Old or New? Profit Found in Both
This is the year of gold, silver, platinum and other precious metals, as gold nears $1,400 an ounce, silver $25 and platinum $1,800. It is a comeback year for the Dow Jones Industrial Average (with the best September since 1939) is back over 11,000. Without even saying it, those who have discretionary income available to take a plunge in the coin market are jumping back in.
It remains a good opportunity for the coin market, as my new book, Rare Coin Investing: An Affordable Way to Build Your Portfolio (Krause, 2010, $24.99) clearly shows. Timing is everything; the book came out on Oct. 2, and is already popular on Amazon.com as a coin investment guide as well as investments overall.
The 1982 edition of the Red Book, A Guide Book of United States Coins by R.S. Yeoman, had a guest chapter that I wrote entitled “Planning Your Rare Coin Retirement,” which melded together a report by the Boston Federal Reserve Board with a survey done at the behest of Salomon Brothers, then a major Wall Street powerhouse firm.
The Fed and Salomon looked at the stock and bond market and the tangible asset market as well, and came to the concusion that stocks were a good buy in 1978. (Put differently, coins were outperforming stocks). They were, and it was.
Several years later, Bonus Books contracted with me to write a book by the same title – I always loved the title more than the book – and in 1997, Planning Your Rare Coin Retirement came out to a giant yawn. Too bad, because that book had dozens of recommendations, many model portfolios, and (if not a theory), then the real thing in terms of advice.
Unlike a number of other books that offer glistening generalities of portfolio stuffers, or great rarities that simply cannot be acquired by the many, the theory of Planning Your Rare Coin Retirement was simple: a $10,000 portfolio with a number of selected components that were waiting to be acquired.
So that there was no misunderstanding, I price sampled Numismatic News and Coins magazine, and perhaps a few other sources, to see what their selling prices were. There were no “buy gold bullion coins for $200 an ounce” when the market was $335 an ounce. Nothing was fake. Everything was transparent and above board.
Although it was modeled after the Salomon Brothers portfolio that Stack’s had assembled for the Wall Street firm, it had fewer preconceived notions. Where Stack’s included no gold coins at all because Salomon wouldn’t let them – they were afraid it would skew the results – my portfolios embraced all metals, gold and silver alike.
In keeping with the underlying decision to not emphasize scarce and rare coins that were priced out of range insofar as the average collector was concerned, at least one of the portfolios listed more than 100 gold coins whose average cost in 1997 was $85 a coin (more or less). (That model portfolio, which had dozens of modern gold coins) cost under the $10,000 mark (about $9,400).
Want an estimate of what that portfolio is worth this week? That $9,000 investment of about 100 coins was selling for about $30,000 (which assumes a general markup on inventory of 25 percent over the spot price, and then 15 percent for profit and overhead). Thud, in this scenario, a new Queen Elizabeth sovereign has a retail price of $543, a 20 Franc rooster is a $435 coin, an old sovereign is about $544, and an Austrian ducat is about $250.
The original book is now out of print (it cost $13.95 when it first came out); on Oct. 10, Amazon.com had a used copy listed for sale for $40.81.
The new volume that Krause published includes the original recommendations, a follow-up (“How’d we do?”) and a profits calculation.
My dear friend of more than 40 years, Donald Kagin, saw the manuscript and some of the charts (lots of bling: color everywhere) and immediately asked for copies for some of his customers – and then he asked whether the results since the manuscript was finished (earlier this year) showed a different result.
Quickly, I did some calculations, and saw that even with the Dow taking off, rare coins had performed so well over the last cycle that their rate of return was astonishing – justifying the position of the Federal Reserve Bank of Boston publishing the Salomon Brothers data in 1978, and the use that others gave.
The gold coins run from Australia to Yugoslavia, with a lot in-between – some are well circulated, others strictly proof condition. Most are lightweight; Surely the increase in the price of gold is one reason why these coins have shot up in value. But so is the relatively light mintage that each has.
There are a total of 226 line items on the spreadsheet that I keep for the Rare Coin Retirement book, but that’s not the whole story. The foreign gold coin line, for example, is a single line that says: Foreign Gold Coins (various, 100 coins, each coin at $85.
