Investment Advice

THE MEMBER VOTES ARE IN!!

Top Ten Best Investments for 2007 - Based On the Top Ten Most Consistently Popular

Compiled and Edited by Dr. Charles Baker, Reuben Harvey, Connie Davis

The following list of the ten most popular are excerpted from data composed by Dr. Charles Baker on behalf of a "Popularity Survey" conducted late last year, December, 2006 by the Beverly Hills Coin Club. Several hundred members responded. They were asked to vote for "Three of your most popular type coins to invest or collect in over the past twenty years". They were also asked to "list the dates/mints/grades that they buy the most of". Most members responded with specific dates that they buy, hoard and/or recommend. Some members even offered comments about the scarcity of some issues in particular grades while others offered advised on what not to buy and why. When our three-person panel agreed with their assessments, such member feedback was duly published below.

This list is a short, simple, yet comprehensive guide for those seeking a coin collection to be proud of or possibly a solid investment based on years of combined knowledge and experience. The three most often voted for were: Morgan Dollars, Peace Dollars and Buffalo Nickels, but the other seven came in very close, so we have listed these all in denominational order:

1.) Better date/grade Indian Cents. Generally, all dates are eagerly sought and purchased even in quantities, with issues from 1859 to 1879 wanted in every grade, even AG and poor, while issues from 1880 to 1909 are mostly being bought up in XF, AU and all Mint State Grades. It is generally agreed that "Full Red" sets are next to impossible to obtain, so many collectors and investors are very happy to have purchased "Brown" "Red & Brown" as well as the few "Mostly Red" ones they can get in the early 1900s.

2.) Early Lincoln Cents, especially D&S mints in the teens and 20s in VG to Gem BU 65, with the 1909-VDB in BU and the 1922 plain, 1922-Weak D and 1922-D all being extremely popular and possibly due for price upswings.

3.) Better date/grade Buffalo Nickels, especially XF, AU and BU examples in the teens and 20s. More sophisticated collectors realized that some dates are hard to find with "Full Horns" even in XF and AU grades, particularly 1921-S and 1926-S. Therefore, so more and more seasoned numismatists are grading the early D & S mints by the obverse only, and are getting some nice rewards as a result.

4.) Better date/grade Mercury Dimes, with AU to Gem BU examples in the teens, 20s and 30s being highly sought after but harder to find these days. The 1916-D is becoming "too pricey" for many collectors in grades above Fine, so it has been observed at coin shows that some collectors have been happy to spend upwards of a thousand dollars to get a "lowly" Fair, AG or "nearly Good". The reverse of the 16-D is often poorly struck, and usually grades about a grade lower than the obverse, and even in VG can sometimes exhibit a weak mintmark. This is possibly because most if not all were minted from just one set of worn dies. The 1916 "plain" is extremely popular, being the first year of issue, and is being hoarded in grades ranging from MS 63 to MS 66 (when on rare occasions the higher grade can be found).

5.) Every date/of higher grade Standing Quarters, except for the 1916 and 23-S in affordable AG or Good. The 24-S, 26-S and 27-S are under priced and sought after in VF and XF. In fact most dates are very hard to find in VF and XF and it took us years just to build up two rolls of the so-called "common dates" in VF and XF.

6.) Better date/grade Washington Quarters - Especially the early dates in the 1930s, with 1932 PDS wanted in every grade from poor to MS 67. Very hard to find Gem BU MS 64 and 65 examples in the later 30s, 40s and 50s.

7.) Better date/grade Walkers - such as dates in the teens and 20s in VG to VF, XF-Choice BU examples in the 30s, and Gem BU MS 64 and 65 examples in the 40s.

8.) Choice BU 63 to Gem BU 65 Franklin Halves, especially P & D mints with Full Bell Lines. S mints are popular in Gem BU 64 and 65 but unaffordable with Full Bell Lines, when they often sell for several thousand dollars each.

