Pocketing Dollars from Change
SANTA ANA, Calif. - Three years ago, Steve Contursi of Laguna Beach, Calif., bought a 1794 silver dollar, believed to be the first minted in the United States.
In case it’s stolen or lost, he insured the coin for $10 million. Last year, Contursi paid $3 million for the Brasher Doubloon, the first gold coin minted in the United States, and, in a separate purchase, $8.5 million for a 10-coin set that President Jackson gave to the king of Siam in 1836.
His newest deal is selling a stash of rare cash: 3,600 U.S. $1 bills and Italian 1,000-lire notes salvaged from the safe in the Andrea Doria, a cruise ship that sank in the Atlantic 50 years ago.
“My success in life was created by having a passion,” said Contursi, 53, owner of Rare Coin Wholesalers in Dana Point, Calif., which traded $50 million in coins and currency last year. “As a kid, I had a passion for collecting coins. I learned early that I could also use my passion to create wealth.”
Contursi’s passion and blockbuster deals have made him one of the best-known figures in America’s $15 billion industry in collectible coins and currency. What’s lesser-known is that Contursi is part of a network of traders, graders and collectors who have helped turn Orange County, Calif., and Los Angeles into America’s coin-industry capital.
Integral to the marketplace is Professional Coin Grading Services in Newport Beach, Calif., one of the biggest coin appraisers and authenticators. Last year, the company put its seal of approval on 1.6 million rare coins worth about $1 billion.
Jeff Howard, 27, authenticates up to 1,200 rare coins a day. He handles each piece by its edges, peering under a lamplight above a black velvet mat, examining the surfaces like a crime-scene investigator for wear, nicks and chemical damage. “This hasn’t been overly cleaned or tampered with, but it appears to have bumped with other coins,” he said of a gold dollar coin.
Founded in 1986, Professional Coin was the nation’s first systematic grader, using a scale of 1 to 70 to give traders a common yardstick to value their goods. Howard gave the gold coin a 66. “We do what Standard & Poor’s and Moody’s do,” said Michael Haynes, CEO of Collectors Universe, the Newport Beach, Calif., parent of Professional Coin Grading. “With that information, the marketplace knows how to set the price.”
The price-setting occurs through the Certified Coin Exchange, an online marketplace established in 1990 that Collectors Universe acquired in a $2 million deal last year. Subscribers can get up-to-the-minute prices for every type of currency from a half penny to American Eagle bullion.
“There’s a tremendous amount of information that wasn’t available 10, 20, 30 years ago,” said Steve Deeds, president of Bowers and Merena, an Irvine, Calif., company that traded $40 million in coins last year in live auctions. Despite the advent of online trading, much of the coin business still occurs face to face. One of the nation’s largest coin expos comes to nearby Long Beach, Calif., three times a year, and a fledgling coin show is scheduled for its second annual run at the Anaheim Convention Center in May.
“This part of California is the coin capital of the United States,” Deeds said. “There’s such a high concentration of people with a high net worth here, people who can afford to collect. And it’s a nice place to live.”
During the past five years, coins, like gold, have appreciated faster than stocks or other investments. But the coin-collecting industry has not been trouble-free. A bubble fueled by Wall Street speculators popped in the late 1980s, sinking enthusiasm in coins for years. Last year, a scandal called “coingate” rocked Ohio politics when a Republican Party fundraiser and coin company operator lost millions of dollars through unscrupulous investments of the state’s workers’ compensation fund in rare coins.
The scandal meant more business for a sister company of Bowers and Merena, Irvine, Calif., coin wholesaler Spectrum Numismatics, which recently inked a $7.5 million contract to buy part of the “coingate” inventory.
Most high-end coin collectors keep their trades confidential, often because of security concerns. Last month, police recovered a gold ingot valued at $500,000 that had been stolen from the Irvine, Calif., garage of Dwight Manley, a rare-coin collector, sports agent and real estate developer. Manley, 40, declined to say how much his collection is worth.
Unlike most collectors, who prefer coins in mint condition, he prefers coins that have
been circulated. His favorites include his first coin, a 1909 penny found in a coffee can, and the first coin he bought, a 1794 penny that cost $400 in 1982.
“Coins are a history you can hold in your hands,” he said. “They tell a story. They changed in size and metallic content because of recessions and wars. To me, they’re like a time capsule.”
Manley considers coin collecting an educational hobby.
Contursi turned his hobby into a profession. His personal collection is his privately held company’s $30 million inventory, which he trades to support himself and 16 employees. He began collecting at age 7, scrounging for pennies to fill a blue Whitman coin album. The son of a taxi driver and a meter maid living in the Bronx, Contursi said he was too poor to collect nickels or dimes. He picked through rolls of pennies for rarities, devoured coin newsletters, haunted coin shows and prowled coin shops.
“I learned I could buy at one shop and go across town and sell what I bought for a profit,” he said. “Here I am as a kid, selling to crusty old veterans, and I realized that not everyone sees the same value in the same thing. What I was doing was arbitraging.”
Contursi enrolled in a Ph.D. program in physics at the University of Minnesota, moonlighting in a coin shop to pay for graduate school. But instead of earning his doctorate, he bought the coin shop. In 1988, he moved to Orange County, Calif., to escape the cold.
“I thought, `What am I doing in this tundra?‘” he said. “All I needed was a phone and a good airport.”
The Andrea Doria cash - labeled, laminated and stacked in the vaults of Professional Coin Grading Services - is a new type of venture for Contursi, a move from wholesale to retail, a scheme that seems to contradict the cold calculations behind his success.
“I fell in love with the story,” he said.
On the night of July 25, 1956, as the cruise ship steamed toward New York, it rammed into another liner and sank. Contursi was only 4 when the ship went down, but the event lived in his imagination, fueled by his Italian-American relatives’ concerns that they could have been on the doomed vessel.
In 1981, divers recovered the Andrea Doria’s safe, anticipating a treasure of jewels. Instead, they found only the bursar’s cash, tattered and faded after decades underwater. “I haven’t decided on the price yet,” he said, “These are the last remaining mementos of a historic event. Once they’re gone, they’re gone.”