In the mailbag this month was an advertising flyer sent to us by Don LeFevre, one of our readers. Written across the top were simply the words "Mr. Sayles: your opinion?". The topic of the flyer was purchasing ancient coins as an investment. Since this column does reflect a personal point of view, it seemed appropriate to answer Mr. LeFevre's question here.
Before launching into any philosophical discussion of the issue, it should be said that advice. although cheap, is often too freely given. It is flattering to be asked for an opinion. the inference of course is that it might be valued. but in reality, the rules of life are seldom so hard and fast that they can apply to all of us with equability.
There seems to be, within the fraternity of collectors of ancient coins, a not uncommon distaste for the term Investment as it applies to the hobby. Some of the feelings in this regard may be a product of events past, particularly the events which transformed or ruined (depending on your point of view) the U.S. coin market and U.S. coin collecting in general. Collectors of ancient coins have tended to be very emotional about their acquisitions and protective of their coins. almost as if they were trying to protect and venerate the ancient sources themselves. It somehow rubs us the wrong way when an ancient coin is traded solely as a commodity for speculation. Nevertheless, ancient coins do appreciate in value, as do other fine collectables. Why do we object to investment in ancient coins when the same motivation for acquiring famous paintings fails to stir the emotions? The objection, one suspects, is more emotional than pragmatic. The purchase of ancient coins for investment is not immoral. illegal, dishonorable or necessarily destructive. It is simply a function of free market enterprise.
Now, back to the flyer from a California firm which prompted this suggests that the entry of Merrill Lynch with Athena Fund II will drive market prices for top quality coins in an upward direction. perhaps significantly. The firm further suggests that the way to beat the rush and cash in on the fallout from this phenomenon is to buy now and buy aggressively. To do so, one may send money to the promoter in a lump sum of $2.500; $5.000; $10.000; or $50.000. Alternately, one may simply send as little as $IOO per month (charge cards accepted for automatic billing). In return, the firm will send the customer bought and paid for coins, apparently of the firm's own choosing. After a four-page dissertation explaining how and why coin prices are going to rise, the promoter caveats that he is not an investment advisor.
Our opinion is that one should buy ancient coins first and foremost because they spark or satisfy some inner urge other than financial gain. To do this one must obviously choose the coins oneself based on some semi-rational ' approach. If one has a modicum of intelligence. it would make sense to buy coins which are personally stimulating and also have the potential for an increase in value. If one desires only to use ancient coins as a medium for storing and propagating capital, then it is advisable to trust an expert to make the choices. It is nearly impossible to ignore emotion when buying ancient coins. and emotion does not usually make a good bed partner with maximization of profits.
We do not see a conflict of interest between investors and collectors. What is more important than the type of market is the stability of the market. A collector can get in and out of the market at any price level and still enjoy the hobby as long as there is some reasonable expectation of stability. One should differentiate here between investment and wild speculation; the latter will certainly affect the stability of any market. We do, however, discourage blind purchases for the purpose of investing. The smart investor will know precisely what he or she is going to receive in exchange for the cash-up front. Spending some of that money on books, and less on "hired expertise", pays a double dividend in knowledge while the books keep increasing in value too!
As we have said many times in the past, it pays to establish a good relationship with a dealer one can trust. But how do I know who to trust? Rely on your instincts; avoid making your first purchase a large investment; understand the return/refund policy (or lack of it); ask others; compare and shop around. Fortunately, there are fewer "problem dealers" in the field of ancient coins than in some other fields of collecting. A collector may obtain information about a dealer from one of the major organizations like I.A.P.N. P.N.G. or A.N.A., but remember these organizations are very limited in their ability to "police the hobby. The old Latin phrase Caveat Emptor still applies.
Thanks to those who commentated on our new paper stock, we'll be keeping it until something better comes along. We love to get mail, take a minute and let us hear your point of view!