the most part few collectors of say, United States coins generically and the same applies to all or at least most other major countries in numismatics.

 

Taking the United States as an example, there are "type" collectors, but aside from these, no one is buying or attempting to buy coins from every series or denomination. What this means from a practical standpoint is that the popularity and demand for different series and individual coins varies dramatically.

 

So while South African coins are less popular than United States coins overall, that is irrelevant to most buyers because they are not trying to buy everything because its a practical impossibility. In my opinion, ZAR is competitive in higher grades (AU or above) with say, contemporary US Barber coinage which is why the coins frequently sell for more.

 

The example I just gave is just one variation. Other considerations also include the quality of the material being bought. The main difference between the bigger markets and others is that because there are more collectors in the larger ones, there is greater demand for "collector" coins or coins in the mid and depending upon the issue, even lower circulated grades.

 

By my standards, there is essentially no active collector market for SA coins other than maybe some ZAR. There is practically no demand for Union coins below mint state and to a lesser degree, AU coins. Except for the scarcest dates, the demand and prices for Union issues in grades below AU is very weak and the prices reflect that.

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ThomasMueller

Yes, I am literally referring only to Euro currency coins. So I am excluding not only the UK, I am excluding also Germany (which is ranked on number 4 on your list!).

 

The reasons why I am excluding Germany are: There was very much trade in German coins in the 80s, when economic was booming and people didn´t know where to "invest" their money. The size of the German coin market right now is only a fractional compared to the 80s. A German coindealer told me: "In the mid 80s I was selling coins for 2.5 million marks at one auction, now I am selling one-tenth at an auction."

 

I am also excluding the UK because Great Britain is in an economic slowdown. Just look at the value of the British pound...

 

I am explicitly excluding Russia. This market is driven by a few oligarchs. Just look at the Berlin coin fair auctions each year. There was only one major bidder for Russian coins, but buying nearly everything from Eastern Europe. He is only doing his instructions, the winning bid price doesn´t interest him. Russian coins fetch high prices, but I am missing the breadth of the market.

 

The Chinese coin market was very weak in the 50s and 60s. There were only two major collectors at that time: Eduard Kann and Irving Goodman, both located in Los Angeles.

During Mao´s "cultural revolution" many old coins were destroyed and the possession of gold was prohibited. How are the things are right now in China? The Chinese government is recommending gold for investment. The Chinese coin market has right now the power as the German and Japanese coin market in the 80s: People want to "invest" very much money in coins, big revenues at recent auctions in HongKong, many young collectors with big money, increasing prices, you can sell rare coins the same day, there is so much demand.

I told a Chinese coin dealer who was buying some Chinese coins from me: There is a little scratch on one panda coin. Answer: this doesn´t interest at all. His buyers in Shanghai are waiting for this issue. If I would sell an imperial German proof coin with a little scratch, this would be "second class" or half price. That´s coin business today!!!

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