The Good Life: Rare Coins Paved With Gold

Living "the good life" doesn't necessarily mean wining and dining, lying on the beach and blowing all your money on roulette wheels in exotic casinos. Indeed, you can make more money (which is the ultimate joy for many anyway) by buying money.

Rare coins are often the currency of the rich and famous -- whether it's historical biblical coins found at archaeological digs or the original silver dollars that launched our nation's currency.

Indeed, there are collectors who, starting from humble beginnings, have amassed fortunes by buying and selling rare coins. John Jay Pittman, for instance, was an engineer at Kodak from 1947 to 1970, making between $10,000 and $15,000 per year. Each year he invested up to half his salary in rare gold and silver coins. Over the course of 20 years, he probably made a total investment of about $100,000, and his collection ultimately sold for over $30 million.

There are two ways one can get involved in coin collecting:

• Collect your own coins, and master the subtleties of the different coins and grading mechanisms that are used to establish value for each coin.
• Invest alongside the masters.

I called up Silvano DiGenova, a rare-coin trader who made his first million trading when he was 21. He started out trading coins, then helped work out the process of grading rare coins, and more recently has been running Superior Galleries (SPGR Quote), a 75-year-old, California-based coin gallery and auction house that trades on the bulletin board.

Silvano buys and trades everything from 3-cent nickels to 1804-minted silver dollars to St. Gauden's gold coins from 1906. When he talks about coins and the value to be found, he can't hide his excitement. "If you take the 12 Piece Gold Type Set, which can be thought of as an index of the 12 most popularly traded coins, and if you had put $1,000 in that "index" in 1970 and held that basket of coins until now, your initial $1,000 would be worth $61,000 now. The same $1,000 put in the Dow Jones Industrial Average would be worth only $12,430 right now, despite the huge bull market in stocks from 1980-1999.

Source: Superior Galleries