Good as Gold

In times of economic uncertainty, rare coins represent an excellent investment. And unlike his competitors, Mike O’Higgins of Steibs Sales East Coast offers a half-century of expertise and experience.

By John Buchanan

After suffering steep declines in the stock market and watching the local real estate market collapse, many affluent South Floridians are looking for safer investments that still yield strong returns. And perhaps there is no better—or less well-known—bet than rare gold and silver coins.

“Gold in general, and rare coins in particular, have a very well-established track record as an investment over time,” says Mike O’Higgins, the veteran proprietor of Steibs Sales East Coast, with offices in Ft. Lauderdale and Boca Raton. “Over time, you typically can see an increase in value of 10 to 15 percent. It’s also something that is tangible. You can hold gold coins in your hand. But the real bottom line is that rare coins have a proven track record as a safe investment. They beat inflation, especially lately. They protect savings from political and economic uncertainties. And the collector base is growing constantly, which increases demand and the size of the market.”

As a result, many financial advisors have recommended for years that investors should have 10 to 15 percent of their portfolios invested in precious metals, such as gold as a time-tested hedge.

For newcomers to the market, there is perhaps no better expert vendor than O’Higgins, a former co-founder of and partner in the country’s largest rare coin dealer, which he merged into Steibs Sales East Coast three years ago.

O’Higgins specializes in pre-1933, investment-quality rare coins that sell for between $1,000 and $250,000. Investment-quality coins are graded by one of two independent services, the Professional Coin Grading Service (PCGS), based in California, and the Numismatic Guaranty Corporation, based in Sarasota. Each of the co-equal services rates coins from one to 70, with 70 representing perfection in terms of quality. Grades of between 60 and 70 are considered investment-quality. One exception would be an extremely rare coin that has a lower grade, but still holds extraordinary value based on its rarity.

Perhaps never before has there been such demand for rare coins, says O’Higgins, who also operates a 31-year-old mail order coin dealership, Gobrecht Numismatics. “The major factor driving the rare coin market now is that people are afraid,” he says. “They don’t want to put their money back into the stock market, because they’ve seen it collapse several times in recent years. And in South Florida, a lot of people started investing in and flipping real estate and they lost money in that when the market collapsed. And interest rates are next to nothing now if you invest in CDs.”

Meanwhile, he notes, gold has quadrupled in value and set new records for prices over the last several years. “So gold is the hot market now,” O’Higgins says, “and rare coins are a good way to invest in gold as a hedge against other kinds of investments.”
Just how good can a coin investment be? Last year, a Steibs Sales East Coast client saw the value of a $1 million purchase of 1,000 St. Gaudens $20 gold pieces skyrocket by $700,000 in less than 18 months, although he had bought them as individual Christmas gifts for VIP clients.

“The buyer was the owner of a large insurance company,” O’Higgins says. “He knew at the time that the price of gold was going to run up, so he wanted to buy them in advance. And he was right. When he bought them, the price of gold was about $1,000 an ounce. And now, it’s $1,720.”

If, in fact, the purchase had been a personal investment, O’Higgins says, the client would have enjoyed a whopping 70 percent return in a little more than a year.

Now that rare coins are generating unprecedented interest from new investors, O’Higgins cautions that smart buyers should do business with a highly experienced dealer such as Steibs Sales East Coast. “I’ve been doing this for 50 years,” he says. “We didn’t just show up in the market when it got hot. We’ve been doing this for a long, long time and we’re very good at it. And that expertise provides safety and confidence for our clients.”

Steib’s Sales East Coast, 954.491.4423, 954.491.4390 or 561.347.9140, by appointment.