Low Pop, older U.S. Coins that are still affordable in lower grades
Tradernik
Posts: 111 ✭✭
As always, many thanks to those of you who are corresponding with me via PM, discussing coins in general and Buy/Sell items.
After a few months trying to understand grading (seeing too many coins in identical holders that are anything but identical) and reading too many threads here about gradeflation and supposedly declining market for many types, a noob's head can spin. Watching GC auctions over the past few weeks has me convinced that rumors of the demise of coin collecting are greatly exaggerated, at least for some coins.
It has been suggested that for someone like me, one way to mitigate risk is to buy coins that are as old and rare as I can afford in lower grades.
So - the idea in this strategy is that grade can be sacrificed a little for rarity and age. Can anyone chime in with their Top 3 coins that fit this profile? When I say old I mean... what, say 1875 or earlier? And when I say affordable for me, I mean <$300. When I say Low Pop, I don't really know what I mean. I don't know enough to know. This strat was suggested to me by someone known to many of you. It's slightly hard to believe that a noob like me who knows (comparatively) little about coins could even get him to take my call. Just confirms to me that there are people in this business who are interested in sharing their knowledge.
Comments
I think this depends on what you are trying to accomplish.
Defining what do you mean by mitigating risk will help. For example, do you mean you want to sell the coins for as much as you paid for them within a certain time period?
I would start with a collecting focus and interest. Low pop, older US coins under $300 sounds somewhat random to me and I'm not sure that strategy will actually mitigate risk for you depending on how you define it. At the same time, for <$300, I'm not really sure what older US coin is available, unless you mean varieties or errors.
Bust dimes by die marriage/variety. They are fun to collect, a pretty short series and only a few higher priced coins. Buy the book first
Bust dime book
If it's old and rare, but it does not cost too much, then you are probably looking at something that is not collected by a lot of people (yet). That makes me think of VF to AU 3-cent pieces and shield nickels right off the bat, and perhaps Fine to AU Seated half dimes if you can live without a few of the expensive ones.
Sure, I understand. By 'mitigating risk' I mean the risk that my investment will be worth less 5 or 10 years from now than when I acquired it.
I came to this after receiving a few coins as part of a small inheritance. In researching them, I got bitten by the bug.
I talked to a few people here about coins as an investment because I thought 'maybe I can invest here as opposed to just plowing all of it into the stock markets'. I've had varying opinions but a lot of guys have said basically what you said - start if you love it and then worry about $$.
So to answer your question, what I'm trying to accomplish is to buy some beautiful old coins that I can enjoy but that won't be worth half of what I paid for them in 5 or 10 years (and ideally will have appreciated). I know there are lots of collectors who are in this position. If I buy a coin for $100 and it's worth $50 down the road, no big deal. If I buy one for $1000 and it's worth $500, I will feel bad about it.
By the way, I'm not sure the strat will mitigate risk either. As I said it was suggested to me by a very knowledgeable person who had no $$ interest in the advice he was giving me because I will never be a client of his.
Thanks, I'll check it out soon!
Funny you should say that - it echoes what this gentleman said to me. He told me to focus on what collectors would want. I guess I was hoping that for $300 (I can actually even afford a bit more per coin) I could get into some lower grades on coins that collectors might want.
Thanks for the suggestion on shield nickels and 3 cent pieces, I'll have a look.
Here's a little further thinking on the series I mentioned above.
Shield nickel varieties might be a good area for you. Just buy coins dated 1866-1876, 1882-1883 and focus on cherrypicking scarce varieties. This series is chock full of crazy re-punched dates and other wacky varieties. If you buy VF-AU coins, you don't even need to get them slabbed. Just learn how to recognize a coin that hasn't been cleaned, and master basic grading, and you're good to go. There is a nice webiste devoted to shield nickel varieties if you do a Google search.
Three cent pieces from 1851 to 1862 (silver) and 1865-1876 (nickel) are affordable, but to me, the nickel 3-cent pieces are less likely to become popular with collectors in the future.
