Insuring rare coins

[O mint bug]

I have a very few rare coins I have stored off site as a result of my standard homeowner personal effects policy now being insufficient coverage. I look a the price appreciation of rare coins relative to the S&P and Dow performance since 1970. At no time has either stock market index been above the rare coin value graph line. In the mid 1990s the better coins really took off to the point that the rare coin index had appreciated 3.5 times better than the DOW and 3.0 times better than the S&P by 2013 with a 1970 starting point. Furthermore, the rare coins dropped less than the 2008 bust and recovered faster and resumed a steep appreciation line. My point is given the continuing run up in good coins it might not be a bad time to discuss coverage on the better coins in your collection separately. Value will be the determining factor but a little time spent making sure you are properly covered will cost you nothing and could save you a significant amount of money, I see nothing wrong with pursuing a hobby you have a passion for while at the same time having the associated assets protected and increasing in value. Your heirs will love you for it.

[MarkFeld]

That's good advice about coin insurance.

 

However, I am highly skeptical of published value graphs showing rare coin appreciation, especially for years prior to the advent of third party grading. So-called appreciation was often dramatically reduced, due to collectors buying at one grade, but having to sell at another/lower grade. And then there is the issue of buy-sell spreads.

 

Also, I would be surprised if most rare coins have appreciated sharply during the past several years.

[O mint bug]

Mark

 

If you know anyone over at U.S. Coins in Houston ask them to mail you the publication that just came out on this subject. Very well written and based on auction results. The real upturn in coin prices came in the 2002 to 2004 range. Each of the selected coins are graphed and prices are recorded since 1970. Just take a look at what a $20 1854 O went for in 2002. I think it was $103,000 per Heritage. It seems the intermediate level rare coins have done even better. All rare coins seemed to move pretty much in lock step and never dipped below the S&P or Dow year to year. Silver and gold were not even close. Also look at the prices realized per David Bowers Red Book. If I only started 10 to12 years ago.

[MarkFeld]

Mark

 

If you know anyone over at U.S. Coins in Houston ask them to mail you the publication that just came out on this subject. Very well written and based on auction results. The real upturn in coin prices came in the 2002 to 2004 range. Each of the selected coins are graphed and prices are recorded since 1970. Just take a look at what a $20 1854 O went for in 2002. I think it was $103,000 per Heritage. It seems the intermediate level rare coins have done even better. All rare coins seemed to move pretty much in lock step and never dipped below the S&P or Dow year to year. Silver and gold were not even close. Also look at the prices realized per David Bowers Red Book. If I only started 10 to12 years ago.

 

You originally wrote "Furthermore, the rare coins dropped less than the 2008 bust and recovered faster and resumed a steep appreciation line."

 

One of my points was that overall, I don't think rare coin prices have enjoyed a steep appreciation (or even close to it) since 2008.

 

And published prices dating back to 1970 can be highly misleading. Prior to third party grading as we know it, rarely could a collector sell at the same grade he obtained his coins at. That negated most or all of the purported price appreciation.

[Conder101]

You also have the problem with pre-1978 prices for the Unc/MS level in not knowing what quality level you should be comparing it to.

 

Should a 1976 price for an Unc coin be considered a MS-60? 63?, 65? If they meant it for an average or typical Unc coin and you are comparing price growth from that price to today's MS-65 price you are comparing apples and oranges.

 

Frankly any price growth comparison from before 1986 is questionable unless you can trace auction records for a SPECIFIC coin from an earlier time to today. Even then that just give you good data for that one coin, not the market as a whole.

 

If you do want to try and make a pre-1978 comparison, compare the growth from then to today's MS-60 price levels. That will give you a fairer approximation.

[World Colonial]

Salomon Brothers (later purchased by Citigroup and now extinct) used to publish an index that was widely cited. It was narrow and not representative.

 

Don't remember the names but there were (or are) two US coin price indices, one for "investor" and the other for "collector" US coins. To my kinowledge, its primarily the higher grade coins that have performed well or circulated series such as early US federal coinage. Just like the stock market, it depends upon what you happen to own.

 

As for insurance, Hugh Wood offers it and to my knowledge, only coins valued at $10,000 or more need to be specifically itemized.

