Release: DECEMBER 30, 2022
Because of the concept of “resolutions,” I used to dread this time of year. Growing up, we were all but required to make some form of New Year’s promise or pledge. The very nature of those is to do something differently. That almost always meant committing to something we disliked.
On the upside, it can also mean resolving to avoid pitfalls. Experience is often the best teacher. Case in point: as a nice gesture, we once used a friend who had become a realtor to sell our home. Disaster ensued. It was our most valuable asset and it cost us a small fortune. Lesson learned (too late)....
It’s not uncommon to hear accounts of people losing comparative fortunes after “investing” in alluring collectibles. Sales pitches for such items can be enticing. Shiny objects, compelling copy and beautiful packaging are incentive enough to open wallets everywhere.
Some years ago, I was asked to provide “expert” testimony in a lawsuit involving a company selling “rare and collectible stamps” as investments. Sitting in the deposition room with a phalanx of lawyers from both sides, I explained the stamps were certainly collectible but nowhere near rare or valuable. The company had done a masterful job of making them sound like a once-in-a-lifetime opportunity from which big gains and profits were virtually guaranteed. In truth, they were lousy investments.
Right now, a lawsuit is pending against a firm that allegedly targeted elderly individuals with prospects of big profits from rare coins. According to the suit, the company purportedly used “misleading, deceitful sales tactics” in telephoned sales pitches. They are accused of leading one older woman to believe the items would be a good investment for her children and grandchildren. Another gentleman spent over $500,000 on coins after being called over 50 times.
A visit to the company’s website shows a variety of attractive coins and bullion from around the world. Some coins were colorized by the issuing governments making them even more appealing.
Again, the issue is not the collectability of the items being sold. Most anything, from matchbooks to political buttons can be collectible. It is the price, or rather, the reasonable fair-market price that so often comes under fire.
For instance, with silver at a spot price of $24 per ounce, the company advertises a five-ounce silver bar for $229. I found local dealers selling similar bars for just $140. The company also offers a common date 1921 Morgan silver dollar for $44. From local dealers that coin is just $29.
In the gold category, the company has modern 1/10-ounce gold US Eagle coins for $320. Locally, they are being sold for $223. Such price differences and markups are significant, especially if buying in quantity.
Value versus price can extend even to the US Mint. The Mint is currently selling a 2022 silver one-ounce Eagle coin for $67. It comes in a nice box with a Certificate of Authenticity. Local dealers currently pay only about $35 for that coin. So too for gold one-ounce US Eagle coins. The Mint is selling those for $2,670. The local dealer “buy” price is just over $1,900.
Perhaps the most glaring examples are the current “American Innovation” one-dollar coins. These are legal tender coins but are not released into circulation. They are called “golden dollars” but have no precious metal content. Each has a face-value of one-dollar. From the Mint, a set of four of the coins in proof condition costs $24, or $6 per coin. Collector demand for the coins is markedly low – roughly their actual face-value.
Admittedly, the Mint is not calling prospective buyers or touting any of these coins as lucrative investments. But, by human nature, they are frequently considered as such.
Given the pitfalls, a wise New Year’s resolution for anyone looking to invest in collectibles of any type would be to do a little homework. Often, the input from a local, trusted dealer can be invaluable.
So too for hobby publications such as Coin World or Linn’s Stamp News, or inclusion in the American Philatelic Society or American Numismatic Association collector organizations. A subscription or annual membership to those is under $50 but can pay that back many times over by helping avoid costly collecting/investing mistakes in 2023 and beyond.
For more collecting information and advice, log onto www.PRexford.com.