PCGS The Standard for the Rare Coin Industry

Talk may be cheap, but investment advice can often be extremely expensive.

Cheap talk seems to be my personal specialty: I'm seldom even ASKED for advice, much less paid for it.

Frankly, this is just as well, for I entered numismatics as a collector and have always viewed it first and foremost as a hobby, and only secondarily as an investment. Still, I can't deny that coins' investment potential does play a part in drawing many people to our hobby. And even among purists, the topic does come up in conversation.

It comes up most often, at least in my experience, in talk with perfect strangers -- strangers both to me and to the hobby. They have the misconception that just because I write about coins, I must possess some mystical inner knowledge of the market.

They tend to ask questions like, "What's a good coin to invest in?" And, at the risk of exposing my lack of knowledge, I feel an obligation to have some sort of answer in reserve.

My answer, as a rule, is a rather unorthodox one, likely to be dismissed by many of the gurus whose advice involves a fee. It is, however, one with which I've always felt quite comfortable:

"Don't go for the gold -- go for the clad!"

The clad?

That's right -- the "sandwich-type" cupronickel coinage that has been almost universally shunned since Uncle Sam introduced it 33 years ago.

I sense that at this moment there are heads being scratched, eyebrows being raised and questions being asked about my sanity. Clad coins, after all, would seem to have about as much investment potential as Florida swampland.

Please don't be too hasty, though, to measure me for a straitjacket or order me confined to an institution.

Strange as it may seem, there are, indeed, highly persuasive arguments in favor of saving clads -- and one of the most persuasive is the very fact that virtually all collectors have ignored them.

Right at the outset, I ought to make it clear that I don't advocate saving any and every clad coin you encounter. Clearly, that would be ludicrous, given their astronomical mintages. No, my advice concerns only mint-state clads -- sharply struck, lustrous uncirculated pieces.

These are far scarcer than most collectors realize, for despite those huge mintages, clad coins have a much lower percentage of "gems" than the silver coins they replaced -- and, more importantly, collectors haven't saved them in meaningful numbers.

Looking back, I must admit that I myself ignored the "sandwich" coins when they first appeared, and my reasons were the same as everyone else's. The Mint was cranking them out in record numbers. Their precious-metal content was nil or greatly reduced (Kennedy halves, although they were clad, did retain some silver for a time). And, to add insult to injury, many -- if not most -- were poorly struck.

As Philadelphia dealer Harry J. Forman pointed out once, during one of my many wide-ranging interviews with him, nickel is "the toughest material for any coiner to work with." For that reason, he said, many of the clads, especially earlier dimes, quarters and Eisenhower dollars, were "hard to come by in choice condition the day they left the Mint."

"I don't think the people at the Mint really worried too much what the coins looked like," Forman added. "They were just trying to grind them out; they weren't worried about collectors. If a guy gets a choice MS-65 set of clad coins, he's got a display set. He's got something I'd like to see."

Back in the mid-1960s, there seemed to be no reason to put clad coins away -- so hardly anyone did. And that represented a major break with the past. Up until then, thousands of collectors had been saving mint-state rolls of each denomination, every year and every mint. But in 1965, most abandoned the practice. And not very many have resumed it in the interim.

During that interim, billions of clad coins have been produced -- and almost as many billions, of quarters and dimes especially, have slipped into circulation.

The impact has been clear for quite some time. By the early 1970s, dealers were having considerable difficulty obtaining mint-state rolls of the early clad quarters and dimes. But, even then, most collectors seem to have remained indifferent or downright apathetic. Evidently, they still found it hard to believe that clads could be worth saving, and still saw no reason to do so. As a consequence, the overwhelming majority of those coins, too, escaped into circulation.

In recent years, of course, quality has become all-important in numismatics, with investors -- and many collectors, as well -- worshiping at the shrine of perfection. Yet, even now, few seem to realize, or care, that clad coins are scarce in choice condition.

The scarcity of these coins has been noted by market analysts with far better track records than mine. And they, too, feel that clads are very much overlooked and undervalued. The late John Jay Pittman, one of the most astute coin buyers of all time, shared that view.

Pittman's perspicacity has been in the spotlight recently because of the spectacular prices being realized at the sale of his magnificent collection. Coins that he acquired for less than $10 in the 1940s and '50s have been bringing thousands of dollars at the auction sale. But guess what Pittman was setting aside from the 1960s onward. That's right -- clad coins.

"Nobody's paying attention to them," he told me in a conversation back in the early 1980s. "People don't bother saving them and dealers don't bother stocking them. Yet, these are U.S. coins as surely as silver dollars and double eagles. And, in years to come, hobbyists are bound to collect them."

Pittman, for one, had been collecting clads from the very start, and buying them in a very economical way: at face value from his friendly neighborhood bank. Year after year, since 1965, he had set aside a hand-picked roll of every clad coin from every different mint.

It may not sound like much of an investment, or even like much of a collection. But, before you scoff at it, shop around and see if you can duplicate such a set. Granted, the price guides list most clads for only a nominal margin over face. Few if any dealers advertise roll sets, though, in mint condition. And the overriding reason isn't a lack of demand: It's lack of supply.

Plenty of wheeler-dealers would love to promote these coins, if only they could get their hands on them -- but most just weren't saved in promotable amounts.

Pittman was bemused by the whole scenario: Buyers, on the one hand, paying fancy prices for old-time silver dollars that were saved in huge numbers in mint condition -- and all but ignoring the scarce modern coins they could have for next to nothing.

"The thing to collect," he told me, "is what other people don't collect. That's the trick to the whole darned thing."

Scarcity alone doesn't equal value, to be sure. Prices don't soar until a low supply is mixed with high demand -- and, up to now, demand for mint-state clads has been minimal.

But Pittman felt certain -- and others like him agree -- that in time, the numismatic multitudes will finally see the light and start looking clads over, instead of overlooking them.

In fairness, I must caution that some of us have been anticipating such a breakthrough -- figuring it would happen any day - for quite a few years. As far back as the early Seventies, for example, Richard S. "Dick" Yeoman, author of the Red Book and Blue Book, told me of his high expectations for these coins.

"Only a minority of collectors have awakened to the future of the clad coin series," Yeoman said at the time. "The great mintage totals and inferior strikes of the first years have delayed and strengthened the impact that these sleepers will finally have on market values. They are being used up while Mr. and Mrs. Collector sleep."

Mr. and Mrs. Collector, and all the little Collectors, are still asleep as far as clad coins are concerned. A great awakening -- and perhaps a rude one -- may await them, though, and it could well come much sooner than any of us expect.

For now, I just don't see how anyone can go wrong by purchasing mint-state clads. The downside risk is negligible and the upside potential, I feel, is truly great.

The biggest problem you're likely to encounter is finding a dealer who has the coins -- especially the early ones -- for sale.

If you do find such a dealer, let me know. I'm thinking of putting my money where my mouth is.