investing in modern coins

[Lastufka Collection]

There was a thread recently discussing disappointing sale prices for modern coins, which were then almost immediately compared to the "better" classic coins. I thought maybe the thread was a little too harsh on moderns. Of course common coins won't hold up well, especially in MS/PF 69 grades, but that's true of any series, I can buy a common St Gaudens in MS 63 for a very small percentage above melt today.

 

That's one of the reasons I was attracted to the 100 Greatest US Modern Coins set/book. They are modern, yes, which meant they were slightly more available, and I could afford them in gem state grades. But they are also unique stories, super low mintages, and/or interesting errors. Which, I thought, meant they'd have no where to go but up. And for the most part, they seem to be doing pretty well price-wise.

 

In fact, I just finished reading this article on Numismater about modern key dates:

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=25048

 

The article argues that key date moderns should perform as well as key date classic coins - you know, the three legged buffaloes and S VDBs and high reliefs and all the other coins I sit and drool over, but haven't sold one of my lungs to buy ...yet.

 

It's an interesting article that I think some of you should read before bashing moderns.

 

Of course the standard boiler plate of buy what you like should be inserted here. But if you happen to like moderns, don't let the recent disappointing sales deter you.

[Arizonadesertrat]

A disproportionate number of the coins in the book you cite are actually error coins (something I suspected would be the case even before I leafed through the book). Some of these are, for all practical purposes, noncollectible because they are genuinely rare and held in strong hands.

 

The article really reflects the impact of the bullion markets on modern mint issues. Yes, there is a real collector base for ASEs. Few collectors actively collect 1 oz. gold or platinum coins because of the cost.

 

For the most part, however, you are comparing apples with oranges. The REAL, two-way market for most modern coins is very thin. Couple this with the recession and you have the rationale for why that collector lost money.

 

I am not saying that there is anything 'wrong' with collecting these coins. Collect them if you like them (I have a number of illiquid tokens, medals, and counterstamped coins that I am not likely to break even on should I sell them). Just be realistic about the collector base (and wherewithal) and liquidity should the coins need to be sold.

[physics-fan3.14]

Every single "key date" listed in that article is a bullion piece. I don't consider them in the same group as modern coins - they will track the price of bullion pretty closely, in almost every case. They have been increasing in price because the bullion has been going up like crazy. Error coins are also a terrible gamble - they are subject to wild fluctuations in price, depending on if they are popular that day or not. I do not have a copy of the book you speak of, but I would almost universally warn against considering "modern coins" as "investments". Buy them if you like them - certainly many collectors enjoy owning and collecting them. There is nothing wrong with that. But be aware of what they are and their expected price performance - and be realistic about it. They often cost far more than you will ever get back again.

 

Unless you really know what you are doing, I would almost universally warn against considering any coin an investment. Skilled, knowledgeable, and patient collectors can be successful at investing with coins. But the vast majority of people will loose money if they attempt to do this. Study a series you like, learn its intricacies, cherrypick only the finest examples, and buy them at a good price. This is really the best way to succeed in coins - you build a terrific set, and it has the most potential for appreciation.

[rons]

Eric is the moderns guru and as is noted in the article wrote the Modern Commemorative Coins book , which is an outstanding study of the moderns market. If you have an afternoon to spare check out his thread ATS. It is currently 517 pages long so it can be a slog but there is some very useful information presented. He also posts here on occasion.

 

http://forums.collectors.com/messageview.cfm?catid=26&threadid=608027

[BillJones]

I don’t think that people should invest in coins in general and modern coins in particular. If you like modern coins, buy them to collect; but don’t buy them because you think that the prices are going to increase. The main modern coins that have done well for me have been my modern commemorative $5 and $10 gold pieces and that has been because of the increase in the bids for gold bullion. Otherwise my modern coin “investment,” with couple of exceptions, like the Library of Congress gold and platinum piece and my Jackie Robinson $5 gold, have been pretty dismal.

