AUGUSTUS SAINT-GAUDEN’S 1933 $20 double eagle gold piece holds the record for the highest price paid for a rare coin: $7.59 million.

The 2002 sale of the $7.59 million Saint-Gaudens gold piece and a 1913 Liberty Head nickel that commanded $3 million in 2004 have raised the profile of numismatics, while proving that these investments can generate enormous yields. The Professional Coin Grading Service’s Coin Universe (CU) 3000 Index is up 18.7 percent since June 2002, and aficionados say the rarest coins are generating even higher returns. Collector Bruce Morelan, who sold the 1913 Liberty Head, says he enjoyed a 45 percent compound return in only 18 months on that coin.

Judicious Genealogy
People have been collecting coins since ancient times, but in today’s increasingly technologically complex world, these simple objects have

VALUE JUDGEMENT Numismatically inclined investors are attracted to rare coins’ beauty and the thrill of the hunt. While seasoned collectors have seen large financial gains on sales in recent years, the rare coins market is volatile. It is only for those willing to commit to learning the field and who can ride out vertiginous drops in value for the sake of their passion.

a particularly potent allure. Rare coins provide a way to appreciate beauty while satisfying a primal desire for tangible ties to the past. Most collectors pursue coins that awaken a powerful sense of personal connection, be it to a beloved grandmother who gave a boy his first 19th-century silver dollar or to medieval Muslims whose belief is shared by contempories in the United States. Many pieces are even invested with pedigrees, bestowing a rare-coin bloodline.

Some $5 billion worth of coins are sold in the United States every year, estimates Andrew Lustig, numismatist at R.M. Smythe & Co., a New York–based financial collectibles dealer and auction house. Collectors who desire a window into the past offered by a rare coin now find it easier than ever to start a high-quality assemblage. Coins, unlike more obscure collectibles, have a huge community of collectors and dealers, while no other avocation has such detailed pricing information so readily available. Many aspiring collectors subscribe to Coin Dealer Newsletter, although the prices that are listed there should be viewed as guides, not gospel. Attending one of the many shows, joining the message boards at www.pcgs.com or examining eBay, where coins are one of the most popular search items, are good starting points.

“The Internet has attracted a very broad base of people,” says Silvano DiGenova, chief executive of coin dealer Superior Galleries in Beverly Hills, Calif. He adds that with 140 million collectors, the U.S. Mint’s state quarters program is also sparking more serious interest. “There is broad-based demand that is funneling its way up to the top.”
Until the late 1980s, collectors lacked a successful, industry-wide benchmark for rarity. But now U.S. coins are assigned a grade

“THERE’s sentimental value, worth and history. It makes all those things connect.”

between 1 and 70 (60 and above is considered uncirculated) and are encased in tamper-resistant plastic to guarantee the rating. Lustig recommends that newcomers buy only graded coins and work with dealers who are members of either the Professional Numismatists Guild or International Association of Professional Numismatists. International coins are not graded, so collectors may handle them directly; but they do require more extensive research to determine their value.

Even with the advent of Web auctions and consistent grading policies, no collector makes a quick leap from novice to successful numismatic investor. To increase the chances of succeeding in this increasingly competitive market, investors are advised to treat coins much like any investment play: Learn as much as possible about the coin in question, regardless of its grade. Likewise, while it is tempting to dream of making a killing on an undervalued specimen, the rare coin market sees rallies and retreats, like any other asset class. The CU 3,000 has gained momentum during the last few years and now tops 64,500, but is still off 65 percent from its May 1989 peak of 181,089.

The Penny Drops
West Coast physician and collector Gene Sherman knows that what seems like a valuable coin one day can look more like a well-worn drachma after a market collapse. He has had a passion for coins since he was an 8-year-old filling in the slots in his Lincoln penny book; he now collects early U.S. pennies. Sherman currently owns two of his favorite designs, but sold the third in a panic during a down market. “As a collector I have watched coins’ value go down,” says Sherman, who is seeking a replacement Liberty Cap cent. “You have got to have a strong will to find the right one and hold on to it if ever the coin market does poorly.”

