Coins: a rewarding investment where returns are personal

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Published : 01/15/14
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Since 2005 Coin World has maintained an index to track the market performance of the top of the rare coin market. In 2013 our Classic U.S. Rarities Key-Date Investment Index showed a 2.5 percent gain.

The index is a well-diversified group of 82 rare coins in high grades representing key dates across many different types.

For comparison, Coin World’s index showed a 0.5 percent loss in 2012, a 4.98 percent gain in 2011 and a 10.3 percent gain in 2010.

How does this compare with other investments? In 2013, the Wall Street Journal’s investment scoreboard showed stocks and mutual funds at the top. In 2013 the Dow Jones Industrial Average gained 29.65 percent while the Nasdaq Composite Index soared 40.12. Bonds fared worse, with all five categories showing negative returns in 2013.

Bank instruments stayed stable with an average money market account providing a dismal return of .11 percent. Gold fell 28.65 percent and silver tumbled 36.63 percent.

Looking at these figures makes the coin index’s 2.5 percent gain seem much more palatable. Plus, coins are more fun to own.

The coin market is a tiny fraction of the world’s investment market. To compare their performance with huge, international markets is a useful reference point, but of limited value. Coins have carrying costs of storage, and higher transaction costs of selling than stocks and bonds.

On the other hand, rare coins are much more pleasurable to own.

Rare coins in the last few years have more closely tracked the art market in terms of market results. The Mei Moses World All Art Index, a widely cited benchmark for charting the art market that looks at auction results, showed that the market for fine art declined 3.3 percent in 2012, and gained 2.2 percent through November 2013.

Unlike the broad art market, the U.S. coin market is largely domestic, although the number of international buyers does seem to be increasing.

The coin market is closer to art and real estate than to stocks and bonds, as no two coins are exactly alike. This fact makes tracking the rare coin market tough, but also makes coin collecting so rewarding.

Over time the best coin investments in terms of monetary return are typically realized by collectors who take the time to learn numismatics; not those who are just chasing returns. ■

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