[Lastufka Collection]

... with couple of exceptions, like the Library of Congress gold and platinum piece and my Jackie Robinson $5 gold...

 

Both of which are considered keys and both of which are included in the 100 Greatest Modern US Coins book. =)

 

I'm certainly not offering investing advice, and you should love the coins you buy, that's why I'll never complete the 100 Greatest Modern set, too many ugly silver commemoratives. But not every coin made after '65 is inferior to those made before them. It was just fun reading an article that backed that up.

[mkman123]

The coins like the 08 buffalos are actually decreasing in value. Yes they are up from the issue price, but if buy them now, you will most certainly lose $$$. My friend bought a pcgs 70 and a ngc 70 set.....he sold them to get more liquidable coins and lost big money wise.

[RWB]

The article argues that key date moderns should perform as well as key date classic coins...

 

Really? The logic of the free market argues the opposite. If one takes out the bologna of "plastic grading" the situation is even more heavily sewed against modern coins as "investments."

 

[BillJones]

The coins like the 08 buffalos are actually decreasing in value. Yes they are up from the issue price, but if buy them now, you will most certainly lose $$$. My friend bought a pcgs 70 and a ngc 70 set.....he sold them to get more liquidable coins and lost big money wise.

 

I'd love to own a set of the '08 buffalo gold coins in the original mint box, but you can keep the slabbed ones. I like the set as a collector, but the hype over this set has passed.

 

"Investing" in modern coins is like investing in Beanie Babies. Even the so-called key coins are bound to go down in price because the modern coin market is driven by fads. Collectors and speculators get excited about some new or recent issue, but then the mint issues something else, and they move on to the next “in thing.” In the mean time the former “key” probably always sells for more than the issues that no one ever cared for, but its future as an “investment” item is bleak.

 

There are literally hundreds of 19th century coins that are far rarer than most any of the modern pieces, but they get limited play because the number of collectors who want them is small. As time goes on the number of collectors who want the older modern issues is limited too, but the supply of high grade coins for many of these modern issues is quite high compared to their 19th century counterparts.

 

If you want to talk about supply driving up the price of something, which is a dubious concept from the get-go because demand is far more important, don’t even go there with most modern coins, especially the commemoratives. With survival rates that are close to 100%, even with a mintage of 5,000 coins in Uncirculated, you are looking at the something is really quite “common.” Remember in the world of “classic coins” a surviving population of 5,000 places a piece in the most common levels of the R-1 rarity rating. In the “modified Sheldon scale” and R-1 is an estimated populations of 1,501 or more pieces. I have no doubt that there are articulate individuals who write wonderful articles about the virtues of modern coin investment, but collectors need to analyze where the marketing ends and the honest numismatic research begins.

 

[Houston Investor]

I have never been a big fan of 70's especially paying huge premiums. My basic experience has been submitting newly purchased USM coins thru Teletrade raw coin service, which has no money up front, then selling and taking profits on the cons I did not buy back. It seems like the longer time goes on on some issues the premiums over melt on some come down over time as their newness wears off so it probably prudent to take profit at the early end of the cycle.

 

There a number of modern coins with fantastic designs I consider favorites. Most of the big ticket coins residing in my bank box are modern world gold issues, especially recent USM issues.

 

One itneresting point is the premiums over melt for genric classic US Gold Type like $20 Saints and $20 Libs are at historically low levels. While gold bullion material has hit a bull run in the last decade, the premiums on the classic pieces have gone south. Now not much more than a lot of your run of the mill World Gold Issues like French Roosters, GB Sovereigns, Denmark 20 Kroner, etc. I specialized in World Gold about 10-15 years ago and thought even then the premiums were too high on $20 Saints and Libs but did not believe I would see them come down in my lifetime.. I am glad I loaded up on nice World Gold Coins close to melt then vs the classic stuff.

[mintcollector]

Question, what is the definition of a modern coin? Is the 'cut off 1935, 1950, etc?

 

I appreciate the answer.

