For the past several weeks, our longtime columnist and one of our
Coin Values analysts, Gerald Tebben, has been providing a refreshing
perspective on coin investing in his blog at www.coinworld.com.
In the series, he applies many of the basic tenets of successful
stock investment to the rare coin market. One of the key secrets to
successful stock and coin investment is to do your research up front,
buy something great, and hold onto it. This strategy has proven
financially successful for generations of collectors.
Tebben cites a classic example of this. In 1950 Louis E. Eliasberg
Sr., was the underbidder for the unique 1873-CC Seated Liberty,
Without Arrows dime at auction. He bid the coin up to $3,625 and was
bested by dealer James Kelly’s bid of $3,650.
Sore from the loss, Eliasberg paid $4,000 for the coin several
months later, and it stayed in the family for the next two generations.
When it returned to the auction block in 1996 as part of Bowers and
Merena’s auction of selections from the Eliasberg collection, it
brought $550,000. That number, while robust (especially considering
that it was nearly 20 years ago), was below the bidding limit set by
the winning bidder, Waldo E. “Pat” Bolen Jr., who told a reporter
after the sale that he was prepared to pay a million dollars for it.
The $550,000 that the unique coin brought was an increase of 13,750
percent over Eliasberg’s cost. As Tebben points out, the same $4,000
investment in 1950 placed in a traditional 3 percent passbook savings
account would have been worth $15,580 by 1996 and the same amount
invested in stocks in 1950 using the Dow Jones Industrial Average
would be worth $116,000 by May 22, 1996.
But the story doesn’t end there, as the dime brought $632,500 at a
1999 auction, and at a 2004 auction it nearly reached the $1 million
level when it sold for $891,250.
In 2012 it sold for $1,840,000 at the Stack’s Bowers Galleries
American Numismatic Association World’s Fair of Money auction.
Now, this is an extreme example, but compare a price guide from 2004
with a current one and there are few declines to be found. Even “bread
and butter” collector coins like a 1909-S Lincoln, V.D.B. cent in
collector grades like Fine show steady and reliable increases over time.
Tebben points out that, as with nearly every investment principle,
there are exceptions, like 1950-D Jefferson 5-cent pieces, which are
worth less today than they were 50 years ago. However, nice coins,
especially scarce and rare ones, tend to go up in value over time.
Buying something of quality and holding onto it over time also
limits transaction costs involved with buying and selling, which are
larger for collectible coins than they are for stocks.
This strategy requires discipline at two points: first, when
purchasing a coin and second, fighting the urge to sell quickly, when
the real money may be made with a holding period of decades, rather