I dislike the question of whether someone is a hobbyist or an investor because it assumes we must be one or the other.
Too often novice collectors and investors squander money buying money because they disregard the beauty, history and value of numismatics.
Each month in online auction portals hobbyists spend thousands winning worthless brass-token replicas listed as California small-denomination gold coins. These fakes have plagued the hobbyist experience for decades.
Beginning investors often pay over retail for junk silver and bullion, failing to bid on rarities that continue to appreciate over time.
Anyone who buys coins as a hobby or an investment needs to spend time studying numismatics as well as the marketplace (reading Coin World, for instance).
Here’s why: At some point hobbyist collections are viewed as investments, especially when family members inherit and then try to sell coins.
I have seen heirs liquidating rare coins at a fraction of their value to traveling “road shows” that advertise big payouts in local newspapers and then leave town before the sellers realize a collection’s actual worth.
True, investors never have to become hobbyists when dealing solely in bullion. They believe it is easier to check daily market prices for precious metals than waste all that time learning numismatics (or the Dow, for that matter).
Their days are numbered, though, because metals rise and fall dramatically. Ideally, a collector should be part hobbyist and part investor.
Most people define “hobby” according to the second listing in the online Merriam-Webster Dictionary: “a pursuit outside one’s regular occupation engaged in especially for relaxation.”
Unfortunately, some hobbyists dislike researching values and varieties of coins and learning to grade them. To them, “research” does not connote “relaxation.” In those cases, perhaps the origin of the word “hobby” might define where their collections are headed.
According to the online Etymology Dictionary, “hobby” is derived from the medieval word, “hobyn,” meaning a small horse. That led to the term “hobby horse,” or child’s toy, and the meaning “an activity that doesn’t go anywhere.”
What about the term “investor”?
The most common definition of “investor” is a person who uses money to make a profit.
If we are both hobbyist and investor, we will enjoy collecting coins and will profit doing so, educationally and monetarily.
I’m 80 percent hobbyist and 20 percent investor. What is your percentage?
Michael Bugeja, a coin collector since childhood, is a professor at Iowa State University and also a member of the Citizens Coinage Advisory Committee. He is a nationally known author, journalist and educator.