ABC
-----Antiques – Books – Collectibles -----
Oldest Hobby, Coin Collecting Cashes in as a
Great Investment
By Ray DeThy
One of the hobbies with the longest history, coin collecting has been a staple of those
who have a need to collect things. But, the mere collection of coin specimens has
recently taken on motives that go well beyond the hobby stage. Many collectors today
have other motives that go well beyond the pure joy of collecting.
These are, collecting coins:
1. From picking coins out of everyday circulation-the traditional hobby
2. Of a particular type or date – e.g. Roosevelt dimes or Morgan silver dollars
3. Of the highest affordable quality regardless of the date or type, and
4. Some combination of above
But a bit of a preamble about coinage with the emphasis on United States’ issues:
We have had over 100 different coins introduced since the country’s colonial inception
(not counting variations).
Many of you may not know that we’ve had some coinage that has not been produced for
150 years or more—including: half cent; two cent; three cent; and half dimes plus 2 ½
and 3 dollar gold pieces. There were reasons for the odd values, but they are too
complicated to discuss here. Also, during times of war or especially tough economic
times in our earlier years, there were coins issued in one cent sizes by local businesses so
that commerce could continue even when most copper was used for military ordnance.
Additionally, paper money called “fractional currency” was issued during the Civil War
in 5, 10, 25 and 50 cent denominations in lieu of metal-based coins because most metal
were needed for the war effort.
But traditional coin collecting usually is limited to regular issue coins.
COLLECTING FROM CIRCULATION: Was and probably still is the most common
form of coin collecting. It generally is in two forms—either finding coins and placing
them in one of the blue cover albums that has a niche for each date and mintmark of the
particular coin or throwing them in bag or a shoebox. For example, the Lincoln penny
folder starts with the 1909 penny and continues through 1958. They are the so-called
“wheat” pennies because the reverse showed sheaves of wheat as the design. During this
time period, there were pennies minted for each year and in most years, they were made
in each of the three operating mints and marked: S for San Francisco; D for Denver and
No Mint mark which signified Philadelphia.
A preponderance of coins were mint marked this way since 1789, but in a few cases, not
all coins were minted in all three mints and for several years there were additional mints
in New Orleans and Carson City, Nevada (mint marks O and CC respectively).
It has always been difficult to find coins that are numismatically valuable by culling coins
that have been in circulation because what determines value in coinage is condition and
rarity (which relates to the number of coins of a specific date and mint that was
produced). Coins that you may find in a Blue Book or a shoe box or similar are almost
always of little value. Though the fun of collecting from circulated coins is often the
result of hoping that looking through an ancestor’s coins might result in finding a rarity.
Giving grades to coins and rarity issues will be part of discussion a bit later in this
column.
COLLECTING NUMISMATIC QUALITY COINAGE: is an expensive hobby. It can
be the obvious next step from the beginner’s search from circulation. Coins become
numismatic quality by having been removed from circulation before any damage has
been incurred from handling and/or when “after the fact” determination indicates there
was a very low initial mintage.
Circumstances that cause the mint to produce low volume coinage is not generally known
in advance, so a high percentage of all production goes directly into circulation which has
on occasion produced very high values, e.g. the 1893 San Francisco mint produced
possibly 100,000 Morgan silver dollars directly into circulation. It is estimated that fewer
than 12,000 survived for more than a few years after the initial issue. About 4,000 plus
are known to exist to exist today, and a coin in the lowest grade (with very little detail
present) is a $2,000 to $2,500 purchase. The highest circulated condition example is in
the $40,000 to $50,000 range. An uncirculated example sold at auction several years ago
for $414,000. This coin is an anomaly, but it should make the point re: condition and
rarity.
You may recall from previous columns regarding “collecting” that I am almost a zealot
about advising that if you collect anything and especially so with coins, buy the rarest
and/or best condition piece you can afford. Buying cheap is okay if you want to fill a
Blue Book, but when (if) you try to sell, you’re faced with flea market and bulk selling
options for low grade coins—unless the coin is made of silver or gold—more later!
COLLECTING NUMISMATIC QUALITY COINS AS AN INVESTMENT: is
probably better than being in the stock market. It tends to be more stable. It certainly has
a marked advantage over going to the casinos. There is a finite number of coins available
and with the likelihood that a coin’s rarity makes it desirable, an owner of a rarity will
generally be able resell the coin to recover the purchase price. But it will take some years
to be able to sell it wholesale (or to pay auction fees) in order to achieve a profit.
Some negative possibilities for the subsequent resale of rare coins include damage or
alteration incurred during storage. (P.S. safety deposit boxes are great theft security, but
generally environmentally unkind to coins).
What the numismatic quality coin collector or investor should know: are
1.
