Coin collecting may be as old as money itself, and though a couple of factors have currently reduced the level of interest in this hobby, they also have created an excellent opportunity to get in on the action.
Experts say the interest in coin collecting has declined over the past decade as the stock market has provided better opportunities for investment.
Dennis Forgue, manager of Harlan J. Berk Ltd. in Chicago, says that the hobby is also battling another problem.
“Kids are wrapped up in collecting sports cards and video games,” Forgue said. “New people that are getting into collecting are starting much older now.”
But John Perschke Jr., manager of Bullion Equity in Deerfield, says there are advantages to be had as a result of the softer coin market.
“People can buy lower than they could 10 years ago, and investors may realize the benefits later if they hold onto things,” Perschke said. “Some coins have lost 25 percent of their value so they’re more affordable.”
Perschke adds this may also be a good time to update collections for those seeking to expand or complete a particular series of coins.
Gary Britton, manager of Silver Reef Inc. in Schaumburg, says the coin market has typically gone through seven- to 10-year cycles and expects to see upward movement eventually.
“Coins are tied to the bullion market value,” he said. “You always want to buy low and sell high, and for those looking to start collecting, this could be a good time.”
Experts say beginners should first determine the amount of time and money they plan to commit to collecting.
“Some people start their kids off as a hobby, while others see this as a major, long-term investment,” Britton said. “Collecting for enjoyment and investing are very separate issues.”
For those curious about the hobby, start with collecting something you enjoy.
“Kids can start with mercury dimes, Lincoln pennies or buffalo nickels,” Perschke said. “Proof sets (a set containing every denomination of U.S. coin from the same year) are still bought by a lot of people as gifts, but as an investment they don’t offer the best return.”
Perschke said prices for various proof sets vary greatly: a 1998 proof set sells for $14, but a 1997 would cost $24.
“Generally, proof sets are a novelty,” Britton said. “People buy them for their child’s birth year or a christening present. The more valuable sets are from 1955 and before where production was more limited.”
Britton and Forgue agree that silver dollars and U.S. commemorative half-dollars are historically two of the most collectible items, in addition, of course, to rarities.
“Commemorative coins are popular, but one tip I’d give is never buy them from the mint when they first come out,” Forgue said. “They’re always cheaper a few years later through an after-market.”
So-called “type collections,” which contain, say, every type of half-dollar ever minted, are another option for beginners. Books or albums are available to collect every type of dime, quarter, nickel, penny, etc. that was produced.
“One mistake in collecting is people starting one collection and deciding midway to get into another,” Perschke said. “It’s better to complete a series of coins before going on.”
The value of coins is based on the date, mint mark, condition and relative scarcity. Perschke says it’s a misnomer to believe age equals value in a coin.
“You can own an 1884 silver dollar like the 1884-O (minted in New Orleans) and it’s worth only $5 to $6 to a collector,” he said. “On the other hand, an 1884-S (minted in San Francisco) could be worth more than $2,000.”
Wholesale prices are usually set by industry publications–Britton says they’re referred to as “gray sheets”–of which the most prominent is the “Coin Dealer Newsletter,” which is published every week.
“The prices are based on professionally graded coins, judged against an industry standard,” Britton said.
Common standards include Good, Very Good, Fine, Very Fine, Extra Fine and Mint, or non-circulated.
“A common silver dollar in Good condition can be worth $5 just to melt the silver down,” Britton said, “but the same non-circulated dollar could be worth $3,000.”
Coins can be bought through retail stores, coin shows and the Internet, but a local supplier, experts say, is probably your best bet.
“You want to buy quality, not quantity,” Perschke says. “I’d advise people to deal with a reputable dealer, and buy somewhere you can actually look at the coins.”
“Like any investment, you should do some research before you start,” Britton said. “Approach a number of dealers and find out who you like. Decide if they’re helpful, and they should teach you something about grading your own coins.”
Internet and coin show purchases may be a source of some hard-to-find gems, but the former doesn’t allow you to see what you’re buying, and both options may not include a return policy.
For the informed buyer, Forgue believes coin shows offer the opportunity to compare copies of the same coin and their prices.
“A show is kind of like going to a shopping mall for coins,” he said.
Forgue says the chance of finding a rare coin in circulation has been next to impossible since 1964, the last year silver coins were made. But you might actually come across something in your pocket.
“A lot of banks won’t take change anymore unless people roll it in folders and bring it in,” Forgue said. “But a number of grocery stores have started offering coin counting machines, and people are emptying their jars with coins that have been out of circulation for years. We’re seeing more coins now that people have just found.”
Regardless of the source, Britton advises collectors to be aware of buying coins that may have been altered.
“I had a customer come in with a bunch of coins he’d purchased through the Internet and didn’t realize the coins had been cleaned until I told him,” he said. “Coins shouldn’t be cleaned because it alters their condition and misrepresents their value, and he lost hundreds of dollars.”
Forgue says dealers sometimes dip coins in a special liquid to clean off surface dirt, but that too many collectors have ruined the surface of coins by using abrasive cleaners.
Dealers that belong to professional organizations add to their credibility, Britton says. Two highly recognized groups to look for include the American Numismatic Association (719-632-2646) and the Professional Numismatists Guild, Inc. (760-728-1300).
If you’re looking to cash in a collection, you’ll want an appraisal first. Experts say to get a couple of opinions, but expect to pay about $50 an hour for the service.