Half dimes from 1829 to 1873-s are collectible in Fine to AU58, and there are many die varieties to hunt down, but like the 3-cent silvers, they're SMALL. Several dates will exceed $300, such as 1846, 1853-O No Arrows, and 1864, 1865, 1866, 1867 business strikes. You don't absolutely have to buy them. You can substitute lower grade proofs for the later P-mints and save a bundle.
Of the three series above, I collect Capped Bust and Seated half dimes, and I have a complete date set minus the 1870-s.
This is exactly the type of lead I was looking for. Thanks. The shield nickel approach is great because it seems fairly narrow.
Because of my work situation, I have time to spend researching this stuff. I'll start looking at the areas you suggested. No matter if it ends up being the right fit for me, it'll be fun looking into it.
It's my bad luck that the coins that appeal to me the most look like this:
2 cent and 3 cent nickels looks to fit your bill.
Another vote for 3 cent nickels. Thanks.
If you really like Saints, I recommend saving your money and buy a Saint. For example, instead of spending $300 per coin that you feel are a compromise, you can save the money for 4-5 coins and buy a St. Gaudens in PCGS/NGC MS64.
If you like eye appealing coins, the Box of 20 approach can also be considered an option in addition to focusing a series and collecting by date/MM. I like luster and toning. There's a Norse medal and a Illinois commem that I like right now just over $300. Also, recently a Hawaiian quarter and seated half dime just sold that I like. Here's the seated half dime which just sold for $375:
Coins should not be your primary investment, because most collectors lose money (especially when accounting for opportunity cost and inflation).
The stock market performs much better, historically.
Coins are consumption - you buy them if you enjoy it and can afford it.
The hope is that you will not lose too high a percentage over time, relative to other forms of consumption (such as, say, gambling in Las Vegas).
I would not advise investing more than 10% of your assets in coins.
yosclimber is unfortunately likely more correct than not. That said, if your primary goal is to minimize loss then gold is probably the way to go. Right now one can purchase old gold coins as you have defined the date for not a lot more than their intrinsic value based on bullion price even though they are of high enough quality to qualify as collector coins. Should gold prices return to their historic high (close to $2,000 an ounce) you will definitely come out ahead and of course there are those who speculate gold could even go higher. You in effect have the potential of two different markets working for you, the collector market and the commodity market.
Yes, there is the risk of both markets going south, but if you get the right collector coins then that will soften the drop in the same way that the rise in the price of gold from its historic lows has made it possible to pick up old gold collector coins for not a lot over their current bullion value.
I have been a serious collector (willing to pay a lot more than face value for a coin) since the mid 1960s. It has been my experience that coins in the circulated grades are bears to sell at good prices UNLESS there is a general perception that they are KEY DATES. The coins that are perceived as “common,” even if they are not, languish in the market.
You have to look at it this way. Very few collectors set out to assemble a complete set of something like Seated Dimes or Liberty $2.50 gold pieces. There are a lot of “sleeper” date and mint mark combinations in those sets, but most collectors don’t care about them. The short answer is, I don’t see these pieces as “investment items.” I see them as money traps if you are buying them as only a way to make money. If you enjoy them as a collector, that is another issue.
I agree with the others that coins are not a good investment. You buy them for fun.
I will cast another vote for coins - in general - not being a good investment. Especially in the areas you have mentioned. Coins are a hobby for most collectors, and - very true - a business for some. As a business, one must have both a knowledge of coins and business knowledge. Some make it, some don't. Some collections gain value, most do not. Enjoy the hobby, but invest in something else. Cheers, RickO
You know if you're open to different "paths" in "investing in coins someone will want", I'd seriously suggest you learn about Dan Carr and his modern catalog of coins issued. Mark my words, this stuff will (and much has) skyrocket in value. Learn the early work and the amazingly low mintages and That's what you buy when the price is right. And, ill tell you a secret, one of the most astute wealthy collectors of great repute here is presently doing exactly this!