 

'mint'

[mtnstyne]

Question, what is the definition of a modern coin? Is the 'cut off 1935, 1950, etc?

 

I appreciate the answer.

 

'mint'

 

Someone else will probably post the textbook answer, but I always think of the end of silver coinage as modern.

[Oldtrader3]

Pricing compression on classic gold coins is certainly noted. What this portends for the future is not nearly as clear, I hope, lower metal prices and higher classic coin prices. Yikes, talk about destroying more value then you create!

 

The Grey Sheet bidding system which is widely employed in this industry is too subject to manipulation and is often too thin on the supply side to be believed or validated as authentic. This is true especially on many examples classic gold coins which have low total known populations (including whatever numbers of resubmissions they may have) of maybe 250 or fewer coins in many instances. This behavior is often characterized by seeing bids which reflect a 20% pricing decline based on one or two transactions, probably steeped in personal financial issues such as foreclosure, job loss or divorce.

 

Someone with a better brain than mine, at present, needs to devise a more encompassing, user friendly, data set pricing model with some integrity of worth-based logic. Some pricing model which does not get dizzy and crash on a couple of incidental sales. I have survived (can't honestly say, really lived well) through several bid system failures of the present system being too unable to function as "a going concern" Bid-Ask market, just since the fiasco of 1989. The volumes required to run a "statistically smoothed and functional bid" market are simply not there.

 

Large dealers make their rake on sales commissions and fees. They have no direct stake, except a percentage (15%,+5%), of any real market movement. That is why they price their services this way, in order to stay in business! Smaller dealers and direct sales dealers of course are as tied to the bid system as collectors are to a great extent.

 

I really am not invested in this hobby as any-body's expert and am just a collector (since the 1950's). However most of my profits during good markets and bad markets have come from some small, personal insight based on buying and selling classic gold coins, for whatever they may be worth? Admittedly, the run-up in metals prices has helped recently but recently is not when I sold most of these coins. Bill makes a good point about pricing in the present market.

 

I used to be a stock trader many years ago (hence my moniker) and the only worthwhile thing that I ever learned from that was: Bulls and bears make money, pigs don't! In other words, pick your arena and don't milk it too far!

[coinman_23885]

Question, what is the definition of a modern coin? Is the 'cut off 1935, 1950, etc?

 

I appreciate the answer.

 

'mint'

 

Someone else will probably post the textbook answer, but I always think of the end of silver coinage as modern.

 

I don't think there is any one "textbook answer" and you can ask this question and receive a thousand different potentially valid responses. I think generally most people consider post-WWII coins to be modern coins (and this is the definition that I personally would apply). Some people make the cut-off at the silver to copper-nickel clad transition, and others make the distinction based on series, considering only non circulating type coins to be non-modern. Each approach has its own problems/merits. With regards to TPG submission tiers, both consider 1955-present modern coins.

[brg5658]

Question, what is the definition of a modern coin? Is the 'cut off 1935, 1950, etc?

 

I appreciate the answer.

 

'mint'

 

There's a guy on one of the others coin forums who thinks that anything minted after 800 AD is "modern".

 

The definition is too variable to answer that question. Besides, what's "modern" today will not be considered "modern" 40 years from now. I wonder if when 100 years have passed since the last Ike dollar was minted if people will still call them "modern".

[brg5658]

With regards to TPG submission tiers, both consider 1955-present modern coins.

 

That cut-off is what NGC considers "modern" for U.S. coins. The cut-off for world coins is 1970.

[MJ]

Some have done extremely well on Modern coins. A lot have not. Some have done really well on classic coins, a lot have not. There is no one stop fit all answer. Knowledge coupled with being savvy seems to go a long ways. Just like in most avenues of life. MJ

[Oldtrader3]

That is for sure. Some people find their way in any format and do well. More power to them, I wish I was that smart.

