Should you consider rare and collectible coins as a part of your investment portfolio?
I think you should.
Coins are a good diversification for investors.
They should not, other than in incredibly exceptional circumstances, be the largest part of your portfolio.
One of the biggest bonuses of investing in coins is the extra dimension of numismatics, as coin collecting is called.
The research, the historical knowledge you’ll gain, the passion… they give an extra depth to coin buying that no other investment can match.
What did this silver drachm buy in the Athens of 450 BC?
Imagine owning something made hundreds - thousands even - of years ago by the best craftspeople of the age and valued by generation after generation of owners, perhaps by some of history’s greatest figures.
And, it might appreciate in value at rates that beat other areas of your wealth management.
Buying coins as an investment
Coins are a particular type of investment.
To many buyers they are worth much more than their financial return.
But to Investopedia, they are a “nonvolatile” and long-term investment.
They record historical returns for elite coins of 1,000% in just four years from 1976 to 1980, and another 600% from 1982 to 1989.
Research by Chartwell Capital’s Michael Fox-Rabinovitz suggests a growth rate of around 10% a year in the long term.
In 2024, the Knight Frank Index (the luxury investment index) showed 127% growth over the previous 10 years for the rare coin market.
The Brasher Doubloon is a two-time record breaker.
Representative indices are hard to collate in this sector, but those that do exist have recorded growth in US coins, for example, of over 300 percentage points in the years since 2000.
Our own Mike Hall tells me that record-breaking realisations in the coin market are becoming the norm. Crucially, these are for items in the best condition that are particularly attractive to collectors.
Investing in coins now
Collectibles generally and coins in particular also have some characteristics that make them potentially attractive right now.
Most rare and collectible coins are made of precious metals. These are booming in their own right.
Coins are portable and can be a safe store for value in times of extreme instability.
Most countries have issued iconic, high-value gold coins, like this Yugoslav 4 Dukata piece. Most have value to collectors.
They’re universally recognised as valuable and are saleable around the world.
You don’t need access to bank accounts and stock market computer systems to realise the value of your asset. It’s hard to “freeze” a stash of coins.
This has brought money into the market.
Covid, Russia’s illegal invasion of Ukraine, climate change, inflation and similar events are evidence of instability.
Covid was a boost to a number of collectible markets in another way.
People were confined to their houses. Lots of them rediscovered old interests or passions or found new ones. Stamp and coin collecting and rare watches were all options for those who were time and money rich.
And, a new generation is entering the collectibles market.
It’s as inevitable as the changing of the seasons. And it means change.
Younger buyers, often rich from web or crypto businesses, are starting to indulge their passions.
So, as the Beatles perhaps pass the “most collectible artist” baton to Nirvana, so younger tastes will start to impact other markets.
The web has been enormous in collectibles.
As Mark Salzberg of Certified Collectibles Group, one of the world’s top numismatists, told Knight Frank, collectibles including coins now have “greater accessibility, safety and confidence.”
You don’t need to be a specialist any more.
And more and more coins are certified as authentic by a growing band of professional experts.
What makes a good investment coin
This ostrogothic coin carries the intrinsic value of very pure gold, plus historic, collectible value and interest.
Coins are valuable as collectibles if they are:
Rare - All collectibles have value on this basis. Coins, unlike stamps, are designed to last and to be stored. However, they can be rare because of their age, because of their high value, their territory, and any number of factors around their genesis. Rarity alone may not be enough to give a coin great value, but it is extremely unlikely that a coin that is not rare will ever have great value.
Rare by type - Coin collectors are after the unique and the specific. So, a silver dollar has some value, but it’s a silver dollar struck in a particular time and place (America has had multiple mints), or with a particular design anomaly that they want.
Significant - Firsts are always attractive to collectors. New production techniques, for example, or coins struck very early in their issue period. New nations - the most valuable American coin is the Brasher Doubloon, a New York State coin that is one of the earliest American made coins. Special issues and commemoratives may also have value, particularly if their sale is well timed.
Different - Errors are much beloved by coin (and stamp) collectors. Coins are very important tools of a state - historically it was common to execute coiners who forged them - and they carry the prestige and legitimacy of that state with them. Errors are ruthlessly stamped out, so they’re automatically rare. Some which have particular visual appeal add even more value.
Abandoned - Coins that are withdrawn for any reason are immediately extremely valuable to collectors. In the ideal world of the mint managers, they are all withdrawn and destroyed, but we know that doesn’t happen, giving us the likes of the 1907 Gold Saint-Gaudens Double Eagle, which was beautifully - and completely impractically - designed, and abandoned before issue. To get one of the 30 known examples will cost you several million dollars.
Condition - As our expert Mike Hall tells us, it is coins in the best condition that are performing really well at the moment. Coins are built to last, and it’s possible - and a privilege - to own even ancient coins made by the Romans and Greeks in extraordinary condition.
This 18th-century George II crown is in wonderful condition and you don't need to be an expect to see it.
Genuine - Certification is the gold standard for authenticity, but provenance also counts. Expert valuation that can be proved is a big plus. Any coin buyer should learn their way around the market before spending big sums.
Meaningful - True collectors love what they buy for its significance. Any item that can be linked to a real-world historical story has added prestige and glamour, and probably value. The coin tossed at the start of the 1966 World Cup Final was sold for £9,000 in 2022. On its own it’s basically valueless. Of course, these stories must be proved and documented.
Marketable - A coin can be all of the things on this list and still fail to have much value. You need a buyer. What makes something desirable to collectors? Sometimes it can simply be that it has been off the market for a long time. Items that have been in a family collection or sold privately can generate excitement when they finally come to auction.
Rarity, discovery and induced rarity
Although coins are minutely catalogued by their producers and then by generations of obsessed collectors there is still uncertainty about rarity in most cases.
A coin for which there are “2 known examples” for example is extremely rare, and will almost certainly be very valuable.
And there are almost certainly more - as yet unknown examples - of it out there.
Any discoveries of such coins will have an impact on the value of the existing stock.
Mints are quasi-commercial operations. Modern mints produce limited edition coins aimed specifically at collectors.
Like first-day covers for stamp collectors, these coins are unlikely to ever reach the most valuable level because they are sold in order to be collected and kept. And they are, so although they are usually limited they are unlikely to become scarce on collector’s markets.
Short-term buying
Coins are a particular sort of investment.
They are a long-term buy, and generally stable.
But they’re also the subject of fluctuations.
For example, there’s currently a trend in banknote trading on sites like eBay, where notes with interesting and unusual serial numbers are making big money.
That seems unlikely to be a good long term buy to me.
Whether some of the more modern craze buys, like particularly rare 50p and £2 coins in the UK, will stand the test of time is also up for debate.
They are certainly relatively rare, but they don't tick many of the other boxes for long-term buys and seem more like an example of induced rarity.
Serious investment buyers would be best shopping among more established issues.
Invest in rare coins now
If you’re interested in rare and valuable coins we would love to hear from you.
Browse our rare coin collection now.
And contact us with your wish list or to ask about valuations.