I'll use this post to illustrate a central concept of "Numismatic Mathematics"-
Old+Rare+Low Grade+Inexpensive=Low Demand+Difficulty Selling
If that is the equation you are searching for, then go for it. If, however, you want to truly enjoy what you are doing then I would suggest you continue to learn and to attempt to prohibit your wallet from outspending your knowledge. There will always be cool coins to buy in our lifetimes, so there is no hurry to jump in with both feet.
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I am assuming, by the way your question is posed, is that you want old simply becausw it is part of the "old and rare" category. However, keep in mind that age does not determine value. As for the outlines you mention: the coin will most likely have a problem. US coin series before 1875 tend to be collected rather heavily, and rarities are generally going to be above your price range. If it is a problem coin, a very low grade, or you get a steal, you might get what you want.
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Yes, I've watched the markets outperform and since this little inheritance isn't enough to participate in the red-hot real estate market here, it's mainly the markets for me. I appreciate your honesty. You're echoing what others have said. It was never going to be close to 10% iof my investment portfolio but even 5% is too much if it's not a good risk/reward proposition.
A nice idea. Especially since the coins I'm attracted to are mostly the gold ones. I pray for $800 gold. I saw that Apmex was selling Saints at very close to spot and actually posted about it. It was suggested that not knowing which actual coin you're getting isn't optimal but maybe I should revisit the idea.
First off let me say that your coin purchases should never be made assuming you will be able to sell them at a profit, especially short term. If you have 20 or 30 or 40 years that may be a different story but even then you would probably never do as well as if the same amount were invested in a well balanced broad based index fund.
But, we all love coins, right?
I can't recommend three specific coins nor can I think of any specific coin I would suggest that would be priced under $300. However, what about classic US gold at <$300 over melt? Many older, lower pop, lower grade, lower denomination issues, $5 liberties in particular fall into that category. I think $5 liberty gold is one of the most overlooked, under appreciated and under valued series out there. Sure, there are plenty of rare coins in the series but since they were minted for 70 years in 7 different mints I think there are plenty of sleepers waiting to be found.
it's crackers to slip a rozzer the dropsy in snide
As others have said, don't go into this trying to make a profit.
Others have given good suggestions. That being said, I personally feel like 20 cent coins are pretty under appreciated. Granted they could stay this way forever or become even less appreciated than they are, no one knows. But especially the 1875 and 1876 Philadelphias in my opinion. Circulation mintage of 36,910 and 14,640 respectively. I was able to pick up PCGS VF25s in the price range you mention. (Granted one is a little bit overgraded, but beggars can't be choosers with the low pops these coins have)
Successful transactions with: wondercoin, Tetromibi, PerryHall, PlatinumDuck, JohnMaben/Pegasus Coin & Jewelry, CoinFlip, and coinlieutenant.
Bill and Rick, you guys have been very supportive and I appreciate it. The fact is my life is not set up in the one way (the only way, I guess) that can work - become a dealer. It's too late for that for me.
Numismatic Mathematics... got it. Right now I'm experiencing the 'I need to buy something' effect where I've been looking at all these nice coins and just want to buy some of them.
The consensus here is clear regarding investing. I can use what's been suggested as a guideline, though. I especially like the idea of gold coins, as I do feel that within my lifetime, I'll have a chance to dollar cost average a gold position and profit by it.
Yes, and I don't have 40 years personally. My heirs might benefit but that's not really the point.
On gold, as I mentioned I saw that the generic Saints are selling for a lot less than $300 over melt. So your idea is to pay up a bit more for coins that are 'higher-end' in terms of desirability, right? Up to i.e. $250 over melt? I'll take a good look at the $5 Liberty gold in the next few days. Thanks a lo for posting.
Thanks for the response and for sharing something you've been doing. I'll have a look this weekend. It really helps to have a narrow range of dates to look at.
Overall, gotta say thanks a to everyone for the input. Again, consensus is clear. You guys took it pretty easy on me and I appreciate it. Some good ideas for me to look into.