[World Colonial]

Mark

 

If you know anyone over at U.S. Coins in Houston ask them to mail you the publication that just came out on this subject. Very well written and based on auction results. The real upturn in coin prices came in the 2002 to 2004 range. Each of the selected coins are graphed and prices are recorded since 1970. Just take a look at what a $20 1854 O went for in 2002. I think it was $103,000 per Heritage. It seems the intermediate level rare coins have done even better. All rare coins seemed to move pretty much in lock step and never dipped below the S&P or Dow year to year. Silver and gold were not even close. Also look at the prices realized per David Bowers Red Book. If I only started 10 to12 years ago.

 

In the last decade, there hasn't been an extended decline and therefore, no need to sell an actually rare coin at a loss unless the owner needed the money. Also, since many coins (though low proportionately) do not sell that often at least in a specific quality, there are going to be instances where there aren't any or at least more than one data point.

 

If you take the most recent "greater recession", the financial crisis didn't really last that long; the worst of it lasted less than a year. I have occasionally seen the same rare coin sell for a lower price, but its unusual. An example I believe are a few of the pre-1858 proof quarters which sold both times on Heritage within a year or so. But otherwise, it isn't likely that the same coin will sell for a lower price. Most of the time I believe the owner will just "sit on it".

 

If it had lasted longer, I can assure you that many actually rare coins would have sold for less than the prior sale if it was relatively recent and the coin was actually offered which it likely would not be. There isn't anything intrinsic about coins that makes them a better "investment" or wealth preservation vehicle than another asset class. Sometimes they are better for these purposes and other times they are not.

[RWB]

The material you cite is sales promotion fluff. Similar examples can be concocted for nearly everything including buggy whips. (Yes, even the large ones needed for mosquitos in Minnesota.)

[O mint bug]

check the heritage auction results and the publication that has all the data you would need. In 1999 the Dow hit 10,000. Doubt you could buy a ms 93 $1 Morgan anywhere near a premium over 60% relative to equity index levels. Also look at coins like the $20 54 O sold by heritage in the 202-2004 levels and look at them now. Ditto on anything from a 18/17 D buff or a 1313 V nickel. An auction is the best way to really determine vale as the information is accurate and easily obtained. Some mutual funds are jumping into the rare coin market with a small % of their cash. Some of the institutional guys may be light on conscience but not on how to select good assets to hold. There is a book on collecting published be Heritage and on of the coin specialist formed an investment fund to buy rare coins for investors, After reading it the only people that lost were the ones that passed on his invitation. Frankly can you tell me one really collectible coin that has not done very well since 2002? The internet helped as it opened distribution channels tremendously. ie broadened the market.

 

I am trying to collect a few type one O DEs and have not had an opportunity to get s 55 or 59 in two years as none have come onto the market. I look at auction results before they rose in price and they were obtainable. The few remaining are going into collections that will not be broken up. Point is the they come up for sale so seldom I frankly don't know what I will have to pay but if it is reasonable I will move. I collected TX Indian artifacts since 1984 seriously. For the first 12 years the common guys could afford some nice pieces. As new people came in and seemingly overpaid it was they that did best in the end as quality points increased as quality coins have. I just hope I can get all but the 54 and 56 O before the offshore Chinese start putting more of there money in DEs ( finite population and rare ) as this will price many of us out of certain coin markets. Again heritage auctions results will tell all. Just look at the 54 5590 $20o or all 12 for that matter and see what they brought 2002-2004 and compared them to the POST bust prices that dropped and quickly recovered and are now appreciating. You could have got an AU 54 O for about $103,000 but it won't be too long before this will be the buyers premium based on the charts. David bowers has a excellent book (red book I think ) that has published prices. Flights leaving in a couple of hours keep well

[O mint bug]

Depends on the other personal effects. The typical homeowners policy covers between 50 and 60% of the home value. If your collection is growing and it is most likely appreciating you can sail close to it after you figure replacement value for everything else in the home. I would read the policy as insurance are much better at taking money than giving it even when they are contractually obligated to.

[RWB]

.

[O mint bug]

That recession has been having a adverse on our economy since 2008 and is still doing so. The rare coins ie $5-10K and up are usually in the hands of people ( not me ) that are not affected to the extent they have to sell. if anything this is when deep pockets go on offense. The rare coin market began to show signs of recovery in the 2009-2010 time period. As I mentioned to Mark the true value of any asset is what it will sell for and Heritage Auctions has excellent archive information, which provides the date, grade, etc as well as the date sold. The best time to buy assets is when other people don't or can't afford to own them. If the rare coins started recovering per auction results in the middle of what I term the " anything but great recession" this is about as good an indicator that the smart collector with the money starts buying I was a banker in TX during the 80s. All large banks failed, foreclosures everywhere, corporate failure. The people that have made the most on TX real estate are the investors that bought good RE at the bottom. They are very wealthy now. Check out your recent purchases on Heritage and see what you would have paid in 2000-2005. Publications are good at teling part of the story. Ares length business transaction that are well documented don.t

[RWB]

Got N2 filled tires, I bet.

