Rare Coins as an Investment

A Word from Dane C. Olevian, M.D.

Most individuals consider coins merely to be small utilitarian objects needed for the purchase of goods and services. Some may even find them to be a nuisance that weighs down their pockets and clutters their kitchen counters and desk drawers. Very early on, however, I learned that coins are much more than a disk of metal stamped with a monetary value. I discovered that they possess history, artistry, beauty, romance, and at times great rarity and value—a value determined not by the numbers struck into their surface, but by their worth to a dedicated and knowledgeable group of collectors.

I myself am a collector first and foremost, but soon after I began acquiring rare coins I realized I would be amiss if I neglected the powerful investment potential of my numismatic collection. That rare coins are top-performing investments is by no means a secret; for decades, informed investors have enjoyed great returns on well-designed numismatic portfolios that, on average, are superior to those of stocks, bonds, and other traditional forms of investment. Today, I wish to share more than a decade of my own numismatic investing insights in the hopes that you too will add these historic treasures to your investment portfolio.

To the new investor―I look forward to advancing your knowledge, sharing your passion, and building your collection. As you embark upon this exciting journey, you will invariably be rewarded in many ways not yet known to you. For you must remember that you are not only an investor seeking to produce a profit, but that by virtue of your position you are also a custodian of numismatic antiquity—and in this position you are charged with the meritorious task of preserving these national relics in order to permit their appreciation and study by future centuries of numismatists. Those who treat rare coins and banknotes with the consideration and respect they deserve will profit in many ways, not the least of which can be a sound financial return on your investment of time and money.

Reasons to Invest in Rare Coins

Investing in rare coins can be a highly profitable enterprise for anyone who approaches the task armed with the right attitude and background knowledge about this exciting field. This website is designed to get you started right away by providing you with the latter. The best advice given to anyone considering investing in rare coins is to use common sense. No sensible person would consider buying a diamond necklace from a street vendor, or an art masterpiece at a yard sale. Coins are no different, and the more careful you are in selecting a qualified dealer and making an educated evaluation of the coins you purchase, the greater will be your chance for a profitable investment. You have already made an important step in the right direction by choosing Olevian Numismatic Rarities of Pittsburgh as your supplier of numismatic investment products. ONR is committed to helping you make educated decisions when building, maintaining, and liquidating your numismatic portfolio.

The opportunities for successful investing in quality numismatic items are as great today as at any time in the past. Inexperienced buyers can now easily purchase coins that have already been graded and authenticated by third-party services to assure their quality, without having to interpret complex grading standards themselves. Furthermore, the fact that rare coins make sound investments is no secret. The impressive performance of rare coins has been featured numerous times in the Wall Street Journal, Barron’s, Money Magazine, and other reputable financial publications. The following section elaborates on the specific reasons why rare coins make superior investments.

1. Rare Coins Demonstrate Top Investment Performance

Throughout history, rare coin collections have produced substantial long-term profits for their owners. Many investors today are finding stock market performance to be too volatile, and at times, downright depressing. Diversification into other investments like rare coins may be the answer. Carefully selected rarities offer the savvy investor a tangible asset that typically maintains or significantly increases its value over time, no matter what the conditions are on Wall Street. Not only do coins increase in value, they increase in value faster than stocks. One important rare coin index called the PCGS3000 Key Dates and Rarities Index, similar in concept to other indices like the DJIA, has increased 2,700% since its inception in 1971, from 1000 points to 26,000 points– a gain of 14% compound interest per year. This outperforms the Dow over the same period of time by about 2% per year. Best of all, selected segments of the coin market have perform dramatically better in the same time period, and Olevian Numismatic Rarities will help you select these top performing coin investments for your portfolio.

For decades, knowledgeable investors have considered rare coins not only as a means for capital appreciation, but also as a way to secure long-term retirement goals and establish a confidential way of protecting their financial assets. Perhaps especially now, in an atmosphere of global economic uncertainty, changing U.S. financial policies, uncertain tax consequences, volatile stock market conditions, and near-zero interest rates, today may represent a true window of opportunity for starting a rare coin investment portfolio. And for those who have already invested in rare coins, now may be the time to take a more aggressive position.

