ANAStaff's Blog

02 May 2014

How to Earn Above Market Returns in the Rare Coin Market

Coins-United States | ANAStaff

Written by: Tony Davis

For those individuals that put forth the time and effort, we believe that there are opportunities to earn above market returns in the field of numismatics. While the overall rare coin market has been performing well in recent years, as is evidenced by this graph from PCGS, which has shown an index increase from approximately 62,000 to 68,000 over the past ten years, only individuals that were invested in all of the coins in the index actually received these returns. The actual returns of most rare coin collectors likely performed better or possibly far worse, depending on the type and condition of the coins in the collection. Fortunately, our strategy below removes from the equation much of the uncertainty and volatility that comes with changing values and trends in the market, and rather allows individuals to benefit in relatively short order from putting forth the time and effort to identify opportunities in the market. Taking advantage of the following resources should help any collector increase their chances of returning strong returns in the rare coin market.


Making the Grade


While we were in school, our focus was on making solid grades and outperforming our peers. The same applies to the rare coin market. Individuals that take the time to learn how to properly grade coins have a huge step up over the coin buying competition and can benefit financially from this skill. Not only do leading numismatic associations, such as the American Numismatic Association, offer correspondence coin grading courses and diplomas, but some of the leading third party grading services, such as PCGS and NGC, regularly offer coin grading classes at national coin shows. Additionally, local and state numismatic societies regularly offer coin grading classes at their monthly meetings and at local shows. One of the best books available on the subject of coin grading is " Making the Grade" by Beth Deisher. This guide provides color pictures as well as a detailed description of grades for the 50 most popular U.S. coins. Once you're able to properly evaluate the grade of coins, you can seek out potential bargains on eBay, coin forums, coins shows, etc. and submit them to third party grading services for certification.


Third Party Grading Services


Third party grading services, such as PCGS and NGC offer valuable services because it helps to eliminate subjectivity with respect to the grading of coins. CAC also serves a purpose, in that they identify higher condition coins for the grade. Once you've purchased a coin or a number of coins that are worthy of being certified (i.e. those that haven't been cleaned or altered), you can submit them to PCGS or NGC where they'll be encapsulated in a tamper proof case and assigned a numerical and letter grade. Typically coins that are professionally graded sell for at least 10 percent more than their ungraded counterparts and sometimes more. Both PCGS and NGC require a paid subscription; however, one of the benefits of being a member of the ANA is that direct submissions to NGC are included. It's typically best to submit multiple coins at once to reduce the per coin expense.


Variety is the Spice of Life


While identifying undervalued rare coins and having them professionally graded is a great way to receive an immediate return on your investment, identifying variety or error coins is likely to pay much larger dividends. These are coins that were produced directly by the U.S. Mint with an error or variation from the standard issued coin. Searching through thousands of coins looking for obvious errors is an exercise in futility. Rather, your best bet is to educate yourself with respect to known variety coins and focus your attention on those particular coins. Two great resources include " The Cherry Picker's Guide" and " The Top 100 Morgan Dollar Varieties," which in the industry are commonly referred to as VAM coins. Any of the major third party grading services are qualified to grade variety coins and will note the specific type of variety that the coin qualifies for on the certified coin holder.  




Becoming knowledgeable in the field of numismatics can not only enhance your coin collecting experience, but can also translate into very nice returns on your investment. A good way to increase your returns is to learn how to properly grade coins and identify ungraded coins that are relative bargains on eBay, at coin shows, and at other venues. Once you've accumulated a decent number of coins, we recommend that you submit your coins to one of the leading third party grading services to have them certified. Certified coins typically sell for more than raw or ungraded coins. Don't forget to explore the area of variety coins, which have some of the greatest possible opportunities. Be sure to identify the type of variety coin you have in your possession when submitting them to a third party grading service so that the error isn't overlooked by a grading specialist.


Tony Davis is the owner of Atlanta Gold & Coin Buyers.


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