Real Coins Cost Real Money

by Brent Lee,

The old adage of getting something for nothing is just not a reality, it is just impossible, and good business requires it. I have a good friend that is in the car business. He tells me quite often of the hour-long arguing that goes along with having to sell a car. As an example, a new pickup truck will cost you only about $10,000 if you don’t want all of the equipment such as the following: automatic transmission, air conditioning, extended cab, power windows/door locks, stereo with DVD, chrome bumpers, and fast track wheels, etc. etc. etc. The truck just described is not called an Extended Truck and will run around $15,750. Some difference, huh? Well, the very same thing occurs with all items whether they are furniture, boats, or a pair of shoes. Common sense tells us all that we get what we pay for, and that is why a pair of shoes at Wal-Mart that cost $14 will not be the quality/ comfort of a pair of Johnson Murphy shoes for $115. You also have to tie-in what you are buying to not only how much it cost, but how well it fits in with your plan You do have a plan don’t you?

Economists all tell us that in order for you to achieve a certain set of goals, you must have a plan, and if you adhere to this plan, you will find that your goals will be satisfied. Why, even gamblers have plans; they will as an example, stick with a certain division in baseball, they will never bet a team that runs odds higher than 180 or take a 140 or less dog. They play a certain amount of money, based on odds, and don’t try to double up when they are down. Numismatics are just the same in all areas. You don’t try to pick up a BU 1893-S Morgan for $80,000 when your entire set of Morgans is only worth $13,000. It just doesn’t make good investment sense. Choosing the right team is also the key ingredient, just as investing in the right coin is key. I am not telling you people that you should only collect Lincoln cents, of Jefferson nickels, or Mercury dimes. Numismatics is numismatics. In coin collecting, there is no more guarantee that what you purchase in coins will be any better than a short position you take on an orange juice contract in the middle of summer. But with proper planning, investing in coins will be the single best investment you could have ever done for you and your families’ future. You see there is a difference in coin collecting, and making purchase is an investment in numismatics. This is where the keen mind comes into play; and also why Salomon Brothers has ranked rare coins the number one investment for the past 15 years. It is all in the experience, and knowledge of the investor. This is what makes the difference between losing money, and making a solid investment.

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I suppose that the biggest discrepancy, or rather, misnomer about numismatics is in regard to the price one pays to become involved in numismatics. Many people are under the impression that you have to have five or ten grand to become an investor. Many years ago everyone was simply a coin collector; the investor played the stock market. But as the numismatic industry as a whole grew, the ones who had just simply started by filling holes in the albums soon found what they had accumulated over the past years was now worth a small fortune. They didn’t plan it that way, it just occurred. This was due largely to the fact that thousands of new collectors across the United States were joining their ranks monthly. This lead to more and more coins coming off the shelves, and prices began to rise. This escalation was self-feeding, and the more it continued the less availability only created a stronger demand, and hence the prices ran higher. I am not referring here to a boom year in this instance like what occurred in 1980. I am speaking of what made a 1909-S VDB Lincoln  Cent jump from $50 to over $1,500. There are many instances in our history where coins that were common in the past suddenly are all listed on the “Want List” of dealers/collectors/ investors alike. Bust coinage which technically ran from 1796 to 1839 has always been very desirable from both standpoints. But there are certain coins you should invest in and others that you need to stay away from. Just as I mentioned in the beginning about the 1893-S Morgan, only the most sophisticated investor should consider a coin of this magnitude. The reason is because that amount of money could be spent in far better directions.

Quality in the piece that you intend to purchase is paramount but this is a trait that often times becomes a problem. You should (like the gambler) establish for yourself a plan, of what direction you intend to go in, and this is best governed by the amount of money you have at your disposal, for this kind of an investment.

If you have a beer pocketbook, and a champagne taste, these two ingredients will never work. You will never be satisfied, and will find yourself frustrated as the events begin to unfold. There are countless denominations of coins that will fit your beer pocketbook, so stick with them. If a coin is slightly out of reach, and you have a special desire to own this coin, then budget yourself for this issue, or place the coin on lay-a-way until you have paid for it. Don’t create a problem for yourself that could have very easily been avoided.

As is anything we buy, choosing the right coins is important; so what is right for you? Let us begin with looking at a hypothetical situation, and you will be able to adjust this case for your own individual situation. You have $500 to spend now, and most likely in the next year you will have an additional $2,000 at your disposal for discretionary purposes. Averaged out, you will find that you have about $200 to spend each month. And this is how you must look at it. If you’re a beginner, then start with proof sets; no, not the 1936 – move to the 1955 and be satisfied with working from that point. Only after you have from ’55 to date will you be allowed to move backwards. You will find some years that will easily run more than your $200 monthly budget, so if you want to move backward, then place the set in lay-a-way, until it is paid for. We all have budgets, and by dealing with them in an intelligent and professional manner, we learn the art of patience and most importantly, being prudent with our resources.

There are Lincoln cents that, like the Jefferson nickel, offer you excellent growth in the next year, and this is the entire idea in a nutshell. Select coins that will not only fit your budget, but will enable you to complete the entire set. If your budget is $1,000 per month, then work on a BU set of Buffalo nickels, or mercury dimes. If your budget shows $45 per month is available, you work on Jefferson nickels or a set of Mercury Dimes.

Whatever financial position that you find yourself faced with, be content and enjoy the hobby. Don’t worry, you will make money, and the intelligent investor knows this from the beginning. In closing, there is one additional comment that I would like to mention to you. When rare coins are purchased, there is absolutely no governmental intervention in this type of investment. What you paid $10,000 for up until 1974 may well be worth $70,000 in 2007. Yes, you can sell the collection for cash, that has never been a problem. It’s your personal decision on what coins to invest in, how much

profit is acceptable, and when to sell. To sum up, buy coins that you like, buy the best grades you can afford, and be patient with your collecting. I hope that I have been able to spark some new questions in your mind with this article, and if you are not sure of the answers, please write and I will be glad to address your questions on an individual basis.