Oct 102012

Share_Your_StoryDanny K.took up our invitation to pen a blog article about his personal experiences as a coin collector. He’s been interested in coins, particularly gold coins, since the 1980s. As their values skyrocketed in line with the gold price, Danny couldn’t resist cashing in on his investment. But even though he made 100% profit, he was unhappy… he simply missed those beautiful gold coins too much!

“I’ve been collecting coins since the early 1980s. In my early collecting years I was a mere amateur. I didn’t even know the difference between XF and VF or which catalogues to consult. With time, I began to specialize in coins of Britain and its former colonies.

As I grew up, I focused on gold coins. It wasn’t that hard. The price of gold in the late 1990s was at rock bottom: less than US$250 per ounce. Coins that are worth hundreds of dollars today cost back then dozens of dollars. Experts even predicted that that was the end of the gold era. How ridiculous those predictions sound today… I remember well my 1762 George III quarter guinea that cost only $80 and a beautiful 10 Maltese pounds proof gold coin, the Zerafa flower, for which I paid $75.

When the price of gold began to soar after economic crisis, I thought it was a good opportunity to cash in. After all, the price of gold had reached $700 – almost tripling its price in less than a decade. I started selling my gold coins on eBay. A good friend of mine questioned the wisdom of selling my collection: “wouldn’t you miss these beautiful coins?” or “imagine how long it would take to build a new collection from scratch” he said. I didn’t heed his doubts and concerns. I knew best!

My coins did well on eBay. Most of them sold for twice the price that I had paid less than a decade earlier. I was mighty proud – not only had my collection kept its value, it actually yielded a nice profit of 100%. How many investments give you such a high profit in seven or eight years?

However, as my collection waned, my friend’s concerns became true. I regretted the whole affair. I wanted my 1762 third guinea back even with a premium! I missed the UNC silver French 5 francs. What on earth had I been thinking? To add insult to injury, the price of gold has more than doubled since 2007. Today, I’d have to pay hundreds of dollars to acquire a 1762 quarter guinea in VF condition. If that sounds a lot, consider what happened to the price of silver. It was around $7 in the late 1990s. Today it’s $35!

This experience has taught me several lessons:

  • Collect coins made of precious metals, regardless of their condition. Ideally they should all be UNC of course but even if you can only afford a humble VF, this is still a fine investment because your coins will always be worth at least as much as their bullion value.
  • There’s no upper limit when it comes to the price of gold. If $1700 per ounce sounds too high, wait until it reaches $2500 and $3000.
  • Finally, don’t sell your collection or parts of it. You will regret that sooner than you think.
  • It’s taken me several years to acquire new coins for my new collection. I‘m still looking for that 1974 proof Zerafa flower coin and the silver 5 francs, though.”

Submitted by Danny K, Israel.



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