How to determine rarity. This is an easy one. There is a reference book
published each year titled “A Guide to Book of United States Coins” by R.S.
Yeoman and printed by Whitman Publishers. Its cost is in the $15-$20 range. It
lists all U.S. coins plus colonials and some tokens, with the number of each type
minted, a simplified grading process and estimates of retail values. The lesser
number minted has a correlation to value and the higher the grade, the higher the
value.
2. How to determine the grade or quality of a coin: is partially answered by
acquiring the Yeoman or similar book at any modern book store and practice
grading. Then go to coin dealers and do a self test as to how close you are to the
seller’s grade.
Now comes the red flag, caution, and whatever word you want to use to describe
your greatest problem. Although there are defined standards, the comparison of a
coin to its grading criteria is a subjective decision in the final analysis. The
tendency of sellers is to over grade and for buyers, the inclination is to under
grade. As a buyer, you certainly need to develop a trust with the person from
whom you buy collectible coins. But you need to develop your own grading
skills before you spend big bucks for coins. If you have doubts, DO NOT BUY!
Some buyers who have doubts try to use one of the professional grading services
to allay anxieties by getting their coin viewed for a fee and receive a written
authentication and grade evaluation. This may be better than your relying on your
own grading skills, but I can tell you from experience that professional grading
services make mistakes. The process may help you resell your coin because the
formal grading certificate may add comfort to you buyer but it’s no guarantee that
it’s correct. I have had a coin sent to the same grading service as many as three
times (under different names) and have received markedly different grades
including one instance when two graders did agree on the grade and a third
evaluator decided the coin was not even genuine. Wow!
In fact, because of my angst, when I buy or sell coins, I pay no attention to a
seller’s grading and I do not grade my coins when I sell. I price according to the
grade I gave the coin and encourage the buyer to decide if the price is right for
him/her.
Today’s Value and Tip deals with the significance of grades and associated
differences especially at the upper levels of grading high grade circulated coins
and uncirculated counterparts.
3. Coin values made of precious metals: are worth giving special attention to based
on current prices of silver and gold. The increase in prices of these metals has
jumped 60 to 70% over the last several years to the point where lesser condition
coins made of gold or silver has risen at about the same ratio as the metal prices..
A worn coin of no numismatic value will return on average of $9 to $12 or $13
per dollar of face value for silver and about $60 to $70 per face dollar for U.S.
gold coins in less than average collector quality. (All dependent upon the value of
the metals at the time of sale of the coins)
Now is probably a good time to sell, but both metals are in a stae of flux. Gold
reached a high of over $1000. /troy ounce and silver hit $22. /ounce several
months ago and regressed to the $850 and $15 levels. As I write, the have both
moved upward from the low. It continues to fluctuate, but is significantly higher
than past years.
VALUE & TIP
VALUE:
Today’s item for evaluation is actually a pair of 1942 Philadelphia mint Walking Liberty
silver half dollars (see photos of obverse and reverse). Though these coins are not rare,
they make it possible to demonstrate how a coin of high quality condition can differ
greatly in value as a result of very small differences in its surface evaluation. The coin to
the left is graded as an uncirculated MS.63 and the coin to the right as an almost
uncirculated AU57. As you might have surmised the MS stands for mint state. It means
that the coin has never been circulated, but there are 11 mint state gradations (MS 60 to
MS70).
The AU is an Almost Uncirculated coin which has 10 gradations (from AU50 to AU59).
When a coin exceeds AU59, it means that grader has determined that it is an uncirculated
coin of the lowest grade – i.e. some scuffs or other blemish(s) that occurred at mint or in
handling to get it to the banks.
What follows is a table that shows accepted retail pricing for coins from grading of
AU50 to MS67 (the perfect coins i.e. MS68-70 seldom exist). An asterisk identifies the
values of our two coins shown by estimates of Professional Coin Grading Service
(PCGS) prices).
AU50
AU51
AU52
AU53
AU54
AU55
$32
$32
$33
$34
$36
$37
MS60
MS61
MS62
MS63
MS64
MS65
$
$
$
$
$
$
42
45
50
55*
170
265
AU56 $35
AU57 $40*
AU58 $40
AU59 $41
MS66 $ 900
MS67 $15,000
TIP:
These tables show that as the criteria get closer to perfection, the value increases at an
astounding rate. Although the difference in values for the coins show only a near 40%
increase and the observable differences between the coins is negligible, please remember
that these are not rare coins. If a rare coin such as the 1893S Morgan dollar were used,
the initial value of an AU57 would be much higher and the proportional increase for the
MS63 many, many times greater.
LEARN TO GRADE BEFORE YOU BUY EXPENSIVE COINS!!!!