The Ultimate Investor’s Guide to Numismatics… Your Questions Answered

The field of numismatics is vast. Even the most astute gold and silver bugs often feel overwhelmed when it comes to numismatics. A seemingly endless variety of coins exists. Thousands of countries, territories, empires, states, and other entities have issued coins in a wide range of sizes, denominations, and metals. That’s why we're doing an extensive two-part series, in which we will attempt to tackle some of the more important terms and strategies.

The next article in this series, which will be released on Thursday, will feature an exclusive interview with a numismatic insider—someone who has been in the coin industry for decades and has some of the hottest insights about this market. So, if you're solely a gold investor, a numismatic newbie, or even a veteran, be sure to read today’s and Thursday’s articles.

Worldwide, the field of numismatics is distinguished into several different groups. From an American standpoint, the landscape is divided into six basic categories:

1. Ancient and Medieval: These are coins struck before the renaissance. The most popular items in this category are Greek and Roman pieces.
2. Vintage World: Coins struck outside the United States between roughly 1400 and 1950. The most avidly-collected countries are Canada, UK, France, Germany, Australia, and China.
3. Modern World: Foreign non-U.S. coins made since 1950. Pieces struck in Australia, China, and Canada are among the most popular.
4. American Colonial: Coins made in the U.S. and its colonies before 1792 (when the U.S. Mint was established)
5. American Federal: Coins struck by the U.S. Mint since 1792 but before 1965. The vast majority of rare U.S. coins fall into this category.
6. American Modern: Coins struck by the U.S. Mint since 1965. This includes modern circulating coins and bullion pieces like gold and silver Eagles.

All six categories enjoy a deep and global audience. While American coins are most popular in the U.S., they have a significant following throughout the world. Germany, for example, is one of the largest markets for American commemorative coins. Similarly, world coins are not just collected in their countries of origin. The most popular series (like British Sovereigns, Chinese Pandas, etc.) have intense demand across the globe.

While it is vast, one of the reasons numismatics is so popular among investors is that it allows individuals to secure their wealth with the stability of gold and silver, while also profiting from appreciation as these coins gain value over time among collectors. Unlike bullion, which can be produced or minted on a whim, you can’t go back in history and remint a gold $20 Saint-Gaudens or silver Morgan Dollar. Bullion is a great investment in precious metals—but it lacks the finiteness and allure attached to numismatic coins.

The Numismatic Marketplace: Efficient, Transparent, and Liquid

Not only is the numismatic marketplace a massive one, but it is a remarkably efficient one, too. With that efficiency comes excellent liquidity and tight spreads. In the fine art market, dealers are often reluctant to “stock” pieces of artwork in their inventories. If they don’t have a buyer lined up, they tend to shy away from making speculative offers on paintings and sculptures.

Of course, even with narrow wholesale spreads on coins, retailers still can tack on significant markups. It’s imperative that collectors and investors work with a dealer who operates on fair margins. When buying coins for your portfolio, your dealer should be able to provide information supporting the price of each coin. This might include historical and current price guide data, transparency as to the premium over melt, and/or Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC) population data. Dealers who operate on fair margins often supply this information. Be wary of coins that are priced “in a vacuum” without any supporting data.

Furthermore, numismatics is one of the most transparent industries, because you can find any information you need online—including coin populations, information about specific coins, and so forth. As a result of greater profit potential, portfolio stability, and transparency in the industry, the market is largely driven by collectors, who enjoy the security of this investment.

Major Numismatic Terms

There are countless numismatic terms, acronyms, and buzzwords out there, but there are a few items that are most important for beginners. We have created a quick and convenient reference guide for you to use when you are ready to get started with numismatic coins!

Types of Collections

$5 Gold Indian Half Eagle

Most numismatists target a specific category or follow a certain theme. A common method is to focus on a series (like $2.50 Indians or Silver Peace Dollars) and acquire one of every date and mintmark combination. This technique is especially popular with easy-to-complete sets that do not have many “key” dates. However, some series have major rarities that can be prohibitively expensive. Numismatists can sidestep these ultra-rare issues by collecting by year (i.e., ignoring mintmarks) or decade.

Another popular technique is to collect by type rather than date. That is, one would buy one example of each major design. A type set of Silver Dollars, for example, would consist of one Flowing Hair, Bust, Seated, Trade, Morgan, and Peace Dollar. Collectors enjoy this strategy since it reduces the number of coins needed to reach the “finish line.” A complete type set of Silver Dollars costs less than $10,000—whereas a complete date set of Silver Dollars would cost millions!

