Seventy at Seventy Part Two — Circulated Early Type

In our last issue, I provided an introduction to this topic - noting that I'd be examining the price performance of 70 coins at 10-year intervals on the occasion of the 70^th anniversary of The Guidebook of U.S. Coins, more popularly known as "the Red Book."

I noted there would be two caveats on what otherwise would be a rather straightforward study; one is the fact that prior to the late 1970s, the notion of large premiums for Gem Mint State and Proof coins really didn't exist. So in our study, up through the 1977 edition, the Red Book listed only one Mint State grade: "Unc." Matching that to today's multiple Mint State listings is tricky. The other caveat is inflation, which while not critically important in short term pricing studies, becomes very important when viewed over an extended period such as 70 years.

That said, let's take a look at our first category of coins - circulated early type. Seven coins were selected and tracked from 1947 to 2017. Since the grades here range from Fine to VF, we don't have the Mint State grading problem we'll encounter in some of the other categories.

A couple of things are readily apparent looking over this chart. The early and mid-1960s witnessed a sizeable boom in the coin hobby, and price increases during this period were quite steep. The cost of our basket of coins grew by just over five times. Similarly, the 1997-2007 period was also one of rapid growth, as prices grew by roughly 3 1/2 times.

However, the pace of growth over this period was hardly steady. One very quiet period occurred during the late 1980s and early 1990s. If you remember, the late 1980s marked the introduction and rapid growth of third-party grading services. There was tremendous attention paid to high-grade type coins, Silver Dollars, Mercs, Walkers, Buffalos and other similar series. Early circulated type was somewhat ignored, as investors took the spotlight away from collectors. The sharp peak in 1989 was followed by a coin market recession in 1990-1991, which saw prices drop precipitously. The recovery would take years, and the early and mid-1990s saw little to no growth in coin prices. Another comparatively slow period is continuing today, with only a modest increase noted between 2007 and 2017.

A graph showing the price increase of early circulated type coins. Note this a logarithmic scale.

Overall though, from a roughly $1,000 investment in 1947, you would be sitting on about a quarter of a million dollars today. That's a steady 8.1% annual return, every year, for 70 years.

Now, we all know that $1 in 1947 represents considerably less buying power today. So if we adjust our table to 2017 dollars, the picture is quite different. Yes, coins were still a very good long-term investment, but a look at the table paints a somewhat more realistic picture.

After adjusting for inflation, the entire period from 1967 to 1997 saw minimal growth, but the 1957-1967 period as well as the 1997-2007 period remains incredibly strong. So even accounting for the decline in purchasing power of the dollar, a 70-year investment in early circulated type coins would have seen your money grow by approximately 22X. That's a real annual return of 4.5% net of inflation. Still not too shabby.

In our following installment, we'll look at the next group in the study: Key Date Coins.

Series Links:

http://www.pcgs.com/news/seventy-at-seventy-pt1-introduction

http://www.pcgs.com/news/seventy-at-seventy-pt2-circulated-early-type

http://www.pcgs.com/news/seventy-at-seventy-pt3-circulated-key-date

http://www.pcgs.com/news/seventy-at-seventy-pt4