Sweet are the uses of adversity.

That's another way of saying that a bad situation can be turned to good advantage--and it's just as true in the coin market as in any other sphere of human experience.

The prices of many coins have declined in recent years, falling to levels significantly lower than the last big market highs in May of 1989. But nothing goes down forever, and many of these coins are excellent candidates now for big- league gains. In fact, quite a few of my current recommendations are coins that have declined the MOST in recent years, for they have the greatest potential to rebound dramatically when the market turns back up--as it certainly will.

As we contemplate the outlook for 1994, it's important to remember that coin-market cycles don't correspond to calendar years. Sometimes, certain coins can increase in value sharply, then take a nose dive, all within the same 12- month period.

With that in mind, I've compiled a list of a dozen recommendations that I think will do very well in the year ahead. But these aren't necessarily coins that will rise in value and SUSTAIN those increases the longest. Rather, they are coins that will, in my opinion, be among the most active --and most popular--during the next 12 months. And as you will observe, I recommend that you not only BUY them but also SELL them soon afterward under certain circumstances.

As always, my comments apply only to coins that have been independently certified in the designated grade or grades by one of the two leading certification services--the Numismatic Guaranty Corporation of America (NGC) and the Professional Coin Grading Service (PCGS)--unless I specify otherwise.

Here, then, is my 1994 list of the "top 12 for the next 12 months":

(1) Three-dollar gold pieces graded Mint State-66.

This first recommendation is not aimed at those with limited budgets. But for those who can afford them, these coins are outstanding buys.

Three-dollar gold pieces, issued by the U.S. Mint from 1854 through 1889, are extremely rare and highly desirable in this very high level of preservation. In 1989, they were valued at $85,000 apiece sight-unseen, and retail transactions were reported to have taken place for more than $100,000. Today, you can acquire one for a mere $16,500. To me, that represents sensational value. These are genuinely rare, and you can obtain them for less than one-fifth the price they were bringing just five years ago.

(2) Modern-issue coins.

I think we're going to see a lot of activity in modern- issue coins during 1994. By "modern issues," however, I don't mean current coins plucked right out of pocket change; I'm referring to pristine examples of relatively recent issues-- primarily those produced by the Mint from 1934 through 1955. These coins are being submitted with growing frequency to the certification services, and we're learning that they're scarcer than anyone imagined in very high grades such as Mint State-66 and above.

I suggest that you check the population and census reports that are published regularly by PCGS and NGC (and available from those companies) and then seek out the coins whose populations have increased the most. These are the coins I recommend most strongly, since these are the ones most likely to be promoted.

Be careful, though: A speculative bubble could very well develop in this part of the market--and, if so, it could burst. So although there is likely to be a great deal of activity in these coins, there is no guarantee whatsoever that your investment profits will be sustained. If you see a profit of any kind in modern-issue coins, my highest recommendation is to get out, go to the cash window and celebrate.

(3) Saint-Gaudens double eagles ($20 gold pieces),especially in Mint State-65.

I think we're going to see a tremendous amount of activity in Saint-Gaudens double eagles. There are strong indications that 1994 could witness greater interest in gold bullion--and as gold increases in value, people get very excited about these beautiful $20 gold pieces, which are widely and deservedly viewed as magnificent works of U.S. coinage art.

In May of 1989, Saint-Gaudens double eagles graded Mint State-65 by either PCGS or NGC--truly gorgeous examples of this numismatic masterpiece--were trading for more than $4,000 apiece. Today, these same coins are trading for a mere $1,000--only about two-and-a-half times the value of the metal they contain. Some may argue that the price was vastly inflated in 1989; on the other hand, I contend that at $1,000 these coins are too cheap. And if gold bullion surges, you can look for "Saints" to fly a lot higher.

(4) Type 3 Liberty double eagles ($20 gold pieces) in Mint State-65.

Type 3 "Libs" are those produced from 1877 through the end of the series in 1907. They are distinguished by the fact that the statement of value is shown on the reverse as TWENTY DOLLARS, rather than the previous TWENTY D.

In May of 1989, these coins were trading for more than $13,000 apiece in Mint State-65. Today, they're only about $3,500--or barely one-fourth the earlier level. As in the case of Saint-Gaudens double eagles, $20 Libs may well enjoy a sharp increase in value if gold bullion shines in the year ahead. It would be very easy for gold to go up $50 or $60 an ounce--and if it does, the psychological boost could push these coins higher by $1,000 or more.

Once again, such higher values might not necessarily be sustained in the different kind of market we're seeing today. My advice would be to go to the cash window and celebrate if you see a significant increase.

(5) Supergrade coins.

Coins graded 68 and 69 are going to do extremely well in the months and years ahead. Meaningful quantities have come out of the woodwork lately and are now being incorporated in the population and census reports--but this has only served to underscore their genuine rarity. Simply stated, they're few and far between. And as these new examples have emerged, they're triggered greater interest, to the point where the demand now exceeds the supply by an even bigger factor than in the past.

We're seeing a number of people come forward who want these coins for type sets--sets made up entirely of coins graded 68 and above. My own firm, Scott Travers Rare Coin Galleries Inc. of New York City, deals with a number of people who are putting together such sets.

The most active supergrade coins will be those whose populations have increased most significantly over the past couple of years--in particular, Liberty Seated quarters with motto in Proof-68 and Barber quarters, Barber half dollars and, to a lesser extent, Barber dimes in Proof-68. All these coins should enjoy a substantial increase in interest and in value. If you see a spectacular increase--anything over 25 or 30 percent within a short period of time--I advise you to go and take your profit. Such gains might not be sustained, and the coins could end up settling at lower levels.

People who are fortunate enough to buy anything graded Proof-69 may find themselves in a very enviable position in 1994.

