What is the Best Way to Invest in Numismatics?

Introduction to Numismatics and NFTs

The world of numismatics and NFTs (Non-Fungible Tokens) may seem like two separate worlds, but they do share some intriguing parallels. NFTs are digital tokens that use blockchain technology to represent unique items, much like numismatics, which involves collecting and trading coins, stamps, and other currency-related items. However, unlike traditional precious metals and numismatic coins, NFTs exist primarily in the digital realm and often represent ownership in unique digital art.

Understanding NFTs and Their Growing Popularity

NFTs stand for Non-Fungible Tokens, which are unique digital assets stored on a blockchain. They are incredibly versatile and can represent anything from art to in-game items. NFTs have gained popularity in recent years, especially as digital art platforms have given creators a chance to monetize their work. Like stamp collecting, investing in NFTs can potentially pay off in the long term, as the value of certain NFTs has skyrocketed due to their uniqueness and scarcity.

Are Numismatic Coins a Good Investment?

Investing in numismatic coins, on the other hand, is another matter entirely. While numismatic coins are undoubtedly beautiful and can hold historical significance, they are often considered a hobby rather than a solid financial investment. Todd Frary is correct in stating that coins are not a good investment, especially when compared to other assets like cryptocurrencies or bullion.

Why Numismatic Coins Are Not a Solid Investment

Firstly, very few coins appreciate in value. This is due to several factors:

Stability and Condition: Coins can be easily stolen, lost, or deteriorate in condition over time. Unlike other investment options, numismatic coins do not generate dividends or rent, and they do not protect against inflation. Storage Costs: Storing coins requires specialized facilities that can incur significant costs, making them more expensive than their intrinsic value. Market Conditions: The peak in coin values was reached in 1989 when Wall Street took interest in them. Since then, rare coins have appreciated, but common date coins have not kept up with inflation.

For instance, rare 1893-S Morgan dollars, which sold for around $500 in uncirculated condition in 1960, reached $50,000 by 1990. However, as of today, the same coin sells for $200,000 or more. In contrast, common date Morgans like the 1885-O only increased in value from $5 to $50 over the same period, barely keeping up with inflation.

Investing in Bullion: A Reliable Option

For those seeking a more stable form of investment, bullion is often recommended. Bullion coins like those issued by central banks or reputable mints are designed primarily to hold precious metals, such as gold or silver, in a convenient form. Unlike numismatic coins, bullion coins are not subject to the same volatility and condition depreciation.

Advantages of Investing in Bullion

Physical Security: Bullion coins are easy to store and secure, making them a reliable option for long-term investments. Intrinsic Value: The value of bullion is based on the precious metal content, which maintains its value over time. Diversity: Diversifying investments is crucial, and including bullion in your portfolio can help protect against market fluctuations.

Final Thoughts on Numismatics and Investments

While collecting numismatic coins can be a fun and rewarding hobby, it is important to recognize that they are not a solid investment vehicle. On the other hand, investing in bullion or cryptocurrencies like NFTs may offer more stability and potential growth. It is always advisable to consult with a financial advisor before making significant investment decisions.

In conclusion, for those passionate about coins and history, numismatics can be a delightful hobby. However, for those looking to invest, it is often better to diversify with other assets that provide more predictable returns.