Investing in Coins: Is It Worthwhile? Part I

Recently, we’ve seen a lot of ads claiming that investing in coins is a good hedge against inflation. Is it really?

While the practice has gotten a lot of press in recent years, investing in coins isn’t a new idea. Back when money was actually made of metals that were worth something, it wasn’t uncommon for folks to put aside a silver dollar here or there as a hedge against inflation, or toward retirement.

That’s still not a bad idea, assuming you can get ahold of real silver coins (that is, dimes, quarters, halves, and dollars minted before 1964.) As of this writing, silver is fluctuating around $18.50 an ounce, and all those coins were 90% silver. That makes a one-ounce dollar coin worth around $14.50.

Tips on Coin Investing

Coin investments in gold have worked out even better, now that the shiny yellow stuff is sprinting toward $1,500 an ounce.

The hype about coin investing got into gear in the pre-millennial years, when folks were convinced the Y2K bug was going to lead to the collapse of civilization. Shady dealers used this fear as a marketing ploy, insisting that even in the ruins, gold and silver would be worth a great deal.

Well, we know how that worked out. The doomsayers have moved on to 2012 as the next big end of civilization as we know it, though surprisingly the coin hypers haven’t caught on to this particular disaster. Either that, or this one’s going to be so big that no one will be left to want precious metals. We’ll see.

Anyhow, interest in coins as an investment has remained relatively high ever since, so it’s worth taking a look at the option if you have an interest in or knowledge of coins. Investing honestly can be a good idea… if you know what you’re doing.

Now, before we get too far, let’s get this out of the way: past performance does not guarantee future performance, especially where volatile precious metals are involved. But with some careful work (and work it is), you can still make some coin off coins.

Often, gold and silver coins are bought as bullion, since their worth will never drop below the value of the metal they contain. This isn’t the case for coins made of non-precious metals like copper or nickel. Value of those coins is mostly based on popularity and scarcity.

And keep this in mind: even silver and gold coins can and will vary in price according to scarcity. Some are worth hundreds or thousands of dollars more than bullion value because of it.

Speaking of scarcity, we’re out of room… so we’ll have to finish this article in Part II. To learn more about investing in coins struck on lesser metals, please catch us then. And we have a new site that focuses on American bullion and gold bullion coins. I recommend you check it out.