The start of a new year is a time for high hopes and great expectations--a time to look ahead with eager anticipation to what the next 12 months may have in store.

For the last half-decade, those of us who admire and acquire rare coins have consistently seen our January hopes fall by the wayside--largely unfulfilled--as the months rolled by.

This year, however, that pattern of frustration could finally come to an end, at least on a modest scale. It's hard to make predictions according to the calendar, but more so than at any time since 1989, the promise seems great that sometime in the year ahead, we may at last witness a significant rally in the coin market.

As this is written, near the end of 1994, supplies of rare coins are at historic lows--lower, perhaps, than at any other time in history. They're so low, in fact, that if we were to see just $1 million come into our marketplace from a single buyer, it might cause a price increase of 10 to 20 percent, right across the board, in the coins that were being demanded.

In 1995, the market should be spurred by somewhat sneaky rises in the prices of precious metals--gold bullion, in particular. Historically, these have played a very important role in driving up the prices of rare coins. Subtle increases in inflationary expectations also have a positive effect on the coin market, as does actual monetary inflating--and we should see both of these, as well, during the coming year.

We're not going to see 12- to 15-percent inflation, as we did when Jimmy Carter was in the White House. But it's reasonable to expect inflation in the range of 4 1/2 to 5 percent, and that would propel our marketplace.

Unfortunately, as I see things, none of these factors-- sneaky increases in bullion prices ($10 an ounce here and $10 there), subtle increases in inflationary expectations and actual inflation--may be strong enough to sustain an all-out bull market in coins. As a result, we may end up with a rally, not a boom. The upturn may be of limited duration and intensity. Nevertheless, it should be a significant rally-- and you should be able to cash in on it, and realize a meaningful gain, if you're careful and resourceful.

With that in mind, I've prepared my annual list of the top 12 coins for the next 12 months.

This year, because there are so many possible choices that need to be considered and because the market has been so depressed for so long, I'm devoting some of my picks to general market areas, rather than specific individual coins.

It should be assumed, unless I specify otherwise, that all of the items mentioned here are certified coins--coins that have been graded by one of the top three certification services: ANACS, the Numismatic Guaranty Corporation of America (NGC) or the Professional Coin Grading Service (PCGS). All three of these organizations are well respected and encapsulate coins in sonically sealed, tamper-resistant holders.

(1) Proof-66 Shield nickels.

In May of 1989, at the market's last major peak, these coins were trading for more than $4,000 apiece. Today, NGC and PCGS specimens would cost you just less than $700 each. With a little help from higher bullion prices, we could see them move up quickly to the range of 12 to 15 hundred dollars.

You should stick with coins that don't have spots on them and that have a cameo contrast between the fields and devices. The fields should be chromium-like and the devices should be snow-white and frosted.

(2) Draped Bust coinage of all denominations, graded Mint State-60 to Mint State-62.

If I were asked to choose which area of the market would increase in value the most in the near future, based on the level of supply currently available, I would pick Draped Bust coinage. In fact, it would be ANYONE'S No. 1 recommendation. There's almost no quantity at all. When a really nice Draped Bust coin does come onto the market, it's scooped up right away--and, for the most part, it sells for considerably more than its listed valuation i either The Coin Dealer Newsletter or The Certified Coin Dealer Newsletter.

In buying Draped Bust coinage, beware of coins with light friction; these have a way of slipping into holders at too high a grade level. Try to pick coins with nice eye appeal that are not too darkly toned. Frequently, we see toning which penetrates the surface of these coins. Draped Bust coins range in price all the way up to the six-figure level. The ones I like the most are those in the area of 10 to 50 thousand dollars. That's where the greatest potential exists for solid increases in price.

(3) The Elgin commemorative half dollar in Mint State- 65.

In preparing this article, I spoke with Anthony Swiatek, the preeminent authority on U.S. commemorative coins. And he and I agree that this coin goes right to the head of the class--and almost to the top of this year's list--as a truly affordable commemorative coin with great potential.

At present, an MS-65 example would cost you $200, whether it was certified by NGC, PCGS or ANACS. Back in 1989, a really nice specimen would have cost you more than $2,000; even dealer to dealer and sight-unseen, these coins were trading for upwards of $1,500 at that time. The population hasn't increased all that much, but the price today is only one-tenth as high. As long as you buy a coin which has been strictly graded and doesn't have unsightly toning, that's a great deal. You could easily double your money in a very short time.

(4) The Alabama 2 x 2 commemorative half dollar in Mint State-65.

This is Anthony Swiatek's No. 1 recommendation for ALL commemorative coins. It's quite a bit pricier than the Elgin: Even today, you'd have to figure on spending $2,500. But as in the case of the Draped Bust coinage, there's virtually no available supply. If you were to try to buy one, it would be almost impossible.

