Ever since the first coins were struck, investing and collecting gold and silver coins has been a popular pastime in the United States. The first serious coin collectors may have hailed from England, but some of the founders of numismatics in the U.S., such as T. Harrison Garrett whose massive collection was sold in the 1970s, have been instrumental pioneers in modern day numismatics.
Rare Coins as Investments
Today, many analysts and successful investors consider rare gold and silver coins a sound investment. In fact, rare coins have been featured several times on CNBC and in notable publications like The Wall Street Journal, Money Magazine, and Barron’s. From financial planners to Harry Browne and other successful investors, nearly every proven professional in the financial world recommends that at least some portion of an individual’s investment portfolio should contain rare gold and silver coins in addition to other precious metals investments. Furthermore, some suggest that as much as 20 percent or more of an individual’s overall wealth should be invested in precious metals and rare coins. Put simply, rare gold and silver coins have been powerful investment vehicles for ‘in the know” investors for quite some time.
Savvy and experienced investors have long considered gold and silver coins as an ideal means of appreciating one’s capital, securing long-term financial goals, protecting other investments tied to the dollar from the currency’s fluctuations, and enjoying a tangible asset that represents a piece of history. Although the fact that rare coins have enjoyed a stable price history and are always in demand contributes greatly in the reasoning behind their popularity as an investment, the opportunity to witness lucrative profits through the purchase of undervalued coins with a rising demand also presents investors with a sound investment argument.
Until the recent wave of investment dollars that has begun flooding the rare coin investment market, investing in rare gold and silver coins has always been considered a long-term investment strategy. Truthfully, every investor should take this approach in an effort to create a more diversified portfolio. All too often in the past, novice investors solely equated investment portfolios with stocks and bonds. However, as witnessed by seasoned investors and supported by the modern investment theory, every individual should strongly consider putting their investment dollars into assets that respond counter to the value of the U.S. dollar and other securities that are tied to the dollar.
By taking this approach, an investor can spread their portfolio out and reduce their risks. For example, if someone invested in rare gold and silver coins to grow their nest egg while protecting it from volatile dollar-related investments, and the dollar-related securities in their portfolio underperformed, the investor’s overall portfolio would typically react favorably due to the asset diversification.
Thanks to an uncertain global economic climate, recent changes that have begun occurring in the U.S. financial markets, an uncertain tax future, an increasing dependence of goods manufactured abroad, wild stock market fluctuations, and rock-bottom interest rates, today represents an ideal opportunity to begin developing a rare gold and silver coin portfolio. In today’s day and age, an investor cannot go wrong with a diversified portfolio of tangible assets that react favorably in declining political and economic conditions.
Determining a Coin’s Value
In the essence of capitalism, the value of a rare gold and silver coin is determined by the marketplace. However, the rarity, demand, and condition of a coin are the three main factors that contribute to establishing its value.
Coins are either rare in terms of condition or their availability. Fundamentally, a rare coin was minted in a limited number. If less than 1,000 coins were minted, than only 1,000 collectors or investors can own that specific issue, making the coin fundamentally rare. Some coins are minted in a large number, but are rare in terms of condition. This can be caused by wear, a poor strike, or the fact that they may have been discarded at one point or another. Since coins with lower minted issues are considered more desirable, they are much more difficult to obtain and fetch a much higher price.
The demand for a particular coin stems from collectors who need a specific coin to complete an entire set. However, demand also comes from seasoned investors looking to sell their coins at the right time to make a significant profit. There are numerous factors that affect the demand for a coin, but the most obvious factors are a coin’s historical significance, provenance, and previous sale price.
The majority of United States coins were issued for circulation and have seen substantial wear and tear, giving them a poor numismatic value. The exceptions to this rule are early silver and gold coins, colonial coins, and early coppers. For most investors and collectors, these coins are virtually unattainable, regardless of the price, but AU50 to AU58 grades can be obtained for some of these issues.
Coins are also categorized as proof coins or mint coins. Proof coins were not produced for circulation. Instead, they were specially struck on polished planchets and handled with the utmost of care. The majority of proof coins were specifically made to only be in the hands of collectors. Mint coins, on the other hand, are coins that were originally minted for circulation but were never circulated. These coins are graded from MS60 to MS 70, and each grade stands for a specific state of a coin’s preservation. Often, there are only minute differences between one grade and another.
Beyond these factors, a coin’s appeal is also determined by its color, design, luster, strike, and lack of wear. All of these factors affect the beauty of a coin and can attract interested investors and collectors, which increases the demand for the set containing the coin.
Set Building as an Investment
Obtaining a rare coin may be fulfilling, but building a set of rare coins is the most rewarding investment strategy that a person can undertake. Rare coins have historically performed well in bullish and bearish market conditions. Due to the high rate of appreciation enjoyed by rare gold and silver coin investors, many have been able to achieve substantial long-term profits by building sets of are coins. Although rare coin investors and collectors are able to profit in the rare coin marketplace, collectors are able to limit their scope by concentrating on only one area of coin collecting, providing them with a decided advantage. By following a plan that allows them to systematically collect coins with a proven rarity, collectors place themselves in a strong position to earn significant returns on their investments down the road.
To do so, most collectors collect sets of coins, and rare coin investors are beginning to understand the reasoning behind this. Coin sets are much more liquid than a random group of coins that are not related to each other. Like most things, the whole is greater than the sum of its parts. Building a successful set of rare coins requires discipline and being able to find numerous coins over time that are both rare and in excellent condition. It may take time, but by doing so, a collector or investor is able to multiply their return in unimaginable ways.
The rare coin market is exciting and full of possibilities. However, it is also filled with dangers and potential pit falls. Budding rare gold and silver coin investors and collectors should seek the expert advice of an industry professional in order to formulate a financial game plan that will allow them to capitalize on the volatile economic climate and secure a profitable future for themselves and their families.
The professionals have been researching, purchasing, selling, and trading rare coin investments for decades. Whether you are new to rare coin investing and in search of valuable insight about the best way to get started as a rare coin investor or an experienced rare coin investor in search of the perfect coin, Monaco has all of the resources you could ever ask for.