2. The Demand for Rare Coins Exceeds their Supply

The demand for rare coins considerably exceeds their supply. By definition, there are relatively few rarecoins in existence. Since the U.S. Mint no longer produces these treasures, there is a finite supply that must be distributed amongst collectors and investors wishing to acquire a specimen. Some coins are truly unique, with only 1 example known to exist. For instance, only a single 1907 Indian Head gold double eagle pattern coin was ever struck, which now resides in the hands of a prominent East Coast collector. Its current market value is estimated to be over $10,000,000.

1893-S PCGS MS-65 Morgan Dollar

Of course, there are many less extreme examples that are more accessible to the average investor, including the 1893-S Morgan dollar. Mintage figures for Morgan dollars were typically over a million each year, but records suggest that only 77,000 1893-S dollars were produced. Furthermore, most of these were later known to be melted and less than 10,000 are estimated to exist in all grades today. Of these, only a couple hundred are in Mint State grades. Prices range from around $1,500 in heavily circulated grades, to over $1,000,000 for the finest known Mint State-67 example. Given that Morgan dollars are singularly one of the most widely collected coin series, there are more individuals seeking to acquire an 1893-S for their collection than there are coins to go around. As the number of numismatic collectors and investors rises against the setting of a fixed quantity of these coins, their value is expected to rise exponentially. There are thousands of other coin examples in which demand exceeds their supply, affording the investor a diverse array of potentially profitable investment options. If anything, the supply of are rare coins is actually decreasing as improperly handled specimens become damaged, and poorly housed collections gradually succumb to environmental threats like heat, humidity, and oxidation from air exposure. Olevian Numismatic Rarities deals almost exclusively in certified rare coins in air-tight holders, essentially eliminating the risk of environmental deterioration.

Although there is currently great demand for rare coins, some investors ask whether that demand is likely to be present 20 years from now. Fortunately, the viability of the future numismatic market looks strong. As the U.S. population grows, more and more people begin collecting and investing in coins every day—and they are competing for a static (or perhaps dwindling) supply of rarities. Highly successful modern coin programs instituted by the United States Mint have been instrumental in capturing the interest of new collectors. The 50 State Quarters Program of 1999-2008 has indoctrinated a new generation of collectors, many of which began collecting state quarters as young children and adolescents. The State Quarters Program alone is credited with drawing tens of thousands of new collectors to the market in the past decade. Although some people have invariably just saved a few quarters from their pocket change and stopped there, many others have inadvertently fallen in love with coin collecting. And it’s easy to do—just buy a few interesting coins and see for yourself! Once these enthusiasts completed their State Quarter collection, they set out to acquire the older Washington quarter dates, which go as far back as 1932. Before they knew it, they were buying certified mint-state 1892 Barber quarters—and the rest is history. In short, the demand for rare U.S. coins is not expected to go away anytime soon.

3. Rare Coins have Great Liquidity

With the advent of the independent coin grading services like PCGS and NGC, rare U.S. coins have become the most liquid collectibles of all. On a typical trading day, thousands of certified rare coins are bought and sold “sight-unseen” on electronic numismatic exchanges, and thousands more are sold directly to collectors and investors at coins shops and public auctions. Olevian Numismatic Rarities belongs to an extensive network of multi-specialty dealers and private clients and is therefore capable of liquidating your assets in time frames commensurate with top industry standards. Furthermore, gold, silver, and platinum bullion coins, as well as bullion bars, can be sold immediately during daily market hours. (See the section on precious metals for popular investment options). Therefore, the typical numismatic portfolio can quickly be converted to cash when needed. Since certified coins sell faster than uncertified coins, ONR deals almost exclusively in certified coins to enhance the liquidity of your assets.

4. Rare Coins are Affordable to all Investors

Compared to other collectibles such as rare oil paintings, or investments like real estate, many rare U.S. coins are very affordable. Despite their record of consistent price gains and the multi-million dollar collections often sold at auctions, rare coin portfolios with outstanding track records and promising futures are available in a wide range of investment levels. Quality coins with strong investment potential can be purchased for as little as one hundred dollars or less. At the same time, there are more than enough six and seven-figure specimens to keep even the investor with the deepest pockets very busy. Olevian Numismatic Rarities will tailor your portfolio to your individual financial situation.