Back in 1998 I also liked silver dollars, though none that I picked werre MS-65 coins. (They are good shots, but simply cost too much in a portfolio that was limited to $10,000). But let’s take a look at a few of them and see what the results are today:
The results are interesting. The 1881-S Morgan dollar has the lowest gain in the period and coins chosen. But even for an MS-63 (which is common for this coin), it does well overall. Take the scarce dates (1879-CC and 1885-CC, for example) and they do well in circulated condition, too.
There were a dozen common-date $5 gold coins minted prior to 1909 which I listed at $144 on acquisition in 1997 as MS-60 coins. Today, bid is at over $420 a coin, a compounded gain of more than 8.5 percent annually.
When I worked as an assistant editor of Numismatic News almost 40 years ago, we constantly took surveys of readers to see why they collected coins, what attracted them to the field, and what we could do to pique their interest. This was also true when I was on the American Numismatic Association board of governors, during my service on the Citizens Commemorative Coin Advisory Committee and in other capacities.
What my colleagues and I found in exhaustive studies of the psychology of collecting is that people collect coins for many different reasons.
The surveys found that people collect because they are fascinated with history, they love the brilliance of the design, they have an underlying fascination for the politics that created the coinage, they are gratified by the commemorative nature of what the mints produce and they like the ability to show off their knowledge about these things to their friends, neighbors and fellow collectors.
Then each of the groups that I was a part of that was making the inquiry asked the follow-up question: what do you read in the newspaper or periodical first? I always hoped that it would be the “Under the Glass” column that I started writing for a small monthly magazine in 1965, and which still runs in Numismatic News.
No such luck. The answer was always the same: the price guide that the periodical had showing its readers the state of the market. The people surveyed wanted to know what their coins were worth. Here are some of the statistics that form the basis of my underlying thoughts. It summarizes my experience covering the nascent coin market and then the growth industry that it became.
It also summarizes the experiences that were polled when I was on the board of the ANA, as the lawyer (general counsel) to the Professional Numismatists Guild, as a founding board member (and counsel) to the Industry Council for Tangible Assets (since 1983), as a member of the Citizens Commemorative Coin Advisory Committee, and as a lawyer in New York City with a significant practice dependent on offering of advice that draws on this.
It’s not the questions or answers from the surveys, but the impressions and trends that are the bulwark of my philosophy of collecting and investing. Each aspect of this counts in taking either a contrarian view, or one which you think will lead the herd.
So here is a summary of key analytical data and points from all the interchange with collecting investors:
- The average collector spends $2,500 annually maintaining and expanding his collection.
- Prior to 1999, and the introduction of the state quarter program, most collectors (95 percent) were men.
- Prior to the state quarter program, there were about 3 million coin collectors in the United States and perhaps 200,000 serious coin collectors in the U.S – a thin market uder the best of ciurcumstances.
- Post 1999 and the introduction of the state quarter program, the U.S. Mint says that between 120 and 150 million people collect coins (most of them collecting state quarters)
- Today there are probably more than 300,000 serious collector-investors, as reported in a remarkable article that escaped general notice: Donald O. Case, “Serial Collecting as Leisure, and Coin Collecting in Particular,” found in Library Trends magazine, vol. 57 No. 4 (Spring 2009).
Then look at the demographics of the hobby. Though they change a bit from year to year, at the same time many of the categories are remarkably similar.
- Collects popular series such as silver dollars (59 percent)
- Collects other silver coins (50 percent)
- Collects gold coins (25 percent)
- Collects modern U.S. 1964-date (45 percent)
- Collects other things: Antiques (28 percent), old books (12 percent), Toys (11 percent); Autographs (5 percent).
So, to see where I believe the coin market is going in the next dozen years, I commend my new book to you. Not just for gold and silver, but for copper, nickel and minor coinage, and platinum as well. There’s a full chapter on platinum and a number of coins on the recommended list. Here’s a teaser and an extract as well.
Taking all platinum Eagles 1997-2008 and sorting them yields a surprise: virtually the entire series is scarce. The largest mintage of any coin is around 133,000, but low mintage is around 6,310 pieces. A full 25 coins are under 20,000 mintage and even the tenth ounce, which has a high metal value, is a low mintage coin. Here they are with the mintages under 35,000 ranked in order.
