Making money from coin collecting isn't that hard if you're methodical and, let's face it, a little nerdy
THERE ARE BIG BUCKS TO BE MADE BY COLLECTING money. We're not talking here about flipping over your couch cushions to scoop up small change, although it's been my experience that you never know what you'll find if you do this. But the real money is in collecting rare coins. Dubious? Then let me say three words to you: John Jay Pittman.
Pittman, a resident of Rochester, N.Y., began working for Kodak as a chemical engineer in 1936. Somehow, this exciting-sounding job wasn't enough to fulfill him. so, over the course of five decades, he spent more than $100,000 (U.S.) on a coin collection that was sold off for roughly $28 million (U.S.) at three auctions in the late 1990s. Pittman was a family man who never earned a deluxe salary, so you can't write off his success as rich man's luck. How did he do it? Pittman had a simple strategy of selectively buying rare coins and holding onto them for the long term.
You can do it, too, in a few easy steps. The first is to make a firm decision to adopt Pittman's approach of operating as a discriminating collector, rather than an aggressive investor. Bret Evans, editor of Canadian Coin News, explains that an investor seeks only appreciation in the value of coins. "A collector," he says, "is quite often very emotionally attached to things." You'll make better decisions if you immerse yourself in the coin world and buy for enjoyment. If you're interested in rapid-fire buying and selling, you're better off with stocks. This probably explains why investors make up only a tiny minority of the people engaged in the pursuit of numismatics, or coin collecting.
Step 2 in becoming a successful collector is to acquire the knowledge needed to make shrewd choices. "The guy who walks into the field with a pile of cash and not much knowledge is raw meat." Evans says. There are lots of web sites on coin collecting, coin clubs to join, and a couple of essential reference books. The Charlton Standard Catalogue of Canadian Coins, Published annually since 1952, list every coin circulated in Canada from the days of New France to the current day, and it costs just $12.95. You can also consider the annual Coins of Canada guide.
If reading coin books sounds like a little slice of hell, well, persevere. How else are you going to know enough to find the hidden gems that others have over-looked? Robert Lodge, who runs a cultural centre in Grand Falls-Windsor, Nfld., and has been a collector for decades, owes his greatest coup to his coin savvy-plus a little luck. Lodge was looking over a coin dealer's wares when he spotted a double-punched Canadian coin from 1859 on which the "9" was imprinted over another number. Cost to him: $3. Estimated current value: $70. "I didn't have my magnifying glass with me, so I couldn't really see it," Lodge recalls of the double punch. "But I had some knowledge about coins because I'd been collecting them for a long time."
To refine your knowledge of coins, try visiting one of the coins show that are held on weekends throughout the country. "Leave your wallet at home and just look at what's out there," says Michael Walsh, a Vancouver coin dealer who calls himself the Canadian Coinoisseur. "Then, compare and go back home and do some cross-referencing."
As a serious collector, you'll inevitably be drawn to coin auctions. Again, Walsh suggests you visit only to observe at first. Buy a catalogue, then take a look at what's available in the various price ranges. One of the benefits of visiting an auction as a beginner is that all items are available for viewing before the bidding. Another way to build up your knowledge of the coin market is to develop a relationship with a dealer of two. Then there's the inherent snobbishness at the high end of the coin market. While just about every city in Canada has its share of reputable storefront coin dealers, Walsh turns up his nose at them for being panderers to common taste. He goes out to meet clients by appointment only.
Actually, the snob in you is really going to like collecting coins. This is a pastime with two extremes, the savvy types who chase rare, old coins and the masses who snap up whatever the Royal Canadian Mint is churning out at the moment. Ah, the Mint. If there's one rule for novices with serious intent, it's to avoid this institution's lines of collectibles. "It's giftware," says Walsh. "It's the ideal thing for Aunt Mildred to give to the nieces and nephews at Christmas."
Now that you know what to avoid, let's look at what's worth buying. According to Bill Cross, publisher of The Charlton Standard Catalogue of Canadian Coins, Victorian and Edwardian coins from 1858 to 1910 are in demand right now, while coins from 1911 to 1936 are worth some attention as well. "They're showing a spark of life," says Cross. "This could be a place for a new collector to start."
An appealing thing about numismatics is that you can play the game with $100 to spend, or tens of thousands. In a catalogue that Walsh prepared for Torex®, the national coin show in Toronto in February, coins up for auction ranged in price from $60 for an 1862 New Brunswick 20-cent piece, to $50,000 for an 1885 Canadian 10-cent piece. Robert Lodge says he buys coins on a weekly basis and tries to spend no more than $100 a pop. "Sometimes, depending on how rare the coin is, I'll buy it even if it costs a little bit more."
Some experts say it's a basic rule that you should go for the highest-quality coin you can afford. "There's an adage - buy the best and forget the rest," says Stan Wright, a Calgary coin dealer. There are a couple of good reasons to do this, the first being that quality coins can sometimes be quickly sold at a profit. Don't get the wrong idea here, however; it might take five to 10 years or longer for some coins to appreciate. Wright says a second benefit of going with quality is that you'll be insulated from the periodic ups and downs in the broader coin market. You might have a little trouble finding a buyer when the market slows, he says, but you should get your price.
There's a whole world of coins to look at as a prospective collector, and ancient worlds as well. Ducats, doubloons and tetradrachmas are widely available from the same dealers who sell Canadian coinage. That said, aspiring John Pittmans might do well to focus on the Canadian market. According to Walsh, a comparatively small population has meant that Canadian coins are rarer than those from many other countries, including the Unites States. At the same time, he says, Canadian coins are one-quarter, or less, the price of comparably rare coins from the United States.
Before you buy anything, study hard. As Walsh puts it, "The person with the most knowledge wins."