Coin collecting as an investement

An article in Fortune describes a coin dealer, Ken Smaltz Jr., 42, who is promoting coin collecting not just as a hobby, but as a way to invest your money.

It’s not really discussed in the article, but there are two (admittedly simplified) schools of thought in the coin collecting world regarding investing in coins.

The first is that it is a hobby and should remain so because people expecting to make a quick buck aren’t likely to contribute to the hobby as a collector would.

The second is that coins are a safe haven in times of turmoil because of the gold and silver content, so why not welcome investors with open arms, encouraging them to join the collectors.

Here’s a snippet from the article that should give you an idea of where Smaltz stands on this issue.

“Smaltz sees rare coins as more than just a schoolboy’s fleeting obsession. With gold rising to a 16-year high, rare coins have appreciated 20% over the past two years. He claims that one of his clients bought an 1871 $20 Carson City gold piece in 1998 for $4,750; it is now worth $12,000, according to Coin Values magazine. “I’m trying to change the perception of coin collecting from just a hobby,” says Smaltz.”

I’m not sure where I stand though. On the one hand, I’ve always been a collector for the fun of it, not for financial gains, but on the other hand, if I could make some money in the process, why not do that too?

The main concern I have is that by investing in coins instead of just collecting them, I set myself up to lose money in the process and that could leave a bad taste in my mouth, ruining the collecting aspect.

The other problem with investing instead of collecting is that after you’ve spent months or years assembling a set of coins, one coin at a time, it’s nigh impossible to bring yourself to sell it.