Much of the traditional stock market focuses on “theoretical value.” Stocks, bonds, and complex futures don’t really have any inherent value if they leave the stock market and are held personally by the investor. Conversely, rare coin investments are “stored value” in nature, meaning the coins contain a great deal of real, monetary value outside of active trading and theoretical manipulation. This makes them an absolutely great way to diversify a traditional investment portfolio, insulating it against major stock market declines, recessions, inflation, and other negative indicators that would otherwise put an investor’s finances or retirement in peril.
Getting started with rare coin investments is easier then ever, thanks in no small part to the explosive growth of rare coin trading and the dramatically increased interest over the past half-decade or so. Rare coins today are one of the fastest-growing investments, with new brokers and dealers setting up shop all the time. Before getting started with this exciting new avenue of portfolio diversification, however, consumers should keep a few key pieces of information in mind. When they do, they’ll be able to make better investments that pay off in a significant way over the long-term.
Defining a Rare Coin: What Today’s Newest Investors Need to Know
Perhaps the most common misconception about a rare coin is that virtually any coin made from bullion is “rare” in nature and should serve as a way to get started with investments. This is not actually true, since most major mints around the world do create bullion coins on a rather routine basis. The United States actively produces its gold-bullion “American Eagle,” just as one example. While the coin is decidedly more rare than the average quarter or dime, it’s still actively produced and it’s not rare enough to hold any real value at the present time. Generally, investors want to look for a few key characteristics.
A rare coin is named as such for a reason, and a lot of that reason lies in the age of the coin. As coins get older, they tend to be snatched up by collectors and stored away, increasing their rarity in almost direct proportion to their value. Older coins are also not likely to be currently minted, and they may have some special characteristics that more modern coins simply don’t share.
2. Minting Status
Coins that are no longer minted will surely demand a higher price and create a more stable long-term investment. Since no more of these coins will ever be produced, their numbers have nowhere to go but down. The scarcity principle will work in favor of the investment as the coin gets older and its days of active minting fall further behind it.
3. Bullion Composition
While bullion itself should not be the sole reason to buy a coin, it’s worth mentioning that gold and other precious metals are high-value and thus give the coin an added way to maintain its value even during more challenging economic times. Furthermore, coins minted with bullion are inherently more rare than coins minted with copper, nickel, or another material, and that enhances their value in a secondary way.
Every rare coin offered for sale to investors will come with a “grade” that assesses the coin’s rarity, its quality, and its long-term investment prospects overall. Consumers need to pay attention to this grading because it will essentially let them know whether a rare coin is worth their time. Because dealers typically sell several types of coins, all with different grades, it makes for easier assessment of the coin and easier comparison-shopping when building a portfolio designed to last. Of course, this hinges on fair grading processes on behalf of each dealer, but that process will be examined later.
Finding the Right Dealer: What to Know When Making the Switch to Rare Coins
The key to a solid rare coin investment is a knowledgeable and trustworthy dealer. The reasons for this are pretty simple. Trustworthy dealers give coins a fair grading process that shows their inherent value, and they sell coins at a fair price that doesn’t detract from the coin’s long-term investment products. A great dealer will also be able to talk in detail about the coin itself, discussing why its value is so high, its rarity is so great, and its investment prospects are so optimistic for those who are just getting started in the field. When choosing a qualified rare coin dealer, consumers should keep a few things in mind.
1. The Best Dealers Have Been Certified by Industry Bodies
Rare coin investments are generally not as tightly regulated as the stock market instruments and more traditional mechanisms offered to consumers by traditional investors and financial advisors. Even so, the industry is still closely watched by a number of key organizations that do lend their seal of approval to those dealers they believe to be the most hones when it comes to grading, pricing, and other business practices. Among the major seals of approval to look for are those offered by the Professional Numismatists Guild and the American Numismatics Society. Both groups are among the oldest in the country, and each group has a series of very tough metrics to meet in order for their approval to be granted.
When dealing with any rare coin professional, be sure to ask them about their membership in either group, and make sure that at least one of those major trade groups has certified the dealer as a trustworthy source of investment information and rare coin products. If not, it might be worth checking into other dealers that will offer the right combination of better prices and better long-term peace of mind with each coin they sell.
2. The Best Dealers Have More than One Type of Coin
The rare coin investment world is a big one, and there are dealers of all sizes offering investment coins for sale. The difference between a great dealer and a merely “okay” dealer can often be seen in their selection. Great rare coin dealers are those that offer gold bullion coins, silver coins, domestic options and even those from foreign mints. Their selection should feature coins of varying ages, giving new investors a way to mix up their portfolio and affordably get into the rare coin investment game.
Of course, it’s not necessarily a deal-breaker if the dealer has a limited supply of coins or only deals in one kind. Investors can always go to a second dealer or even a third. That’s not convenient, though, and it increases the risk incurred by investors while decreasing the likelihood that all of their coins were uniformly graded, fairly and uniformly priced, and offered for sale to maximize an investment portfolio over time. In the rare coin world, a diverse selection is always an asset and the best dealers will have no shortage for their investors.
3. Choose a Dealer that Believes in the Power of One-on-One Investing
The great thing about the rare coin world is that, despite its explosive growth in recent years, many of the best dealers on the market still believe in meeting with their prospective customers on a one-on-one basis. These meetings allow the dealer, or their representatives, to assess the investor’s needs and determine their long-term goals within the marketplace. It is this assessment that will allow them to recommend certain coins based on their rarity, age, origin, and other factors.
Consider this to be much like meeting with a traditional financial advisor. Any reputable dealer should have representatives that are knowledgeable, approachable, and eager to talk about the products they’re offering to the public. With this kind of relationship, long-term success with these stored value investments will be much easier to achieve.
Great Opportunities for Eager Rare Coin Investors
With plenty of great coins, trustworthy dealers, and future growth opportunities, the rare coin investment industry is one that can significantly diversify a portfolio and prepare it for stable growth well into the future. Remember to carefully research coin history, metallic composition, and dealer reliability, and it will be easy to maximize returns in a short amount of time.