Introduction – If you become a numismatist (collector of coins, paper money, tokens and medals), you should decide if your primary focus is on collecting, investing, or a combination of the two. Collectibles are a much different kind of investment than stocks and bonds. Collectibles do not produce monetary interest or dividends; they have value only because of limited supply combined with demand from collectors who appreciate their historical, artistic or other merits. Numismatic items tend to gain in value when there is more money to be spent (either because of inflation or because of greater wealth) or when there is an increase in popularity, as we saw beginning in 1999 and 2000 with the 50 State Quarters and the Sacagawea dollar.
A very brief history of coin supply/demand trends in the United States:
1950’s — Coin collecting increases in popularity during a period of post-war prosperity.
1960’s — Coin collecting was very popular with well-attended coin club meetings across the U.S., but there was a fairly narrow focus on modern U.S. coins. Varieties such as the 1960 “small date” cent helped spark interest, as did the removal of silver from coins in 1965.
1970’s — Collecting U.S. coins by design type becomes popular; prices increase due to inflation and the rising price of silver and gold (which became legal to own again in the form of gold bullion and bullion coins). Price of silver peaks at about $50/ounce in 1980 before falling rapidly.
1980’s — Introduction of third-party graded coins encapsulated in plastic slabs; temporary speculative price increases for many high quality (but not necessarily rare) slabbed coins.
1990’s — Numismatic investments perform much worse than the stock market; coin prices fairly flat (often well below 1980’s peak values); coin collecting and other “old-time” hobbies suffer due to increasing demands for peoples’ time.
Late 1990’s — Resurgence of interest in coins due to new U.S. coin designs; prices on high-end material increase due to wealthy bidders (many of whom made their money in the stock market). Internet auctions pioneered by eBay® make it much easier to buy and sell collectibles, including numismatic items.
2000’s — Described by some as the “Decade from Hell,” it began with the “dot com” and stock market downturns and the attacks of September 11, 2001, and ended with the “Great Recession” triggered by the mortgage crisis. Nonetheless, collector interest remained high in many areas, and the prices of silver and gold bullion rose to near record highs, at least measured in weakened U.S. dollars. The middle of the decade saw strong prices realized (including many new price records) at major numismatic auctions. The recession softened the market somewhat, however the prices of high quality coins did not decline nearly as much as the stock market.
Certified or “slabbed” coins are now the norm rather than the exception for mid to high priced material, and certified paper money is also popular. Collectors compete to build “registry sets” with the major grading services, and most coins submitted for grading are now modern coins, in the hope of receiving the MS-70 (“Perfect”) designation. Anyone buying or selling U.S. coins (and even some world coins and other items) should be familiar with coin certification and how it impacts the market.
2010’s — Predicting the future is always difficult, but it seems that numismatic collecting in various forms will be with us for a long time to come, even if the usage of currency in the forms of coins and paper money continues to decline. Demand trends will vary; it remains to be seen whether modern coins in very high grades (e.g., MS-70) will remain popular. Diversification by including classical coin designs and types, world coins, and perhaps other numismatic items such as tokens and medals, might seem advisable.
2013-2015 — In early 2014 we heard reports from Numismatic News and other sources of “crazy prices” (often at auction) but only for rare coins and coin types in high grades, both U.S. and world coins. [For example, according to the Professional Numismatists Guild, “… historic U.S. rare coins established unprecedented records in 2013 for the number of coins that sold for $1 million or more.”] Demand for less rare coins (and grades below EF) is likely to be softer, and common items (especially non-bullion items) remain difficult to sell. Also, commercial third-party grading (“slabbing”) is fast becoming the norm for better world coins, and collectors should be aware of this trend. 2014 and 2015 saw a downward trend in the precious metals market, however the market for many better collector coins, including silver dollars, remained relatively strong. The certified U.S. coin market was a bit weak in 2015, but may have reached bottom, hence a buying opportunity.
2016-2017 — The year 2016 got off to a good start. Reporting from the Dallas ANA National Money Show, Coin Dealer Newsletter said, “middle tier of the market – coins in the $500 to $5,000 range – are fairly liquid and consistently sought by dealers.” CDN also reported that the year ended with “increased market stability” but also “an extreme focus on quality.” Bullion prices were also fairly strong. By April 2017, Heritage Auctions reported that “the coin market is experiencing a resurgence,” with the company’s most recent auction of rare U.S. coins realizing almost $10 million, with a 100% sell-through rate and a lot of collector bidding action. Good news!
2018-2019 — Numismatic market activity continued to be strong, with highly successful auctions and bourse at major events such as the annual ANA convention. One potential negative factor, however, is that many sellers are now required to collect sales taxes on out-of-state sales. (eBay started collecting these taxes on behalf of its sellers.)
2020 — As the new decade began, CDN Publishing reported on the first major event of the year, the Florida United Numismatists convention in Orlando. According to CDN, “… Heritage’s January 8-12, 2020 FUN Signature Auction grossed close to $42 million, led by an example of the classic rarity 1927-D double eagle.” Bourse floor activity at FUN was also strong. So the new decade was off to a great start, before the virus outbreak hit. As of June 2020, Numismatic News reported that “The market for coins is doing well despite the coronavirus shutdowns that have decimated so many businesses. Brick-and-mortar coin shops without any internet presence of consequence have felt the impact; however, those with a strong internet following have continued to prosper.” (See the full article.) Likewise, auction houses set records with millions in online sales. As the year 2020 ended, most major coin shows continued to be cancelled, however, major auctions kept the coin market very strong.
2021 — By the summer of 2021, coin shows including the ANA convention were routinely happening again (albeit with health precautions), and the market, both in-person and online, remains strong. By the end of 2021, bullion prices were down a bit, but “numismatics continue to show exceptional strength,” according to Heritage Auctions.
2022 — Numismatic markets remained strong this year. As noted in the article “Indicators Point to Prosperous New Year” written by Richard Giedroyc for Numismatic News, factors such as high inflation, global uncertainty, strong precious metal prices and investors nervous about the stock market tend to be favorable for coins, including for investors, some of whom will also take up collecting coins as a hobby. Heritage Auctions reported record overall sales in 2022, including U.S. Coins, “which realized more than $310 million in total auction sales, a 21 percent increase over 2021’s record-setting numbers.”
I’ll repeat my advice for the 2010’s: Diversification by including classical U.S. coin designs and types, world coins, and perhaps other numismatic items such as tokens and medals, might seem advisable.
The best advice for the average person is to enjoy collecting, treat it as a hobby, and spend modest amounts of money. Coin investing has many risks (for example, coins are not a standard commodity and are subject to differences of opinion with regard to grade and value) and should be approached with great caution, and only when the investor possesses the necessary knowledge. You can gain a great deal of knowledge and fellowship by joining a coin club and becoming friends with experienced members who specialize in various aspects of numismatics! Although a great deal can be learned on the Internet and in books, there is still no substitute for personal interaction, especially if you want to maximize your enjoyment of the hobby!