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A Guide to the Best Coin Investments

written by: •edited by: Doreen Martel•updated: 9/20/2011

Collecting coins can be fun. It can also be profitable. There are many coins that have soared in value over the years. Some have sold at auction for hundreds of thousands of dollars. There are some best coins to invest in, but which ones depend on your budget.

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    Are There Best Coins for Investment?

    Well, yes and no. It all depends on your budget. If you have millions and money is no object (no pun intended) there are several coins that are definitely the best coins to invest in. We have selected five as examples.

    U.S. Silver Eagle Dollar - The U.S. mint began producing these one ounce coins in 1986. They are .999 percent pure silver, and are the only coins whose weight, content and purity is guaranteed by the United States government. Uncirculated (see below) 1986 Eagles sell for about seven dollars above the price of silver (called spot) which at this writing is right at $45 an ounce. An Eagle proof coin (see page 2) will go for about $52 from the mint. From dealers some are selling as high as $111.Silver Eagle dollar 

    Canadian Silver Maple Leafs - With much of the same type pedigree as the Eagle, the Maple Leaf offers a bit more. For one, it is .9999 pure silver, and numismatists consider it one of the finest examples of the engravers craft. It also has been produced in fewer numbers since its introduction in 1988. Still, it is selling for just around three dollars over spot.

    Morgan Silver Dollars - These dollars were minted from 1878 to 1921 at five different U.S. mints, including Carson City (see below), Denver and San Francisco. They were designed by George T Morgan, and his initials appear near Lady Liberty’s neck. Overall, the Morgan’s are valued at about $160, but at least one has sold for $66,000.Morgan silver dollar 

    Dahlonega Gold Pieces - In 1837, gold was discovered about 100 miles north of a town then called Marthasville - it’s called Atlanta now. The town near where the gold was discovered was Dahlonega, GA. It was a rich find. So rich the U.S. decided to establish a mint in Dahlonega to produce gold coins from the gold mined there. From 1838 until the beginning of the Civil War in 1861, the Dahlonega mint produced four types of gold coins: the $5 half Eagle, the $1 coin, the $2.50 quarter eagle and a $3 coin. All Dahlonega coins were stamped with a ‘D’ mint mark (the D belongs to the Denver mint now). An 1861 Half Eagle recently sold for $207,000. Another D coin went for $57,500. Note the D coins are the only gold coins in our ‘money is no object’ selections That’s because gold’s inflated price now skews the prices of other gold coins beyond their normal numismatistic value. The D coins however are so popular their numismatistic value exceeds their gold value.

    Carson City Mint Coins - In 1859 two prospectors just outside Virginia City, NV hit it rich. They found gold. But another miner named Henry Comstock insisted their claim was on his property, and convinced them to let him join the partnership. As they mined the gold, they had to slog through some awful blue gray mud that slowed production. Comstock had the mud tested. It turned out to be silver ore. He had been slogging through the first and biggest silver find in U.S. history. It became known as the Comstock Lode. As it had done in Dahlonega, the U.S. Mint eventually built a mint nearby, 15 miles down the road in Carson City, NV in 1870. Note this is the beginning of that short period of history often referred to as ‘the wild west.’ That is part of the reason CC coins are so popular. Collectors are owning a part of one of the most exciting times in our history. The CC mint produced five types of silver coins: a dime, a 20 cent piece (the most sought after), quarters, half dollars and silver dollars. It also produced some gold coins but these do not have the numismatistic value of the silver ones. It is estimated fewer than 20 of the 20 cent coins exist today. An 1876 20 cent piece recently sold at auction for almost $300,000.

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    Proof Sets

    The U.S. Mint sells Proof Sets of many coins, especially new issues and new designs and definitely some of the best coins to invest in. These are your most affordable investments. Proof Sets are different from the regular coins minted. They are struck on a specially formed die that is highly polished and produces extremely bright and well formed coins. The Mint offers sets of variations of a single coin, such as the America the Beautiful quarters, sets of complete denominations-penny, nickel, dime, quarter, half dollar and dollar—with a special commemorative coin in the set, and any number of other combinations.