An amateur who decides to make an in-depth, long-term commitment to coins requires an initial investment of at least $10,000 to fund a collection with a chance of seriously appreciating. Professionals recommend building a focused collection rather than buying vastly different individual coins; specialization helps a collector deepen his knowledge and makes him a savvier competitor in this very broad market. Investors should also note that some highly personal selections amassed carefully over decades, such as the coins that belonged to noted collector John Jay Pittman, have commanded millions at auction in recent years. Pittman, a chemical engineer for

CATHERINE CURAN is a New York–based journalist who writes about business, culture and style.  Photography by Professional Coin Grading

Eastman Kodak in Rochester, N.Y., began collecting at age 10 and continued until his death in 1996. His collection sold for more than $30 million in a series of three auctions in the late 1990s.

The Web is helping many collectors enjoy a novel type of competition. They build registry sets—groups of one kind of coin—register them with Professional Coin Grading Service or Numismatic Guaranty and display them on their Web sites, often under pseudonyms, in a public competition for the highest-rated set. As with rare coins generally, these vary in value depending on the number of  specimens that were minted and their current condition.

A love of the lore and the quest, more than financial upside, motivate many top-flight collectors, including the owner of the legendary King of Siam set, today valued at $10 million, who spoke with Worth on condition of anonymity. Assembled in 1834, this collection was presented to the King of Siam by the U.S. government in 1836 to help establish trade relations. Anna Leonowens, the woman who inspired The King and I, is believed to have owned the set, passing it on to her descendants upon her death in 1915.

The set boasts all the elements a rare-coin collector thirsts for: uniqueness, rarity, provenance—and a value more than double the previous purchase price. The set’s current owner, whose holdings are known in coin circles as the Connoisseur Collection, could quit the game confident in having achieved the pinnacle of American numismatics. Instead, this collector still spends about 20 hours a month actively researching new acquisitions; he recently traveled to Europe in search of Roman coins featuring the image of Caesar, valued in the neighborhood of $20,000. Certainly it was thrilling to hold the King of Siam set, scrutinize one of the extremely rare Class 1 1804 silver dollars with a magnifier and examine the hand-tooled leather box before he clinched the sale in 2001. But since then, the set has mainly sat in a vault, and it will be sold when the right offer comes along. “For me, the fun has always been in the hunt,” the collector says. “Once I have it, OK, let’s sell this and move on to something else.”

The Race to the Swift
The King of Siam collector personifies the expert who is able to balance the thrill of high-stakes poker with the demands of a strategic chess match. While the 2004 price for the Liberty Head nickel made headlines, that sale was in fact merely one move in a complex series of transactions to build a set. Collector Morelan, who is a minority partner in the Lincroft, N.J.–based coin dealer Legend Numismatics, bought $12 million worth of coins, including the Liberty Head nickel. He eventually sold all of them, save a high-grade set of dollars featuring Liberty seated on a rock, worth some $5 million. Missing the Liberty Head, in June Morelan paid $4.15 million for one of the other four 1913 Liberty Heads that were struck.

Many high-priced sales are arranged privately through dealers; buyer and seller never meet. Serious coin collectors usually hold large amounts of inventory, and sales happen when an owner or buyer asks dealers to put out the word about a specific coin. Thus, new collectors must constantly network and, to make certain top coins continue to cross their path, earn a reputation for acting decisively. When the King of Siam set went up for sale, the Connoisseur Collector saw it, made an offer and wrote a check the next day. Anonymity allowed the new owner to pick up the set himself and simply drive off, confident that no one would know he had millions of dollars’ worth of rare coins on his person.

“If people think you’re a tire kicker, they’re not going to deal with you,” the collector says. “Once they realize you are a buyer, a lot of unique things come your way.”

Ultimately, the true prize for many collectors lies in the coins’ value as durable pieces of history rendered personal. Three of Abdul-Jabbar’s children are coin enthusiasts, and he expects that they will continue to develop his collection when it eventually comes into their hands.

The coins he will bestow on his heirs tell stories about important relationships and periods in Abdul-Jabbar’s life. A commemorative Booker T. Washington Memorial half dollar from his mother awakened an interest in numismatics when he was a boy. The Saint-Gaudens recalls his youth in New York, where he became a fan of the artist after viewing his statue of General William Tecumseh Sherman near Central Park. A Chinese gold coin from Bruce Lee survived a fire at Abdul-Jabbar’s house and is the last present he received from Lee before the actor’s death in 1973.

“It’s very important to me,” Abdul-Jabbar says of his collection. “There’s sentimental value, worth and history. It makes all those things connect.” 

Catherine Curan is a New York–based journalist who writes about business, culture and style.