[Oldtrader3]

Actually, I believe that the history of origin on "modern coins" started with an arbitrary 50 year's old. That was in about 2000 when a 1950 was 50 years old. Twelve years have passed now and this target is one, engraved in stone, or two, moving to 1962 now? Rhetorical but fitting, that is if it matters at all?

[World Colonial]

The article argues that key date moderns should perform as well as key date classic coins...

 

Really? The logic of the free market argues the opposite. If one takes out the bologna of "plastic grading" the situation is even more heavily sewed against modern coins as "investments."

 

This sounds like a few claims I have heard for other coins, both here and on the South African coin forum I sometimes post on,

 

Personally, though I consider the coins vastly overpriced, I believe there is an opportunity for the knowledgeable specialist in niche markets like "conditional rarities", toned coins, mint errors and die varieties. And temporarily in some individual issue that is subject to a speculative frenzy. But most of the others I believe are almost exclusively "dead" money because they are either too common or most collectors would rather buy other coins for the same money,.

[physics-fan3.14]

With regards to TPG submission tiers, both consider 1955-present modern coins.

 

That cut-off is what NGC considers "modern" for U.S. coins. The cut-off for world coins is 1970.

 

I never understood their reasoning for calling 1955 the cutoff. That cuts many series in half, and there is no logical reason to make that distinction.

 

I personally have always considered 1964 the cutoff, a logical divide between silver and non-silver.

[ericj96-migration]

A disproportionate number of the coins in the book you cite are actually error coins (something I suspected would be the case even before I leafed through the book).

 

Answer: Some of the coins mentioned are called errors because they were not offically sanctioned issues. We dont know if the people on the production floor did it to mark one of their kids birthday or not. Kind of like 1913 V nickels are errors right? While I did not have anything to do with the 100 greatest book the coins mentioned to not have anything "wrong" with them other than the presence or absence of a mint mark. The 1800s are full of such things and they are not called errors. They just exist.

 

Some of these are, for all practical purposes, noncollectible because they are genuinely rare and held in strong hands.

 

Answer: Well if thats the case then $20 Saints, V nickels etc are not collectable because only 1-10 sets can be completed. I agree that being able to complete the set is important for long term collector base growth. Moderns offer the ability to complete the sets in most cases many classic series do not.

 

The article really reflects the impact of the bullion markets on modern mint issues. Yes, there is a real collector base for ASEs. Few collectors actively collect 1 oz. gold or platinum coins because of the cost.

 

Answer: Its true that high material cost surpress the growth of collector ranks but many of the smaller denomination issues are doing very well even in the face of high material cost because they remain affordable. The interaction of metals and key date pricing is a long topic. Moderns collectors may want to read pages 73-79 in Modern Commemorative Coins "Invest today profit tomorrow" for detailed coverage. Lower denomination moderns struck on silver gold and platinum have held up much better than classics in the face of rising metals prices. Look at the trend line for classics indexed to inflation and gold.

 

For the most part, however, you are comparing apples with oranges. The REAL, two-way market for most modern coins is very thin. Couple this with the recession and you have the rationale for why that collector lost money.

 

Anwer:

Modern coins are traded on the internet. Ebay and guys like Modern Coin Mart make a very active two way market in the good stuff. Good luck with a MS-65 1982 cent.

 

Just be realistic about the collector base (and wherewithal) and liquidity should the coins need to be sold.

 

Answer: We are being realistic. These massive precious metal modern series are the growth segment and if you dont believe it you need to look at the slabbing trends at NGC and PCGS. If something does not change we may see 50% of all slabbed coins being modern silver gold or platinum issues in the next 10-15 years!

[ericj96-migration]

Every single "key date" listed in that article is a bullion piece. I don't consider them in the same group as modern coins - they will track the price of bullion pretty closely, in almost every case.

 

Answer: Common dates with high material content track bullion closely and thats about the best any common date can do. 1927 saints do the same thing last time I checked. The key dates are not tracking bullion and classic key dates are not tracking bullion either....... even worse they are not keeping up with bullion.

