Five sure-fire ways to make money in coins: Buy and hold

After introducing the topic in my last post, here’s my first sure-fire way to make money in coins.

Buy and hold. This classic stock advice applies to coins, too.  Pick a good coin and hold on to it.  

While there are notable exceptions (1950-D nickels, for example, are worth less now than they were 50 years ago), coins in the long run tend to go up in value, sometimes spectacularly.

In 1950 famed collector Louis E. Eliasberg Sr. spent $4,000 for the unique 1873-CC half dime, the capstone of his collection. In May 1996, the coin sold for $550,000.

If Eliasberg had placed the money in a 3 percent passbook savings account, his estate would have amassed $15,580 by 1996.  The same amount invested in stocks in 1950 (using the Dow Jones Industrial Average as a proxy) would have grown to $116,000 by May 22, 1996.

While that coin outshines just about everything else, run-of-the-mill collector coins tend to go up year after year, too If you compare a Red Book from 2004 with this year’s, you’ll find few negatives. The farther back you go, the larger and more numerous the positives.

In 1976, a 1909-S VDB cent cataloged for $115 in Good condition. Today it catalogs for $750.

Keep in mind, though, that you’re paying retail prices for coins (even if the seller claims he’s selling at wholesale) and that you’ll have to hold on to the coin long enough to cover the spread (figure 30 percent) between wholesale and retail before turning a profit.

Next: Buy blue chips