Investing in Gold: The balance of the coin market

With the economy's woes over the last few years, one thing that may or may not be surprising is that the demand for coins has remained strong. There have been some price corrections, but as a whole the prices of rare coins have done very well.

One of the biggest factors for coins doing well is the fact that many of them are made with precious metals. Gold and silver are primary metals that many coins were made of for years. With the prices of gold and silver rising over the last few years it has also brought up the prices of rare coins. Silver quarters that were worth $1-$1.50 each are now worth around $3 each just based on their silver content. Common silver dimes, quarters, halves, and dollars have all experienced price increases because of silver being worth more.

Equally, gold coins have done very well. A typical $20 gold coin that was $300-$350 in the late 1990s is now $1,100-$1,450. But the metal content is not the only rise that common gold coins are experiencing.

Let's look at a $20 Saint Gaudens as an example. Years ago a nice uncirculated coin (MS-63) would typically bring about $75 over the price of spot. Today that same coin trades at $250-$400 over the price of spot. Not only is the gold worth more, but the premiums are up as well.

Rare date dollars are a good area to look at for price corrections. I will use the example of an 1879-CC Morgan dollar in MS-63. At the peak of the market this coin was worth $6,500-$7,000. Today it is worth $5,000-$5,500, but if you look back just a few years further it was only worth about $3,000. Yes the price has corrected, but is still worth much more than it was about seven years ago, and today the market is holding firm.

Prices of rare coins are good news in our economy today. With those looking for extra cash, selling coins or a coin collection is a great option. The coins are generally worth more today than they were 5-10 years ago, and that is a great thing for those who need cash. Many collectors that were buying coins over the last 20 years are now able to cash them in for hefty profits. The proverbial "rainy day" saving of rare coins is paying off.

Just as interesting is the fact that many are actively seeking rare coins as a way to store value. Over the last 20 years many collected out of excess, but today are buying coins as a way to preserve value. Demand for rare coins remains very strong.

The market today is experiencing a nice balance. Which way the pendulum will swing from here is yet to be seen, but for right now it is a great time for buying or selling.

• Allen Rowe is the owner of Northern Nevada Coin in Carson City.