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Coin Collecting: No Sure Trip to the Bank

Kathy Kristof, Tribune Media Services

When a Michigan man got a strange-looking quarter from a vending machine, he considered it an oddity, worth a few bucks at most. But the collector who bought it for pocket change suspected otherwise.

The coin, double-struck with images of a Massachusetts quarter and a Sacajawea dollar, may be worth a small fortune.

"This is a drastic mint error," says John Abbott, vice president of Abbott's Corp., a Birmingham, Mich., coin dealer. "Some of the lesser mint errors go for between $10,000 and $20,000. We really think this will bring about $50,000."

Thanks largely to the U.S. Mint's 2-year-old state quarter program, coin collecting--which once rivaled stamp collecting as America's No. 1 hobby--is undergoing a renaissance.

But as the Michigan story attests, coin collecting can deliver drastically mixed results when approached as an investment method. Novices should resist advertisements that promise glittering returns from buying rare coins, gold bullion and commemorative issues, and leave such risk-taking to professional collectors.

U.S. Mint officials estimate that about 114 million Americans are collecting state quarters. In fact, about two of every three quarters minted in the last two years have been taken out of circulation by collectors amassing stockpiles that average 25 quarters each. Many of these new collectors are kids.

"It was inconceivable to people to think a few years ago that coins could become a collectible in the realm of Beanie Babies or Pokemon cards," says U.S. Mint spokesman Michael White. "But this state quarters program sort of transformed coin collecting from a smaller hobby to something very mainstream."

Basic coin collecting can be an inexpensive hobby. Collecting all 50 state quarters can cost as little as $12.50, and groups such as the Professional Numismatists Guild are giving away holders for displaying the coins. A Sacajawea golden dollar costs, well, $1.

It's also educational. The state quarters are issued in the order the states were admitted to the Union, and depict historic events or, like South Carolina's, the state bird, tree and flower. The Sacajawea dollar has raised the profile of the American Indian woman who served as a guide to explorers Meriwether Lewis and William Clark.

"Every coin has a story to tell," says Donn Pearlmann, an avid collector who runs a Chicago public relations firm. "Money is history that you can hold in your hands."

But anyone who collects state quarters in hopes of reaping big gains will probably be disappointed. Although some collectors maintain that a few of the quarters disappeared from circulation so quickly that they might bring $1 (if they're in extremely good condition), common coins rarely appreciate that much.

Making money at coin collecting means finding rarities at cheap prices--or in pocket change. Unfortunately, like the Michigan man who sold the $50,000 coin for peanuts, a casual collector probably will not know what's valuable.

"If you are going to collect coins not only for enjoyment but also for investment, you ought to buy the book before you buy the coin," says Steve Bobbitt, a spokesman for the American Numismatic Association, in Colorado Springs, Colo.

Bookstores carry dozens of titles dedicated to coin collecting, but trade groups and the Mint offer free publications to help collectors who are just starting out.

The Professional Numismatists Guild, for example, publishes free booklets for beginning collectors (available by writing to: Robert Brueggeman, PNG Executive Director, 3950 Concordia Lane, Fallbrook, CA 92028). The PNG also offers free "quarter boards" for displaying state quarter collections.

In addition, Web sites run by the Mint http://www.usmint.gov and the American Numismatic Association http://www.money.org are full of information about coins and coin collecting.

Here are a few tips for beginners:

- Mistakes (a coin is minted upside down, double-struck or struck without a border or mint mark) are usually worth something. The bigger the error, the more valuable the coin.

- How do you tell whether a coin was struck upside down? Hold it with the face up and rotate it from top to bottom. If properly struck, the image on the other side should be right side up. If not, the coin may be worth a lot more than its face value.

- Except in the rarest cases, coins must be in exceptionally good condition to retain value as collectibles. Judging a coin's condition is a highly technical endeavor, and minor variations in grading can change a coin's value by thousands of dollars.

- Some dealers will take advantage of naive investors, either by promising an unrealistic return on a coin, selling improperly graded coins, or offering to pay an unreasonably low price for valuable coins. Moreover, it's not unheard of for counterfeiters to forge a rare coin by altering the date or mint mark on a common specimen.