“My wish is that my drawings, my prints, my curiosities, my books—in a word, those things of art which have been the joy of my life—shall not be consigned to the cold tomb of a museum, and subjected to the stupid glance of the careless passer-by; but I require that they shall all be dispersed under the hammer of the auctioneer, so that the pleasure which the acquiring of each one of them has given me shall be given again, in each case, to some inheritor of my own tastes.”

—Edmond de Goncourt, 1896

 

5. Rare Coins are a Private Investment

Rare coins are one of the few remaining investments that can be accumulated privately. Since coins are highly liquid and easily transportable—and because investors can take physical possession of their holdings―coins are attractive to investors who do not care to tell the rest of the world what they own. You can carry a rare coin worth $400,000 in your pocket without anyone else knowing. No one will know what your numismatic portfolio is worth, or that it even exists in the first place. Olevian Numismatic Rarities maintains strict confidentially with all clients and Dane C. Olevian,M.D. is always available to privately discuss your investments.

6. Rare Coins are a Great Portfolio Diversifier

All investment professionals agree that an investment portfolio should be diversified. Many financial advisors recommend that investors place 20-30% of their discretionary funds in tangible assets to achieve a properly diversified portfolio. Rare U.S. coins stand out as the ultimate portfolio diversifier. For one, they have proven to be an excellent hedge against the effects of inflation. Although renowned for their performance in periods of high inflation, rare U.S. coins have generated strong long-term price gains in virtually every period of economic growth over the past thirty years. They can also be very useful in reducing the overall volatility of your investments because they tend to perform well when more traditional investment vehicles are performing poorly. Thus, the diversity afforded by adding rare coins to any preexisting investment portfolio can provide investors with security and peace of mind.

7. Rare Coins have Historic Beauty

At the very least, rare coins are beautiful works of art. U.S. coins are direct links to America’s rich heritage and are as timeless as history itself. For two centuries, U.S. coins have been symbols of American stability and reflections of national pride. Throughout our nation’s history, coins have spotlighted our national heroes, paid tribute to our great achievements, and commemorated significant events. These truly historic works of art honor past sacrifices made in the name of freedom. Rare coins acquaint investors with historical figures and events, no matter how far removed by time. The satisfaction of actually owning a piece of history from a bygone era makes investing in rare U.S. coins truly unique. Each coin has traveled a different path through history, and as a result, each is a distinct embodiment of the hopes and dreams of our founding fathers. This is undoubtedly something that a monthly statement from your bank account can never offer. ONR encourages you to hold an old coin in your hand and allow it to tell its story. You may be quite surprised by what you learn.

Strategies for Investing in Rare Coins

“The science of coins and medals is as old as antiquity itself. There is probably no other branch of collecting so ancient and honorable, or that has received the attention of the students of all ages, as that of coin collecting. If there are “sermons in stones,” then what eloquence and learning must be stored up in these bits of metal? If they could only talk, what strange stories would they tell?”

                                                ―George F. Heath, M.D.. November, 1889.

There are a multitude of approaches to assembling a thoughtful rare coin portfolio, but a full discussion of numismatic investment strategies is beyond the scope of this text. Rather, this section will highlight some basic principles that will have you building an impressive portfolio in no time.

Think Like a Collector

Anyone who thinks they are “just an investor” and therefore need not look to pure collectors for advice has made a fundamentally important mistake and is less likely to attain the highest profits on their investments. Sure, not every investor needs to immerse themselves in the history and artistry of their portfolio, as producing a profit can certainly be the primary motive behind buying and selling coins. At the very least, however, an investor must learn to think like a collector when choosing pieces for their portfolio. This is because collectors represent the most knowledgeable clients acquiring coins. They frequently acquire specimens in a highly systematic fashion, selecting historically important coins that are in great demand and of the highest possible conditions they can afford. Coin collecting itself is as much of an investment strategy as it is a hobby, and for this reason collectors enjoy the greatest investment returns. As a lifelong collector himself, Dane C. Olevian can offer this important perspective when assisting you in the selection of coins for your investment portfolio. One great approach is to build specific “sets” of coins, which is described in more detail the next section.

