For some coin collectors, gain and loss on coin trading isn’t that critical because they do it for a hobby and have sufficient income to cover any losses without depleting their bank accounts, but for the average coin collector, return on investment is crucial to their business.
The first thing anyone should learn from collectibles of any kind is that they do not always reach a value that warrants using them for investments. Coins are generally a little better in that area because they almost always go up in value as they get older. Faster returns on investment occur sometimes because of fluctuations in the coin market. This can be caused by things such as the death of a political figure or overthrow of a government.
Because these variants can be hard to foresee, and due to the difficulty in determining how they will affect the market, it is much better to look to the coins with historically high ROIs (returns on investment).
There are four conditions that cause coins to be valuable in the first place, and these have much to do with the return of investment on the coin.
1 – Condition
You probably already know that the coin that looks new or almost new is going to be much more expensive to own than one that is barely legible or has been beaten or bent. Unless a coin is the sole remaining one of its kind, it won’t have much value in poor condition.
2 – Quality
Quality is difficult to set a value on, but it does determine the final value of a coin. Many very old coins were of poor quality when they were minted. These poorly made coins were sometimes the only survivors of an era, and quality took a back seat because there were so few of them, but luster, shading, symmetry and other qualities can be found in some coins and missing in others of the same style. The amount of copper put in a coin can make a great deal of difference in how the coin looks when it is silver or silver plated.
3 – Scarcity
It stands to reason if you have the only coin of its kind and it is an old coin, it is going to be worth some bucks. Even if a coin is one of only a handful, it can be very easy to make a profit on it in the right markets. A certified population supplied by the NGC is instrumental in determining how rare and valuable a coin is. Gold or silver coins with a limited population are the best bets for a good ROI.
4 – Popularity
No matter how rare a coin might be or the condition it is in, if no one is interested in it, you are not making a good investment when you buy it. Some coins may be in mint condition and have scarcity and age as advantages, but they sell for less than they should because they aren’t popular.
When you buy coins for your collection, keep in mind the four conditions that each should meet to some degree for the best ROI. The final way to ensure a high ROI is by purchasing at the lowest possible price. You have to be very careful with this part of the process because some coin traders will attempt to sell a coin for more than it is worth.
Find out more about coin collecting at Coin Collecting Values and Best ROI Coins.