Investing In Rare Coins Involves Research And Timing

If the thought of investing in rare coins has occurred to you, certainly you are not alone. Many of today’s rare coins are desired by investors eager to diversify their portfolio with these proven hard assets. Many investors view investing in rare coins as a valid alternative from traditional real estate and stock market investments but simply do not understand how to start. The growing trend of investing in the rare coin market begins by building collections of various coin designs across the spectrum of denominations.

In fact, there are numerous reasons to become invested in ancient and/or rare coins. Some of these reasons include:

A Limited Supply

Both ancient and/or rare coins are limited in supply. The price of every coin is generally affected by both inflation and demand. Rare coins maintain their worth because of their antique value, along with the intrinsic value of their silver or gold content. Many collectors (numismatists) have been able to accumulate several coins in a small collection only to discover later that they are valued as a small fortune.

Stock Market Volatility

Since the recent downturn in the economy that caused a recession, the performance of the stock market has remained volatile. Many investors recognized this was the opportune time to diversify. Over the last six years, many investors have carefully moved away from their poor performing stocks and bonds and have chosen rare coins as a way to diversify. Holding the tangible hard asset in hand assures the investor of an increase in their investment portfolio no matter what Wall Street is doing.

Historically, many rare and antique coins are renowned for their positive performance during times of inflation. Valuable rare coins have consistently generated long-term, strong price gains during virtually every spurt of economic growth. In addition, they serve as an excellent solution for hedging against inflationary times.

A Liquid Asset

Rare coins tend to be highly liquid assets. This is because of its collect-ability and updated published prices. When the investor chooses to liquidate one coin or the entire collection, the process is usually extremely simple. Rare coins have accepted value at locations all around the world.

A Diminishing Supply

Likely the most intriguing aspect of investing in rare coins is there diminishing supply. It offers a strong advantage to secure an investment portfolio. Even the smallest increase in demand can cause the rare coin price to increase quickly. Because no new rare coin can be minted, the only way to satisfy the demand is by increasing its price.

Even so, beginning a coin collection can be extremely affordable. It offers a fun and rewarding hobby to many numismatists interested in the historical value or in its scarcity. Many pieces are vintage, intricate and beautiful pieces of art that hold historical significance and value.

Protecting the Investor and the Investment

In 1977, a standard for grading was established by the American Numismatic Association, which overtime has been revised. Today, rare coins are graded by certified graders using a scale that ranges from 1 to 70. The range indicates that a “1” is a poor coin, where a “70” is perfect. To meet the 70 on the scale, the coin will need to be entirely free of any scratch, knick, imperfection or blemish of any kind.

Usually, rare coins that have the highest value are often those that are classified “MS” or Mint State. Usually, these coins tend to be graded in the MS 60-70 range. However, other coins ranging AU 55-58 (About Uncirculated) are also very desirable, when they appear much like a Mint State piece.

In addition, there are proof coins that have been struck by the mint from highly polished specialized dies at very slow speeds using extra pressure. The result is often a mirror-like, brilliant surface. These pieces are typically the ultimate “70” proof and are offered for sale to the public separately.

Avoid the Wooden Nickel

Becoming successful in investing in rare coins requires an extensive amount of research. This will help any newbie investor in their effort to avoid purchasing the proverbial “wooden nickel.” In addition to becoming familiar with a reliable price guide, it pays to deal with a trusted coin dealer, like Rare Coins, that uses a reputable 3rd party service for coin grading, either the NGC (Numismatic Guarantee Corporation) or the PCGS (Professional Coin Grading Service).

Every coin purchased by an investor should be fully evaluated and graded by a competent service and encased in a hard, professional style plastic holder (slab). It is the design of the plastic “slab” that will prevent any knick or scratch and protect the coin from moisture, dust or any other harmful contaminants. Although, it should be known that no casing can protect the coin 100%.

Building a Long-Term Strategy

Numismatists worldwide buy and sell approximately $100 billion worth of rare coins every year. Even so, it does not always pay dividends immediately. Often times, investors will only show a sizable profit after waiting 5 to 10 years for its value to increase. However, it offers a valuable store of wealth and is an easy way to hand down investments to future generations.

It is quite easy for a sizable numismatic collection to become a family heirloom. Even investing in rare coins in a small way today can provide significant profits for generations many decades from now. The collection can be enjoyed over time and cherished by each generation. In addition, it can be used as a way to provide security, if a hard time ever comes.

Numismatic collecting is not a short-term solution for flipping to create fast cash. Even so, many financial advisors recommend investors store upwards of 10% to 15% of their total investment portfolio in both precious metals and rare coins. This allows the investor to create the ideal foundation for building wealth while adding more security to the family’s financial status.

In the event that the stocks and bonds markets tank, the investor’s coins continue to hold their value and many times increase in worth. This is because many investors choose to drop their traditional paper trading instruments during times of economic strife, and grab up all available physical asset commodities.

The Starting Point

For any individual interested in investing in rare coins, they can be purchased piece by piece or as a set. However, it is important to understand that knowledge about rare coins is power. Staying informed about the latest prices, demand and supply, allows the investor to become skilled in buying and selling rare and antique coins.

Investors should recognize that the price of gold and numismatic coins tend to share a historical relationship. This helps minimize the guesswork involved when investing in rare coins. However, even though the rare coin industry tends to follow the spot price of gold, it will eventually surpass the precious metal in value.

Timing is always a factor when purchasing a rare coin at the best price. Always consider using a reputable dealer to find the best available opportunities.

Investing In Rare Coins Involves Research And Timing
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