How to invest in coins

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The “ah!” moment may occur upon further examination of an unusual coin received as currency.

While old coins offer a tangible link to the past, few people would be excited by a dusty box of coins at a yard sale – until they read that a rare coin is selling for millions. There are significant opportunities for appreciation if you choose wisely.

In the world of investing, anything that has the potential to be bought cheap and sold for a profit is worth considering. As a result, traditional investment vehicles such as stocks and bonds have been joined by investment-grade coins.

One of seven made, a 1787 New York-style Brasher doubloon sold for $9.3 million in 2021 is a prime example of how rarity can increase the value of coins. (Courtesy of Heritage Auctions)

Because there are so many coins to choose from, ranging from Roman denarius to misprinted coins, it’s wise to choose a theme for your collection. This approach allows you to focus and learn about specific parts or categories, such as age, history, design, or material composition, in order to make wise acquisition choices. There’s nothing like having too much knowledge.

There is always a chance that you can discover a valuable coin in the change you receive from a store purchase, but most investors buy coins from auction houses and coin dealers. , or look for them at antique stores, estate sales, and yard sales.

1943 Steel Lincoln Penny - Courtesy of Professional Coin Grading Services
Coins minted in 1943 were made from steel due to material shortages associated with World War II. In mint and uncirculated condition, these pennies command high prices. (Courtesy of Professional Coin Grading Services)

As is the case with antiques and fine art, a number of auction houses specialize in coins, such as Heritage Auctions, which in 2021 sold a New York-style Brasher duplicate of 1787 for $9.3 million. One of only seven coins made, this particular coin had been resold several times at auction since 1847, increasing in value dramatically each time. Heritage Auctions and others hold regular auctions that bidders can participate in in person or online. With all auctions, be aware that a buyer’s premium of up to 20% of the winning bid will be added to the total due.

It cannot be overstated that a thorough knowledge of a particular coin or category is essential when acquiring them in the hope of future appreciation. Also keep in mind that in most cases it takes a long wait to see a significant increase in value. Unless you come across an extremely rare coin that you are able to acquire inexpensively and resell soon after for a large profit, most experts suggest a hold of 10 years or more.

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Some coins are priced based on materials used, such as silver, as well as limited production and annual design changes. (Zlaťáky.cz/Unsplash)

Many companies specialize in reselling coins used as currency as well as commemorative coins, but like any other business, their goal is to buy low and sell high, thereby reducing most, if not the all of the potential for short-term appreciation. .

Organizations such as The Franklin Mint offer starter kits for coin collectors, in which you can focus on first-year issues, history, or composition (metal content). One of their most popular core collections includes a one pound bag of Lincoln Wheat coins from 1909 to 1958. Named after the wheat design on one side and the likeness of Abraham Lincoln from the Other, these circulating and often worn coins are 95% copper, with the exception of the 1943 coins, which were steel due to wartime copper shortages. Selling for $42.99, this kit is an easy way to get started in coin collecting, but isn’t a great investment, as most Lincoln pennies range in value from pennies to maybe 10 cents each.

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As with all high-value antiques, consider having an expert confirm authenticity before purchase. (Hadis Malekie/Unsplash)

That being said, a 1943 Lincoln penny sold for $1 million at auction in 2012. As noted above, 1943 Lincoln pennies were steel, with most currently worth around 10 cents in one state worn and in circulation, according to Gainesville Coins of Tampa, Florida. . However, by accident or on purpose, a very small number, as yet unknown, were made from copper planchettes (discs from which the coins are minted) and remain from the 1942 production runs. There are also other pennies Lincoln’s valuable “error” including 1944 steel examples worth up to $125,000 in uncirculated condition.

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Coins that were once common but are now rare can reach high values. Examples in mint condition are worth more than those with obvious signs of use. (SergeyKPI/Shutterstock)

The lesson here is to focus on specific categories and learn as much as you can about them so you recognize a lot of things when you see them. Many collectors and investors only focus on error coins. Generally, an uncirculated coin will be more valuable than a circulated coin with scratches and other indicators that show it has been worn and used. Similarly, the US Mint will pay the bullion value of older US coins, such as silver or gold, regardless of their condition.

Scarcity throws all the rules out the window, whether due to low production numbers or simply very few surviving since they were minted hundreds of years ago. The bottom line? Investing in coins requires significant knowledge, time and effort, as it does with any potential asset. If you pursue it, be very careful and seek the advice of investment and tax professionals.

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