Dr. Sol Taylor

Beware Coin Ads in General Magazines, Newspapers

By Dr. Sol Taylor
"Making Cents"
Saturday, May 17, 2008

dvertising is a form of linguistic sleight of hand," as my high school journalism teacher Max Benov once said.
    One example as it applies to numismatics goes as follows. It is well documented that collectors and investors who have bought rare coins at auction in the past five to 10 years have earned somewhere between 10 and 20 percent per annum in appreciated value. Advertisers offering modern-made U.S. Mint coins, such as the recently issued Presidential brass dollar coins, select the profit potential extrapolated from the success of rare coins in recent years to imply that such modern coins can increase in value at a rate of 10 to 20 percent per annum. Such projections are falsely based. On top of that, the advertisers charge more than double market value for such coins nicely packaged in plastic tubes and sealed in little boxes. My response to a recent Los Angeles Times columnist exposing such misleading advertising was, "Never buy coins from newspaper or magazine ads."
    Without naming specific ads, one company recently claimed the U.S. Mint is never going to release any more Morgan dollars.
    The fact is, the last Morgan dollars minted in 1921 were included in the great silver dollar release back in 1964 when the Treasury Department decided to unload its vaults of more than 3 million stored silver dollars of various dates and mintmarks going as far back as 1859. Adding to this claim, they were offering the most common of the Morgan dollars (1921 issues) at $75 each, plus shipping and handling, and limiting purchase of 10 coins per order.
    This sound of exclusivity is part of the advertising sleight of hand. The other statements, such as the scarcity of Morgan dollars (citing a few rare dates being worth thousands of dollars each), and the fact that these coins hardly circulated, does not qualify for the alleged investment quality of such coins. Collectors can buy such coins from most coin dealers at somewhat above their silver content value.
    Another ad, this time accompanying my credit card bill as a tear-off flap on the return envelope, offered a set of 12 Lincoln cents from World War II: Three each from 1942, 1943 (steel cents), 1944, and 1945 for $16.95 plus shipping and handling. The coins were mounted in or on a card listing their mintage and some other facts. The coins were almost certainly not Brilliant Uncirculated — and were probably polished to look shiny.
    From my experience as president of the Society of Lincoln Cent Collectors and as a Lincoln cent collector for more than 70 years, such sets have a fair retail value for $1 (or less, if polished). However, some (hopefully not many) such sets were sold to be given away as gifts. They were not represented as investments, although the ad strongly hinted that these wartime cents cannot be found anymore in circulation — thus implying some appreciated value.
    A similar offering was seen in newspaper ads offering the eleven wartime Jefferson nickels issued from 1942-1945 for $29.95 plus shipping and handling — also nicely mounted on a cardboard holder with some facts and figures. Again, the coins appeared to be cleaned or polished and have a fair market value (because of their 35-percent silver content) of less than $10 — varying mainly on the value of silver on any given day.
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    Many consumer watch groups have compiled files on such advertisers who often switch names and locations to offer similar "investments" to the uninformed public.
    Coin collectors who read the numismatic media would never fall for such ads, but they represent only a very small percentage of the general public and do not have regular access to the broader media. After all, why should John Q. Public believe a newspaper ad offering a 10 percent return (or more) on his money when the leading investment brokers hype funds that generate much less with a lot more professional skill and tools? Unfortunately, some Johns do believe in the tooth fairy.
    If you want to invest in coins, attend public coin auctions. Follow the progress of the coins you like from past auctions. Buy some high-grade, certified rare coins — and chances are they will appreciate at a much better rate than other forms of investments.
    The 1990 No-S proof cent I bid $1,500 at auction three years ago (but was outbid by $100) was sold in 2007 for $6,500. The other coins I bought at the same auction have more than doubled in value in the past three years. Not all coins do so well — but I could fill many pages of highly appreciated coins in the past few years.
    On the other hand, I have bought many coin collections in recent years, and the coins bought as investments from newspaper and magazine ads have resulted in cash losses of anywhere from 10 to 50 percent. The losses would have been greater were it not for the fact that many of the coins were silver — and silver alone has soared in value in the past few years.
    The best advice is, "Ignore those newspaper and magazine coin ads."

    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.