How Should Coins Be Stored?

If your coins are certified by PCGS or NGC, they are protected against the elements. Both companies use inert sonically-sealed holders that prevent any kind of environmental deterioration. However, collectors and investors should still think carefully about security options.

We strongly suggest keeping your coins in a bank safe deposit box or at a trusted depository. The cost of safe, secure storage is minimal compared to the downside of potential theft. In choosing a depository, insist upon a facility that carries its own insurance, carries important industry certifications, and offers clients regularly scheduled activity statements. Depositories should allow to inspect and/or withdraw your material at any time.

Can You Acquire Specific Coins?

Yes. We can source specific coins from our network of suppliers and trading partners. As mentioned previously, the coin market operates in an efficient manner. We are able to canvass the marketplace and locate hard-to-find and specific items. Even if a certain piece is not available today, we are constantly reviewing other dealers’ inventories, attending conventions, and being offered collections for sale. We welcome any and all specific requests and have been successful in fulfilling these “wish lists” over the years.

When and How Do I Sell My Coins?

If coins are bought for future resale, we suggest a long-term hold strategy. The best returns are often realized by those who hold onto coins for a minimum of 3 to 5 years. Our professionals can help evaluate your holdings and determine the best way to sell your coins. We make the selling process quick, efficient, and effortless.

Which Coins Perform Best?

We’ve observed the numismatic marketplace closely for decades. In reviewing numismatic “success stories” over the years, we’ve noticed two common threads. The best-performing coins have an excellent combination of rarity and historical significance. Coins with an intriguing story and fascinating background are always in demand. Both beginning and advanced collectors and investors are drawn to coins with an alluring historical connection.

However, what makes a coin truly “take off” in value is its rarity. Extremely common coins are less likely to move in price—even if they have a great story—as supply will almost always cover demand. Coins with low populations often vanish from the marketplace and appreciate dramatically in value. These coins have the most potential.

In many cases, one can acquire rarer dates for a relatively modest premium. These coins offer the absolute best value. Rather than buy the most common dates, you can own coins that are many times rarer for just a 10% to 30% premium. In hot markets, these rarer issues often leave the common dates in the dust.

The scarce dates are the first to vanish from the marketplace and appreciate in value. As the expression goes, a rising tide will float all boats. Both common and rare dates will see a jump in price during an active market. However, the increases will not be equal. The scarcer a coin is, the more likely it is to outperform. We’ve seen this phenomenon countless times in the marketplace—and the savviest coin buyers make sure to buy rare dates with this kind of superior upside.

Do Counterfeits Exist?

For as long as coins have been used as currency, counterfeiting has existed, too. Counterfeits can be divided into two major categories: contemporary and modern. While the term may be slightly misleading, contemporary counterfeits are older fakes that were made when the coin originally circulated. They mimicked the original coin so that they could be passed as money. Modern counterfeits, on the other hand, were produced more recently to deceive collectors.

If you are investing in numismatics, you should insist on PCGS and NGC certified material. One of the many benefits of third-party grading is that each coin is guaranteed authentic. Both grading services unconditionally guarantee that the coins they certify are 100% genuine. The experts at PCGS and NGC perform two important functions: they grade coins and guarantee their authenticity. Not only are they world-leading authorities on counterfeit detection, but they also possess sophisticated testing equipment. At ASI, the coins we sell undergo an extensive selection process and are chosen by our leading coin experts. Furthermore, the numismatic coins we select are always graded and certified by PCGS or NGC, so you can be assured of their quality and legitimacy.

Getting Started with Numismatics

$20 Saint-Gaudens Double Eagle

As you can see, the market for numismatics is vast and presents a great opportunity for investors looking for an asset class that has considerable growth potential. Furthermore, you don’t have to make a significant investment to get started in numismatics. Numismatic coins vary widely in price, so there’s something available in almost anyone’s budget!

To learn more about numismatic coin investing or to start your own portfolio, call us at 800-831-0007 or email us. Also, be sure to keep an eye out for Thursday’s newsletter, where we interview our industry expert about what to look for when purchasing numismatic coins.

To learn even more about numismatic coins and to receive exclusive offers on these coins, sign up for our Numismatic Navigator newsletter here.