Incorporating Rare Coins Into Investment Portfolios

A few years ago, a woman told me that she had happened into possession of some ancient coins. I mean really ancient. It’s a long story involving an ex-husband and a trip to the Middle East. Anyway, she had researched the coins online and, even though it turns out they were minted in Damascus during the rule of the Roman Empire, she was surprised to find out that they were not as valuable as she had imagined they would be. As I explained to her, age alone isn’t the deciding factor in the value of a coin.

There are really two different types of people who engage in coin collecting: people who do it for the love of the coins themselves and investors. The collectors are interested in the historical importance of a coin or the fact that they can complete a series of coins having significance to a certain period. For instance, a collector’s goal might be to assemble a series of civil war coins. These are the people who might be interested in the ancient coin from Damascus. And then there are the investors. The difference is that the collector is interested in what he likes. The investor is interested in rarity, investment, and appreciation in value.

Not surprisingly, coins are a predominantly male driven market. Thus far, coin collecting is not something that has captured the female market. It could be that women feel they don’t know enough about coins to invest wisely or feel that there is a science to the field that is intimidating to a lay person. But it’s really not all that different closing on a house, or investing in stocks. If you ask most people, they have no idea what all the paperwork they signed at the closing meant. Likewise most people can’t tell you in any depth about their stocks or other investments. Coins, like any other specialized subject, have their own jargon, too, but it’s not difficult to get up to speed quickly. The language of coins does not involve any kind of legalese and is arguably easier to understand than the documents you signed when closing on your home. If you understand option trading, or puts and calls, or real estate terminology (or even if you don’t); you can understand coins.

Although the world of coin collecting is vast in its scope, it is relatively small when compared to other types of investment vehicles like real estate, stocks or bonds. Many people don’t understand that coins are a hard asset like a home, or antiques, or paintings. What people should know is that investing in coins is no different than investing in other more traditional instruments and that, if purchased properly and prudently, in time investments in coins will pay off. Just like art or antiques, if a coin is common now, it will be common later. But if a coin is rare now, it will be even rarer later.

Experienced investors will recommend looking for coins with “key dates.” Key date coins are comparable to blue chip stocks. These are coins that are noted for the date of their minting – not necessarily because they are the oldest coins around but because they are among the rarest. These coins, it turns out, are like IBM stock is (or was anyway). If you buy a key date coin, down the road there is a very strong chance that it will be worth more than what you paid for it. Of course, all investments are subject to fluctuations but if you look at a graph of a coin’s value, even with the peaks and valleys, the overall progression of its worth will show an upward trend.

OK, so you’re interested in investing, now how do you find out if a coin or coins are a good buy? There are several sources where the investor can determine an appropriate price. Potential investors should know that there are sources that take the guesswork out of purchasing coins.

If a buyer performs adequate due diligence, purchasing coins is as basic as anything else. One resource is a periodical called Coin Values put out by Coin World. Coin Values is a monthly publication that includes articles about coin collecting as well as dealer advertising; but, more importantly, it includes an insert listing the value of all U.S. coins on the market given their various grades or condition. The listing includes average retail price which is gathered and compiled each month using data from online purchases, auctions, and coin shows. The rate listed for an individual coin reflects the closest price that the buyer should pay for that coin. Buyers want to aim to be within 20% of the price listed in Coin Values. For more details, please visit these sites:-

And back to the issue of how old a coin is. . . there are coins that were minted in the time before Christ that are worth $10 and there is a $20 St. Gaudens coin produced in 1933 that sold during a 2002 auction for 7.6 million dollars! So, the moral of the story is: if you want to make a prudent, potentially lucrative investment in coins, put away your digging tools and call a coin dealer or go to the newsstand and get a list of coin values.

Ken Smaltz is a preeminent expert in the collection and integration of rare coins in balanced, responsible investing. Based in New York, he has been a rare coin expert for more than 25 years. He has been featured in More! Rags to Riches by Gail Liberman and Alan Lavine as well as in Crain’s New York, Black Enterprise, Fortune Small Business and The Network Journal’s “Top 40 Under 40” list. Ken advises private individuals and collectors on incorporating rare coins into their investment portfolios.



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