[GoldFinger1969]

MarkIf you know anyone over at U.S. Coins in Houston ask them to mail you the publication that just came out on this subject. Very well written and based on auction results. The real upturn in coin prices came in the 2002 to 2004 range. Each of the selected coins are graphed and prices are recorded since 1970. Just take a look at what a $20 1854 O went for in 2002. I think it was $103,000 per Heritage. It seems the intermediate level rare coins have done even better. All rare coins seemed to move pretty much in lock step and never dipped below the S&P or Dow year to year. Silver and gold were not even close. Also look at the prices realized per David Bowers Red Book. If I only started 10 to12 years ago.

 

That's just it....you are measuring from an optimal point in time.....you would have benefited from both a low gold price AND low premiums after the 1989-90 bubble which took a decade to deflate (and is still going on by some measures).

 

Again, the coin(s) you track may have done well but others HAVE NOT. Even if you go by the very popular, very liquid, most common Saint Gaudens $20 Double Eagles.....they have appreciated by about 50% the last 10-12 years despite gold quadrupling over that time period. The S&P 500, with dividends, has done better.

 

 

[GoldFinger1969]

I look a the price appreciation of rare coins relative to the S&P and Dow performance since 1970. At no time has either stock market index been above the rare coin value graph line. In the mid 1990s the better coins really took off to the point that the rare coin index had appreciated 3.5 times better than the DOW and 3.0 times better than the S&P by 2013 with a 1970 starting point.

I question these data points.

 

The S&P 500 has returned about 10.3% from January 1970 - April 2014, including reinvested dividends.

 

If you go by one of the more popular gold coins -- like a common Saint Gauden Double Eagle -- you are looking at about 8.5% appreciation because there is no interest/dividends to reinvest. And this gives gold coins the benefit of the following 1-time special instances:

• 
  
• Buying at an artificially controlled pre-1973 price that was substantially below the market. That opportunity will never present itself again.
  
• Buying the Saint Gaudens at a very low price exactly in 1970
  
• Riding an initial 20-fold increase in the price of gold in 7 years, the classic definition of a bubble
  
• benefitting from a numismatic frenzy in the 1970's/1980's, not likely to be repeated

The point is this: you had an unusual number of 1-time events that helped raise the price from an artificially low price in 1970 to an absurdly high price in 1989 (even though gold itself had fallen out of favor). While the frenzy for both gold and numismatics has since dissipated, the low-starting point itself is STILL not enough to match the S&P 500 total return.

 

Furthermore, the rare coins dropped less than the 2008 bust and recovered faster and resumed a steep appreciation line.

An illiquid asset class, gold coins didn't have enough time to fall more in 2008-09. Gold itself fell 30-40% in that period and most numismatics (i.e., Saint Gaudens) had lagged the gold price since 2002.

 

My point is given the continuing run up in good coins it might not be a bad time to discuss coverage on the better coins in your collection separately. Value will be the determining factor but a little time spent making sure you are properly covered will cost you nothing and could save you a significant amount of money, I see nothing wrong with pursuing a hobby you have a passion for while at the same time having the associated assets protected and increasing in value. Your heirs will love you for it.

Here we are in agreement. My collection is very small right now but in the future I will look for more coverage and a bigger safe than what I have right

now....hopefully !

 

 

IMPORTANT FACT: I used $50 as the starting point for the purchase of a Saint Gaudens $20 DE in 1970. This is probably an unlikely purchase in 1970 since the real price of gold was above the official price and more so for quality coins. In fact, it is likely that an MS-65 or similar coin back then probably cost $100 or more, cutting the annual price appreciation significantly.

[RWB]

Ideology and reality are not the same.

