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Collecting And Investing In Coins

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( Published 1963 )

In the world of numismatics today, there are three main classes: the coin collector, the investor and the speculator. There is something to be said for all three, although most legitimate collectors are inclined to take a very dim view of the speculators.

The Collector

If you become a collector, there are certain rules which you can make for yourself and follow. These rules are generally considered sound, although you may choose to modify some and ignore others.

FIRST RULE: Buy only those coins which please you. Since this is your hobby, those coins which can give you pleasure are those you should acquire. If you can take genuine pleasure in the coins you collect, you'll be happy. If you act principally on the advice of this dealer or that acquaintance, you may get coins which, once in your collection, will make you wonder why you ever put out any money, no matter how much or how little, for them. If, on the other hand, you bought a coin because its design or patina or overall appearance pleased you at that time, chances are excellent that it will continue to please you well into the future.

SECOND RULE: Buy single coins. Don't be tempted to purchase a completed series, because then a great deal of the fun of collecting is lost. If you want only a single specimen of a series, such as a silver 3-cent piece, don't be persuaded that you should buy a dozen or two just because you can get them for a little less per coin. You'll find the extra ii or 23 are just so much excess baggage.

THIRD REASONABLY SOUND RULE: Either buy the best you can afford, or those coins which you consider the most attractive, or both. As in all things, quality is a consideration not to be taken lightly. It's usually better to have one coin in Extremely Fine condition than two or three Very Good specimens. You'll take greater pleasure in your collection if the coins, whether 2 or 200, are in a beautiful state of preservation.

At first, if you're like most collectors, you'll go in for quantity rather than quality. But, as you become more experienced, you'll want to replace the inferior coins with better examples. And you may decide to discard many which merely are so-called "space fillers:" It's something like the old adage, "One bad apple can spoil the whole barrel"-one inferior coin may detract from the striking appearance of all the others.

FOURTH RULE (WHICH IT'S A GOOD IDEA TO FOLLOW): Be catholic in your taste. At the outset you may decide to accumulate coins regardless of series until you can decide which coins you desire to concentrate on and collect.

So you give up accumulating and become a collector. But, once having decided upon an era or series, don't become so engrossed in your specialty that you overlook or neglect other beautiful coins. The type collector might be considered the prime example of one with catholic taste; he wants a fine specimen of every type of half cent, half dime, large cent or half dollar, and he's not interested in any one series. He has fun, the same as any other collector, so who's to deny him his type collection?

The well-rounded collector is usually the person who has finally found a series he likes, is concentrating on it, but does not close his mind to acquiring a type coin here and there if it pleases him.

FIFTH RULE: Don't be frightened by a price tag, or be impressed by it. Some coins in Extremely Fine or Uncirculated condition may carry what appears to be an unusually high price. If the coin pleases you, fits in somehow with your collection and your pocketbook can afford it, don't be frightened away. By the same token, don't hurry to purchase a coin merely because the price is high. Don't be persuaded by the seller. Make certain that the coin pleases you and that it will bring a measure of pleasure proportionate to its cost. If it fails to measure up to the standards you set for yourself and your coins, pass it up.

SIXTH GOOD RULE: Avoid "junk," even though it may fill a blank space in your collection. As mentioned previously, you'll be a happy collector if you learn to live with blank spaces. Maybe you'll be able to fill them properly. Meanwhile, forget them and be not unhappy.

An example of the extreme to which a type set collector might have to go if he couldn't live without a blank space is in the album page labeled "Types of U. S. Half Dollars." There are spaces for g types, starting with 1794-1795 and continuing through igi6-igq7. Now, eight of those spaces can be filled with passable examples (Good or better) for from a few dollars to a maximum of about $65 for a Good 1795. But that ninth space, Type 2, 1796-1797, must be filled by a Good example for a minimum of $700

Is there any collector (except one to whom money is absolutely no object) who would be willing to pay about $700 for a single coin in a series in which the other 8 examples cost altogether only $100 or so?

One collector solved the problem by cutting out a halftone picture of a 1797 half dollar, mounting it on a circular piece of corrugated board, and inserting the picture neatly into the blank space. If a friend inquires why there's only a picture instead of a coin in that opening, the collector honestly reports he didn't care to spend $700 just to make the page complete.