One drawback: the high price and great track record of platinum as a metal makes collecting these costly, but also an investment not only in numismatic rarity, but also in platinum, in drawing a line at 35,000 mintage, these are attractive coins for any rare coin retirement portfolio.
 | By February 07, 2011 |
This is the year of gold, silver, platinum and other precious metals, as gold nears $1,400 an ounce, silver $25 and platinum $1,800. It is a comeback year for the Dow Jones Industrial Average (with the best September since 1939) is back over 11,000. Without even saying it, those who have discretionary income available to take a plunge in the coin market are jumping back in.
It remains a good opportunity for the coin market, as my new book, Rare Coin Investing: An Affordable Way to Build Your Portfolio (Krause, 2010, $24.99) clearly shows. Timing is everything; the book came out on Oct. 2, and is already popular on Amazon.com as a coin investment guide as well as investments overall.
 Rare Coin Investing Want to broaden your retirement portfolio beyond stocks and bonds? Get your copy today! |
The 1982 edition of the Red Book, A Guide Book of United States Coins by R.S. Yeoman, had a guest chapter that I wrote entitled “Planning Your Rare Coin Retirement,” which melded together a report by the Boston Federal Reserve Board with a survey done at the behest of Salomon Brothers, then a major Wall Street powerhouse firm.
The Fed and Salomon looked at the stock and bond market and the tangible asset market as well, and came to the concusion that stocks were a good buy in 1978. (Put differently, coins were outperforming stocks). They were, and it was.
Several years later, Bonus Books contracted with me to write a book by the same title – I always loved the title more than the book – and in 1997, Planning Your Rare Coin Retirement came out to a giant yawn. Too bad, because that book had dozens of recommendations, many model portfolios, and (if not a theory), then the real thing in terms of advice.
Unlike a number of other books that offer glistening generalities of portfolio stuffers, or great rarities that simply cannot be acquired by the many, the theory of Planning Your Rare Coin Retirement was simple: a $10,000 portfolio with a number of selected components that were waiting to be acquired.
So that there was no misunderstanding, I price sampled Numismatic News and Coins magazine, and perhaps a few other sources, to see what their selling prices were. There were no “buy gold bullion coins for $200 an ounce” when the market was $335 an ounce. Nothing was fake. Everything was transparent and above board.
Although it was modeled after the Salomon Brothers portfolio that Stack’s had assembled for the Wall Street firm, it had fewer preconceived notions. Where Stack’s included no gold coins at all because Salomon wouldn’t let them – they were afraid it would skew the results – my portfolios embraced all metals, gold and silver alike.
In keeping with the underlying decision to not emphasize scarce and rare coins that were priced out of range insofar as the average collector was concerned, at least one of the portfolios listed more than 100 gold coins whose average cost in 1997 was $85 a coin (more or less). (That model portfolio, which had dozens of modern gold coins) cost under the $10,000 mark (about $9,400).
Want an estimate of what that portfolio is worth this week? That $9,000 investment of about 100 coins was selling for about $30,000 (which assumes a general markup on inventory of 25 percent over the spot price, and then 15 percent for profit and overhead). Thud, in this scenario, a new Queen Elizabeth sovereign has a retail price of $543, a 20 Franc rooster is a $435 coin, an old sovereign is about $544, and an Austrian ducat is about $250.
The original book is now out of print (it cost $13.95 when it first came out); on Oct. 10, Amazon.com had a used copy listed for sale for $40.81.
The new volume that Krause published includes the original recommendations, a follow-up (“How’d we do?”) and a profits calculation.
My dear friend of more than 40 years, Donald Kagin, saw the manuscript and some of the charts (lots of bling: color everywhere) and immediately asked for copies for some of his customers – and then he asked whether the results since the manuscript was finished (earlier this year) showed a different result.
Quickly, I did some calculations, and saw that even with the Dow taking off, rare coins had performed so well over the last cycle that their rate of return was astonishing – justifying the position of the Federal Reserve Bank of Boston publishing the Salomon Brothers data in 1978, and the use that others gave.
The gold coins run from Australia to Yugoslavia, with a lot in-between – some are well circulated, others strictly proof condition. Most are lightweight; Surely the increase in the price of gold is one reason why these coins have shot up in value. But so is the relatively light mintage that each has.
There are a total of 226 line items on the spreadsheet that I keep for the Rare Coin Retirement book, but that’s not the whole story. The foreign gold coin line, for example, is a single line that says: Foreign Gold Coins (various, 100 coins, each coin at $85.