    Proof Sets will average around $45 from the Mint. Individual Proof coins, such as a Medal of Honor silver dollar will sell for close to $60. The Mint also sells Gold Proof coins and sets, but because of gold’s inflated price these are not in the easily affordable range, averaging $800 to $900, with some selling for almost $1700.

    Proof sets can appreciate quite well. A 1997 set which sold for $50 is selling today for $110. A 1968 set with a dime without a mint mark which sold for $30 is now selling for $9000.

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    Some Other Affordable Coins

    There are other affordable coins that make good investments. One of the most famous is the well known Indian Head penny. If you are talking to a true numismatist, never refer to it as a penny. They exist only in the British commonwealth. It is a ‘cent.’ At any rate, the Indian Head cent was produced from 1859 to 1909. They are in great supply and so are affordable but highly sought after. Depending on quality they can cost from under a dollar to about $450.

    Before this cent was produced, the U.S. had a large cent, 27 mm in diameter. First produced in 1793, it was minted until the Indian Head cent became the cent in 1859. It is prized because of its size. Depending on quality and rarity, it sells for $60 to several thousand.Large cent 

    Another easily afforded coin is the Jefferson nickel. First minted in 1938, it replaced the famous Buffalo nickel and remains in circulation today. Early Jefferson nickels sell for as much as $7.50 in uncirculated condition. Circulated coins can sell for as little as $1.50. Later versions, from about 1952 on, sell for a nickel. Which brings to mind Yogi Berra’s remark, “A nickel ain’t worth a dime no more."

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    Coin Grades

    We’ve mentioned terms like uncirculated and circulated. What exactly do these terms mean? They clearly affect the value of coins.

    The most valuable condition for a coin is Proof, abbreviated PR or PF. These are the Proof Sets we’ve discussed. Next most valuable are uncirculated coins. These of course are coins that have never been used in commerce and show no or very little signs of use such as scratches or other marks. There are 11 grades of uncirculated coins abbreviated MS for Mint State. The best is MS-70. It has no marks at all. Typical are MS-63—MS65. These have some scratches or marks, but good luster.

    For circulated coins, there are two grades: AU for About Uncirculated. These are AU-55, Choice About Uncirculated and AU-50, just About Uncirculated.

    Below these grades you will find Extra Fine, Very Fine, Very Good, Good, etc. Obviously, the further down the scale you go, the less desirable the coin is, unless it is extremely rare.

    There are 70 grades for coins. For investment purposes, you want to stay with the higher grades, at worst MS-63. These are the best coins to invest in.

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    Now the Caveats

    First, coins are not the most liquid of investments. You must find someone who wants your coin to sell it, and they must be willing to give you your price. A dealer will give you only the wholesale price.

    Second, you should have a strong portfolio of other investments—stocks, bonds, treasuries, etc—before you sink significant funds into coins. My rule of thumb is no more than 20 percent of your portfolio should be in coins. If your total investment portfolio is less than $250,000, no more than 10 percent should be in coins.

    Of course, you can always collect just for fun.

    For more tips and advice, be sure to check out Bright Hub's Guide to Investing in Precious Metals.

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    Sources and Credits

    Sources:

    1. Proof Set Prices: http://sammler.com/coins/us_proof_sets.htm
    2. Carson City Mint: http://www.coinlink.com/News/us-coins/coins-from-the-carson-city-mint-more-popular-than-ever/
    3. Coin grading: http://www.us-coin-values-advisor.com/grading-coins.html#70Point
    4. Professional and personal knowledge and experience. For several years I wrote a column on coin investing for 'The MoneyLetter', an investment newsletter published by Hume Publishing. I also appeared on local and syndicated radio and TV talk shows discussing coin investing.

    Credits: