Ancient Coin Investment: Worthy Or Risky?

Ancient coins have been collected for centuries, with their value influenced by their rarity, historical importance, and aesthetic appeal. The market for ancient coins is highly specialised and volatile, with prices fluctuating due to discoveries of hoards, changes in supply and demand, and the influx of wealthy collectors. While investing in ancient coins may not yield quick financial returns, it can be a good way to preserve wealth and own a piece of history.

Ancient coins are affordable

Ancient coins are a good investment option for those who are looking for something more exciting than stocks and bonds. They are also a great way to own a piece of history. Ancient coins are surprisingly affordable compared to modern coins, especially those from the US. This is because there is a very limited supply of high-quality ancient coins, and they are in demand by collectors.

The affordability of ancient coins is also due to the fact that they are not considered a traditional investment vehicle like stocks or bonds. Instead, they are seen as a niche market, which makes them more affordable for those looking to enter the market. Furthermore, the value of ancient coins is not solely determined by their precious metal content but also by their historical significance and rarity. This means that even coins made from less valuable metals can be worth a lot of money.

The affordability of ancient coins also depends on their grade and condition. While a rare coin with a high grade can command a high price, a more common coin with a lower grade may be more affordable. Additionally, the market for ancient coins is less predictable than that of modern coins, which can work in favour of buyers. For example, the discovery of a large hoard of ancient coins can flood the market and cause prices to drop.

However, it is important to note that investing in ancient coins comes with risks. The market is highly volatile and subject to the whims of a small number of collectors. Additionally, the lack of standard grading systems for ancient coins means that buyers need to be cautious when purchasing coins that are not certified by reputable companies like NGC.

Overall, ancient coins offer an affordable entry point for those looking to invest in tangible assets or own a piece of history. However, buyers should be cautious and do their research before making any purchases.

They are tangible links to the past

Ancient coins are real, tangible links to our past and the earliest days of commerce. They are a window into the history of currency, art, and written language. Each ancient coin tells a story, allowing you to take a journey back in time to the roots of commerce and appreciate a magnificent work of art from thousands of years ago.

Coinage, as an invention, is undoubtedly one of the most important in human history. It facilitated trust in a clearly identifiable object of value, enabling people to transact business instantly instead of relying on barter. Ancient coins are a direct connection to this pivotal moment in the evolution of trade and economics.

The process of creating ancient coins is also a fascinating aspect of their history. Unlike modern coins produced by machines, ancient coins were crafted by human hands. The image on an ancient coin was typically created by placing a planchet (a small, round, flat piece of metal) onto what would become the coin and striking it with a hammer. This human element adds a unique dimension to these ancient artefacts.

The rarity and historical significance of ancient coins further enhance their appeal as tangible links to the past. Many ancient coins are rare due to the lack of accurate mintage figures, making it challenging to determine how many were minted or remain undiscovered. Additionally, the discovery of large hoards of coins can flood the market and impact the value of specific types of ancient coins.

The historical importance of ancient coins also contributes to their value. A coin may be highly sought-after because it commemorates a significant event or figure in history, such as the Brutus "Eid Mar" Silver Denarius, which marks the assassination of Julius Caesar.

In conclusion, ancient coins are not just financial investments; they are investments in owning a piece of history. They provide a unique opportunity to hold and appreciate the artistry, craftsmanship, and cultural significance of currency from thousands of years ago.

The market is volatile

The market for ancient coins is volatile, and investing in them is considered a "fool's quest". This is because the market is extremely niche and emotional, subject to the whims of a small number of wealthy collectors. Ancient coins are also highly susceptible to flooding, as new discoveries can bring thousands of coins to the market without warning. For example, the discovery of the Mir Zakah II hoard in 1992, containing approximately 550,000 ancient coins, is thought to have depressed the market by up to 90%.

The market for ancient coins is also impacted by restrictive laws, which can reduce supply and increase demand. Ancient coins are considered antiquities, and it may be illegal to buy those that do not have verifiable documentation attesting to their existence before 1970. The number of coins minted is often unknown, and they are often uncovered in hoards, making it difficult to assess their rarity.

Ancient coins are also vulnerable to counterfeiting. Raw, ungraded coins may be counterfeited, and even graded coins may not be authentic. NGC, a top grading service, does not guarantee the authenticity of ancient coins.

However, some sources suggest that ancient coins can be a good place to "park money", as long as you are prepared to accept a small loss. If you select pieces carefully, with an eye to their potential appeal to genuine collectors, you can invest in rare coins without fear of significant losses.