This coin was priced at $8,000 back in 1989. But even then, and even at that price, it was very scarce. In fact, really nice examples were trading at $12,000 back in 1989. So at $2,500, this is a great buy now--if you can find it. Just be sure to examine the coin closely and make sure that it doesn't have any unsightly flaws or nicks or scratches and it's decently well struck.

(5) The 1883 no-CENTS "V" nickel in Mint State-66.

Liberty nickels without the word CENTS were widely saved when the U.S. Mint released them in 1883. They were new, they were different--and many Americans soon became aware of the controversy surrounding the omission of the statement of value, which led the Mint to revise the design and include it. While widely saved, however, no-CENTS nickels weren't well preserved. Many were simply tossed in a drawer or jewelry box without no protective covering. So although there's a tremendous quantity of these coins today in Mint State-64 and even in 65, MS-66 pieces are not all that available. Then, too, these coins are made from an alloy of 25 percent nickel and 75 percent copper--and the copper makes them susceptible to spotting. This has reduced the surviving population of MS-66 specimens even further.

Back in 1989, an MS-66 piece might have cost you seven or eight thousand dollars. Even sight-unseen, these coins were trading for well over $5,000 in May of 1989. I just sold one to a customer for $675 retail. Think of it: Here's a coin that might have cost more than six THOUSAND dollars barely five years ago, and now it's changing hands for not much more than six HUNDRED. These coins are almost always fully struck, but you should look for one that has vibrant luster and perhaps light blue or mauve toning. This is a case where you could very well make a profit of $500 to $1,000 within a year. That's a fantastic return!

(6) Classic and semi-classic rarities.

Whenever coin prices go up, we see major collections enter the marketplace. People view this as a timing opportunity. Conversely, when prices go down or remain stagnant, as they have in the last few years, people with major collections tend to sit on the sidelines, waiting for a better time to sell. However, I have noticed an interesting phenomenon: Any time major rarities come out, they sell for more than established market levels, not less.

Recently, Stack's of New York conducted a marvelous auction featuring coins from the James A. Stack Collection. With all the wonderful coins and magnificent rarities in this collection, you might have thought the prices would have been lower than if the rare pieces had been sold individually-- especially at a time when the market was depressed. But in fact, just the opposite occurred: A lot of these coins sold for a multiple of what their reasonable pre-sale estimates would have been. Classic and semi-classic rarities have been languishing for several years now--but when they're put together at an auction, they do well.

When the market rally occurs, these will be among the biggest beneficiaries. A note of caution, though: Some of these are gray-area coins, where you can't be really sure what the value is. Let's say five examples of a certain coin exist, and the last one that sold changed hands six years ago for $300,000. What's it worth today--$60,000? $80,000? This type of gray-area coin is going to sell for a lot closer to the $300,000 that it realized six years ago than to the $60,000 to $80,000 estimate that someone might give it today.

(7) Mint State-64 Morgan dollars.

These are coins I personally despise. However, they WERE $145 sight-unseen back in May of 1989, and today they're available for about $30 to $35. Percentagewise, I think they are going to perform spectacularly during the coming rally, even though they exist in tremendous quantity.

There's no real need for someone to buy this kind of coin in quantity; all you really need, perhaps, is one piece for a collection of type coins. We're seeing a trend away from this type of generic, fungible coin. And since more of these coins continue to be certified, and fewer people want them today than in 1989, we have a situation where their value is being eroded on both ends--by a growing supply and a falling demand.

No one except an investor would want these coins by the dozens or even the hundreds. Nevertheless, with the new excitement I foresee in the coin market, we're going to see these coins increase from around $30 or $35 apiece to the $50 range. And even though a $15 increase in a coin may not mean much to you, percentagewise that's a significant number.

(8) Indian Head $10 gold pieces graded Mint State-64.

At $1,500 each, these coins are going to be a great play when gold bullion rises in value, stimulating interest in numismatic gold coins as well. These coins are very popular, they're extremely beautiful--and in Mint State-65, they cost more than $3,000 apiece. Back in 1989, they were trading fluidly in MS-64 at six or seven thousand dollars apiece, and nice ones brought closer to $8,000. At that time, MS-65s were priced at upwards of $15,000.

This coin may not be on exactly the same pedestal as the $20 gold piece designed by the same artistic genius, Augustus Saint-Gaudens, but it's not far behind. It's widely viewed as a coin of great aesthetic appeal. It's also perceived as a coin which is less common than generic, fungible Saint- Gaudens double eagles in Mint State-64 and 65. I think we could see it double in value if gold goes up $75 an ounce. And that's really something to watch.

If it does occur, this increase is going to be really quick, and I would advise that if and when we do see a price rise of 100 percent on Indian $10s, you move VERY quickly and just sell out, even if you have a premium-quality coin. Incidentally, you should look carefully at these Mint State- 64s for nicks and hits in the headdress. Often, you can find coins with really vibrant luster, really premium quality-- very close to 65--for a price under $2,000. And I think that's a great buy.

