In an example of how certain categories of antiques and collectibles can rise and fall quickly, the market for gold coins is undergoing gyrations because of volatility in global commodity prices for the precious metal, according to a recent Wall Street Journal article.
Because of the runup in the price of gold over the past year, many speculators have jumped into the gold coin market, hoping to use these coins as a bet on the price of gold, or a hedge against inflation. But when the price of gold dipped in the past month, the values of many gold coins sank quickly. And many older collectible coins, according to the article, are trading at only slightly above thir “melt value,” or the value of their gold content if melted down.
This despite the fact that experts say older, rarer coins tend to hold their value better when the price of gold falls (because they still have collectible value). But that didn’t happen this time.
The recent ups and downs in world gold prices have created a couple of other phenomenon: the rise of fraudulent schemes where companies advertise and sell “layered” gold coins with little actual gold content at high prices; and the softening of the market for traditional collector coins such as the $20 Double Eagle (shown here) as investor attention focuses on the new U.S. Bald Eagle commemorative coins and similar issues from other countries.
Moral #1 of the story: antiques and collectibles values can rise and fall, often for reasons you can’t predict in advance. Moral #2: be sure to be clear on why you’re collecting. For the fun of it or as an investment? Ideally it would be both, but recall that over time many categories of antiques and collectibles have lagged the overall market, while others have done quite well. And in either case, there can be long periods when values can be either very up, or very down.