Coin hoards don't equal treasure

The romance of finding a treasure never dies. Neither does the appeal of getting in on something special and unique. And when people hear about found treasure or cashing in on rediscovered rarities, secret hoards, and stashes of valuables, the appeal is strong.

But the hoards of collectibles widely advertised on television and radio recently are nobody's chance to cash in. Instead, they're a case of people confusing a hobby with an investment, which typically leads to bad financial decisions.

No one can say if the number of gold and silver coin hoards really has gone up over the last few years or if it's simply the advertising of them that has taken off.

Many coin dealers say that the first real hoard they heard of that affected the marketplace showed up in the 1970s, when a man named Lavere Redfield died, leaving behind more than 600 bags of Morgan and Peace dollars - at 1,000 coins a bag, the face value was more than $600,000.

While the ads talk about the rarity of the item of a collectible, the precious-metals prices are always a part of the equation. Yet most coin dealers are saying that investors looking for gold and silver don't want to go after hoard discoveries.

Unlike many collectibles that are marketed solely for their keepsake value - such as commemorative Michael Jackson coins - the coins and gold pieces being hyped in ads are real, valuable coins. Their value has grown because they are old and have been hidden away or lost over the years.

But when the hoard goes public, not only does it drive prices down, it typically works only for investors under perfect circumstances. Right now, most dealers report that the public is buying lower-quality coins, indicating that the activity is more bullion-related than high-quality coins fitting into a collection.

If you had a hoard of old coins, you would consider yourself lucky. But if you're buying into collectibles being advertised to a mass audience, the very fact that you're hearing about it in a TV or radio commercial, or by a mass e-mail, should be enough to convince you that this is not going to be a good deal, let alone a worthwhile investment.

Charles Jaffe is a senior columnist for Marketwatch.