Buy quality! Buy quality! Buy quality! That’s all you hears these days when you are considering rare coins as an investment. First, are you really buying coins as an investment, or merely for the pleasure of owning a piece of history? That is sometimes the real dilemma for many collectors, or is it investors? Everybody wants to make sure that their investment is protected, but there are no guarantees, especially in rare coins. In fact, some rare coins take years to appreciate to the point of being able to sell it profitably.

Hey, I would love to be able to plunk down $100,000 for a 1919-s Standing Liberty Quarter in MS67 condition certified by PCGS. There is only one coin with this date certified by PCGS as of February 7th so it is the finest available. But not many of us have that luxury. I don’t, and I suspect you do not either. It’s hard to comprehend paying more for a single coin than my first house cost. And while the rarest and finest of all rare coins have reached stratospheric prices, what does this leave the rest of us? Not much, unless you are willing to do a little work.

So if my interest is in rare coins as an investment, what do I do? Well, there are many other coins and options you can choose. First, let’s review what drives the price of a coin.

1. Demand. Demand perhaps is the biggest driver of price. A clear example of this is the 1909 S VDB with a mintage of 484,000 and an estimated retail value of $720.00 in G4 and $7,500 in MS65 vs. an 1879 Shield Nickel. The Shield Nickel had a mintage of only 29,100 yet the estimated retail value of a G4 is only $415 while the MS65 example is $1,950. To further illustrate this point, PCGS has certified 703 MS65 Red 1909 S VDB cents and only 27 MS65 Shield Nickels. How many Shield Nickel collectors do you know vs. Lincoln Cent collectors?

2. Scarcity. Generally speaking, putting demand aside, the more scare/rare a coin, the higher its value. This is usually very true, especially when comparing dates within the same series. Scarcity should not be confused with overall mintage. During the silver booms, many, many silver coins were melted for there bullion content. Additionally, some coins with higher mintages can be quite rare in certain grades such as higher MS condition coins due to weak strikes, etc.

3. Condition. This is the most obvious one. When comparing the same coin, the better the grade, the higher its value.

4. Age. Although age can have some factor, I would rate it lower than the three above

Ok then, considering all these factors, how do I find nice coins that I can afford that will not only appreciate in value, but appreciate at a higher rate than other coins? I think the key word here is “nice”. Coins other than Mint State coins can appreciate in value if you know what to look for. Look at the 4 driving factors of price again. They are demand and scarcity. Take a good look at the following chart. The chart shows a good comparison of some different coins. Some you might consider a good investment and some you may not. The main comparison I am trying to make is from 2005 to 2006. I had an old issue of Coins Magazine from November 1973 so I thought I would throw those values in as well.

First, let’s look at the 1877 Indian Head Cent, the key of the series. In a one year period of time, the value of the coin rose 18-19% depending on condition. The 1909 S, the coin with the lowest mintage of the whole series rose only 2-3%. Take a look at the mintages. The 1877 had over 2.5 times the coins produced than the 1909 S yet is valued much higher. Part of this is demand and there are probably less 1877 dated cents to go around.

Next, take a close look at the 3 Lincoln Cents in G4. While the 1909 S and 1931 S are considered keys just as the 1909 S VDB is, it is the 1909 S VDB that has risen in price while the 1909 S did not budge and the 1931 S moved ever so slightly. It is interesting to note though that in XF condition the 1909 S VDB stayed the same.

Compare the mintages of the 5 above coins to the 1879 Shield Nickel. A mere 29,100 nickels were produced that year yet the price for a G4 is a paltry $415

So, what does this all prove? To me, it proves that picking coins solely for investment is as tricky as playing the stock market. You just never know what may be the hot item. Certainly, key issues will continue to rise and will probably rise at a higher rate than non-key issues. If you are truly set on buying rare coins as an investment and you cannot afford the high-end items then keys in some of the lower grades may be the way to go.

What will be the next “hot” coin? Only time will tell and your guess is as good as mine. I suspect that with more and more interest in Lincolns, especially with the upcoming changes to the Lincoln Cent

As always, happy collecting!

Things you should know about coin collecting
by Ian Niven

People take part in hobbies for several reasons.  Some do it for pure pleasure, while others do it for profit.  This carries across all sorts of hobbies and types of people, including those who collect gold coins.  Why would someone choose to collect gold coins as a hobby?  Again, some people choose their hobbies based on pleasure, while others aim to make a profit.

Of course, most gold coins don’t fetch anywhere near that much, and most would not sell for more than face value alone.  However, having a complete set of a certain edition can up the value of each individual coin.  Also, there is always the chance that you’ll run across one of those gold coins that is worth a great deal.  Even if you don’t, having an extensive collection of gold coins that includes several important era pieces can draw in some extra cash as well.

One thing that is very important to do when you are collecting gold coins is to make a periodic trip to a knowledgeable individual and have some of the rarer individual coins as well as the entire set of gold coins appraised to see if you are gaining or losing value over time.  Obviously, if you continue adding gold coins, the value will increase, but by how much?  How do you know that you are collecting valuable coins or scrap metal?

There is a key to knowing when it might be worthwhile to purchase gold coins.  First of all, never sit in awe of a commercial for commemorative issue gold coins in limited quantities.  Obviously, these gold coins are still mass produced and could not be considered rare, regardless of what the commercial says.  Also, it is better to verify the sale and purchase are through some kind of authorized vendor who has been proven to sell only authentic gold coins.

While you may only be collecting gold coins as a hobby and are not interested in selling your set for profit, it is still a good idea to periodically have your collection of gold coins appraised.  Why this is necessary if there has been no addition or change to your collection, and what is involved in the appraisal process?

Getting your gold coins evaluated is something that should be done at least every six months.  This allows you to keep track of changing values of individual gold coins, verifying the net worth of your collection.  This is important partially because there may come a time that you do wish to sell your collection of gold coins.  However, even if you don’t, you really should have an inventory of your collection, complete with values so that you can quote someone intelligently should they ask how much your gold coins are actually worth.

Also, having your gold coins appraised gives you a solid number that you can take to an agent and have your gold coins insured for a specific amount.  Knowing exactly what they are worth will give the adjuster a better idea of where to begin with your insurance quote in terms of value.  If your collection is worth $50,000, you obviously don’t want to purchase a $5,000 insurance policy on your collection.  On the other hand, you don’t want to overpay, so getting an appraisal for your gold coins can be of great assistance to you.

Putting together such a collection is also one way that many collectors of gold coins assure that they have a family heirloom to pass on to their children and grandchildren.  Not everyone has a long history of heirlooms in their family, especially if the family was not always financially secure or if things were lost in the past in some sort of disaster.  However, starting a collection of gold coins can offer something to the future generations that they can inherit and hold dear as items once owned by ancestors.

Because many hobbies can become expensive, few people follow through to the point of having a marketable collection.  This could be for show in a museum or art gallery, or it could be for sale purposes.  The rule holds true especially for gold coins.  However, there are investors out there who have spent a lot of time and money building up an incredible collection of gold coins in order to profit from the rising value of such coins.

My name is Ian Niven, I hope you found my article informative. For more information on <a href=”http://coincollectoronline.info”>coin collecting supply</a> please visit http://coincollectoronline.info

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