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MY FATHER, WHO DIED in 2007, collected coins in a haphazard fashion through the 1970s, ’80s and ’90s. I believe he did this in the hope they’d appreciate significantly in value. In other words, he did it as an investment, not as a coin collector pursuing a hobby.
I’ve now been assigned the family task of “seeing what we can get” for Dad’s coins. As an investor in the stock market, I’m curious: Did my father’s efforts pay off—or would he have been better off putting the money into stocks?
My own bias is to invest in the stock market because it’s liquid and has historically provided handsome growth, while hard assets like coins and other collectibles aren’t as liquid. Because of this belief, I’ve not done any collectible investing. But maybe collectibles do provide decent returns if you hold them for long enough. Now, I had the chance to do a real-world test.
Here’s a snapshot of Dad’s collection:
My plan was to bring the collection to dealers to get quotes. But first, to be sure I’d get something like fair value, I created a spreadsheet listing all the coins and my estimate of their value. I hoped, of course, to find that rare 1955 doubled die penny worth north of $10,000. But, alas, there was no super coin in the set. My spreadsheet showed the collection was worth about $5,000 at retail. What this means wholesale I’ll find out as I shop the set among dealers.
Some interesting facts about the collection:
Did my dad do better than the stock market with these coin purchases? To test this question, I made some assumptions:
Would $500 invested in the stock market in 1985 be worth more or less today than $5,000? There have been some four decades for the $500 to grow. The result of four decades of stock market growth, with shares doubling each decade, can be found with this calculation: 2 x 2 x 2 x 2. That gives us 16-fold growth. If we multiply $500 by 16, we get $8,000.
Moreover, I’m likely being far too generous in my valuation of the coins. I recently went to two dealers and got quotes of $1,500 and $2,300 for the lot. The dealers said many of the U.S. coins were of the “spend it” variety, meaning they were merely worth their face value.
Bottom line: My dad’s $500 invested in the stock market might have returned $8,000, while his coin investments will yield at most $5,000. This analysis doesn’t mean you can’t do well investing in coins. But I believe you must treat the effort as a business and become knowledgeable about the subject. If you’re a casual investor using a buy-and-hold strategy, the stock market has proven to be a far better place to increase your wealth.
Bruce Roberts recently retired from IBM after a 35-year career as a software engineer. Degrees in math and computer science served him well during his career and when investing. In retirement, Bruce enjoys tennis, playing bridge and tutoring math.
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Bruce, greetings from a fellow IBM retiree. Your article may motivate me to pull out my box of old coins I collected in the 1960’s when I had a paper route for several years. I enjoyed sorting through the coins and pulling out ones that were particularly old or interesting. I think the oldest was an 1898 Mercury head dime. During that period I also collected (hoarded?) all of the silver half dollars I came across, Franklin and Kennedy coins mostly. Unfortunately, most of those I foolishly spent in my high school and college years. I never collected coins as an investment, just as a passing interest. Thanks again for your article and the memories it stirred.
Jerry, not be a stickler (OK, yes I am), but if you have a dime from 1898, it is a Barber style dime, not a Mercury. Unless it has an ‘O’ or ‘S’ mint mark and is in great condition, it is not particularly valuable.
I had a similar experience with my parents’ 60-odd silver dollars. The first thing I was told by a dealer was that every family in America seems to have a small hoard of silver dollars and thinks they are valuable. They are usually wrong. Most silver dollars are too worn, or aren’t that rare. You can buy nice shiny silver dollars in good condition at some flea markets for $25, if all you want is a nice silver dollar. So a dealer would offer you less. I hate to tell you that even your modest estimate may be too high.
Ultimately, we followed most of the same steps that you did. Since there weren’t any hidden treasures, we chose another path. The five surviving children sat around a table with all the silver dollars spread out in the middle. We told family stories and took turns picking one of the silver dollars until all of them were taken. Everybody was happy with the memories.
Being an avid viewer of Antique Roadshow on PBS the one collectible that I have noticed which seems to consistently appreciate in value is old sports memorabilia. On the “vintage” shows (probably the only benefit of COVID) when they reappraise items from older shows I don’t recall the value as decreasing. I still would not take the plunge as an investment however.
I’ve been helping a family member deal with this as well. The six siblings inherited an unbelievable quantity of coins.
If this happens to you, the “intel” from several dealers in three different locations across the US was the same. First, you have coins that are really the equivalent of boullion. In other words, valued at the weight of the metal. It may be a “mint in box” Morgan Silver Dollar but it is only worth the 90% silver it was made with.
Second, is the truly collectible coins. These might be from the same pile as the first but have extra value to collectors. But this pool of collectors is shrinking. Our Millennial, Gen Z, Gen X, E-I-E-I-O, children don’t want this stuff. So far they are not collectors. I just took a large box of Lemoge china to our dump. The antique dealers could have cared less as they don’t have buyers for Grandma’s wedding present.
All three of our coin contacts were also in the same “commission” range which is 10% to sell your bullion coins, and 25% to “auction” your collectibles. I would make a list or spreadsheet of what you are handing over to the dealer and not just take a large plastic tub and say “Here you go” for fear of some prize pieces vanishing. OK, yes, I have trust issues.
