Numismatic Diversification

During a recent meeting with my financial advisor we discussed the importance of diversification. Having all of your eggs in any one basket is risky and obviously not a great idea. The same can be said for your investments in rare coins. Regardless of your love for numismatics, nearly everyone hopes their investment in the hobby is well rewarded in the long run. If you collect only one series, your financial rewards will be closely tied to the success of that area of the market. It should be remembered that different series of coins have performed better than others over the years. Some coins have risen sharply in the last 10 years, others can be purchased for the same price as 25 years ago.

I would never advise buying rare coins purely as an investment. To do so would mean missing out on the pleasures of the hobby. You would not learn about the history that is connected to nearly every coin or the nuances of the series. One of the great reasons to consider numismatic diversification is the opportunity to learn about different coins. You may love Morgan silver dollars, but this laser focus prevents you from learning about other areas of the market. Consider diversification as an opportunity to increase your numismatic vocabulary.

One idea I have discussed before is assembling a Type set of United States coins. This concept is perhaps the ultimate diversification when collecting United States coins. You purchase one of every coin produced by the US Mint. Coins have been produced in the United States since 1793 and there are a lot of different issues for every denomination. You can vary your collecting strategy based on your budget. For those thinking big, try assembling every issue in the highest grades possible. One of the finest collections ever assembled in this manner was the Jimmy Hays collection. He tried to purchase the finest known examples for the first year of issue of every series. His collection was amazing and was sold by Stack’s in the early 1980s.

For those with more modest budgets, you can assemble a Type set of coins in the best grades you can afford and also focus on the non-gold series. In general these are much more affordable. Some of the gold Type issues are far above the means of average collectors. Another idea is to assemble a 20th Century Type set. These are the coins struck from 1900-1999 and there are no five figure stoppers in the series. Another interesting strategy that one of my clients utilized is to assemble a Type set composed of the rarest coin for each series. His theory was that as more collectors enter the hobby there would be increased demand for key issues. Over the last 10 years he has been well rewarded for his idea.

Collectors might also consider purchasing ancient and world coins. This area of the market has shown tremendous growth over the last several years. As parts of the world become more prosperous, their citizens often start to collect artifacts of their past. This includes rare coins and paper money. Over the last 25 years Chinese coins have exploded in price. The same can be said of Russia and India. Ancient coins have also become very popular because of their affordability and amazing historical value. I have personally become very interested in ancient coins and highly recommend others to investigate this fascinating part of the market.

There are many ways to diversify in numismatics and the above are just a few of the options. You may want to explore other series or just buy a few great coins unrelated to what you currently collect. By exploring other parts of the numismatic market you may develop a passion for coins you previously knew little about. As I have always recommended, regardless of what you collect, do your research before making purchases. Also, consult with experts in the field and learn as much as possible. When buying with investment returns as a goal, smart purchasing is a must.

Questions about the rare coin market? Send them to wmr@ngccoin.com.

Jeff Garrett bio