Set Building is an Excellent Approach to Investing

Coin Sets Explained

There are many fun and profitable ways to collect coins, but if there was ever one strategy that has proven to be both academically and financially rewarding over the years it was set building. A coin set is a collection of coins that are related in one way or another. While there are a number of ways to build sets, the two basic set forms are “type” and “series” sets. A type set is made up of all those coins sharing a specific characteristic such as design, designer, year, historical period, or denomination. An example of a small type set is the 1950 year set, which includes a cent, nickel, dime, quarter, and half dollar minted in the year 1950. A “series” set consists of one coin from each date and mint of a particular coin series, such as a set of Morgan dollars containing one coin from every year and mint they were produced (1878-1921).

Hundreds of Interesting Sets Exist

There is virtually an endless variety of interesting and investment-worthy sets available to collectors and investors of all personal tastes and price levels. Indeed, an impressive coin set can be assembled on every investor’s budget. Some sets tend to be more appropriate for investors than others and Olevian Numismatic Rarities can make specific recommendations in this area. The following is a partial list of some great sets that make excellent numismatic investment portfolios:

Type Sets

Period Sets: Include one example of each coin type minted during a specific time period.

Examples: 18th century, 19th century, 20th century, and 21st century. Each of these can be with circulation strikes, proof strikes, and include or exclude gold coins.

Mint Sets: Include one example of each coin type struck by one of the U.S. Mints during the period of their operation.

Examples: Philadelphia, Denver, San Francisco, West Point, Carson City, New Orleans, Charlotte, and Dahlonega.

Denomination Sets: Include one example of each coin type of a particular denomination.

Examples: 1/2 cent, 1 cent, 2 cent, 3 cent, 5 cent, 10 cent, 20 cent, 25 cent, 50 cent, 1 dollar, 2.5 dollar, 5 dollar, 10 dollar, and 20 dollar.

Design Sets: Include one example of each coin type sharing the same obverse or reverse design.

Examples: Flowing hair, draped bust, capped bust, seated liberty, barber, gold liberty head.

Series Sets

Coin Series: Include one specimen of every date and mintmark of a particular coin series.

Examples: Indian head cents, Buffalo nickels, Mercury dimes, Barber quarters, Walking Liberty dollars, Morgan dollars, Indian head $2.50 gold pieces, Liberty head $10 gold pieces, Saint Gaudens $20 gold pieces,and over one hundred other U.S. coin series.

Many Sets Offer Diversity

All investors know that diversification is the key to assembling a stable financial portfolio. A numismatic portfolio is no different. In the realm of coins, diversification is achieved by investing in coins of different years, mints, conditions, types, denominations, metal contents, and so on. Many classic numismatic sets are inherently diverse in their composition. Good examples of sets with built-in diversity include the 18th, 19th, and 20th Century Type Sets. Each of these spans a significant period of United States coinage and include dozens of coin types across every domination and metal type. We shall use the 20th Century Type set as an illustrative example.

A Closer Look at the 20th Century Type Set

One great set that is beloved to investors and collectors alike is the 20th Century Type Set, which contains one of each coin type minted from 1900-1999. There are several subclasses of this set, but one popular version of the 20th Century Type Set requires a total of 39 different coins, excluding the gold issues. Specifically, this set requires examples of Indian Head cents, Lincoln cents, Liberty Head nickels, Buffalo Nickels, Jefferson Nickels, Barber dimes, Mercury dimes, Roosevelt dimes, Barber quarters, Standing Liberty quarters, Washington quarters, Barber half dollars, Walking Liberty half dollars, Franklin half dollars, Kennedy half dollars, Morgan dollars, Peace dollars, Eisenhower dollars, and Susan B. Anthony dollars. Adhering to strict numismatic criteria requires that this set include 39 different examples even though it includes only 19 coin series. Thus, the set will have up to 5 examples of certain coin series. This is because minor design or composition changes were introduced to these coins during the period they were issued that count as distinct “types.” For instance, the reverse design of the Washington quarter, Kennedy half dollar, and Eisenhower dollar were changed in 1976 to commemorate the U.S. Bicentennial. A true 20th century type set therefore requires a 1976 example of these coins, in addition to one example representing the reverse design of the other years of issue.