Back in 1998 I also liked silver dollars, though none that I picked werre MS-65 coins. (They are good shots, but simply cost too much in a portfolio that was limited to $10,000). But let’s take a look at a few of them and see what the results are today:
The results are interesting. The 1881-S Morgan dollar has the lowest gain in the period and coins chosen. But even for an MS-63 (which is common for this coin), it does well overall. Take the scarce dates (1879-CC and 1885-CC, for example) and they do well in circulated condition, too.
There were a dozen common-date $5 gold coins minted prior to 1909 which I listed at $144 on acquisition in 1997 as MS-60 coins. Today, bid is at over $420 a coin, a compounded gain of more than 8.5 percent annually.
When I worked as an assistant editor of Numismatic News almost 40 years ago, we constantly took surveys of readers to see why they collected coins, what attracted them to the field, and what we could do to pique their interest. This was also true when I was on the American Numismatic Association board of governors, during my service on the Citizens Commemorative Coin Advisory Committee and in other capacities.
What my colleagues and I found in exhaustive studies of the psychology of collecting is that people collect coins for many different reasons.
The surveys found that people collect because they are fascinated with history, they love the brilliance of the design, they have an underlying fascination for the politics that created the coinage, they are gratified by the commemorative nature of what the mints produce and they like the ability to show off their knowledge about these things to their friends, neighbors and fellow collectors.
Then each of the groups that I was a part of that was making the inquiry asked the follow-up question: what do you read in the newspaper or periodical first? I always hoped that it would be the “Under the Glass” column that I started writing for a small monthly magazine in 1965, and which still runs in Numismatic News.
No such luck. The answer was always the same: the price guide that the periodical had showing its readers the state of the market. The people surveyed wanted to know what their coins were worth. Here are some of the statistics that form the basis of my underlying thoughts. It summarizes my experience covering the nascent coin market and then the growth industry that it became.
It also summarizes the experiences that were polled when I was on the board of the ANA, as the lawyer (general counsel) to the Professional Numismatists Guild, as a founding board member (and counsel) to the Industry Council for Tangible Assets (since 1983), as a member of the Citizens Commemorative Coin Advisory Committee, and as a lawyer in New York City with a significant practice dependent on offering of advice that draws on this.
It’s not the questions or answers from the surveys, but the impressions and trends that are the bulwark of my philosophy of collecting and investing. Each aspect of this counts in taking either a contrarian view, or one which you think will lead the herd.
So here is a summary of key analytical data and points from all the interchange with collecting investors:
- The average collector spends $2,500 annually maintaining and expanding his collection.
- Prior to 1999, and the introduction of the state quarter program, most collectors (95 percent) were men.
- Prior to the state quarter program, there were about 3 million coin collectors in the United States and perhaps 200,000 serious coin collectors in the U.S – a thin market uder the best of ciurcumstances.
- Post 1999 and the introduction of the state quarter program, the U.S. Mint says that between 120 and 150 million people collect coins (most of them collecting state quarters)
- Today there are probably more than 300,000 serious collector-investors, as reported in a remarkable article that escaped general notice: Donald O. Case, “Serial Collecting as Leisure, and Coin Collecting in Particular,” found in Library Trends magazine, vol. 57 No. 4 (Spring 2009).
Then look at the demographics of the hobby. Though they change a bit from year to year, at the same time many of the categories are remarkably similar.
- Collects popular series such as silver dollars (59 percent)
- Collects other silver coins (50 percent)
- Collects gold coins (25 percent)
- Collects modern U.S. 1964-date (45 percent)
- Collects other things: Antiques (28 percent), old books (12 percent), Toys (11 percent); Autographs (5 percent).
So, to see where I believe the coin market is going in the next dozen years, I commend my new book to you. Not just for gold and silver, but for copper, nickel and minor coinage, and platinum as well. There’s a full chapter on platinum and a number of coins on the recommended list. Here’s a teaser and an extract as well.
Taking all platinum Eagles 1997-2008 and sorting them yields a surprise: virtually the entire series is scarce. The largest mintage of any coin is around 133,000, but low mintage is around 6,310 pieces. A full 25 coins are under 20,000 mintage and even the tenth ounce, which has a high metal value, is a low mintage coin. Here they are with the mintages under 35,000 ranked in order.
One drawback: the high price and great track record of platinum as a metal makes collecting these costly, but also an investment not only in numismatic rarity, but also in platinum, in drawing a line at 35,000 mintage, these are attractive coins for any rare coin retirement portfolio.
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