In the not-so-distant past, if the Dow moved 10 points, it made the front pages of the New York Times, the Wall Street Journal, and other financial dailies. Today, even 100 point changes in a session achieves little more than a yawn. In fact, even when the Dow moves two percent in a single day, it may make headlines, but investors have become jaded.

         Salomon Brothers' survey compared rare coins with the Consumer Price Index; with the stock or equities market; with bonds, stamps, Chinese ceramics, farmland, gold, silver, Old Masters paintings, foreign exchange, diamonds and even Treasury bills. For tangible assets, a variety of reliable sources were utilized for the information.

         Results of the annual survey, which considered a market basket of type coins, of silver dollars, subsidiary and minor coinage (but no gold coins) were consistently impressive, showing that over long periods of time, rare coins had a solid track record that regularly went up. Gold coins were omitted because private gold ownership was relatively new and there was a fear that it would skew the results.

         Initial showings in 1978 were that stocks had grown 2.8% annually over the prior 10-year period (1968-78), while bonds in the same decade rose 6.1% -- the precise change of the consumer price index. That mirror meant that there was essentially no growth after inflation was taken into account. It is taken as proof by the Wall Street crowd that the bond market indeed doesn't always grow, but can sometimes be stagnant. (Over the long run, stocks remain a good investment).

         By contrast, rare coins in that first survey had shown a consistent 13% annual return, the same as Old Masters -- works of art that had not yet exploded to the stratospheric proportions that made the front page of prestigious daily newspapers in the 1990's.

         Heading the list, then, was Chinese ceramics (with 19.2% return) and gold bullion, with a 16.3% compounded annual rate. Chinese ceramics popularity had a lot to do with the fact that China had just re-opened to trade with the west after years of being buttoned down to a communist system of economics.

         Gold's activity in the free-market was relatively new (private gold ownership had only seriously begun in 1975 in the United States), and the meteoric rise of 1980 had yet to be recorded -- as well as the precipitous decline in later years that has left gold bugs scratching their heads.

         The inclusion of gold was at once a benefit and a curse. The bad part is that it gave Salomon an excuse not to include gold coins in the coin investment equation. The good part is that it shows what a meteoric rise the metal had, and how it has struggled since the 1980's to regain a foothold in serious investment portfolios.

         Still, what gave mettle to the study was that a highly respected firm on Wall Street created it, and that others therefore viewed it seriously not in the collectibles field. Just how serious was seen in a government study. The New England Economic Review, a publication of the Federal Reserve Bank of Boston, made the study the focus of an article in May, 1979, entitled, "Are Stocks a Bargain." (It concluded that stocks were well off their historical rate of return and hence were in fact a bargain).

         In comparing rare coins with other indicia of investment vehicles that included farmland, stocks, bonds, stamps, Chinese ceramics, and other tangible assets, Salomon Brothers requested that a model portfolio be built to act as a market-basket.

         A market-basket can best be described as something like the Dow-Jones Industrial Average, 30 key stocks that are broadly representative of all industrial stocks, or the Standard & Poor 500 -- a still broader index. The market basket gives a good general picture of what is transpiring, and how it contrasts over a long period of years, but it is hardly perfect. The Dow Jones Industrial Average, which has been around for more than a century, is one such focal point. But there are those who prefer to look at the NASDAQ, and its index. There are certainly other indices that have been, and will be, used to examine coin price trends.

         Over time, the Dow's composition has changed as companies have merged, gone out of business, or simply been bypassed by time itself. (Today, only General Electric Company is around of the original stocks in the first Dow Jones Industrial Average). Indeed, in the year 2001, Salomon Brothers itself is now a part of Smith Barney, which in turn is a part of the Citicorp group - a virtual bygone name from an era of the past.

         The coin prices that are used to analyze the index have changed, too, through the years -- not by date, type or denomination, but in some instances by grade. The reason has as much to do with the mechanics of reporting, as it does to changes in grading terminology.

         Early on, for example, typical coin prices in many earlier years simply weren't shown for every grade and condition. The extremely fine 1793 large cent, for example, contained in the Salomon market basket wasn't even listed in the 1947 edition of the Guide Book of U.S. Coins (by Yeoman). The maximum condition then was fine.

         All of this makes a long-term examination and comparison difficult, but not impossible -- if you're willing to settle for long-term trend lines, and themes, rather than pinpoint accuracy, which is nearly impossible -- and assuming that you accept that the cataloguer and researcher is an honest broker of information.

         Like the Dow Jones average, which neither represents all publicly held companies, or even all significant stocks that trade on the exchange -- each coin in the portfolio is broadly representative of the marketplace as a whole, and to that extent, its trend-line symbolizes what the market actually does.

         The firm chosen by Salomon Brothers to perform the function of monitor, Stack's of New York City, selected components of the rare coin portion of the Salomon study. According to one of its principals, Harvey G. Stack, the index was never formulated with the intention of showing that rare coins were an investment, per se. Instead, the market basket chosen constituted coins that were selected principally because they were type coins that might be found in a serious collection, but not necessarily by a collector who viewed only the best condition possible as worthy of inclusion in the collection.

         No doubt, a substantial amount of capital would be tied up in these coins, but they did not necessarily constitute an investment, except to the extent of course that any purchase retained over time has a definitive value. None of the 20 coins included in the market basket were of gem quality; most were choice uncirculated, the equivalent of MS-63 on most of the numerical grading scales that are now employed.

         If gold coins had been added to the component, it would only have made for an even greater rate of return. One need only look at the collection of Harold Bareford, the New York attorney who acquired an extraordinary collection of gold coins from 1945-1954 at a cost of $14,000. When his collection was sold in 1978 by Stack's, it realized over $1.3 million.

         Although not initially revealed, because of a fear of market manipulation, the list of silver and minor coins that were included in the Salomon Brothers annual survey of collectibles were first made public by Neil S. Berman and Hans M.F. Schulman in their guide book on rare coin investment, The Investors Guide To United States Coins (Coin & Currency Institute, 1986).

1794 Liberty cap half cent, extremely fine
1795 draped dollar, uncirculated
1807 draped bust dime, uncirculated
1815 bust half uncirculated
1834 bust half dollar, uncirculated
1847 seated dollar, uncirculated
1855-O seated half dollar
1862 half dime
1862 3 cent silver
1866 liberty seated dime
1866 nickel with rays, brilliant proof
1873 arrows quarter
1876 20 cent piece
1881 trade dollar
1884-S Morgan
1886 seated quarter
1916 quarter, uncirculated
1921 Walking Liberty half dollar
1928 Hawaiian commemorative half

         The listing includes a half cent, a two and three cent (nickel) piece, a 5 cent coin, a silver trime or three cent piece, a half dime, two dimes, a 20 cent piece, three quarters, four half dollars of regular issue, three silver dollars and a single commemorative half dollar.


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