Are Physical Coins a good investment?

[jcoin200]

I've been looking at investing in physical BTC coins for a little while now, but I wondered if they are the best bet.  Heres what I was thinking:

For example : You buy a 1BTC physical coin for 1BTC (the funded value) + a premium, say $300.  So right now you'd pay about 1.48BTC.

Then if BTC value goes up to say $750, the coin would only be worth 1.4BTC, and less if BTC goes higher.

So my question is, is it better to just hold BTC rather than physical coins?  Assuming the coin gains some collectors value, it would have to gain a lot in my opinion to keep with with any rise in BTC.  Any thoughts?

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[C10H15N]

A physical coin with an intact hologram will not only have the underlying bitcoin value, but also the collectable value of that physical bitcoin with an intact hologram.  Make sense? 

[jcoin200]

A physical coin with an intact hologram will not only have the underlying bitcoin value, but also the collectable value of that physical bitcoin with an intact hologram.  Make sense? 

Yes I get that, I'm just wondering if they are as good of an investment as straight BTC.  Because if BTC were to rise, the "collectors value" would have to rise too to match the rise in BTC value.  If it didn't the coin would be worth less in BTC.

[C10H15N]

An intact physical bitcoin should never be worth less than the underlying bitcoin. 

[jcoin200]

An intact physical bitcoin should never be worth less than the underlying bitcoin.  

Yes again I realize 1BTC will always equal 1BTC. But say you buy a Casascius 1BTC which carries a $400 premium in addition to the 1BTC funded value, would you of been better off to just hold the $400 worth of BTC, rather than put it into the collectors value of the coin?  Cause if BTC goes up, then that $400 extra you paid for the coin would be worth less in BTC.  Same in $ value per say, but less in BTC.  See what I'm getting at?

[Melbustus]

A physical coin with an intact hologram will not only have the underlying bitcoin value, but also the collectable value of that physical bitcoin with an intact hologram.  Make sense? 

Yes I get that, I'm just wondering if they are as good of an investment as straight BTC.  Because if BTC were to rise, the "collectors value" would have to rise too to match the rise in BTC value.  If it didn't the coin would be worth less in BTC.

It's an open question. Some think the numismatic value will effectively remain denominated in btc as bitcoin value rises, others think more so in fiat. To give some "historical" perspective, IIRC, we had tiny btc premiums in 2012, then the boom in btc popularity in spring 2013 boosted premiums significantly (toward 1.5x-2x for a 1BTC Series-2 Casascius coin). The lull over summer/fall 2013 dropped premiums down (1.25x-1.5x), but nowhere near pre-spring2013. Then the run-up in November boosted premiums again (back toward 2x), and now they're down a bit again...

NOTE: I'm only talking about Casascius coins. Others are far less "iconic", so I don't see much sense in discussion their numismatic appeal (seems a lot less likely to hold long-term, IMO). The story of Casascius coins tracks bitcoin very nicely; from inception as a conversation piece to production-termination due to regulatory aggression... It takes that sort of history to create lasting numismatic value. Fundamentally, "collector value" makes no practical sense; it's our human nature in seeking ties to the past and continuity (and therefore mementos) that drive it.

[Melbustus]

Arguments against btc-denominated premiums:
1) People think in fiat.

Arguments for sustained btc-denominated premiums:
1) People will think in btc when dealing with btc assets.
2) Premiums on many gold/silver bullion coins are enormous. There are hundreds of different issue pre-1933 gold and silver coins that trade for *many* multiples of their bullion/melt value.
3) There aren't many Casascius coins in existence. Especially compared to the surviving populations of gold and silver coins that still maintain bullion-premiums of many multiples.

[jcoin200]

A physical coin with an intact hologram will not only have the underlying bitcoin value, but also the collectable value of that physical bitcoin with an intact hologram.  Make sense? 

Yes I get that, I'm just wondering if they are as good of an investment as straight BTC.  Because if BTC were to rise, the "collectors value" would have to rise too to match the rise in BTC value.  If it didn't the coin would be worth less in BTC.

It's an open question. Some think the numismatic value will effectively remain denominated in btc as bitcoin value rises, others think more so in fiat. To give some "historical" perspective, IIRC, we had tiny btc premiums in 2012, then the boom in btc popularity in spring 2013 boosted premiums significantly (toward 1.5x-2x for a 1BTC Series-2 Casascius coin). The lull over summer/fall 2013 dropped premiums down (1.25x-1.5x), but nowhere near pre-spring2013. Then the run-up in November boosted premiums again (back toward 2x), and now they're down a bit again...

NOTE: I'm only talking about Casascius coins. Others are far less "iconic", so I don't see much sense in discussion their numismatic appeal (seems a lot less likely to hold long-term, IMO). The story of Casascius coins tracks bitcoin very nicely; from inception as a conversation piece to production-termination due to regulatory aggression... It takes that sort of history to create lasting numismatic value. Fundamentally, "collector value" makes no practical sense; it's our human nature in seeking ties to the past and continuity (and therefore mementos) that drive it.

