In 1757, a young Mayer Amschel Rothschild took an overlooked job in the rare coins department of a local bank branch.
Even then, coins were considered a smart investment — and the young Rothschild had a front-row seat to their power.
He dealt with ancient coins from Persia, Byzantium and Rome.
He dealt with the most powerful families and empires of the age — the savviest investors of the day, all of whom had stakes in the rare coin market.
And he parlayed his knowledge of coin values — and the connections and trust he built with the 1% of the 18th century — into the greatest banking empire the world has ever known.
There’s no doubt Rothschild was a singular talent — plenty of other people had similar opportunities and didn’t create one of the richest families ever to have walked the Earth.
But it’s equally true that Rothschild was lucky to start out working in one of the greatest areas of wealth creation and protection that investors have been tapping into for millennia.
That’s not hyperbole.
Augustus, the first Roman emperor, didn’t just appear on coins — he was an avid collector and investor in the days before Christ was born.
Even before Augustus — as far back as the fourth century B.C. — coins were among the first collections created.
Coins at the time were considered an art form. And having a great collection was akin to having an art gallery today.
Both Thomas Jefferson and John Quincy Adams had some of the most impressive collections of their age.
And today, everyone from the late Penny Marshall (the director and Laverne of Laverne and Shirley) to Kareem Abdul-Jabbar to James Earl Jones to Josiah Lilly (of Eli Lilly Pharmaceuticals) has amassed impressive collections.
Coins have made up a significant chunk of the net worth of folks who won’t appear on Lifestyles of the Rich and Famous as well.
Chris Atkinson, a former Microsoft vice president, has a large chunk of his wealth stored in 30 rare coins — last valued at over $250,000.
One of his favorites is a silver penny commemorating the Battle of Hastings, minted while the ground was still wet with the gore of war.
“It’s a beautiful coin, literally struck in Hastings just after the battle,” Atkinson wistfully mused while thinking of his prize.
But while he loves the beauty, he wouldn’t be investing in coins if it didn’t make financial sense.
“I felt they were a very safe bet. If you look at premium coins over the last years, they’ve always gone up in value.
”Atkinson isn’t wrong — investment-grade coins have averaged nearly 12% annual gains since the 1970s. That compares favorably with all other investments, including stocks.
Meanwhile, coins just haven’t suffered busts the way stocks have, over and over, since the end of WWII.
That’s just one reason investment-grade coins are such a great investment. But there are plenty of others.
David Ganz, a New Jersey lawyer, was able to turn a childhood fascination with coin collecting — especially Hawaiian coins — into a house.
He amassed his collection over a number of years — often buying coins with little more than earnings from odd jobs as a teenager. He bought and traded his coins over two decades, constantly curating his collection. Until…
“I sold my collection in 1996, when I decided to buy a house. The collection formed a good down payment,” Ganz said.
Not many people can turn a teenage collection into a home. But with coins, you can.
And there are plenty of chances to create truly astounding riches as well — much more than the cost of a house.
Collectors and investors alike highlight how coins are a tremendous store of wealth:
- Unlike stocks, they can never go to zero — they have intrinsic worth in the precious metals used to make them (especially those coins minted before 1933, when many countries stopped using gold, silver and other valuable metals to make coins)
- Unlike bullion, they provide premium values that outpace the metals market. In fact, since 1970 or so, rare and valuable coins have more than doubled the return of gold bullion
- And — perhaps best of all — rare coins are the No. 1 investment that hedges against inflation.
Indeed, for those of you who are technically minded, rare coins historically have a 0.58 correlation with inflation. A perfect correlation would be 1 — meaning if inflation went up 5%, rare coins would go up 5% as well.
For comparison’s sake, regular gold bullion has a 0.27 correlation and stocks have a 0.15 correlation.
There really is no safer place to protect yourself from inflation — particularly important in an age of massive corporate tax cuts and cheerleading for quantitative easing.
But rare coins aren’t just a store of wealth — a hedge against market troubles or a faltering economy.
They are intensely profitable in their own right.
Editor-in-chief, Unconventional Wealth
Ryan Cole is the editor-in-chief of Unconventional Wealth. He’s been covering the alternative investment space for nearly a decade and writing about finance and investment for almost 20 years.
Ryan has walked the walk for years, living a very unconventional life. He’s led snowmobile tours through the mountains of Colorado, settled in Japan for five...