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Collecting should outrank investing

CMAGAnyone who reads this weekly “Coin Market at a glance” commentary regularly should recognize I am a big proponent of coin collecting as a hobby, but not as an investment. The recently auctioned Proof-63 1804 silver dollar that realized a disappointing $3.5 million is a classic example of what I am talking about. Another 1804 dollar failed to sell about a year earlier, the reason being a ridiculously high (and still undisclosed) reserve price of somewhere over $10 million.

The Dexter specimen of the 1804 dollar was sold on March 31 to two coin dealers, not to a collector. Those dealers then sold the coin for a profit to yet another full-time dealer who also identifies himself as a collector.

Where are the collectors who aren’t dealers? Some persons involved in these recent transactions are asking if the coin might have sold for more had it been offered privately initially. I say that unlike in mainstream investment markets there is no true pattern to follow when it involves an emotion-driven commodity.

There simply is no price guide to be followed. The prices realized are based on the exuberance of the moment or lack of it. On the other hand if you purchased stock in Collectors Universe (CLCT), the parent company for Professional Coin Grading Service on April 22, 2016, at $18.04 per share, each share would on April 21, 2017, have been worth $26.02 each. This is an increase of 30.66 percent per share plus a dividend yield of 5.38 percent (paid $0.35 per share quarterly throughout the same one-year period). Coin collecting should be a hobby first, and an investment second. Enjoy the pride of ownership – and the hobby.

 

This article was originally printed in Numismatic News. >> Subscribe today.

 

More Collecting Resources

• Is that coin in your hand the real deal or a clever fake? Discover the difference with U.S. Coins Close Up, a one-of-a-kind visual guide to every U.S. coin type.

• The 1800s were a time of change for many, including in coin production. See how coin designs grew during the time period in the Standard Catalog of World Coins, 1801-1900 .

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