Making Cents of Rare Coins

Rare coins can play a role in an investor’s portfolio as an alternative asset.

Rare coins can hold their value quite well over time, while remaining small and portable as physical assets. A rare coin can also sell for many multiples of the metal contained within, and this additional premium is known as its numismatic value.

The caveat to rare coins is that the market is often illiquid, specialized, and partially arbitrary. Just like collecting fine art or other unique assets such as colored diamonds, it is not typically a game for amateurs. Coins can be misrepresented or over-graded by dealers and it is important to be armed with knowledge and experience in any given transaction.

The following infographic from Express Vending gives an introduction to rare coins, including the stories behind certain coins and why they are worth up to millions of multiples of their face value.

The types of rare coins that are sought by collectors tend to be valued for one of two reasons:

1. The coin is commemorative and made in small amounts. For example, the rarest British coin in general circulation is the 250th anniversary commemoration of Kew Gardens 50p, which is well known in the coin-collecting community.
2. The coin can also come about because of a minting error. The Kansas State quarter, minted in 2005 in small quantities, was made with too much grease in the press, resulting in the unfortunate text: ‘In God We Rust’.

In some cases, the numismatic value can be absolutely shocking, which is part of the lure of rare coins. Look at the Canadian “dot” penny from 1936. It’s believed that only three were produced in the world, and one recently sold at a U.S. coin auction for over 25 million times its face value for $253,000.

The difference between these coins and the millions of other pennies minted in 1936? It’s just the tiny dot placed below the date on the “tails” side of the coin.

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