9.) Better date/grade Morgan Dollars such as all the CC issues in all grades, the 83-S, 84-S, 96-O and MS 60 are always popular, as the higher grades are not affordable to most. Same applies for better dates in VG to XF (and if, below a thousand dollars or so, AU). These include tougher issues such as 1879-CC, 1880-CC, 1893-O, 1894-O (very popular), 1895-O, 1895-S, 1896-S, Other issues that we think might be poised for big increases by the end of this year, but mostly in AU and BU MS 60 to Gem BU MS 64 are: 1878 7F, 1878 8F, 1879-O, 1880-O, 1885-S, 1886-S, 86-O, 90-O, 91 and 92 P and O, 98-S, 99-S, 1900 O/CC (very popular) 1902, 03 and 04. 1921-D & S mints are very tough to find these days in MS 64 and MS 65 and in our opinion are also way under priced. We're not sure if the Japanese investors have hoarded some of these or not, but one thing is for sure, when they invest they usually do it generationally - meaning the coins will probably remain in overseas hands and off the market for generations to come.

10.) Better date/grade Peace Dollars, such as 1921, 1928, 1934-S (all three popular in every grade) as well as all the D & S mints in the 20s and 30s in AU to Choice BU 63 (They get a bit expensive and thus move slower in grades of MS 64 & 65.

Summary Notes

By Dr. Charles Baker

In summary, all ten of the above "type" coins continue to be in strong demand and may be both a great short term as well as long term investment. This is not to say that Gold Coins, Large Cents, Seated and Bust type coins are also doing well, they are. This is just merely a list of the ten most popular as voted on by Beverly Hills Coin Club members. Similar surveys in other parts of the country may or may not reveal similar results.

It should also be noted, that members voted mostly for the scarce and rare issues. One long-term member noted that it appears that prices are going up for many of the above series at about 5% to 10% per month in the later part of 2006. As he noted, if such a strong trend continues, then based on laws of compounded interest, prices will have just about doubled by the end of 2007. If it doesn't, chances are you are still left with something valuable, historical and beautiful that will continue to become harder to find with each passing year. This is because the numbers of coins continue to dwindle from the market while population and pocket books continue to grow with inflation.

Thanks to many television promotions, including several from the U.S. mint, coupled with online resources, there are many collectors entering the market. According to reports from the Beverly Hills Coin Club and other sources, millionaires in the Middle East and Japan have squirreled away hundreds of millions of dollars in older U.S. coins as a hedge against inflation and stock market uncertainty. Supplies of better date and higher grade material are drying up, and some of it has been going at auction for two or even three times published prices.

Many members recommend that investors avoid commemoratives (over priced and ignored by overseas investors) modern proof sets, State Quarters, modern bullion coins (1986 to present) and the newer dollars such as Eisenhower/Susan B. Anthony/Sacagawea/Washington. The mints have produced millions upon millions of these and all remain in high grade. Things are very much different with many pre 1965 issues, most of which have either been melted and/or mishandled to the point that what few survive grade mostly below Very Fine. Also, try to avoid coins in the range of $50,000-$100,000 or more. Although they tend to go up also, but not as quick as less expensive, popular coins in the $50 to $50,000 range - the reason the less expensive coins such as almost every complete set of the "Top Ten" keep staying popular and keep going up is that there are millions of people who can afford them. Once you get past the $50,000 range investors are limiting their available market and the coins move slower due to the decreased number of investors/collectors who can afford them. A good case in point is the recently offered 1913 Nickel by Stack's at auction. Even though there are only five known and most are those are in permanent museums, the only one offered on the market did not reach its reserved price as there are not too many people willing to spend over $7 million for a coin at this time. However, if history is any indicator, it is just a matter of time before some coins sell for many times that price, similar to the $50 million-plus figures paid for much more fragile paintings. For example, the $140 million paid for what I consider a rather ugly Jackson Pollock painting (#5 - 1948) in November of 2006.