 

They have been increasing in price because the bullion has been going up like crazy. Error coins are also a terrible gamble - they are subject to wild fluctuations in price, depending on if they are popular that day or not.

 

Answer: One of the examples of error coins from the 100 Greatest is the 1999w gold eagles..... lets see we have a 4-12 million series total population in the $5 and $10 gold MS gold eagles with strong "w" mint marked gold as a run of series keys and then NGC and Whitman tell you that the 1999w is likely an important coin and you want to find fault?

 

I do not have a copy of the book you speak of, but I would almost universally warn against considering "modern coins" as "investments".

 

 

Answer:

Many would warn against classics as an investment too. There are three stages of asset maturity. Infancy, growth and maturity. Moderns are in late infancy/ early growth portion of the asset maturity cycle (S curve in economics). Classics are mature and thats one of the issues that make it hard for them to keep up with constant dollars. Series issued in the 1900s tended to peak in less than 50 years after they were no longer available from the government index to inflation.

 

Buy them if you like them - certainly many collectors enjoy owning and collecting them. There is nothing wrong with that. But be aware of what they are and their expected price performance - and be realistic about it. They often cost far more than you will ever get back again.

 

Unless you really know what you are doing, I would almost universally warn against considering any coin an investment. Skilled, knowledgeable, and patient collectors can be successful at investing with coins.

 

Answer: True, better not cross the street unless you are paying attention and know what you are doing.

 

But the vast majority of people will loose money if they attempt to do this. Study a series you like, learn its intricacies, cherrypick only the finest examples, and buy them at a good price. This is really the best way to succeed in coins - you build a terrific set, and it has the most potential for appreciation.

 

Answer: True of many things

 

[ericj96-migration]

The coins like the 08 buffalos are actually decreasing in value. Yes they are up from the issue price, but if buy them now, you will most certainly lose $$$. My friend bought a pcgs 70 and a ngc 70 set.....he sold them to get more liquidable coins and lost big money wise.

 

Answer: Timing and patience are needed in life. The Moderns Race article clearly shows the initial price spike that needs to be avoided. It shows up over and over. It also shows that you need to hold off until the market corrects about 30 to 40% off the one year highs if you miss the straight from Mint buy opportunity. The article also clearly states that you can get hurt over paying for 70s when they first come out. Dont fight the masses. Get there early or buy after they are looking somewhere else for the moment.

[ericj96-migration]

The article argues that key date moderns should perform as well as key date classic coins...

 

Really? The logic of the free market argues the opposite. If one takes out the bologna of "plastic grading" the situation is even more heavily sewed against modern coins as "investments."

 

Answer: Buy the coin not the holder is long respected advice. For a classic or a modern. Buy very low mintage material that dominates large series when they are young and cheap and be picky about the quality of the coin. An outstanding coin is good in anyones holder. AND can change holders if one of the grading outfits fall from favor by the loss a great deal of market share.

[RWB]

An outstanding coin is good in anyones holder. AND can change holders if one of the grading outfits fall from favor by the loss a great deal of market share.

 

1. ericj96. Do you actually believe the first part of your comment? Put a 1996 MS-70 cent in anything except NCG or PCGS and it is worth exactly one cent. A delusional market might price it at more than one cent in NGC or PCGS holders, but the "value" is in the plastic not the coin.

 

2. The second phrase is a perfect example of "bologna plastic." Slice it thick, slice it thin, fry it, coat it with chocolate -- it's still bologna!

 

[ericj96-migration]

The coins like the 08 buffalos are actually decreasing in value. Yes they are up from the issue price, but if buy them now, you will most certainly lose $$$. My friend bought a pcgs 70 and a ngc 70 set.....he sold them to get more liquidable coins and lost big money wise.

Answer: Look at the article and check out the year one spike and drop that keeps showing up. That has been addressed. If they dont make any more fractional buffs a resumption of the up trend is likely by year 4.