Receiving those two Buffs I posted about was a real kick. Only thing is... they're small! Looking at these internet pics, I wasn't prepared for how small they look in the holder. I need some bigger coins so my old-guy eyes can see them without reading glasses!
I know I'll enjoy these coins for the sake of them. Still happy I found this world.
Great, one more thing for me to look into. I'm at the computer waaaaay more than I should be over the past few months...
If you like big coins and not getting wiped out is a goal, consider common-date silver dollars. Eye appealing Morgans & Peace dollars can be had for small premiums. They're never going to skyrocket in value but the downside risk is mitigated by their silver content.
As others have said, don't view this is a profit-making opportunity. It's a hobby, and if you're lucky you might break even.
Having said that, the point of a hobby is to have fun. Only you can decide what would be fun to collect. Most series can be had inexpensively in low grades.
Personally, I am fascinated by shield nickel varieties. See my website!
http://www.shieldnickels.net
At first I equated "noob" in your 1st post with young, then I see it's too late in your life to become a dealer, then hold 5 - 10 years, then 5% of your assets if it's not a good risk/reward proposition, and even "I pray for $800 gold".
It is not clear in the opening post what your objective is. Is it to "make money"? What is your time horizon (5-10 yrs)? Were you a.) intending to invest $900 - $1,000, or b.) just pick one coin out of all the top 3 coin ideas <$300 that were offered, or c.) become a trader because the idea in this strategy is that grade can be sacrificed a little for rarity and age? I mean really, 10% of $300 or 50% of $1,000 is not much. Set your objective, then seek out advice if you need it.
I want to answer this because my OP was obviously not worded well... and I think I was shy about saying I have an investment bent.
I was praying for $800 gold before I got this inheritance just because I felt that if it got there, I would see it go back over $1500 from that level in my lifetime. I missed out on buying a lot of it around 2000. I'm 53 years old.
From your a, b, and c above, it's most like c but not a trader who needs to turn things over to generate income. I had this discussion with a well known figure in US coins and we talked about coins as an investment. His take was 'think like a collector and don't pay exorbitant amounts for recent coins. Acquire older coins and try not to buy the grade that's just after the huge jump in price'. He also has some interesting things to say about the current dislike for cleaning and the current grading scene.
I love the look and the history of these artifacts. I would like to own them and I thought that maybe if I did a lot of homework and picked carefully, I could buy items that might appreciate. Found these forums and realized that it's not at all easy. I know that if I buy a coin today for $1000 and it's worth $500 in 5 years, I'll be unhappy about it, so I want to try to avoid that if it's possible. My budget is whatever it needs to be. My coin buying is not fixed at 3 x $300, that was misleading in my OP. When I mentioned 3 coins, I just meant it like 'what are your top 3 prospects'.
In any case, like I said, there's a clear consensus and in fact I had contacted a few people here via PM before I ever posted and asked about this. The consensus was the same. The vast majority of knowledgeable pros here suggested that I should do it for the love of it and pick carefully, and if they appreciate, well and good. I don't give up easily so I kept researching and studying price histories, then I got a chance to speak to this gentleman and I posted here just to develop the seed of an idea that he planted in my mind. Thanks for asking though, because my OP wasn't very clear.
Great site!
I vote for draped bust 1/2 cents.
Successful BST deals with mustangt and jesbroken. Now EVERYTHING is for sale.
What's interesting about this thread is that it shows there are still corners of the market where experienced collectors see value.
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Haha, yes, not getting wiped out is a good way to put it.
For the past few days I've been watching Morgans on eBay, trying to see if they can be had anywhere close to melt. Even coins in very bad shape always seem to get bid up to at least $22. Thanks, it's a bullion type play that appeals to me.
Will do. I actually wrote to PCGS early on asking why the numbers I saw on Darkside holders didn't work to bring up detailed info like in Coinfacts. Seems that in world coins, it would be even more important to pick an area and learn it front to back.