Okay, let’s get something
straight… I do not
advocate the purchase of United States coins strictly for investment
purposes. Like most traditional collectors, I believe coins are to be
primarily appreciated for their artistic beauty, historical
connections, and the joy of pursuing them.
However, it should be no
secret that a significant number of us do add to our numismatic
holdings while simultaneously peeking at the payback angle, too.
In truth, there are probably substantial numbers
collectors who prefer to acquire coins destined to increase in esteem
and value over time; treasured heirlooms and a source of pride to be
passed from one generation to the next.
On the flip side of this
equation, it seems implausible that anyone would buy a coin with the
hope or expectation to see it stagnate or decrease in value. Indeed,
any commentator who suggests the words “investment” and “coins” should
never appear in close proximity to one another is ignoring a heavily
populated segment of our hobby.
|No one can go
wrong in buying a 1916-D Mercury dime; it is the quintessential bullish
US coin, gaining in value at a 5-10% average annual pace over a period
of many years, across the full grade spectrum. Buy only from a
reputable source. Coin Photo courtesy of Ira
& Larry Goldberg Coins
& Collectibles, Inc., Beverly Hills, CA.
Now that we’ve established that it’s not
numismatic heresy to seek
coins with strong upside possibilities, let’s get down to basics. The
guiding principle is simple: Any coin that has demonstrated solid,
consistent gains over a long period of time is likely to show continued
growth in the years ahead. Easily said, but as we shall soon see, not
so easily put into practice.
So exactly how does a one identify coins with a potentially bullish
future? The best clues are revealed by analyzing the retail value
trends over a long period of time for a given coin. Observing current
prices alone does not yield enough information to correctly evaluate
prospective price movements. What was the coin selling for two or three
years ago compared to today? Dig deeper, and find the market price for
the same coin 5-10 years ago. While you’re at it, get something from
20-30 years or more in the past, too. The more good data researched,
the more reliable will be your final conclusions. Now whip out your
spreadsheet and chart the numbers, or compute annualized rates of
return. Flat or negative trends are bad. Positive trends are good.
Steep positive trends are best. Any coin displaying a proven annualized
growth pattern of at least 5-10% over a span of many years qualifies as
an attractive option for the collector desiring coins headed for much
higher price levels a few years down the road.
During the course of my lengthy numismatic career, I’ve researched the
long term value trends of many collectible US coins. Thanks to my
trusty computer, I’ve calculated annualized compounded percentage
return rates and honed in on a handful of coins that have consistently
beaten the overall coin market averages. Unfortunately, the
blue-chippers are scarcely encountered. Perhaps it is this fact that
explains why so many well-intentioned hobby purists scorn the idea of
blending coin collecting with the profit motive.
Individuals whose objective is to satisfy their numismatic pleasure by
assembling a collection certain to be the envy of tomorrow’s collectors
must do their homework today. Remember to research historic value
trends and evaluate growth potential based on previous performance. One
last word of advice… never loose sight of the fact that you are
handling artifacts of America’s past, and that all of us are merely
their temporary custodians. Respect these coins and the history they
represent, and you’ll always discover new avenues of adventure not
found in most other investment opportunities.
About the Author: Daniel J. Goevert
is the webmaster of US Coin Values
Advisor, specializing in coin value trends and listing bullish US
coins. The site also includes detailed coin collecting advice and an
illustrated history of the US Mint.