(9) 1909-S VDB Lincoln cents in all grades, but especially Mint State-65 Red PCGS.

There are basically two reasons I think this coin is going to do well--and I look upon this as a winner all around. First of all, collectors love this coin; they always have and probably always will. Acquiring a 1909-S VDB is every young collector's dream--and an ongoing dream for many OLDER hobbyists, as well. In this respect, it's akin to the 1916-D Mercury dime. The second reason I like this coin right now is that several people are promoting it aggressively, thereby creating even more demand. One person I know is putting together a mini-hoard of 1909-S VDB's, buying up every coin in sight, and I know this person has tremendous funds available. When you combine those two reasons, you have the makings of a mega-winner, especially considering that there are not that many pieces around right now anyway. With all the pressure on these coins, I think it's possible to see them go up in value 30 percent--on top of the substantial gains they've already posted recently. I could see extremely fine examples trading for close to $1,000 in the not so distant future.

(10) The 1877 twenty-cent piece in Proof-67.

This is the lowest-mintage proof in the twenty-cent series, and also the highest-graded for the rare-date 1877. It's also one of the most desirable U.S. coins of ANY kind. And its price has decreased dramatically. But these are not the reasons I've selected it. I've chosen it as a good example of a coin type that may become the object of a major new collecting trend--and of feverish demand--in the coming several months.

The trend that I'm seeing, as someone who deals with high-end retail clients, is one in which people putting together type sets try to acquire the rarest-dated coins in the highest grades available. That's one reason I recommend the 1909-S VDB cent in Mint State-65 Red; the demand for such a coin could soon be enormous. We're seeing people put together type sets in Proof-67 and Mint State-67. In the case of the twenty-cent piece, the 1877 in Proof-67 is a natural. This is a growing trend. So although the 1877 is a coin that I just sold--a very nice coin, at that, and certainly well up there, I'm really recommending this entire category of coins. People have learned from their mistakes; they've learned from the crash of 1989, where generic, fungible coins went begging and have continued to go begging for so many years--and, on a relative basis, the so-called collector coins, the keys to the series, have held their value the best. I think we're going to see a lot of intelligent collector/investors, and dealers who direct them, seek to put together these kinds of type sets.

That 1877 twenty-cent piece, by the way, is worth about $50,000 now--probably half of what it was not very long ago.

(11) Mint State-65 Liberty Seated quarters.

Business-strike Seated quarters are far scarcer than proofs in 65, and for that reason I think people are going to be concentrating on the business strikes. Solid bread-and-butter 65 coins--really nice coins with very light toning, toning which doesn't penetrate the surface--are the backbone, the staple of the investment coin market, the type of coin collector/investors have always liked. And whenever we see a rally in the type-coin market, Liberty Seated quarters and halves lead the way. I don't think this cycle is going to be any different.

With Liberty Seated quarters with motto--those struck from 1866 to 1891--you can get a really nice MS-65 specimen for 12 or 13 hundred dollars. And I think that's a great deal, especially if you find a coin literally dripping with luster that has a needle-sharp strike. The other types of Liberty Seated quarters are also very good deals at the present time, especially those bread-and-butter 65s. If you look at the difference in price between the 65 and the 66, you'll see that clearly the 65 is the much better value. Often, a high-end 65 is barely discernible from its 66 counterpart. A Mint State-66 Liberty Seated quarter with motto would cost you at least $3,000 for a nice example--and when you can take a really nice 65, possibly crack it out of its holder and get a 66, there's not much of a need to pay the extra couple of thousand dollars. These coins are quite underrated, I think; a doubling in price wouldn't be out of the question with a little bit of new interest in the coin market.

(12) Mint State-65 Barber quarters.

With Barber quarters, we're witnessing a similar phenomenon to what exists for the Liberty Seated type. We're seeing an increase in type collectors--collector/investors who think it's prudent to diversify not only their overall financial assets but also their numismatic assets. They don't just buy 10 coins of one type and hold them all; instead, they put together a diversified coin portfolio while at the same time they're assembling an attractive collection.

MS-65 Barber quarters are always in the forefront in coin market rallies and recoveries, and I would be very bullish on this coinage type. They're really a great deal right now: You can obtain a really nice 65 for about $1,000. Again, as with Liberty Seated quarters, I suggest buying coins with very light toning --toning which doesn't penetrate the surface. Stick with coins with vibrant original mint luster, and coins where if possible the strike is needle- sharp.

With Barber quarters, you can often find scarcer dates at the type-coin price of $1,000 or so. I think on this kind of coin, a 50- to 75-percent increase in value in 1995 is not at all out of the question.