One question I am sometimes asked (by people who know that I am a Grand Rapids coin dealer) is, “What are the trends in rare coin values?”
In general, over long periods of time, rare coin values tend to increase. This has certainly been the case for rare coins over the past two years… but the key word is “rare.” When a coin’s value is largely determined by rarity (along with condition and desirability) vs. bullion content, values tend to rise over time. However, when a coin’s value is largely tied to the spot price of silver and gold, its value will rise and fall with the value of the metal. Gold and silver prices have declined in the past two years; hence, bullion coin values have also declined.
When purchasing coins, you can purchase numismatically important rare coins or you can invest in bullion coins. Truly rare collectible coins have little relationship to the value of their precious metal content. Investing in rare coins is similar to investing in rare art, antiques, or other rare collectibles. Investing in bullion coins is akin to investing in other commodities such as oil, corn, soybeans, etc.
How have truly rare coins performed in the declining bullion market? Very well!!
Ten years ago, a rare coin selling at auction for six or seven figures was shock. Within the last few years, though, these price ranges have been achieved regularly. In 2013, there was incredible competition for “trophy” coins like the 1794 Flowing Hair silver dollar. That coin, which is thought to be the first metal U.S. dollar ever minted, was sold at auction by Stack's Bowers Galleries for $10,016,875 in January 2013. In fact, a total of 11 U.S. coins sold for over $1 million in 2013. Numerous records were broken each time one of these masterpiece coins was publicly offered.
In the United States, other rare coin values have followed trophy coin prices in the last decade. According to the Luxury Investments Index in the Knight Frank 2013 Wealth Report, rare coin values soared 225% during the preceding 10 years.
American collectors seem to be interested in collectibles for enjoyment as well as for the intended appreciation of the investment. The recent spike in sales of high-end collectibles, such as rare coins, art and antiques, may also reflect the increase in liquid assets the wealthy have to spend. Investors and collectors may be moving profits derived from the stock market into rare coins.
With the recent decline in gold and silver prices, new bullion buyers have entered the market; some have migrated to rare coins in search of additional sources of investment returns
Like any investment, rare coins and other collectibles certainly carry their own risks. They produce no income, and have no future capacity to produce. If you invest in rare coins, you’re speculating that you will later be able to sell them for a higher price. Rare coins are not as liquid as, for example, stock market investments, and prices for most coins can only be determined through individual sales. However, for a true collector or an investor seeking to diversify, rare coins offer very attractive and inherently interesting possibilities.
If you’re in the Grand Rapids area, it’s important that you consult a Grand Rapids coin dealer whom you can trust. Research your coins, ask questions about the value and provenance of all rare coins that you are considering, and learn about the market value of rare coins. In many cases, it makes sense to invest in graded coins. Whether you are a seasoned investor or an avid collector, contact Mullen Coins for insights into rare coins.