WSJ’s investment scoreboard

Jan 12, 2011 --- The "Classic U.S. Rarities Key-Date Investment Index" is composed of 82 rare coins, such as the 1796 Capped Bust, No Stars gold $2.50 quarter eagle. This example graded Mint State 65 – perhaps the finest known – sold at a 2008 auction for $1.725 million. Image courtesy of HeritageAuctions.com.

By Steve Roach
Coin World Staff

Are rare coins an investment class? They are according to the Wall Street Journal.

For the past several years, Coin World has provided a "Classic U.S. Rarities Key-Date Investment Index" for use in the Wall Street Journal’s investment scoreboard.

The scoreboard tracks investment groups in the categories of stocks, bonds, mutual funds, bank instruments (bank certificates of deposit and money market accounts), money market funds, precious metals and residential real estate.

Coins are listed in the category "Rare Coins, top investment grade" in the year-end survey.

The investment index consists of 82 coins: 15 copper coins, five copper-nickel pieces, 39 silver coins and 23 gold coins, all with a total 2010 value of just more than $13 million. It’s a collection of coins that tracks the high end of the market, with a diverse group of rare U.S. coins in high grades.

Coin World’s rare coin index gained 15.8 percent in 2006, registered a 31.9 percent gain in 2007, rose a more modest 8.8 percent in 2008 and in 2009 recorded a 7.9 percent loss.

The 2010 index measured a gain of 10.3 percent, showing the resilience at the top of the market for rarities and the increasing confidence of sellers to test their luck by offering high-value coins at public auctions. The announcement of several substantial private-treaty sales of $1 million plus coins also bolstered confidence in the top end of the market.

Broken out by categories, copper coins gained 8.3 percent in 2010, compared with a huge 37 percent gain in 2009.

Silver and copper-nickel coins rose 6.2 percent in 2010, compared with an 8.9 percent loss the prior year. Gold coins rose 14.3 percent in 2010, nearly completely erasing the 14.7 percent loss that was registered in 2009.

On the scoreboard, in 2008, rare coins were one of the few investments that registered a gain. However, fortunes can change quickly in the investment world, and in 2009, rare coins as measured by the Coin World index were among the worst-performing investments as the housing and investment markets rebounded.

So how did coins do?

The Wall Street Journal published the scoreboard in its Jan. 3 issue. Rare coins’ 10.3 percent gain outpaced residential real estate, money market funds, certificates of deposits and bonds. However, the gains that rare coins enjoyed in 2010 were less than the increases in stocks and mutual funds, and below the gains seen in the precious metals markets.