Rare Coin Investing Serves as a Stellar Inflation Hedge

Many investors believe that high inflation is just waiting around the corner and see an investment in rare coins such as gold and silver as an excellent hedge for inflation. Now is a great time for them to join the coin market.

After a successful World’s Fair of Money trade show in Chicago presented by the American Numismatic Association two years ago, the rare coin market has slowed down a little bit. Gold has rapidly declined and softened outside investor psychology for rare coins and gold.

However, there is still a huge demand for people who are in the know about premium quality high-end coins. Although trading has slowed down a little, it is still very active. In addition, many experts consider it a good time for any rare coin investor to buy.

A Simple Explosion

When the U.S. went through the last high inflationary period during the Jimmy Carter years, many investors were throwing out money at coin dealers such as Monaco. This causes a once simple investment market to explode while sending some coins that could have been purchased for less than $300 in 1977 to nearly $3,000 three years later.

This was not the only case. It was typical. Market values often become distorted as the coin market that is mainly investor-driven shifted away from the fundamentals that make it the collector-based market it is now today. Huge overall dealer profits were also reinvested into the rare coin market at that time.

This further fuels the coin market because that is what people know and do with their hard-earned cash as coin dealers. They invest in a portfolio. After those bad days, the rare coin market did experience quite a bubble. However, this only happened once fortunes had been made in the coin market. Aside from that, people should bear in mind that learning about the coin market is the key to success.

Important Organizations

Many people are asking if a runaway coin market could happen again. The answer is that it very well could. However, the industry has much more positive fundamentals this time around. The Numismatic Guaranty Corporation and were formed the Professional Coin Grading Service in the 1980s. These organizations are considered the backbone of the industry when it comes to coin grading. This is one of the most important fundamentals for valuing a rare coin. It has also led to strengthened consumer confidence and protection in owning rare coins.

Increased Confidence

The formation of the NGC and PCGs has also given rare gold and silver coin investors, dealers and even collectors more confidence in obtaining more expensive rare coins. Aside from that, these organizations also made it much easier for people to sell and buy rare silver and gold coins.

However, certified third-party coin grading has also allowed inexperienced coin dealers to easily get in on the action. Because of this, people should choose their dealers carefully. Additionally, there are some dealers who are market makers for certain rare coins on the wholesale end of the rare coin market.

However, some market makers today will purchase many rare coins on an sight-unseen basis by simply relying on the certified grades that were assigned by the U.S. grading services. This is not the case for all certified rare silver and gold coins, but this factor is present in the industry for some select rare coins.

The Internet and Rare Coin Investment

Another important factor in the rare gold and silver coin market that has become the backbone of the industry is the Internet. This high-tech tool has given investors and collectors a great information resource for studying and learning about rare coins that the present market did not have during the last investment-inflation surge.

It has provided for greater coin trading through inventory offerings and auctions for collectors and even dealers who have the capability to sell their rare silver and gold coins by themselves online. However, there is a learning period for both new investors and collectors and even experienced ones who want to branch out into new areas of collecting. The Internet is a great resource for people to tackle this problem. Once again, the rare coin market did not have this beneficial tool when the inflationary investor market happened in the 1970s.

Coin prices have improved since that time. Aside from that, the Internet has also provided collectors, dealers and investors another great tool for doing research. This is an easy way for them to gain access to auction records of rare silver and gold coins. There are a number of times when researching auction records is quite an easy thing to do, but sometimes it takes lots of sophistication in knowing what is really happening in the market.

Apart from that, many analysts believe that rare coin pricing is the next thing to be perfected during the upcoming years. This is similar to coin grading that has been finely tuned since the mid-1980s. Once again, it is important for the individual to know their dealer and their experience.

More Efficient and More Structured

Although it is not perfect, the rare coin market is considered to be the most efficient and structured of all the inflation-hedge, collectible markets in existence. An individual can trade their rare coins within a range that is fair unlike other collectibles. Aside from that, there is always a ready market for rare coins at some price level even if the market is down. Rare silver and gold coins have often been seen as very liquid especially at the right price points. Although the gold bubble has recently burst, what people did not hear from economic experts is that it has continued to climb and even outperform many traditional investments over the last ten years.

The Bottom Line

The federal debt will continue to grow. Deficit spending occurs every year and is adding to this debt. The only temporary way to contain financial crises and social unrest is to print more money. This cannot continue forever, but it will for many years to come. Silver and gold rare coins have the ability to protect investors from the effects of inflation.

Rare Coin Investing Serves as a Stellar Inflation Hedge
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