In the meantime, most of the big-money guys are putting their money into complete 20th Century sets, rolls, and bags, knowing that they're affordable to the "little-money" guys and thus very liquid in just about any economic cycle.

Notes: Although not a dealer himself, Dr. Baker has been a long-term investor and has conducted similar polls for the Coin Investment Newsletter, published in the 70s/80s in Waskom, Texas.

RARE COINS AS AN INVESTMENT-RARE COIN MARKET CYCLES

(Note: The ACC/BHCC is primarily an educational organization. However, we cannot ignore the fact that rare coins have continued to increase in value for the past 150 years or more. We therefore decided that some investment knowledge should be part of every club's educational program for those collectors who wish to profit from their hobby. We caution, however, that it sometimes takes several years to make substantial profits in rare coins, and that all hobbyist should think like a collector first and an investor second to maximize their enjoyment of this great and oldest hobby.)

The following information is provided courtesy of Austin Rare Coins http://austincoins.com

RARE COINS AS AN INVESTMENT

Rare Coins are Private and Non-Reportable - Sales of US rare coins are non-reportable. However, the sale of many modern bullion coins over 25 ounces requires dealers to file a 1099-B with the I.R.S. reporting your profits at the time of the sale.

Less Speculative as an Investment - Rare Coins have proven to be far less speculative than bullion in the short-term. The prices of gold and silver change daily on the world markets and are subject to rapid price fluctuations.

Rare Coins Outperform Bullion - In the long-term, a carefully chosen portfolio of US Rare Coins has far outperformed gold bullion since 1970.

Gold Gives You Leverage - A bull market in precious metals has shown to dramatically drive up demand on prices for older US Rare Coins. This gives you a “Double-Profit” Opportunity.

Many US gold coins are very price sensitive and go up almost immediately with the gold market. In the past, rare coins have offered two to three times the leverage of holding ordinary gold bullion coins like American Eagles.

MARKET CYCLES
Until recently many people believed U.S. stocks would go up forever.

However, recent crashes in high tech stocks and the overall stock market correction left many investors holding investments with huge losses. Clearly, market cycles are changing.

The return of high inflation, combined with a slowing economy, suggests it's more important than ever to move into safer, more profitable investments in the coming market cycle.

Balance and Diversify Your Portfolio - We believe you can profit handsomely by diversifying your portfolio with investments currently undervalued. Everyone agrees gold, hard assets, and commodities have been out of favor in the past decade. For many reasons, we feel these sectors are most likely to be top performers in the next market cycle.

Move To Hard Assets in Bad Economic Climates - For that reason, it’s important to consider moving into precious metals, gold, and U.S. Rare Coins. Prices are attractively low today compared with past market highs. The table below details recent cycles for the U.S. Rare Coin Market showing increases ranging from 348% to 1,195%.

$1,000 Invested in Rare Coins Worth $57,977 - Collectors Universe researched the U.S. Rare Coin Market carefully based on a study of 3000 Rare Coins. The graph above shows $1,000 invested in rare coins in 1970 would be worth $57,977. The conclusion is that U.S. Rare Coins have produced superior profits over gold bullion or Dow Stocks.

Buy Rare Coins During Market Lulls - Since January of 1970, the U.S. Rare Coin Market has had eight very definitive market cycles. There have been three complete Bull and Bear Market cycles since 1970. To maximize profits, collectors prefer to acquire coins that are currently undervalued. They hold their coins and wait until a Bull Market when investors move in and bid up coin prices– then they sell and take their profits.

The most profitable period for the U.S. Rare Coin Market showed increases of 1,195% from December of 1975 through March of 1980. This market cycle parallels a time of high inflation in the U.S., rising gold prices, and a very weak economy– a market cycle that appears to be on the horizon ahead.

Other Rare Coin Market cycles since 1970 showed increases of 665% and 348%. Past performance is no guarantee of future value, but it is an indication of just how volatile and profitable collecting U.S. Rare Coins can be in uncertain economic climates when there's a flight to safety from stocks to hard assets.