The first question I ask people is why they want to invest in rare coins. Is it because they heard that rare coins appreciate at a sizable rate? Did they hear that rare coins have outperformed just about every market over the past 50 years? Is it that they want to hold hard assets as part of their investment portfolio?
Most people respond that they like what they have heard from large rare coin companies whom they have spoken with. They like knowing that these coins go up in value every year. They like the fact that there are limited quantities of the “rare coins”. But too often, they are not aware that not all “rare” coins are rare. That is, just because someone says something is rare does not make it so.
Investing is rare coins can be profitable but you really must know what you are doing. Like any other profession, there are good service providers and bad ones. There are those that truly want to see you make prudent investments and then there are those that only want to line their own pockets. The way to avoid losing your shirt is to be proactive.
Being proactive means learning about rare coins. Would you just buy a stock that someone tells you is a good deal without knowing what the company produces or the service they provide? Probably not, so you must do the same due diligence when investing in rare coins.
First off, find out what makes a coin rare. Is it rare because so few were made or because of the fact that although millions were minted, few have survived? Is there a possibility that a hoard may be uncovered and the market flooded thus driving the value of you coin down dramatically?
You really must become a student of numismatics to make informed decisions or you will have to rely on the honesty and integrity of a professional dealer. If you rely on a dealer to make recommendations, find out what you can about the dealer. How long has he been in business? Does he own the company or is he just a salesman? Is the company too large? Will you merely be a number when you deal with them and not a person? What are the dealers credentials? What about his personal life? Does he seem to be honest?
For those of you who are willing to do your own homework, welcome to rare coin investing. To those of you with no interest in rare coins and merely want an alternative investment vehicle, buy gold, silver and platinum bullion until you have the knowledge to invest in rare coins. Rare coins are a long term investment and may not be liquid enough for your purposes. Bullion is liquid anywhere in the world, any time.
When investing in rare coins, find out what the different grading services mean. Some services have no credibility and must be avoided at all cost. These coins are often overgraded and worth a fraction of the asking price. What about population? Population is the number of coins that have been certified in a particular grade. Just because the population of a coin may be 2 or 3 does not necessarily make it rare. It may be that enough people have not submitted their coins to be certified but there are in fact, hundreds of these coins waiting in the wings.
Every dealer has an opinion about what coins to invest in. Some dealers specialize in only one type of coin, hence they are partial to selling and touting that type of coin. If you intend to specialize in the same type of coin, such a dealer may be perfect for you. If you have no interest in forming a “collection” and instead are looking at investment potential, do not invest in one particular type of coin only. If that series falls out of favor with collectors and investors, the values will drop.
In my years of designing numismatic portfolios for private clients, we have seen some coins come and go in popularity. However, some series are always popular. Similarly, when we design precious metals portfolios (bullion), we take into account the current and projected demand (and supply) of the metals we include in the portfolio and the percentage of each.
Investing in rare coins, and/or bullion, is not to be taken lightly. There is a lot of work involved with designing a well balanced portfolio. We work with high net worth individuals who are seasoned investors. We welcome their calls and questions. Nothing makes me happier than telling a client that his portfolio has risen 30% in the past year.
If you have been thinking about investing in rare coins or bullion, or if you are presently working with a dealer but are unhappy, feel free to contact me. I would be glad to answer your questions, and possibly work with you to achieve your goals.
Source by Joe Hylas
Should I Invest in Rare Coins?
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