Money begets money. But those who’ve invested in rare coins are minting big bucks.

Coins as an asset class delivered a nominal mean annual return of 10.5% between 1941 and 2003, according to the Journal of Financial Planning.

“The rarest coins offer strong price appreciation for mid- to long-term investors,” says Daniel Wade, editor of a news website for Paul Fraser Collectibles, a U.K.-based company specializing in the sale of high-end collectibles, including rare coins.

“Coins are not directly correlated to any other mainstream investments,” he says. “They offer investors diversity away from the stock market—hugely important [considering] the state of the world’s economic climate.”

Coins deliver their best relative performance during periods when long-term bonds do poorly, he adds.

But more importantly, “The price of gold and silver always plays a part in the value of a gold or silver coin, with many specimens trading way above their numismatic value,” says Wade. “Be sure to choose a coin that has collectible value in addition to metal value.”

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US coin with female head
representing Liberty, dated 1891

1967 Canadian dollar

Front view

1967 Canadian dollar

Back view

The soaring price of gold since 2000 has seen several common gold coins achieve considerable price appreciation in recent years, to such an extent that values in some cases match those of much rarer specimens. However, a bubble could be waiting to burst.

“What will happen should the gold price drop?” Wade asks. “Gold coins of numismatic value will still be valuable because they are highly collectible, yet the more common examples will fall away in price.”

Over the long term, though, a fall in gold prices can be offset by the historic value of truly rare coins. So invest when gold prices are stable, stock markets volatile, and interest rates persistently low.

Finding the right time to enter the market can be tricky. Many investors are holding on to their collections in the belief that an end to the global economic crisis will bring more potential buyers and create a seller’s market.

Bear in mind, though, harsh economic conditions mean people need quick cash. So “buy through a reputable dealer; one that offers you a lifetime guarantee of authenticity, and you avoid the worry of being stung by a fake,” Wade says. “The most valuable coins available through auction houses will already have been fully authenticated.”

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