SEVENTH RULE, WHICH A WISE COLLECTOR MIGHT FOLLOW: Study carefully the early United States coins-they're the classics of American numismatics. True, you'll never encounter a half-cent piece or a bust-type half dollar in change, but you'll get a whale of a lot of pleasure and satisfaction if you put together one of the early United States series.

EIGHTH AND FINAL FACT OF A COLLECTOR'S LIFE: If you have followed the first seven rules, and there comes a time when you have to part with your coin collection, the chances are excellent that you'll realize a profit on what you've spent, even though you've made no conscious effort to plan it that way. Fine coins, particularly the early ones, appear to increase in value annually. The reason is rather obvious: there simply are not enough to go around.

The Investor

Suppose you decide to invest in coins. Are there any rules which you might follow? While not exactly rules, there are suggestions which it might prove wise to heed. But they are not any more guaranteed to make you money than is the advice from your Wall Street broker.

The wise investor is guided somewhat by mint totals. The early reports are vague at best, for the simple reason that the mint reported how many coins of a certain denomination it issued during a certain year, not how many were actually struck in that year. Thus the mint reported it put out 19,570 silver dollars in 1804 (and there are about iq, more or less authentic examples known today) and that same year issued 156,519 silver half dollars (of which not a single example is known today).

The second suggestion for one who would invest in coins:

Look carefully into the neglected series-the half cents, half dimes, silver 3-cent pieces and bust-type half dollars.

The half-cent series has been discussed at length previously. Of principal significance is the fact that the total output of United States half cents was only slightly more than 8 million coins, and that most of these available today are underpriced in comparison with large cents and other early United States coins.

Half dimes from 1829 through 1873 are still reasonably priced. The earlier examples-1794 through i805-with their higher prices due to rarity, are believed to be the only drawback to a real boom in half-dime collecting. But when enough collectors will be content to leave unfilled those spaces prior to 1829, expect the half-dime series to show real growth in values.

Most silver 3-cent pieces have reasonable price tags, principally because the last ii years of issue were minted in Proof only. Again, if the blank spaces from 1863 through 1873 can be ignored, this series may catch on.

Bust-type half dollars dated from 1807 through 1836 long were a drug on the market. Until a few years ago, a collector could get every date (with exception of 1815) in Fine condition for around $5 or less. Today, the values are up considerably. That same series in Fine condition would range from a minimum of $4.50 for the least expensive example to around $20 for the scarcest example. In Uncirculated condition, the price increases have been spectacular-it was discovered that there simply aren't many Uncirculated examples around any more.

The third suggestion for the investor is to buy the best coins available. This means the best of the earlier coins, not recently minted specimens of "scarce" coins, on which someone attempts to put an artificial value, though there may have been as many as 2 to 5 million minted.

There's some question whether an investor should buy the very best coin-for instance, a "unique example:" If he does purchase such a treasure, he may not be able to dispose of it (at a profit or any other figure) unless and until he finds someone who simply must have the very best. If he's in coin buying to make some money, he's much better off with choice Extremely Fine or Uncirculated coins, for there are usually enough of them around to reflect demand and supply.

The fourth suggestion is one which should be obvious: Don't try to corner the market on any specific coin-it can't be done. Earlier issues are too well dispersed to permit it, and recent coins have been issued in such quantities that an investor would have to hire a warehouse just to store his hoard.

The Speculator

In recent years, many persons have decided that rolls of modern Uncirculated coins will be valuable some day; that is, have a value above that stated on the coin. Possibly they will, but probably not until every American suddenly decides to become an avid coin collector, thus creating a demand for coins minted annually by the many millions.

Such roll collectors are in the forefront of the speculators. Now, there are some speculators who have made a specialty of attempting to corner all the $3 gold pieces in sight, and others try to monopolize certain dates in the Standing Liberty quarter series, but the vast majority are those who buy and trade and sell rolls of Uncirculated recent coins.

Now, some coin rolls conceivably could be very much worthwhile-such as a roll of 1795 dollars-except that no one ever collects genuine scarcities or rarities that way.

These strange hoarders of current coins barter rolls as if they were bars of silver or gold or platinum. They swap among themselves and create a strange sort of make-believe market in which prices can go up and down with the speed of a first-rate roller coaster. Occasionally, some sharp hoarder decides he's had enough of this strange hysteria and proceeds to unload his accumulation. The crash that follows sounds a lot louder than the boom which preceded. And numbers of innocents have been burned by this strange mania for trying to get rich quick through rolled coins.

