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Build a Portfolio with Affordable Coins
By David L. Ganz
June 24, 2010

The following is an excerpt from David Ganz’s upcoming book, Rare Coin Investing: An Affordable Way to Build Your Portfolio, due in bookstores mid-August. It can be pre-ordered at

What attracted me to coin collecting (and ultimately coin investing) some 50 years ago was the ease of entry. No forms to fill out. No disclosure. Just sift through your pocket change and transform money into MONEY – real money. Perhaps my story is typical, but in 1960 I used to check my pocket change for things that were unusual. I found a well-worn, circulated 1906 Indian head cent in my pocket change, probably from a comic book or baseball card purchase. That wasn’t unusual, because D.C. Comics charged 12¢ for a Superman comic, which meant tendering a dime and a nickel, with three cents change.

Thinking that I had been given a worthless foreign coin, I complained to the wise fountain of information, my mother, who took me to the Rockville Centre, N.Y., public library. A red-covered book by R.S. Yeoman set me straight at once: the coin was an Indian head cent, American issue, and was in very good condition (three letters of the word “Liberty” were visible). According to the Guidebook of United States Coins, then in its 14th edition, my pocket change investment was worth somewhere between 15 and 70 cents.4 This wasn’t rocket science; my allowance in those days was 25 cents a week in return for which I made my bed, cleared the dinner table, and dried the dishes. (This is so long ago there wasn’t widespread use of dishwashers, except for the two hands of a child). For an investment of 1/25th of my weekly allowance I was hooked on coin collecting very quickly. Before long I was helping the local newspaper delivery boy go around each week to collect for the paper’s subscription delivery costs. My fee: 25 cents, which I could apply toward buying any coins that I needed for my collection at double face value.

That started a lifetime of collecting, though in those days, I rarely bought anything more than an old, well-worn Shield nickel (cost by this “method,” a whopping 10 cents), but still not a bad deal considering that the Red Book was quoting Shield nickels in good condition at $1.20 to $1.50 for the inexpensive common dates. I picked up some 2-cent pieces (4 cents cost) that way, too: the Guidebook listed inexpensive dates in good condition at 85 cents to $1.30.

What is astonishing is to place this investment (the real start of a coin collection) in a very affordable coin from pocket change and to overlay on the same scale the price of gold, which in 1960 on the nascent “free” market averaged $36.50 per troy ounce, and to carry the returns over a 50-year collecting lifetime. Because the “investment” is so nominal, a convenient and practical way to measure the success is to borrow the price shown in the Guide Book of United States Coins (the Red Book) in seven years selected at random during the period: 1961 (the 14th edition, covering 1960), 1964, 1970, 1979, 1997 and 2010.

The overall gain is from the base cost of 1 cent. I measured it against the price quote in 2007, as well as 2010. Even as gold topped $1,000 per troy ounce in the late fall of 2009, the rare coin from pocket change had a better return when holding both for essentially a half century.

Almost a dozen years ago, I wrote a book called Planning Your Rare Coin Retirement. It built a $10,000 portfolio and a $100,000 portfolio in 1997 and suggested reasons why these portfolios could grow over the long run. The results, in 2010 and beyond, exceeded my expectations and, I am assured, anyone who followed that advice. A more expanded view of the premise and results will be discussed in upcoming chapters.

This is not a book about 1804 silver dollars or 1913 Liberty head nickels. It’s a book of affordable rare coins that you can collect or invest in, or if you agree with Harvey Stack’s theory – and I do – both.

Here are some of the statistics that form the basis of my underlying thoughts on the general topic of this book. It summarizes my experience as a writer for various coin magazines over the last 45 years and the experiences that were polled when I was on the board of (or legislative counsel to) the ANA, as the lawyer to the Professional Numismatists Guild, as a founding board member and counsel to the Industry Council for Tangible Assets, as a member of the Citizens Commemorative Coin Advisory Committee, and as a lawyer in New York City with a significant practice dependent on offering of advice that draws on this.

It’s not the questions or answers from the surveys, but the impressions and trends that are the bulwark of my philosophy of collecting and investing. Each aspect of this counts in taking either a contrarian view, or one which you think will lead the herd.

So here is a summary of key analytical data and points from all the interchange with collecting investors:

• The average collector spends $2,500 annually maintaining and expanding his collection.
• Prior to 1999, most collectors (95%) were men
• Prior to 1999, there were about three million coin collectors in the United States.
• Prior to 1999, there were about 200,000 serious coin collectors in the U.S.
• Prior to 1999, there was a thin market for coin collecting items.
• Prior to 1999, the number of serious investors in rare coins was probably under 200,000.
• Post 1999 and the introduction of the state quarter program, the U.S. Mint says that between 120 million and 150 million people collect coins (most of them collecting state quarters)
• Today there are probably more than 300,000 serious collector-investors.

Population of serious collectors and investors
• Median age of collector: 63
• Average investment position: $380,000
• Average investment position excluding coins: $342,000
• Average value of numismatic collection: $39,100
• Collects popular series such as silver dollars (59%)10
• Collects other silver coins (50%)
• Collects gold coins (25%)
• Collects modern U.S. 1964-date (45%)
• Collects other things: antiques (28%), old books (12%), toys (11%); autographs (5%).
• Social and economic:
• Gender - Male (92%)
• Married (74%)
• Attended college (70%)
• Own my own home (89%)
• Average net worth (about $800,000)
• Average household income exceeds $100,000

Tax laws recognize three types of “collector” investors: those who pursue their hobby regardless of the profit or loss, investors who seek a long-term profit, and dealers. Some collectors become “vest-pocket” dealers; some dealers are also collectors. Some investors become collectors – but every collector is ultimately an investor, the longer that he or she holds on to the coins in their collection.

This book will look at some models of portfolio building as well as past performance as analyzed by Wall Street wizards of another generation – the Salomon Brothers survey that took a model portfolio for a dozen years starting in 1978 and showed how rare coins stood up against other investment entities. The method works so well, and is grandly illustrative, that you can compare how the extended Salomon charts look at the market of yesteryear and that of tomorrow. (I have extended some of the coins back 80 years, and carried all of the coins forward from the last time Salomon did the chart to the 21st century, now a generation later).

You’ll also have the opportunity to look at the model portfolio of $10,000 that I suggested in the original 1998 edition of Planning Your Rare Coin Retirement, and the expanded $100,000 portfolio. This will give the opportunity to see how not only the portfolio as a whole made out, but selected individual coins as well. (There are too many coins to have extended analysis on each, but the typical specimens are included). Ditto on the $100,000 portfolio. At the end, I’ll ask you the question, “How’d we do?” You can’t hide from the printed recommendations. The answers will be black and white and may surprise you.

Please remember that past performance is not a guarantee or even a hint that a new portfolio – or the same one – will yield similar or identical results. Indeed, it could be the opposite. That’s a hint to do your own research and draw your own conclusions.


More Coin Collecting Resources:

State Quarters Deluxe Folder By Warmans

• Subscribe to our Coin Price Guide, buy Coin Books Coin Folders and join the NumisMaster VIP Program

Strike It Rich with Pocket Change, 2nd Edition

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