COMMENTARY ON RARE COIN MARKET

The Rare Coin Market is emerging from a virtual 12 year hiatus. Investors seeking alternatives to paper asset investments are studying the risks/rewards of rare coin investments. The New York Times recently ran a story that answered many questions.

Coin Trade Becoming More Like a Market

Recent record setting prices for selected rare coins in public auctions have renewed many people's interest in the historic field of numismatics.October 27, 2002

By Bernard Simon

Special to NY Times TORONTO

The Professional Coin Grading Service has begun tracking the coin trade electronically in much the same way that Standard and Poor's tracks the stock market. The firm's CU3000 index, which can be found on its Web site, www.pcgs.com, covers 3,000 American coins and incorporates within it nine other subindexes. Visitors to the Web site can find 12-month highs and lows, as well as 1-, 3- and 10-year charts for each.

The daily price guide is among the recent moves by coin experts to quantify their passion and to transform coin collecting into a liquid investment with easily identifiable objective values. And as the turbulent stock market has encouraged investors to take a new look at more tangible assets, there is some evidence that those efforts have had some effect. David G. Hall, the president of Professional Coin Grading Service, based in Newport Beach, Calif., says his company is now asked to grade 70,000 to 80,000 coins a month, more than double the level five years ago. The business is a unit of Collectors Universe, which trades on the Nasdaq market and grades and authenticates other collectibles like sports cards, stamps and autographs. (The stock chart of Collectors Universe, however, has been far bleaker recently than that of many of the collectibles it tracks. The shares are down 45.7 percent this year.)

Volumes at the nation's other big coin grader, the privately held Numismatic Guaranty Corporation of America in Sarasota, Fla., have also doubled since 1998, according to Mark Salzberg, its president. Under a widely used grading system, coins are assigned a point score between 1, the worst, and 70, the best, depending on variables like luster, scratches and other marks. Grading and daily price guides have "certainly made the coin market more liquid, just like organized stock exchanges made equities more liquid," said Dalton L. Chandler, an analyst at Needham Company, an investment firm based in New York.

Professional Coin Grading Service and Numismatic Guaranty Corporation have also set up online registries for coin collections. "Who has the biggest, who has the best, is the driving force behind the collector base," Mr. Salzberg said. Mr. Hall said Professional Coin Grading Service has registered 4,000 coin sets since the service started three years ago.

Over the last few years, some investors have shifted money from the stock market into coin collections. "They have good rates of return — not as good as when we were riding the Internet bubble, but the coin market hasn't burst," said Arnold-Peter C. Weiss, a surgeon in Providence, R.I., who has played both markets. Dr. Weiss said he had taken "a big hit" on a few dot-com investments. But he has done well, on paper, at least, in coin investments. In 1998, he bought a type of ancient Greek silver coin, minted by the city-state of Megalopolis and featuring the head of Zeus, for $60,000. It fetched about $200,000 last year at an auction at Bank Leu in Zurich, Dr. Weiss said. In July, the only known 1933 American double eagle, a $20 gold coin, was auctioned in New York for $7.59 million, a record price for a coin.

Coin experts say interest has been stimulated by the "state quarters" program of the United States Mint. Every 10 weeks, the mint issues quarters celebrating one of the 50 states, in the order that they joined the union. The program began in 1999 and is to run to 2008. The releases this year are for Tennessee, Ohio, Louisiana, Indiana, and Mississippi. A 1999 Georgia quarter with a near-perfect 67 grade was sold for almost $1,500 in an eBay auction last year, when only nine coins were rated so high by Professional Coin Grading Service. Today, 30 of those quarters share the 67 grade.

Mark Ferguson, the trends editor at Coin World, said, "people who bid on eBay may get carried away." He said it was unlikely that such a coin would fetch that much now. Even ardent coin fans warn that coin prices, like those of stocks, can go down, as they did for much of the 1990s. The Web site of Professional Coin Grading Service advises: "The coin market is volatile and thinly capitalized." Scott A. Travers, a Manhattan coin dealer and author, said questionable grading services have surfaced on eBay and have "fooled consumers into paying higher prices."

Kevin Pursglove, an eBay spokesman, said eBay is aware of the complaints. He said that the company provides links from its Web site to the Professional Coin Grading Service and Numismatic Guaranty Corporation sites, but that it is "up to buyers and sellers to determine what services they use." Serious coin collectors and investors should buy only coins graded by Professional Coin Grading Service or Numismatic Guaranty Corporation, Mr. Travers said.

Some collectors are interpreting the current price boom as a sell signal. Sidney H. Belzberg, a Toronto entrepreneur, recently decided to put his collection of rare Canadian coins on the block. The collection, to be auctioned early next year at the Waldorf-Astoria in Manhattan, is expected to fetch $4 million to $6 million, according to Robert B. Korver, the director of Heritage Numismatic Auctions in Dallas, a unit of the Heritage Capital Corporation that is handling the sale. "Coins have never done better," said Mr. Belzberg, a distant cousin of Samuel Belzberg, the 1980's corporate raider. But he also said, in a telephone interview, that an even better investment now is to increase the 19 percent stake that he holds in Belzberg Technologies, a Canadian company that supplies order execution technology for traders in financial markets. The company's shares, which have risen 13.3 percent over the last 12 months, now trade at 4.25 Canadian dollars. "We've detected a number of opportunities in the stock market, not the least of which is our stock," Mr. Belzberg said.