What would you guess is the top performing asset class of the past three decades?
Amazon (AMZN) shares? Vintage cars? French collectible postage stamps?
I'll give you a hint: You may find one in your right pocket.
If you picked rare American coins, you would be right.
Stack's Bowers Galleries, a Santa Ana, CA-based firm dealing in rare coins (click here for the site), sold a United States penny in nearly mint condition dated 1793 for a staggering $940,000. And this was by no means a record.
That is a return of 94 million times.
If you think this is about kids cashing in on their collections you would be dead wrong.
Like everything else, I got into this game early.
I keep in a safety deposit box the first coins my Italian ancestors received upon landing in the Americas in 1903, which I inherited a few years ago. Today, they are worth a fortune.
I got into collecting defaulted Chinese and Russian bonds during the 1970s because a major London dealer was just down the street from my office at The Economist.
When I spotted one of the original bonds issued to finance the construction of the Golden Gate Bridge a few decades ago in a tourist gift shop, I knew I found collectors' gold. It hangs on my office wall today.
The early days of collecting were a dubious business at best, filled with fakes and charlatans.
Many of the early buyers were looking for a hedge against the default of the U.S. Treasury and the end of Western civilization, which always seemed imminent.
Then in 1986, the first independent appraisal firm opened for business in California, the Professional Coin Grading Service (PCGS).
It set common standards that provided the rare coin business some legitimacy, which drew in serious investment capital.
PCGS rates coins on a 1-to-70 scale, depending on strike, surface preservation, luster, coloration, and eye appeal.
Opinions among different coin graders and dealers can vary widely. An improvement of a single point in a coin's grade can triple its value.
(PCGS) did for coins what Gemological Institute of American (GIA) and the lesser-valued European Gemological Laboratory (EGL) did for diamond grading.
By the way, I happen to have a whole manila envelop full of these certificates. A bevy of former girlfriends still hold the actual diamonds.
PCGS has since been joined by another competitor, the Numismatic Guaranty Corporation (NGC) in Florida (sounds official, doesn't it).
Needless to say, the net effect of this newfound respectability has been higher prices - much higher prices.
The D. Brent Pogue Collection netted total sales of $106,720,432.25 over the course of five auction events held from 2015 to 2017.
It included a coin legendary among serious collectors, a Dexter specimen U.S. 1804 silver dollar, which brought in an eye-popping $3.3 million.
Today, the global coin trade is a $5 billion to $8 billion a year business, with Americans accounting for 85% of the trade.
Incredibly, you can still pick up Revolutionary War era currency for only a few hundred dollars.
After all, the Continental government was printing money as fast as it could to pay Washington's soldiers, while the British were counterfeiting just as rapidly to undermine its value.
As for Confederate money, it never appreciates. It seems that the South unsuccessfully tried to win the Civil War with printing presses. There is a lot out there.
Stack's Bowers regularly holds auctions around the world, including in New York, Denver, Baltimore, Hong Kong, and online.
If you are interested, you can bid as little as $5 for an 1878 Morgan Silver Dollar (I have a drawer full of them).
Or you might hold out for the 1877 Indian Head Penny for $4,400.
As with all illiquid asset classes, I would counsel caveat emptor, or "buyer beware."
Always get a PCGS or NGC certificate before investing serious money in the sector. Never deal with complete strangers or blindly buy online. Remember, as with real money, it's easy to counterfeit these certificates as well.
And like everything else these days, prices to me seem really high, just like my Amazon (AMZN) and Apple (AAPL) shares.
But if you live long enough, everything seems expensive, especially all those diamonds that decamped for greener pastures.
