Recent economic turbulence has sent American investors, and people all around the world, on a quest for new investment strategies that reduce risk and are simply less tied to the overall economic fortunes of global markets. This strategy makes sense; actually, as there are a number of great ways to help money grow without tying it to the overall value of a stock index or to the value of an individual company’s stock price. One such investment strategy is to pursue rare coins instead of common stocks and bonds. Rare coins are known to hold their value quite a bit better than the wider stock market at large, and this helps investors insulate themselves against wild fluctuations, market speculation, and other factors.
Investing in rare coins is quite unlike making traditional investments in stocks, bonds, mutual funds, and other better-known investment mechanisms. For customers to be able to draw the maximum amount of value out of any rare coin investment, they should understand the basics about rare coin investing as well as the warning signs to look out for when choosing a rare coin dealer. Armed with all of the right information and industry facts, consumers can turn themselves into respected rare coin investors who enjoy stable earnings and calm investment management.
Rare Coins: What Are They and Where Do They Come From?
The reason that rare coin investing represents a reduced risk to consumers is because the price of each coin tends to remain relatively stable, with gradual increases rather than wild swings in either direction. This is due mainly to two key factors that pertain to the coin’s materials and its historic nature. First and foremost, virtually all rare coins are made using bullion of some sort. This means that rare coins are typically created using yellow or white gold, silver, or platinum. As most consumers know, these materials are highly valuable and the price of each has only gone up in recent years as professional brokers have offset their own risk by dealing in commodities.
In addition to being tied to very high bullion prices, rare coins tie their value to historical legacy. Most of the coins worth investing in are quite old, with some dating back a century or more since they were last minted by either the United States Mint or its foreign equivalent. This historical nature allows rare coins to blunt the effects of decreasing bullion prices with an ever increase historical value. Therefore, even if gold, silver, or platinum prices were to decline, investors would still notice that the overall value of their coins remained stable or, in the worst-case scenario, declined negligibly.
Investing in Rare Coins: A Different Procedure than Traditional Investments
Investing in today’s rarest coins is quite a bit different than making investments in stocks, bonds, mutual funds, retirement accounts, and other mechanisms. Rare coins are actual, physical pieces of metal that can be owned and stored by the investor for as long as they wish to hold onto them. That means that, rather than logging into a bank or investment account and transferring funds between stocks and bonds, investors will have to actually purchase the coins and keep them save.
This process must be done through a rare coin investment firm in most cases. Prospective investors will need to shop around for a rare coin company that offers fair prices on a wide variety of different coins. These various companies each come with different selling points, whether it’s because they deal in international coins, high-value historic coins, or those coins with the highest amount of bullion used during their minting. Each company has a unique aspect to their service, but they’re unified by certain characteristics that make them trustworthy and worth developing a long-term investment partnership with.
What to Look for When Buying Rare Coins
Purchasing rare coins as an investment requires dealing only with the most reputable companies online, as there are all too many cases of customers trusting a fraudulent company that just couldn’t deliver on lofty promises and weighty statements about coin value. The general rule of “if it’s too good to be true, it probably is,” does apply when looking for an investment company of this kind. Beyond that, though, customers looking to invest in rare coins should keep an eye out for a few key characteristics that will help to identify the most trustworthy rare coin investment companies.
1. Guild or Trade Agency Certification
While traditional banks and investment companies flaunt government regulation acronyms like NCUA, FDIC and others, rare coin companies are regulated by independent trade industry bodies that attest to their value, security, and faithfulness to their customers. Without a doubt, the largest such trade industry group for rare coin investing is the American Numismatic Association, based in Colorado Springs, Colorado. The association is one of the oldest such bodies in the country and its commitment is to help both new and seasoned coin investors make trustworthy deals and sound investments.
A second trade industry group, known as the Professional Numismatists Guild, provides much the same service. Membership in the Professional Numismatists Guild is far more selective and restrictive, however, with the organization requiring dealers to have quite a few years of experience and a sterling record in order to join. For this reason, both the Professional Numismatists Guild and the American Numismatic Association are considered great seals of approval when comparing potential investment partners.
2. Look for Fair Grading and Appreciation
The number one thing that scam investment companies do to lure customers to their products is to over-promise and under-deliver in a major way. This is typically done using two factors that are central to rare coin investments and the growth that they will deliver to customer investment portfolios. The first thing is the grading of the coin, which determines its overall condition as well as its historic value and its potential for long-term growth. There are some rare coins that will not grow very well at all, and reputable companies will give them a low grade. Scam companies, though, will talk up their potential value and sell them at a much higher price. This amounts to defrauding customers, as they pay a large amount for a low-value coin that won’t add any value to their portfolio at all.
The appreciation index of a coin is another key way that companies look to draw customers in with false promises of growth. The appreciation index measures the coin’s ability to grow in value over a certain period of time, and it’s one of the key tools that rare coin investors use to determine whether or not their purchase of a coin will result in good returns over time. Good companies deliver honest appreciation results. Less reputable companies will promise huge returns for virtually every coin they sell, and these promises are very hard to back up. In most cases, they’re impossible to meet.
3. Sites that Talk More About Bullion Than Rarity
Most customers can easily fall into the “bullion trap” when participating in rare coin investing. This involves focusing more on the construction of the coin than it rarity, and it’s easy to do because most coins simply aren’t made of bullion. In that respect, many customers consider any bullion coin to be quite rare and of great value. That’s just not the case, however. Bullion coins like the American Eagle are actually quite common and traded regularly. Their appreciation index is low, even though their bullion content is quite high.
A rare coin is one that cannot be regularly traded and is generally hard to find due to its age and its lack of present minting. Websites that deal in legitimate rare coin investing know this, and that’s why they proudly flaunt their historic coins and those are that are no longer in production. Less reputable websites, though, don’t have access to those coins and so they’ll try to get customers to fall for the bullion trick every time.
With Careful Shopping, Rare Coin Investing Can Provide Real Growth
The growth in rare coin investment, as well as in the value of the coins purchased by customers is no accident. In recent years, the stock market’s uncertainty has driven up the price of bullion that is used to create almost all rare coins. Furthermore, consumers are finally beginning to understand that their traditional investments must be paired with something tangible and reliable, as well as a bit more stable.
Because bullion prices look to remain strong through the end of the year, and generally through the next several years, the value of rare coins will likely continue to grow or at least hold steady. And, as the historical value of coins increases and their availability decreases, their value will shoot up in a big way. For this reason, it just makes sense of customers to take advantage of recent economic conditions to diversify their portfolio and to embrace the benefits of rare coins.
As always, though, any rare coin investment partner should be carefully researched and chosen only after they’ve been verified as trustworthy and honest about their products. With careful attention to detail and a solid investment strategy, rare coins represent real opportunity for many of today’s investors.