This set can also be paired with the 20th Century Gold Type Set, which requires 13 gold coins minted from 1900-1933 across 2.5, 5, 10, and 20 dollar denominations. Assembling a full 52-coin 20th Century Type Set with Gold and Non-Gold Issues can be a satisfying experience, not to mention something that leaves you with an outstanding investment portfolio containing a diversity of rare coins that have enjoyed decades of great financial returns. Depending on the date and condition of the individual coins you choose to include, the 20th Century Type set, excluding gold issues, can cost anywhere from several hundred dollars to over $1,000,000. Investors at every price level can enjoy owning a 20th Century Type Set as part of their investment portfolio. Another excellent set is the 19th Century Type Set, which requires 88 different coins including gold issues. This can be a significantly more expensive set, however, given the rarity of some of its coins.

There are hundreds of great sets to choose from and Olevian Numismatic Rarities will help you build an investment set that takes into account your specific tastes, price level, and investment goals. Please see our “Current Products” page for quality examples of many of the pieces mentioned here.

“If one means to become a collector, and not merely a possessor, it is wisest to choose perhaps a somewhat limited field… It is in the possession of some special line, after all, that the real joy lies…The average dealer in numismatics has a hotchpotch of unrelated specimens on tap. The collector does not want his collection to be like that unless he be the proprietor of a town museum. The average collector should choose some special line in numismatics and follow the same consistently, seeking for the finest examples in season and out. A collection is desirable when it means something… There is a charm and beauty in it when it is chosen with good judgment, which the devotee can never adequately express nor the Philistine ever understand.”
―Waldo C. Moore. December, 1918.

Sets Afford Greater Liquidity

A well-designed coin set is often worth more than the sum of its parts. This is because fine coin sets are considered great accomplishments and are highly prized by collectors. Therefore, completing a set might give you an immediate return on your investment, without waiting for an actual increase in market value of your coins! Such sets are also often more liquid than the accumulation of unrelated coins.

Set Building is Fun

When you choose coin sets for their historical significance or their beauty and artistry, coin investing can be a very enjoyable endeavor. Best of all, sets assembled in this fashion tend to be the most popular amongst collectors, increasing the likelihood of great returns on your investment. One great way to have fun with your collection is to start a “set registry” with PCGS, a leading coin certification service. PCGS Set Registry gives the owners of PCGS-graded coins a chance to display their collection in a secure online environment and compare them to the collections of other collectors and investors. Awards are given each year for the finest sets in each category, and owners of high ranking sets are offered incentives such as free submissions to PCGS for coin certification.

Showcasing your collection online is not the only way to enjoy your prized rarities. A set of fine gold and silver rare coins on display in your home is also a great way to impress your guests. Several display options are available for exhibiting your rare coins, just as there are for fine paintings, sculptures, and objet-d’art. Ask Olevian Numismatic Rarities for great ideas about how to present your collection in your home. Even if the financial return is all you are after right now, chances are you will find collecting and investing in coins to be rewarding in many other ways, not the least of which is an exciting and satisfying way to spend your free time.

Consider Choosing Key Dates for Your Portfolio

Whether you choose to build a coin set or not, you should consider selecting coins that are “key dates” for your portfolio whenever possible. A key date refers to a particular date and mintmark combination of a given coin series that is harder to obtain than other dates of the same series because fewer examples are known to exist. Key dates are generally considered the most important coins in a series and are the most expensive to purchase. Key dates are always in great demand because every collector needs the key date to complete their collection. The combination of limited supply and high demand causes key dates to appreciate in value at faster rates than other coins in the same series. For this reason, Olevian Numismatic Rarities considers key dates the ultimate coins for investors. There are key dates in essentially every coin series, so investors are not likely to get bored anytime soon. Popular key dates include the 1909-S VDB Lincoln cent, 1916-D Mercury dime, 1932-D Washington quarter, 1893-S Morgan dollar, 1921 high relief Peace dollar, and the 1907 Roman numeral Saint Gaudens gold double eagle.

1921 PEACE DOLLAR