Tips For Successful Rare Coin Investing.

When you say conditional rarity I thought of a coin that is rare in a high grade. I can go to my coin shop right now and choose from probably 30 different PL70 ASEs. I dont think they were talking about modern coins when referring to conditional rarity.

Advice appropriate to collecting Classics isn't necessarily appropriate to collecting Moderns. Moderns do not have the fullness of time to determine whether they will retail ongoing collecting "legs," regardless of scarcity (and "scarcity" for Moderns is a relative term by comparison to typical Classic mintages).

I disagree with shying away from Conditional Rarities. The people who can afford them are recession-proof, and will be buying during a down market. And as a for instance: An issue which becomes a ridiculous Condition Rarity at MS65 is probably going to be an attractive buy at 64, because of all those who'd like a 65 but can't afford one.

Successful coin investing is not about making money. You can't assume or even hope that investing in coins will do you as well as other investment vehicles.

It won't.

So what you do is, maximize the liquidity of what you're holding. Invest in stuff with either broad demand or specialized niche demand aided by rarity. Buy things people buy. An AU 1909-S VDB is a far better investment than a Gem 1875 3CN with a mintage half that of the Lincoln and a similar street value.

It would figure, you'd be the next poster by.

Most hobbies are poor choices for an investment. Luckily coins have sort of stayed popular for a long, long time. But interest in coins as an investment is just not smart. With the way things are changing monitarily on Earth, Coins too may vanish, become a lost hobby, etc. For investing in coins and asking others is sort of like asking which stocks to buy, what car to buy or what person to marry.

Supply and demand. Many coins are known by few examples but aren't in demand and therefore aren't as expensive as other coins known by many examples in greater demand. This happens in ancient coins fairly regularly: it doesn't cost much to own a unique coin, but it may be unique by some set of attributes that others don't deem significant enough to pay a premium.

Here are two examples from my collection. This coin is not terribly expensive (mid-four-figures) from a city-state in ancient Greece which isn't well known. It is the finest of only four known, from the first pair of dies used (minted ca 200 BC and truly prooflike in condition).



This coin is one of about 80 known, rare but not terribly so, but very historically interesting (many consider it the #1 ancient coin: it was minted by Brutus to commemorate his assassination of Julius Caesar, on the "EIDibus MARtiis" - Ides of March - 44 BC). It costs well into the six-figures because there are many more than 80 people who want one and can afford the price tag:



My approach is to find historical coins in broad demand in solid condition. They don't have to be the finest known but should be attractive, aesthetically pleasing, and of a high enough grade to not need to upgrade to enjoy the coin.

With any investment there are always four factors to consider and understand before it is purchased
1. Rarity
2. Desirability
3. Condition
4. Expected Positive Return

As numismatists we all have a basic understanding of Rarity and Condition. As collectors many of us get a bit fuzzy on the other two.

As Tom Goodheart has stated his collection is of Very rare Charles I silver coins. They are in high end circulated to moderate uncirculated conditions. So why do these coins not demand five and six figures like the aforementioned 1909 S VDB? As Tom mentioned they have low desirability. There are not millions of collectors old and young rich and poor seeking an example of a high end Charles I shilling or crown. So unlike the relatively young and comparatively common 1909 S VDB cent silver coins of Charles I do not have a high Expected Positive Return Value, so they are not a good investment.


So, does this mean that Condition rarity is where it is at? Should we all be buying rolls, mint sets, and proof sets to break up and send to TPG hoping for the elusive 70? Well, that is speculation and that is as different from investing as American Football is to Cricket. So do we buy graded MS 70 modern American coins, are they a good investment?

For this discussion I am calling American Moderns as stuck post 1964 and in a series intended for circulation. In these parameters there are no true rarities. Yes there are a number of varieties, die marriages, mint mark punches and errors that are considered rare. So does a non rare modern coin in a holder marked in a rare grade a good investment? It certainly will fail at rarity as it is only rare in this condition. There is a relatively small market for high priced high graded moderns. Condition is a win. So where are we on Expected Positive Return? There are not enough to give as a good record yet, but from what I have seen they do not look like a good investment.

Historically collectables are not a good investment. There are times when prices run up but they always settle back down, and many times the chic this week collectable is worthless in a year. If you collect coins do it for the love, if you deal in coins understand what and why you are doing it for, if you must invest in something hire a financial advisor and listen to them.

Coin ‘investing' is far more speculation than investment, and if you do not understand the difference you should not be attempting either.

But what do I know?