A final note: Significant new tax advantages now apply to charitable contributions, including donations of rare coins--and this is going to be a particular stimulus to the supergrade coins. I'll be writing about this in a future issue of COINage.

(6) 1909-S VDB Lincoln cents graded Mint State-65 Red by PCGS.

This particular recommendation is limited to coins graded by PCGS--not because the grading standards are different between the two leading services, but because NGC does not provide a grading guarantee on copper coins: Since it believes they are susceptible to deterioration even when housed in sonically sealed, tamper-resistant holders, it declines to warrant them against such loss of quality and grade.

Traditionally, the Lincoln cent series has been the foundation of the modern numismatic marketplace, and the 1909-S VDB cent is the cornerstone of the Lincoln series. This perennially popular coin will continue to attract great interest, and I expect to see tremendous demand--feverish demand, in fact--for those "ultimate" examples graded Mint State-65 Red.

At present, such a coin might cost you approximately $1,500. But if the demand increases as I expect, that figure could jump appreciably. I've been trying to acquire some specimens for clients, and I've had great difficulty finding them. Be careful of this coin, though: Occasionally, inferior coins make their way into MS-65 holders--coins with fingerprints on them, coins with significant carbon flecks and coins which, if you use your common sense, you can see are not red, despite what the holder may say.

(7) Coins that have been certified by ANACS.

For years, I have been limiting my recommendations to coins graded by PCGS and NGC, since those are the dominant grading services--the ones with the greatest acceptance in the marketplace. This year, I am modifying this stance and also recommending coins that have been certified by ANACS, a grading service based in Columbus, Ohio, and owned by Amos Press, the company that publishes Coin World.

Surprising as this may sound, I predict that in 1994, ANACS-certified coins will be a lot more fluid, a lot more liquid and a lot more easily traded and easily bought and sold than they have been in the last couple of years. There are a number of complex reasons for this, but perhaps the most important is that ANACS has maintained admirably consistent grading standards and, as a result, has established itself as a reliable grading service very, very close to being in the same league as NGC and PCGS.

I think 1994 is going to bring significant new activity for ANACS--perhaps a rise in its level of submissions, and certainly a rise in the number of ANACS coins being traded in the marketplace.

(8) Capped Bust dimes, small size, in Proof-66.

This is another recommendation not intended for those with modest budgets. These coins, minted from 1828 to 1837, are high-ticket items by anyone's definition--but the prices on their tickets are a lot lower today than they were a few years ago. Thus, I am including them in keeping with my practice of recommending coins which have dropped in value dramatically.

In May of 1989, a Proof-66 example of one of these coins would have cost at least $110,000, with premium-quality specimens bringing $150,000 to $200,000 wholesale. At retail, that kind of specimen would have cost you a cool quarter of a million dollars. Today, that same Proof-66 specimen would run you a mere $50,000. It's highly recommended.

(9) Scarcer-date circulated gold coins.

Lately, we've seen unusually low premiums for so-called "junk" gold coins--common-date coins in lower grades, whose market value is based primarily on their bullion content, rather than any premium as collectibles. For instance, a VG-8 (very good) example of a $5 gold piece dated 1916 would be worth only about $100--very little more than its bullion value.

If gold bullion were to increase in value even modestly, and more collectors were to come into the fold, the value of such coins could go up pretty dramatically. It wouldn't be a big deal to see that 1916 half eagle climb from $100 to $125. In fact, no one would even talk about it. Percentagewise, however, that gain would be very impressive: a 25-percent increase in value.

So circulated common-date U.S. gold coins--and scarcer dates, as well--deserve a careful look. This is a good opportunity, with the market a bit on the dull side, to go out and try to find flashy, attractive coins.

One note: Often, these coins are uncertified, and I wouldn't recommend that you get each of them certified; their premium value doesn't justify that kind of expense. You might consider submitting them for authentication alone, without grading--but other than the possibility of their being counterfeit, there's not too much of a risk.

(10) Indian Head eagles ($10 gold pieces) graded Mint State-66.

In May of 1989, these coins were valued at more than $30,000. In fact, a beautiful, premium-quality specimen of a little bit scarcer date might have run you close to $50,000 on the retail level. Today, the same coins are priced at just over $7,500 each--although they've already started to move up noticeably.

Be careful here, however: Sometimes, these coins can appear scuffed up, especially on the reverse. If the reverse appears to have problems, stay away from the coin.

(11) High-quality collector coins.

We're going to see a resurgence in this area, thanks in no small part to the favorable donor policy promulgated by the IRS, which is due to take effect in 1994. That's one reason I earlier recommended the 1909-S VDB Lincoln cent in Mint State-65 Red.

Among the specific coins I also recommend is the venerable 1856 Flying Eagle cent in grade levels of Proof-65 and above. I think we could see this coin increase by upwards of 30 percent--possibly as much as 50 percent--within the next year in Proof-65. Once again, such gains might not be sustained If you see a profit, take it.

The values for these coins, and all the others mentioned in this article, can all be determined by reading my book, "The Insider's Guide to U.S. Coin Values, 1994" (Dell Publishing, $4.99).

(12) 1936 proof Lincoln cents.

The first of the "modern" proof cents--the scarce 1936 Lincoln--is a good buy today in either Proof-65 or Proof-64, so I recommend both of these. Let your budget dictate which you can afford.

In Proof-65 Red, the price today is $725--only about one-fourth the $3,000 premium it would have brought five years ago. But I think Proof-64 examples are real sleepers. You can get a very attractive Proof-64 specimen today for only about $115--and that's a tremendous value. Back in 1989, the wholesale price was more than $300 sight-unseen, and a really nice piece might have cost you $700 retail. The current price sounds like a bargain to me.

Just remember this: What goes down must come up--and what goes down the most has the most room to maneuver.