The Warehouse Theory of Coin Collecting/Investing Revisited

A few years ago, I wrote an article entitled “The Warehouse Theory of Coin Investing.” The gist of this article was that there are certain coins that remain in such demand with collectors that a sound investment theory might be to stockpile attractive examples of these and work with a specialized dealer who could then, over the course of time, resell them to other collectors. A coin that I used as the Poster Child for this was the 1854-D $3.00. If you had listened to this advice, you probably outperformed the market. There are clearly a small but definable group of coins that have been in strong demand over the last few years and their price levels have risen accordingly. Even in the now-weaker market of early 2009, I think many of these remain in demand and their overall level of value has stayed higher than other, “non-essential” coins.

What are some of the coins that I would suggest collectors put away multiples of in 2009?

I remain a big fan of any coin that has multiple levels of demand. What I mean by this, is a coin that is sought-after by collectors who might not normally be interested in this series. An example is the 1861-D gold dollar. Because of this issue’s association with the Confederacy, there is demand for it from collectors who are likely to never buy another Dahlonega coin of any date or denomination. But this coin is also sought by gold dollar specialists, last-year-of-issue collectors, Dahlonega specialists and collectors who like cool, historic coins, regardless of when or where they were produced.

What are some of the other coins that I would suggest collectors might be clever if they owned a few decent examples? Let’s look at this on a mint-by-mint basis. (Please note that this assumes that any duplicate coins purchased for “warehousing” meet the following criteria: choice for the grade, fairly priced and good overall eye appeal).

Carson City: Any 1870-CC gold coin is desirable and they always sell quickly for me when I have them in stock. Because of its currently high price I might not want to own two or three 1870-CC double eagles. I would be most likely to want multiple examples of the 1870-CC eagle in VF and EF grades as this issue remains a good value at current levels. I wouldn’t be opposed to owning multiple examples of any relatively affordable half eagle or eagle from the 1870’s that was totally original with great color and choice surfaces, especially if it were priced below $15,000.

Charlotte: The one Charlotte issue that comes to mind as being a great warehousing candidate would be the 1838-C half eagle in Very Fine to About Uncirculated grades. This issue’s status as a one-year type and a first-year-of-issue makes it extremely popular with collectors. My other two choices would be an 1838-C quarter eagle and an 1839-C half eagle. I might also suggest stockpiling any $3,000 or lower coin from this mint that was 100% virgin original.

Dahlonega: There are five very obvious warehouse choices from this mint: the 1855-D and 1861-D gold dollars, the 1854-D three dollar and the 1838-D and 1861-D half eagles. The first, third and fifth coins are one-year types while the second and the fourth have Confederate association(s). Another issue that I would give consideration to is the 1855-D quarter eagle. This has the lowest mintage of any Dahlonega coin and it is the single rarest issue produced at this mint. I would remind the potential warehouser of any or all of these coins that damaged or low-end examples need not apply. The same comment that I made for sub-$3,000 Charlotte coins applies to those made in Dahlonega as well.

Denver: Your basketball team is doing well this year but I don’t see many warehouse possibilities. With the possible exception of the scarce 1911-D eagle. Oh, and I like LoDo a lot...

New Orleans: There are five distinct one-year types from this mint: 1855-O gold dollar, 1839-O quarter eagle, 1854-O three dollar, 1909-O half eagle and 1879-O double eagle. I find all five of these to be popular and liquid, although I’m not sure that I consider all of them to be warehousing candidates. As an example, I wouldn’t suggest that anyone own multiple examples of the 1909-O in Extremely Fine. But I like this date in properly graded AU55 and above and I certainly would encourage a warehouser to salt away a few.

The New Orleans issues that I would be most inclined to suggest that someone own multiples of are the key issues that are still not fully valued. Some of these include the 1845-O quarter eagle, the 1847-O half eagle, the 1841-O, 1879-O and 1883-O eagles and the 1855-O double eagle.

Choice, original No Motto coins from New Orleans that are priced at below $3,000 seem like a good area to warehouse as well; especially half eagles.

Philadelphia: One of the problems about discussing gold coins from this mint is that you are looking at a lot of denominations (gold dollars through double eagles) and a long, long time of issuance (1795-1933). For the sake of this article, we’ll focus briefly on the early issues (pre-1834) and the Liberty Head issues (1840-1908).

There are lots of early gold coins that make sense as warehouse candidates. Most people are going to guess that I suggest famous issues like the 1796 No Stars quarter eagle. Actually, the coins I’d be more likely to want to warehouse are the Fat Head half eagles from the late 1820’s/early 1830’s. These coins are expensive and could certainly decline in value if the economy gets more uncertain but they are incredibly rare and, after many years of neglect, are now appreciated by many levels of collectors.

The Liberty Head issues that would make interesting warehouse candidates include the classic rarities from this mint: the 1841 and 1863 quarter eagles, the 1875 and 1876 three dollars, the 1887 half eagle and the 1875 eagle. I would also suggest a small number of very rare issues that, while not extremely popular (at least yet...) appear to represent good value relative to their rarity. These include the 1863 gold dollar, 1864 and 1865 quarter eagles, the 1863 and 1865 half eagles and the 1863, 1873, 1876 and 1877 eagles.

San Francisco: The obvious issues to warehouse from San Francisco would be the mega-rarities: 1854-S quarter eagle, 1864-S half eagle and 1864-S eagle. Even though there are a lot of undervalued and very rare issues from San Francisco, this mint’s comparative unpopularity leads me to believe that warehousing coins from the Barbary Coast might not be a stellar idea.

If you do decide to warehouse a specific issue (or more) my advice is to be under the radar. Let one dealer with who you have a good relationship know about it. I wouldn’t suggest you broadcast to the world that you own five 1838-D half eagles. If you are discrete about what you own, it will be to your advantage when it comes time to sell.

I currently know a number of collectors who warehouse certain gold issues and it is enjoyable for me to work with them. If this is something that intrigues you, please feel free to contact me via email at