Many people see rare coins as a valid alternative investment and a diversification from traditional stock market or real estate investments, for example, but they don’t know where to begin. There’s a growing trend in the rare coin market to invest in building collections of the various design types of coins across all the denominations of coins.
For example, in the one cent denomination beginning in 1856 the coins were greatly reduced in size to the size of the coins we use today. So from that point on a “type set” would include a Flying Eagle cent, an Indian cent and a Lincoln cent. In the silver dollar denomination, for example, a collection/investment would include an example of a Flowing Hair silver dollar, a Draped Bust design, a Seated Liberty dollar, and Morgan and Peace design silver dollars, then the set would jump in time to the next issues coined, the modern era dollar coins beginning with the Eisenhower dollar.
Type coin collections provide a diversification across all American coin issues, and this kind of collection/investment is interesting, rather than building a collection of just one coin type, such as Morgan silver dollars, for example. This method of collecting and investing in rare coins also touches on all segments of the various coin series. Silver coins, gold coins and copper, nickel and bronze coins will be included, so if any one area of coinage gets “hot” and prices rise, a type coin collection includes examples from that market segment.
A type coin collection/investment can also be tailored to meet all budgets and personal preferences. For example, some people are drawn to gold coins, others silver coins, some like coins from a particular U.S. Mint, such the Carson City, Nevada Mint, etc. A particular overall grade of coins in your collection can also be chosen to meet your budget. For example, if you have the means you could purchase finest known examples in each series, such as in the MS 66, 67 and 68 grades. But if your budget has limits, as it does for most people, you might want to consider collecting and investing in AU-58 coins, which are normally attractive coins that have a minimum of friction on their high points, and tyey’re often more attractive looking than many Mint State coins. Planning out a collection/investment is wise so you have a direction for your purchases.
Another reason type coin collections are increasing in popularity is because prices for rare coins have been rising over the long-term. For example, I know one collector/investor who sold out and diversified into other areas because his area of focus, “early silver dollars” which were coined from the 1794 to 1803 period, became too expensive for him to carry on. He was used to paying around the $1,500 level for these coins in the grades he collected, but when they started appreciating to the $4,000 level it got too expensive for his budget and he sold out, realizing a handsome profit.
Remember that planning out your collection/investment in advance of beginning your purchases will pay huge rewards for you in the future. A good place to start is by looking through A Guide Book of United States Coins, annually published by Whitman Publishing. It is chock full of information about U.S. coins, covering everything from coin grading to mintage figures and market prices. The book is famously known as the “Red Book.”
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