Although coin collecting has been a popular hobby among many for years, there are a far lesser number of those willing to dedicate the time and study to collect rare coins for investment purposes. The truth is that investing in rare coins isn’t rocket science, but for those who buy as a hedge against inflation or any other reason, the key words are patience, determination, and research. In fact, there isn’t a rare coin investor who doesn’t have still more to learn about the field. Fortunately, along with the guidance of a knowledgeable and experienced rare coin dealer, investing in rare coins can be very rewarding, financially and otherwise.
More Than Face Value
The first issue to consider before buying any rare coins is to determine whether you want to invest in coins for their melt value or their collectible value or numismatic value. The melt value is simply the value of the metal that the coin contains. On the other hand, coins that a purchased for their collectible or numismatic value, which are priced on factors like the type of coin, the year it was minted, the place it was minted, and its condition – or “grade.” Rare coins are most often valued for their collectible value since they don’t contain as much precious metal as melt value coins.
An investment in rare coins can be profitable and enjoyable. From collectors to investors, these coins can help to diversify a portfolio. Each investment can be done for a coins numismatic value or the value of its metal content. For many years, the rare coin market was comprised almost entirely of collectors. Most of these collectors began a fascination with coins in their youth and began to gradually purchase more coins. In modern times, the rare coin market has changed significantly. Many buyers of rare coins do so in order to invest in the metal’s value. They may also purchase a coin as an investment instead of to collect it.
Benefits of Investing in Rare Coins
When inflation increases drastically, the value of someone’s money goes down. During World War II in Germany, inflation increased so drastically that people supposedly had to purchase a loaf of bread with a wheelbarrow full of cash. Although the United States has not dealt with this level of inflation for a long time, it can happen again. One of the few ways to beat inflation is to invest in a product like a rare coins, bullion or high-quality jewelry. As prices creep upward, the value of the investment will keep match. Rare coins are a great way to diversify a portfolio. The goal of any portfolio is to provide investments that can appreciate in any economic situation. Rare coins are good diversification tools because they have characteristics that regular stocks and bonds do not have.
Most people with an interest in collecting gold and rare coins hope for a coin portfolio that appreciates with time. To avoid losses and make money in any collectible, investors should plan with care and ask questions before investing. Investors should research the best coins to buy, then learn how to avoid losing money in rare coins.
A short history of rare U.S. gold and silver coins. According to the authors of “2012 North American Coins & Prices,” (2012) the market values of gold and silver varied in the early years of the country. For example, during the California Gold Rush, silver values temporarily exceeded that of gold on a supply vs. demand basis. Author Edgar Holmes Adams (“Private Gold Coinage of California: 1849-55, its history and its issues,” 1912) writes about the bonanza years that started in 1849. An octagonal $50 gold “slug” was used as currency. Ten, $20 and $25 gold pieces were stamped “CALIFORNIA” and reflect the plenitude of gold in the country during this exuberant time.
Prior to 1838, most Americans preferred to place gold coins in a vault rather than spend them for goods and services. In 1870, with the discovery of several Nevada silver mines, the price of gold declined in relation to gold once again.
One of the most beautiful precious metals traded today is platinum. It is found in even smaller quantities than gold and silver. However, it is commonly ignored in favor of other precious metals. This is also a very interesting investment asset because it is commonly used in industrial applications. It is also a vital component in motor vehicles. There are many different options for people to invest in platinum. This includes stock in businesses heavily involved in the sale and extraction of the metal. Other investment options include exchange traded-futures contracts and both futures-based and physically backed exchanged-traded products.
Uses and Physical Properties of Platinum
Platinum is a malleable and dense transition metal. It also belongs to the platinum group of constituents that are generally unreactive. It has certain physical attributes that make it very useful for industrial applications. It is highly resistant to corrosion even in extreme weather conditions. This makes it very appealing for use as a component in catalytic converters.
About half of the world’s supply of platinum is used for emission control devices for motor vehicles. Due to its catalyst attributes, it helps in the conversion of hydrocarbons from the car’s exhaust into water vapor and carbon dioxide. Electronics and jewelry also make significant use of platinum. At the same time, platinum is also being used in thermometers and certain dental applications.
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