Recently updated on October 25th, 2022 at 11:15 am
Collecting old currency is a beautiful hobby that has been present for generations. People who collect old currency see each coin as a practical piece of art, and a piece of history. The science behind this hobby is called numismatics.
There are many ways to get old currency today. You can do it the traditional way and meet up with fellow collectors, visit flea markets and antique shops, or you can order currency online on e-commerce websites or online exchange services, such as US First Exchange.
If you’re into old coins, this will make a nice hobby for you, but since it does require a certain investment of time and money, you are probably wondering if you can make this investment profitable. This article should answer some of your questions.
The Difference Between Collectors and Investors
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Collecting old coins started as a hobby, out of some people’s love for rare crafts and history. We call these people collectors, and they are the ones that mainly create the demand for coins and determine their numismatic value.
The value they generate naturally attracts investors who are always in search of a secure and profitable investment. Once they became aware of the money some collectors are willing to pay just to get hold of a coin they like, some investors became interested in old currency.
However, even though old coins are usually a stable investment, it takes a lot of passion and knowledge about numismatic to know what and when to buy and sell. Collectors are still the ones that create the demand, so it takes a collector to know the pulse of the market.
Collectors are usually interested in finishing their collections, so even if one of the coins they own suddenly rises in value multiple times, they would rather hold on to it until they finish their collection. An investor would usually sell this coin, but the collector’s patience could bring more profit once they finish their collection and sell it as a whole.
Sources of Coin Value
An interesting thing about coins is that they have two main sources of value, which means that they attract different buyers. Aside from the sentimental value that certain coins might have for someone (inheritance for example), two main sources of a coin’s value are bullion value and numismatic value.
1. Bullion Value
This value is based on the material of the coin itself. If the coin is even partially made of a precious metal such as gold or silver, it is more valuable than coins made of copper, zinc, or nickel.
Furthermore, the bullion value of a coin depends on the percentual presence of precious metals in it, and finally the weight of a coin. Naturally, this value varies with the fluctuation of prices of gold and silver on the market.
2. Numismatic Value
Numismatic value is more symbolical and harder to determine. It does to a certain extent depend on the owner’s sentiment towards the coin, but they should also be aware of its real value on the market.
Some series of coins are more popular than others, depending on what era they’re coming from, the country of origin, the design, the exotic quality, rarity, etc. The most valuable coins are usually very rare but very popular.
However, not every rare series of coins is as valuable as you might think. A lot of countries have issued limited commemorative series of coins, but there is simply no demand for them. This is usually the case with smaller countries that are not considered to be exotic or interesting enough by the collectors.
On the other hand, limited series of coins from major countries, exotic countries, or countries that ceased to exist are usually very popular. Simply put, the numismatic value of coins depends on the market’s demand, and this demand depends on numerous factors that are not always rationally explainable.
3. Combination of Both
The most valuable coins are the ones that have great bullion and numismatic value combined. By chance, the coins of the highest numismatic value also have a high bullion value.
This is because coins generally used to be made of precious metals in the past (while today’s coins are usually made of plain metals), and older coins, like antiques, usually carry higher numismatic value.
A Secure Investment
Old coins are considered to be among the rare secure investments. This is mostly because they are usually made of precious metals that genuinely tend to grow in value, but there is no reason for their numismatic value to drop either since they can only get older and more desired (unless they get severely damaged).
This investment takes patience, and you might not gain any significant profit, but you can always return the investment if you decide that this is not for you. It’s almost impossible to lose money investing in old currency.
Investment for Future Generations
We are all aware of the growing presence of digital currency, most transactions today are made electronically, and we know that some countries are already planning to ban cash as a payment method.
If we take all this into account, we can assume that in a couple of decades, most countries won’t have physical currency in circulation. Old coins will only be getting older, and we can expect that element of nostalgia will make them even more popular, which means that old coins’ value will skyrocket.
If you’re a passionate collector of old currencies and you don’t have to sell them for a living, you should consider leaving your collection to your offspring, because it might make them rich one day.
Where and When to Buy/Sell?
Just like anything nowadays, old coins can be bought and sold on e-commerce websites. However, you should only use this method if you’re having a hard time completing your collection, and you find the coins you’re missing online.
The shipping fees for antiques are usually high, a lot of shippers don’t offer insurance for such valuable packages, and you can have problems with customs if you’re getting them from abroad.
If you have good knowledge of coins’ value, real treasures are hidden at flea markets, antique stores, pawnshops, garage sales, and other places where merchants are just trying to get rid of the goods and might not be aware of their actual value or future prospect.
It’s always a good time to buy a coin that you like and think it might grow in value soon. However, you can track the price of precious metals and buy silver coins when silver goes down. It’s almost certain that silver will go up again soon, and that might be a good time for you to return your investment.
On a Final Note
Everybody should have a hobby, a little thing they do to relax and get away from daily stress for a while. If you’re into coins, then you shouldn’t have second thoughts about starting collecting old currency as a hobby. The best thing is, this hobby can turn out to be very profitable.
It’s not very advisable to invest in old currency just for profit if you’re not into numismatics. It takes a lot of learning and staying updated, which is really hard to do if you don’t have a passion for it and you already have another job.