Gold coins command premiums

Gold coins are a flat, disk-shaped piece of 0.999+ pure gold. They are also known as gold bullion coins. Gold coins, unlike gold rounds, carry an official face value (legal tender value) in the country of issue. These investment instruments carry one of the highest premiums over the spot price of gold due to collector demand and official recognition from sovereign governments.

Gold coin premiums are the additional costs beyond the intrinsic value of the gold content in a coin. They are calculated as the difference between the price you pay when you buy gold coins and the current gold spot price. These premiums are essential to understand when investing in gold as they can significantly influence gold coin prices and your overall return on investment.

The premium of a particular coin is then added on top of the spot price as a percentage. As the gold price increases, the cost of the gold content within a coin also rises, leading to higher premiums in real terms as the percentage calculation is based on a higher price. Conversely, when gold prices decrease, the premiums typically follow suit.

There are six main factors that affect gold coin premiums:

Manufacturing Costs

Manufacturing costs play a significant role in determining gold coin premiums. These costs include the expenses associated with producing, packaging, and distributing gold coins. Manufacturing costs can vary based on the complexity of the coin design, the production process, and the mint's overhead expenses.

Bullion-grade and proof-grade gold coins differ in their production quality and design intricacy. Bullion-grade coins are produced primarily for their gold content and benefit from lower manufacturing costs. On the other hand, proof-grade gold coins are more expensive to produce and therefore have higher premiums. Proof coins are targeted more at the collectable market rather than at investors.

Size of Coin

Premiums tend to vary between the different sizes of coins. The general rule of thumb is that the premium decreases with size. Investors will pay far higher premiums for tiny coins and lower premiums for 1-ounce coins. This is due to economies of scale and the relative cost per gram of production.

Coin Rarity and Collectability

Commemorative or limited-issue coins often have slightly higher premiums due to their limited availability and historical significance. In contrast, more common coins, like bullion-grade gold coins, typically have lower premiums. Historical and rare coins can trade at significantly higher premiums. The older a coin is, the higher its premium.

Gold Supply and Demand

Market trends and investor interest can also affect gold coin premiums. When demand for gold coins is high, premiums may increase as a result of limited supply and heightened competition among buyers. Conversely, when demand is low, premiums may decrease due to an abundance of supply and a lack of buying interest.

Quantity Discounts

Gold coins are generally offered at quantity discounts. The premium paid when buying just one Canadian Maple Leaf coin will be higher than for someone purchasing ten of them. Gold dealers will incentivize buyers to buy more by offering clear discounts on a coin's premium when buying in bulk.

Type of Coin

Different types of coins, such as gold bullion coins and limited-issue gold coins, offer varying benefits to investors. Gold bullion coins are produced mainly for their gold content and are a popular choice for investors looking to hedge against inflation or diversify their portfolios. Limited-issue gold coins, on the other hand, often have numismatic value and appeal to collectors.

Ancient gold coins are thousands of years old and are surprisingly affordable compared to U.S. coins. They are tangible links to the earliest days of commerce. As the certified ancient coin market continues to grow, it is expected that it won't take a lot of buying pressure to push prices higher.

The ancient coin market is complicated and difficult to track due to factors such as constant discoveries, restrictive laws, the influx of super-wealthy collectors, and the rise of internet stores and online auctions. While the likelihood of the value of ancient coins increasing exists, it may take a very long time.

Cleaning ancient coins can devalue them

Ancient coins can be a good investment, but there are some things to keep in mind. Firstly, the age of a coin is not the only factor that determines its value. Its condition, history, demand, and quality are also critical drivers of price. For example, the Brutus "Eid Mar" Silver Denarius from 42 B.C. is extremely valuable not just because of its age, but also because it commemorates the assassination of Julius Caesar.

Even if you intend to clean an ancient coin without lowering its value, it is challenging to achieve this. The only ways to "clean" a coin without impinging on its value are to use non-abrasive methods that do not alter the patination or toning. This includes running the coin under a slow stream of tepid water and then patting (not rubbing) it dry with a soft cloth, or bathing the coin in 100% pure acetone in a well-ventilated setting before rinsing it with clean, tepid water and patting it dry.

If you are unsure whether to clean an ancient coin, it is best to consult a professional. Major grading services offer restoration and conservation services that can evaluate your coin and determine if professional restoration can be performed to improve its appearance without damaging its surfaces or overall value.

Frequently asked questions