 

I'd love to own a set of the '08 buffalo gold coins in the original mint box, but you can keep the slabbed ones. I like the set as a collector, but the hype over this set has passed.

 

"Investing" in modern coins is like investing in Beanie Babies. Even the so-called key coins are bound to go down in price because the modern coin market is driven by fads. Collectors and speculators get excited about some new or recent issue, but then the mint issues something else, and they move on to the next “in thing.” In the mean time the former “key” probably always sells for more than the issues that no one ever cared for, but its future as an “investment” item is bleak.

 

Answer: Well thats your opionion but its not what the data is showing. Its important to opperate in what can be documented by the numbers and you dont want to stack the moderns numbers up against classics if you like classics.

 

There are literally hundreds of 19th century coins that are far rarer than most any of the modern pieces, but they get limited play because the number of collectors who want them is small.

 

Answer: Correct. Key dates are driven by things like popularity of design. Total public exposure (total population) material content and any number of other variables. Moderns face the same development issues that the classic series did but the key is you can pick your modern series and do so on the front end of the maturity cycle.

 

As time goes on the number of collectors who want the older modern issues is limited too, but the supply of high grade coins for many of these modern issues is quite high compared to their 19th century counterparts.

Answer: High mintages makes a coin a common date. Stay off common dates old or new if you hope to see key date behavior out of it. At least common date moderns are close to melt so if the price of the metal spikes you dont have 40% of the coin buy price as dead space in the pricing curve.

 

If you want to talk about supply driving up the price of something, which is a dubious concept from the get-go because demand is far more important, don’t even go there with most modern coins, especially the commemoratives. With survival rates that are close to 100%, even with a mintage of 5,000 coins in Uncirculated, you are looking at the something is really quite “common.”

 

Answer: Price is based on supply and demand. You want low supply relative to demand. The 1928 MS Silver Hawaiian half has a 10,000 mintage and it has close to a 100% survival rate but it is the key to a large population set so they bring big money. Moderns with mintages well short of 10,000 that dominate large series with sky high slabbing rates are a very good bet and they are not 3-5 grand a copy YET.

 

Remember in the world of “classic coins” a surviving population of 5,000 places a piece in the most common levels of the R-1 rarity rating. In the “modified Sheldon scale” and R-1 is an estimated populations of 1,501 or more pieces. I have no doubt that there are articulate individuals who write wonderful articles about the virtues of modern coin investment, but collectors need to analyze where the marketing ends and the honest numismatic research begins.

 

Answer: None of that matters. 1936 and 1937 proof sets have run of the mill Sheldon scare rarity too but it does not hurt them a bit. Its relative rarity in series that drives most series key date price performance. Moderns are no different.

 

 

[ericj96-migration]

I wrote out the above text over lunch and have not had a chance to go back and edit. I will do so later maybe.

 

 

Those of you that collect moderns do not let others run down what you like. You are doing the same thing that moderns collectors did from 1906 to 1936. Buy the rare stuff at low mark up over melt in large series with rapidly expanding collector bases that are affordable. You are in the right place but you have got to be patient, watchful and dont spend a ton on lables. Stick with the basics, buy series dominant material thats excellent quality and dont put all your eggs in one basket by date or series.

[ericj96-migration]

"1. ericj96. Do you actually believe the first part of your comment? Put a 1996 MS-70 cent in anything except NCG or PCGS and it is worth exactly one cent. A delusional market might price it at more than one cent in NGC or PCGS holders, but the "value" is in the plastic not the coin."

 

 

 

No I would not buy it. I have been talking about low mintage modern material struck on precious metal. None of my comments address such things.

[coinman_23885]

Those of you that collect moderns do not let others run down what you like. You are doing the same thing that moderns collectors did from 1906 to 1936. Buy the rare stuff at low mark up over melt in large series with rapidly expanding collector bases that are affordable.

 

No one is trying to talk anyone out of buying modern coins if they are buying them for enjoyment; we're just saying don't expect a large appreciation in cost (and you may incur losses). Also, please define "rare."