10 Tips For Picking Coins That Go Up in Value

American coin collectors are a very passionate lot. When talking to them about their interests in collecting, they literally give dozens of reasons for acquiring US coins. Their reasons range from the truly esoteric to the truly predictable. In the end it usually comes down to a variation on five themes:
1) they are interested in the beauty of the design of the coin;
2) they are interested in the rarity of the coin;
3) they are interested in the precious metal content;
4) they enjoy the social aspect of the hobby, or
5) they want to buy low and sell high - making a nice profit in return.

This article serves as a primer for the fifth group.

First, to protect the less experienced investors, it's important to note that coins do not offer a "guaranteed return" or even protection against deterioration of the original purchase price (in fact almost no investments do these days); however, select choices possess characteristics that have historically yielded a nice price increase over a longer period of time.

With that caveat, below are USACoins.com's "10 Tips for Picking Coins That Go Up in Value."

1. Less is More - Rarity is a strong determinant of a coin's price performance. Intuitively this makes sense. The less available an object is, the more it's worth. Consider for a moment a purchase of either a new Ferrari or a new Corvette. Both are high performance machines with beautiful lines and strong engineering, both can go from zero to sixty in less than five seconds, both come in candy apple red with a black leather interior, but there are a very limited number of Ferrari's produced in any given year and there are many Corvettes. It's no surprise that the Ferrari sells for three or four times as much as the Corvette. The same can be said of a coin with a very limited number of the series in circulation.

2. Speaking of Cars, Condition Counts - Choose a coin that is high in quality. I personally will not go below AU 50 for coins minted before 1935, and MS 60 for anything newer. This is a personal preference of course, and budget dependent, but there is far more demand for most coins in excellent condition than those that are worn. The single exception to this is if there is no inventory of high quality coins available.

3. Solid Strike - A solid strike is a funny thing. In many ways you only know it when you see it. Coins can rank very high on the grading scale but still possess a dull strike. Buying coins with a sharp strike will give you a definite edge when selling your coins later. Professional coins collectors seek this out, you should too.

4. Uncleaned - Harsh chemicals permanently damage the surface of a coin and reduce its value by as much as 90 percent or more. They also eliminate the "pinwheel" on silver coins. We recommend that you never clean your coins.

5. You Can't "Repackage" a Coin - There is a saying used in sales the world over. "If you can't sell it as is, repackage it" This saying refers to selling something to someone that they don't really want, simply by using flashy marketing or other tricks. There are certain coins that just are not popular. Their price has not moved in 30 years. We recommend staying away from these. If it has not gone up in value after a long period of time, it won't likely in the future.

6. Buy Right - Let's say you have found "the one." Rare, solidly struck, never cleaned yet beautiful, and popular in the numismatic community. "Attack!" you think... Not so fast buddy. About the worst possible thing you could do is purchase that coin at any price. Remember the more you pay, the lower your return on investment when you sell. You need a good price. Even "the King," the 1909-S VDB Cent had 484,000 other cents in circulation. So unless you are buying a coin like the 1804 Dollar (only 15 are known to exist), take a deep breath and negotiate. If you miss there are others out there.

7. Time is your Friend - In my view, there is one time to buy and one time to sell. Buy when you're working, sell when you're in need of funds (such as retirement) or have grown tired of the hobby. Many collectors have purchased coins throughout their working life and used their collection to finance part or all of their retirement. If you have an eye for it, you can go far..

8. Buy What You Know - I highly recommend that you specialize. This means different things to different people, but to me this means knowing more about a coin, series, or a few different series' than the competition, to make a superior buying or selling decision. Is it boring - absolutely, but we're talking about making money. This rule does not apply for those interested in reasons one through four in the opening paragraph.

9. Continue to Study - Numismatics has taken a quantum leap forward over the last 30-years. Grading, previously undiscovered hoards, research results, they've all advanced beyond what coin collectors of old would have thought possible. I believe we are still at numismatic infancy. Watch the next 30 years for some truly remarkable advancements, and keep learning. You'll need the news skills into the future.

10. Be Patient, The First Coin is Rarely the Best Choice - Assembling the perfect collection is a labor of love - don't be in a hurry. Choose your coins wisely and then slowly, very slowly, begin the process of acquiring the best of the best. This is definitely a marathon, if not an around the world trek. Take your time and look for reasons to say no. Once all your conditions have been met, only then should you act. Your collection will have more meaning to you personally and likely will garner a higher price later.