Are You a Collector Or an Investor?


 

Bullion Trading LLCis here to assist you.  As you start your venture into , the single biggest question that will determine the direction of your pre-sale research should be if you are a or an investor.  This will obviously greatly affect how you proceed with your purchase or even what you will purchase at all.  But in the event that perhaps you have yet to reach an answer to this question, let’s go over both.

gold-bar

Gold Bar

On the other hand, if you are buying as an investor, then you will be making your purchases with a very different strategy, and each sale will be motivated primarily with what it will take to get to the next step.  In this case, it is recommended to stay away fromcollectible coins due to their premium commissions and instead buy either circulated coins or brand name bullion bars.  This will mean having to store your purchase and keeping it out of sight, but those things shouldn’t be your goal in this case.If you are gold for the sake of collecting, then you are likely to choose to purchase rated American Eagles for their collectible status even with their 30-40% markup.  You are simply drawn to their novelty.  Having a collection of gold coins is a nice keepsake that you can show to others and use to display your wealth.  Being a collector is obviously the more personally satisfying choice, and it doesn’t necessarily mean that you’re not interested in eventual profit.  You may have the goal of your entire collection some day as a giant set, or at least have knowledge that your successors might.  But for most collectors, the drive is to continue collecting, and the venture of selling is only a far thought in the back of their minds.

While we do not necessarily endorse one of these models over the other, and we certainly will help a collector find the purchase he wants, we do cater to the investor as he is the crux of our business.  The investor will face different pitfalls and will be in need of consultation.  Each item you purchase is a different investment vehicle that can yield different results.  Therefore, there needs to be a strategy and basic familiarity with the market as well as more concern for the potential economic future.

It should also be pointed out that being a collector and being an investor are not necessarily mutually exclusive.  There are certain purchases that will satisfy both of these needs, such as the Saint-Gaudens Double Eagles, which is considered a “classic” coin.   It only ran from 1907 to 1933.  Its gold is worth the bullion value, yet the premiums on them are extremely low in spite of their rarity.  And should they become even rarer, their value will only increase.  There are many websites that provide a full list of all US gold coins to have been in circulation, including Indian Heads and Capped Bust Eagles, some of which go back to 1795; items such as these draw in both collectors and investors and with good reason.

Yet, in the end, most customers tend to clearly lean one way or the other, and as they begin looking through items at Bullion Trading LLC, I find I can discern early on if their interest is motivated by value or novelty.  So before going in to visit a bullion dealer, be honest with yourself and see where you stand.  This is important for you to decide, not because either one is necessarily better than the other, but just so that you can make the right strategy early on and get the right consultation you need without being misled.  If you are indeed an investor, then you certainly have a lot to lose from following bad advice and that’s what we want to avoid.

And on a final note, be aware that many investors turn out to be closeted collectors who despite thinking they were accumulating gold for profit, discovered years later that they enjoyed owning it and couldn’t come to terms with selling it at all.  This is an interesting development, but perhaps not too surprising.  Again, this is part of the alluring power of gold bullion that stocks and bonds can never quite replicate.