Of course, saving some rolls of Uncirculated coins as they are issued is of manifest value to the collectors of tomorrow. But who should get into this act of being savior to the numismatists yet unborn? Should it be the reputable dealers? And who decides who is reputable? Should it be every Tom, Dick and Harry with an urge to get rich quick?

Which rolls should be saved? And how many? Can there be any reasonable prophecy of scarcity for a cent with a total year's mintage of around 250 million? Such a roll, with a face value of exactly 50 cents, today is bounced back and forth between roll dealers and roll collectors until the quoted theoretical value may reach $2 or $5 or even more. Such silly bartering of modern common coins, even though they be in the best of Uncirculated condition, often arouses the disgust of the more-or-less normal coin collector.

Occasionally, you'll hear a true history of the spectacular rise in price of a roll of legitimately scarce coins. For example, back in 1947, a dealer bought several rolls of 1931-S Lincoln cents at $20 a roll. Now, this date is a key coin in the Lincoln series, with total mintage of only 866,000.

One week later, the dealer sold them at $25 a roll. About 6 months afterward he was able to buy them back and promptly sold them for $5o a roll. Nine years later, in 1956, he bought one of those same rolls (they'd gone through the hands of 4 or 5 others meanwhile) for $400 and sold it the next day to a collector for $425. Today, such a roll is worth in the neighborhood Of $2,000.

It is on such stories as this that the mania for roll collecting is based. The speculators aren't concerned with scarce issues (such as the 1931-S with mint total of only 866,000) but they tout each other on the advisability of tying up lots of good money in rolls of half dollars (total mintage over 5 million), quarters (5 to 10 million per year), and nickels (with a mint total of more than 2 1/2 million). And these are all modern coins, issued within the last 20 years. How long will it take such coins to become even moderate scarcities? That's the jackpot question.

With the roll-collecting mania there has sprung into existence the so-called "suitcase dealer." He has a post-office box as his business address, and usually engages in his coin speculating as a side line. His stock may be great, but it's usually rather small. His expenses are at an absolute minimum. Despite all this he calls himself a coin dealer. He may advertise his buying and selling prices. But, unless he has a firm order from a cash customer to buy, he often will decline to buy your coins because he's "overstocked" at the moment.

Proof sets comprise another area which has experienced the blight of the speculator-the fellow wha'd get wealthy without using either brawn or brain. The spectacular rise (and subsequent fall) of the 1936 United States Proof set can be credited with starting it all. This set, issued by the U. S. Mint in 1936 for a total charge of $1.81, zoomed skyward in the middle 1950s and reached the neighborhood of $750 before it hit the skids. Now, anyone who can build a $z investment into hundreds of dollars in about zo years is bound to have a lot of imitators. Even the fact that the skidding 1936 set eventually reached a sub-peak level of around. $250-$300 didn't bother the easy-money lads.

So, led by speculators, the rush for United States Proof sets was on in earnest by 1957. From total Proof set mintings ranging from 3,387 to 21,120 in the period 1936 through 1942, the modern Proof sets zoomed to a total of 1,247,952 in 1957. The market was glutted and the quoted price fell as low as $1.85 each - 30 cents under the cost at the mint.

One final phenomenon of numismatics today is the issuing of various and sundry medals by reputable firms as well as by the speculators. This medal mania undoubtedly was started by someone to fill the void left in the Commemorative coin area when Congress and Presidents frowned on - me new meaats appear to be issued for almost any occasion, from the planting of the first peanut in the South to the launching of the largest showboat on the Mississippi River. They seem to have one thing in common: to make money for the firm or individual issuing it. They are struck in almost every metal imaginable-alloys of various kinds, silver and even platinum-but not gold. The government still takes a dim view of such a use for gold.

What's the future of this rash of medals? Who can guess?

Of the three types presently in the world of numismatics -the collector, investor and speculator-it would appear that the knowledgeable collector, who buys good coins which please him, stands as good or possibly even a better chance of coming out ahead financially in the long run.

And there's always that intangible but valuable item, the pleasure and relaxation he gets from his hobby. Sometimes that's almost as good, possibly even a little better, than just grubbing for an extra buck or two.