[GoldFinger1969]

That recession has been having a adverse on our economy since 2008 and is still doing so. The rare coins ie $5-10K and up are usually in the hands of people ( not me ) that are not affected to the extent they have to sell. if anything this is when deep pockets go on offense. The rare coin market began to show signs of recovery in the 2009-2010 time period. As I mentioned to Mark the true value of any asset is what it will sell for and Heritage Auctions has excellent archive information, which provides the date, grade, etc as well as the date sold. The best time to buy assets is when other people don't or can't afford to own them. If the rare coins started recovering per auction results in the middle of what I term the " anything but great recession" this is about as good an indicator that the smart collector with the money starts buying I was a banker in TX during the 80s. All large banks failed, foreclosures everywhere, corporate failure. The people that have made the most on TX real estate are the investors that bought good RE at the bottom. They are very wealthy now. Check out your recent purchases on Heritage and see what you would have paid in 2000-2005. Publications are good at teling part of the story. Ares length business transaction that are well documented don.t

Totally agree, and if you can afford to play in that sandbox -- I can't -- more power to you. And while I think that the total number of potential wealthy buyers is likely to go up over time, that does NOT mean that actual wealthy coin buyers will materialize. Look at golf, a rich man's sport, which has not recaptured the 1990's boom.

 

What happens if just 1 wealthy social media gazillionaire decides to buy a few coins because he/she collected coins as a kid...drives the price of some coins up 100% in a few months....and drags up similar coins.....and then this is NOT repeated for years if ever again ?

 

You'd have a bust like what happened in 1989-90 ?

 

Coin collecting is not like art collecting in that folks don't usually display their coins. So in art, even if 1 dumb buyer pays a huge premium, it might just take the next cycle to eclipse that price. That hasn't happened for many gold coins if you go by their 1990 highs.

[mommam17]

Unc. Gaudens were $60-65 in about 1968-69. Rolls were $1200.

[RWB]

...and Unc Saint-Gaudens $20s were $75 in 1945.

[MarkFeld]

That recession has been having a adverse on our economy since 2008 and is still doing so. The rare coins ie $5-10K and up are usually in the hands of people ( not me ) that are not affected to the extent they have to sell. if anything this is when deep pockets go on offense. The rare coin market began to show signs of recovery in the 2009-2010 time period. As I mentioned to Mark the true value of any asset is what it will sell for and Heritage Auctions has excellent archive information, which provides the date, grade, etc as well as the date sold. The best time to buy assets is when other people don't or can't afford to own them. If the rare coins started recovering per auction results in the middle of what I term the " anything but great recession" this is about as good an indicator that the smart collector with the money starts buying I was a banker in TX during the 80s. All large banks failed, foreclosures everywhere, corporate failure. The people that have made the most on TX real estate are the investors that bought good RE at the bottom. They are very wealthy now. Check out your recent purchases on Heritage and see what you would have paid in 2000-2005. Publications are good at teling part of the story. Ares length business transaction that are well documented don.t

Totally agree, and if you can afford to play in that sandbox -- I can't -- more power to you. And while I think that the total number of potential wealthy buyers is likely to go up over time, that does NOT mean that actual wealthy coin buyers will materialize. Look at golf, a rich man's sport, which has not recaptured the 1990's boom.

 

What happens if just 1 wealthy social media gazillionaire decides to buy a few coins because he/she collected coins as a kid...drives the price of some coins up 100% in a few months....and drags up similar coins.....and then this is NOT repeated for years if ever again ?

 

You'd have a bust like what happened in 1989-90 ?

 

Coin collecting is not like art collecting in that folks don't usually display their coins. So in art, even if 1 dumb buyer pays a huge premium, it might just take the next cycle to eclipse that price. That hasn't happened for many gold coins if you go by their 1990 highs.

 

It's not just "many gold coins" which still trade at levels far below their 1989-1990 highs. That applies to many nickel and silver coins, as well.

[GoldFinger1969]

It's not just "many gold coins" which still trade at levels far below their 1989-1990 highs. That applies to many nickel and silver coins, as well.

 

Excellent point, Mark.....and that would be because even if there wasn't any actual buying of those coins, the market tried to front-run the expected purchases (I posted articles from that time in other threads).

 

Like I said....actual or expected buying of 1 coin type lifts others, too...obviously the biggest impact is on the coins most similar to the type purchases or expected to be purchased. (thumbs u

[GoldFinger1969]

Unc. Gaudens were $60-65 in about 1968-69. Rolls were $1200.

...and Unc Saint-Gaudens $20s were $75 in 1945.

As the hobby was much smaller back then, and this was before the TPGs were established, no idea if those coins were MS-60, MS-65, or MS-67. I'm sure a wealthy buyer in 1945 or 1969 would pay $200 for a Saint that looked flawless (probably MS-67 or higher) if they really wanted it.