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'How Do I Invest in Coins?'
By Dr. Sol Taylor
Saturday, May 6, 2006
nstead of writing another book on the subject of investing in coins there are several in print here are some guidelines.
First, don't expect to buy cheap coins today and expect them to become rare 10 years from now. Cheap coins tend to remain cheap for a long time. In fact, ancient Roman bronze coins can still be found for about $2 each and they are really old.
Investment-quality coins have always been expensive for their time. Back in 1934, a rare 1856 Flying Eagle cent in mint condition was advertised for $12.50. Today it would cost $5,000 or more. In the same price list, more common cents of the same era were 25 cents to $1 each. Today those common coins are worth perhaps $50 to $250 each a huge appreciation, but not a great annual percentage of growth.
Buy a price guide such as the annual "Red Book" ("A Guide Book of United States Coins") by Kenneth Bressett. It gives a fairly accurate retail valuation for all American coins, from the colonial period up to the present.
In each series of coins, a few stand out in terms of prices. In one series, for example, most of the mint-condition coins may be $10 while two or three are $200 to $500. Those are most likely the best investment-grade coins.
Collectors who can afford expensive coins tend to pay whatever it takes to buy the scarce and rare coins. Most of these sales take place at public auctions where collectors and investors have a chance at coins that rarely show up in a dealer's showcase.
Modestly priced coins also tend to do well in many cases. It was not that many years ago that bright "red" uncirculated Indian head cents sold for $2 each. Today those same coins sell for $200 to $500 each for common dates. How they will fare in the future depends upon demand, inflation and supply.
Any rare coins bought during the Great Depression and still held today turn out to be fantastic investments with an annual appreciation of 30 to 50 percent in many cases. However, one cannot replicate the Great Depression and still have the disposable income to buy rare coins.
For novice investors, a day at a major auction would be a good learning experience. The catalogs are free to those who register for the sale. Preview lots of coins and make notes on which look the best (to you).
Follow the floor action as these coins come up for bid. If several bidders on the floor and on the phone compete for a certain coin, that is a good investment coin, since only one bidder will win the coin this time.
I have seen a coin such as the 1969-S doubled die cent in mint condition sell at one auction for a record $16,500, only to turn up at another auction the following year and sell for more than $30,000. I know of many other examples.
In highly competitive sales, the auctioneer often will contact the buyers to offer them a low or no commission to put the same coins up in a future sale. The auction house gets 15 percent (usually) from the buyers, so they have flexibility in what commission they can charge the consignors anywhere from zero for a major estate to 10 percent for an assortment of coins.
Investors often focus on one area of coins, such as early American gold coins or large cents or colonial coppers from Connecticut or Buffalo nickels and so on.
Small investors the term often refers to those buying coins under $1,000 each have a good chance to cash in on the coin boom by carefully buying coins in their price range after deciding which ones they like best and which ones have a steady track record.
Buying coins directly from the U.S. Mint generally has not turned out to be a quality investment, unless one started back in 1936 or 1937.
Many of the proof sets for sale today are selling for less than they did in 1964, and some even sell for less than the Mint original price. The George Washington commemorative half dollar of 1982 had an issue price from the U.S. Mint of $8 in uncirculated condition and $10 in proof. Today they retail for about $3 each.
However, if one follows the current market value of all proof sets and modern commemoratives over the past 30 years, some will stand out as top-dollar investments, while the majority do not. The price charts are in the back of the "Red Book."
The days of assembling complete or nearly complete sets of coins from circulation are long gone. But those oldsters who assembled sets of Indian head cents, Liberty Walking half dollars and Barber coinage from circulation have done very well, investment-wise.
I frequently run into partial sets of such coins in estates and often pay 100 to 500 times face value for coins Grandpa found in change 50 or sixty 60 ago. Even common Indian head cents, which circulated well into the 1950s, are worth at least 50 cents each, and for better grades, $1 or more.
I recently paid $400 for a Barber quarter found in change in the 1950s. I sold my shiny like-new steel wartime 1943 cents when I joined the Whittier Coin Club in 1960 for 20 cents each. At that rate, $100 in 17 years would grow to almost $2,000 if compounded. It sure beats current CD rates.
Combining collecting with investing can prove profitable and fun by following guidelines of study, patience and research. Good luck. Similar pieces to the Blue Hill coin also show either a missing piece or a hole, indicating they were used as jewelry.
Dr. Sol Taylor of Sherman Oaks is president of the Society of Lincoln Cent Collectors and author of The Standard Guide to the Lincoln Cent. Click here for ordering information.
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