Thank you, this is what I was wondering, if they have a history of keeping their premium in BTC value, not the equiv fiat value.  It seems you are right, going with a Casascius will probably be a good bet long term, while the lesser known coins probably not so much.  Thanks for the insight!

[djjacket]

NOTE: I'm only talking about Casascius coins. Others are far less "iconic", so I don't see much sense in discussion their numismatic appeal (seems a lot less likely to hold long-term, IMO). The story of Casascius coins tracks bitcoin very nicely; from inception as a conversation piece to production-termination due to regulatory aggression... It takes that sort of history to create lasting numismatic value. Fundamentally, "collector value" makes no practical sense; it's our human nature in seeking ties to the past and continuity (and therefore mementos) that drive it.

Very good explanation.  Numismatic appeal and demand comes from many factors - condition, appeal, rarity, history.  IMO the taking into these factors, the best investment would be High Grade ANACS slabbed Casascius coins.  The history of the coins is well documented.  The ANACS grading standardizes the condition and preserves the condition.  The original 2011 coin in a pristine condition is not an easy find considering the value at the time they were produced.  They were developed as a novelty and way to bring attention to bitcoin.  Many of those early coins probably did not get stored properly to maintain the original condition.

[Melbustus]

... Many of those early coins probably did not get stored properly to maintain the original condition.

Definitely not. I used to carry a couple around unprotected in my pocket and pass 'em around.

[giveBTCpls]

If Bitcoin goes mainstream, physical coins would be a really legit investment because of collectible and rarity value. Like I see it being exposed in a museum in 50 years as something curious to see.

[chennan]

A physical coin with an intact hologram will not only have the underlying bitcoin value, but also the collectable value of that physical bitcoin with an intact hologram.  Make sense? 

Yes I get that, I'm just wondering if they are as good of an investment as straight BTC.  Because if BTC were to rise, the "collectors value" would have to rise too to match the rise in BTC value.  If it didn't the coin would be worth less in BTC.

There are many physical bitcoind that can be easily made. They are not special and unique that will make sure its value appreciate as the time is going by. It is not worth to pay premium to buy it rather than just holding bitcoin.

[Mieehayii]

One way, you can do day trade, buy low and sell high, but the trend needs to constantly stare

[Rub3n]

An intact physical bitcoin should never be worth less than the underlying bitcoin.  

Yes again I realize 1BTC will always equal 1BTC. But say you buy a Casascius 1BTC which carries a $400 premium in addition to the 1BTC funded value, would you of been better off to just hold the $400 worth of BTC, rather than put it into the collectors value of the coin?  Cause if BTC goes up, then that $400 extra you paid for the coin would be worth less in BTC.  Same in $ value per say, but less in BTC.  See what I'm getting at?

I think it's personal preference. However I also think digital will get you the most money. Imagine btc going to 50 usd. A 400 usd 1 btc coin is then a lot less interesting.

[TookDk]

I think it's personal preference. However I also think digital will get you the most money. Imagine btc going to 50 usd. A 400 usd 1 btc coin is then a lot less interesting.

The coin would be worth nine time the face value in terms of bitcoin, in your described scenario.

[polynesia]

It also depends on how many physical coins are made ('rarity' factor).
If a manufacturer floods the market with physical coins as BTC prices move up, then the premium will not move up proportionately.

[Brewins]

Its like investing in silver artwork and special edition coins. They are sold by more they face or silver value, and may or may not be worth much more in the future.

I don't know much about this market, but I think the bitcoin market is in some sense more risky, because we have less previous cases for us to analyze, and less risky, because we can count on bitcoin's history of valuation over years.

[polynesia]

Its like investing in silver artwork and special edition coins. They are sold by more they face or silver value, and may or may not be worth much more in the future.

I don't know much about this market, but I think the bitcoin market is in some sense more risky, because we have less previous cases for us to analyze, and less risky, because we can count on bitcoin's history of valuation over years.

You even have physical coins made out of gold these days. 

http://www.forbes.com/sites/ericxlmu/2014/07/21/chinese-bitcoiner-made-physical-bitcoin-in-pure-gold/

[TookDk]

Its like investing in silver artwork and special edition coins. They are sold by more they face or silver value, and may or may not be worth much more in the future.

I don't know much about this market, but I think the bitcoin market is in some sense more risky, because we have less previous cases for us to analyze, and less risky, because we can count on bitcoin's history of valuation over years.

You even have physical coins made out of gold these days.  

http://www.forbes.com/sites/ericxlmu/2014/07/21/chinese-bitcoiner-made-physical-bitcoin-in-pure-gold/

lolz, you are funny  

Mike made a 1000 BTC, 1 Oz Solid Gold back in in 2011:
http://casascius.uberbills.com/?address=1Au1uZnK87eUMoJKRL9S3wroM29AiUQtL5

[redwhitenblue]

I would say that physical coins would be a horrible investment as you do not have the ability to send the coins around the world for $0.06 US. If anything the coins would probably trade at a discount to what is on them as you would have an elevated risk of theft.