There is also a third pile: junk. These are the “advertised collectible” items “as seen on TV”. The memories they inspire are worth about as much as the memory. They might mean something to the buyer but not to our kids. And sadly for many, it’s retirement funds out the window. This pile the dealers all said to throw away…next to Grandma’s Lemoge.
Hope this helps.
The fact that collectible types go in and out of favor surprised me initially. But, on reflection it makes sense. Similar to equity categories (growth, small cap, etc).
No need for such a rough estimate of market return. A $500 investment into the Vanguard 500 in 1985 would be worth $30,021 as of June 30, 2023; equivalent to $10,361 when adjusted for inflation.
Good point.
Could have been worse, he could have collected stamps. LOL
Stamp dealers are a vanishing breed, in part because true stamp collectors are vanishing. Stamp collections accumulated over the years before “forever” stamps go for far less than their calculated value, because there aren’t buyers for what is in them.
However, “forever” stamps might be an interesting exception. “Forever” stamps purchased years ago have appreciated in line with the increase in stamp prices, of course. You won’t get rich on them, but at least that “forever” stamp you bought at 30 cents will still send the same letter that would be costing you 66 cents if you bought the stamp today. If you can estimate your stamp needs, it may make sense to stock up just before a stamp price increase. (if you bought some late last December, you’d be up about 10% for 2023 already.)
That’s another article. 🙂
My father once owned and serviced gumball machines. He would bring home sacks of pennies to be rolled before depositing those coins in the bank. I would search through those pennies looking for anything rare or unusual. To my delight, I once found a 1909 VDB Lincoln head penny.
In the mid-1960s, I sold that penny to a coin dealer for $19. For many years thereafter, I regretted selling that coin. I felt I should have kept it so its value could have appreciated further.
Fast forward to today. A 1909 VDB Lincoln head penny in uncirculated condition can be purchased on eBay for $18.
My father had a collection of Indian Head Pennies. I’m guess 50-75. I recently looked up the value of such pennies and it varied greatly. Some were worth thousands.
Unfortunately, as a little girl decades ago my sister used them in a gumball machine.
Unfortunately, they weren’t my father’s gumball machines.
$18 sounds about right. But when I went on eBay today, I found a rather worn specimen (no ‘s’ mintmark) offered for a crisp $1000. When it comes to coins, ignorance could be costly.
Great article. I too was an amateur numismatist as a kid, but only for fun. I don’t have anything of any value. I’ve just always loved coins and paper money for their beauty and what they represented to the countries or mints that issued them. I’m right there with you in that I wish my FIL had sold his collectibles while he was alive because now nobody wants to touch them and no one knows what they could be worth. Better for the collector to liquidate them while alive and share the proceeds with his heirs! Now I just need to follow my own advice.
Don’t forget about taxes. Stocks, in general, get more favorable tax code treatment, with the tax rate on collectibles ranging as high as 28%.
I know, as if we needed another reason not to treat collectibles as an investment…it just re-enforces the notion that, unless you really enjoy what you are collecting, don’t bother.
Bruce – I had a nearly identical experience with most of the value in a few coins and silver appreciation:
https://humbledollar.com/2022/07/penniless-at-last/
John, thanks for the link! I really like the table comparing returns.
You had that wonderful experience with your uncle as a memory. My father collected on his own.
In my case, as in yours, the gold and silver coins were the bulk of the value for the collection. The dealers say those coins have “melt value”. They’re worth the value of the coin’s rare metal content. The coin itself adds little to no value.
Yep, I’d suggest just keeping the gold coins as they are beautiful and retain sustained asset values as a diversification. They are a far better collectable than most objects, and the wholesale to retail spread reduces any pressure to immediately cash out. We kept the two gold coins we had just because…….
Thanks for sharing the link to your article, John. It was also a fun read and I enjoyed the comments under your piece as well.
Thanks for these thoughts. I have all of my Dad’s collected coins. He usually only collected US coins, and preferred encased as proof/mint sets. My Dad started his career as a machinist. I know he bought the coins because he appreciated the designs, and I think he was mostly influenced by the engineering and precision machining that produced them. He often commented on the pristine surface finish and edge detail.
One day I will do what you’re doing – try to find someone to buy them. I just haven’t gotten there yet.
Thanks Jeff.
My dad also purchased proof sets for a number of years. They are beautiful, little works of art. The surprising thing is, they are worth LESS today than my dad paid form them! The coin dealers told me the mint turned so many of them that it diluted the value for most of the sets.
Bruce, as a kid who collected coins since age 8 and an adult who has had occasional spurts of interest over the years, I really enjoyed your article. Coins are not a good investment in general, although if you enjoy the hobby, there are worse things you could spend your money on. A book called “The Coin Collector’s Survival Manual” by Scott Travers finally convinced me of the folly of treating coins as a serious investment vehicle, at least for myself. From a hobbyist perspective though, I still enjoy looking at old and rare coins. The estimates you received from the dealers seem about right…40% of retail is quite generous for a group of more common coins.