|
|
Law and Coins
AN EXTENSIVE LOOK AT THE LAWS
THAT GOVERN OUR NUMISMATIC
COMMUNITY AND OTHER TOPICS
OF INTEREST
|
|
|
Extended Survey Depicts Good Coin Market
by David L. Ganz
Column 6 - July 7, 1999
|
|
(CONTINUED FROM PAGE 1)
When graphed side by side (the Dow on the left axis, silver on the right axis), the hurly-burley character of the price swings is not that disparate. In fact, for some of the period, it would have been better to buy silver; for the balance, an equity fund consisting of the Dow would have done better. Each was volatile, however.
Also interesting is the 60 year measure from 1938 to the present comparing the Coin Market Basket Yearly Average with the CPI, the Dow, and Platinum. Again, there are significant periods of time when the commodities and the equities market performed about the same -- roughly 1938 to 1971.
|
|
Thereafter, there are times when platinum substantially out-performed every element and times when rare coins were the way to go. The 25 year legacy of silver, and rare coins is also instructive -- for it shows silver's high point (1979-80), the steady march of progress of rare coins, and the recent development of the Dow catching up with all of the vehicles.
|
A decade ago, I was able to note that rare coins surged in value, returning on average of 30% last year according to the annual Salomon Brothers survey of tangible assets, released June 5, 1989. Over the preceding 20 years (going back to 1969), the review of investment returns discloses that no asset surveyed rose as high as the 17% annual rate of return ascribed to coins.
On a one-year basis, in 1989, old master paintings jumped 51% in value, fueled by stratospheric prices of $39 million for Van Gogh's "Sunflower" and other unique works of art to lead the pack. Chinese ceramics came in second with a 40% rate of return.
Coins, based on a market basket of 20 mostly mid-19th century silver and copper type coins, nearly all of which are in choice uncirculated condition, stood at third for 1989. The 1988 Salomon reports that its five-year index showed coins with a 15% rate of return (third, behind stocks at 20% and bonds and old masters at 18%).
Over 10 years (1979-1989), the rate of return on coins (at 13%) was second only to 17% for stocks; and at 20 years, coins pulled away hands down with its average return of 17%; only Chinese ceramics (13%), gold (12%), and old masters (11%) came close. Next came stocks and diamonds (10%). Inflation, as measured by the consumer price index, averaged 6% during this 20 year time frame.
Another of the charts that accompany is one comparing the average cost of a coin in the market basket versus total cost, and the Dow Jones Industrial Average. Some of the coins have received higher rates of returns than others -- and the average coin price makes that weigh in at only 1/20th of what it might otherwise do.
|
This chart shows the real cumulative effect of the market basket, shows the average price (lower) and the Dow -- and still shows a solid performance for rare coins over a 60-year period of time.
The intervening years have been less than kind to gold and ceramics, and even diamonds. Rare coins still look like a good bet -- and even if Salomon Brothers data isn't around to validate it, the data can be re-created, and that shows just how good an investment that rare coins can be over time.
|
BACK TO PAGE 1
Copyright 2000 by Krause Publications, all rights reserved. Reprinted by permission of the assignee, David L. Ganz. Unauthorized reproduction is a violation of Title 17 of the United States Code and other statutes.
|
|
|
David L. Ganz
