Rare Coins Investment: A Primer

The economic climate currently being experienced by the citizens of the world is one of extreme volatility. There is, it would seem, a new story daily of government collapse in one country, hyperinflation in another, and of course, always and everywhere there are wars and the rumor of wars. This high-tension atmosphere only serves to put the minds of those involved in investment and other forms of economics in a state of near-constant unease. Fear is not conducive to a steady rise in economic prosperity. Even so, with all the uncertainty in today’s world, some things remain a source of constancy, rare coins investment among them.

Like other forms of tangible asset investment, the securing of wealth by means of rare coins is popular because the investor, public or private, can put their hands upon the literal bulwark of their otherwise very liquid assets. Paper money and electronic funds transfers have their place, but now, as in days of old, there seems to be something special about the clink… clink… clink… of hard currency. In addition to the pluses attached to and shared with other investment avenues of this type, such as land, rare coins investment carries with it a high degree of asset portability. The market is narrower, but the demand found within its confines can be very high. Rare coins investment is a very special field. Read on to learn how you can navigate it safely, and come out on the other side with stability, peace of mind, and profit as the result.

The question of why rare coins ought to be a part of one’s investment portfolio is a fair question. It has a deep answer for those who love research for the sake of research, but obvious reasons abound, too. For instance, rare coins are, in some cases, still legal tender. This isn’t the norm, but it helps to know that even if the paper money in one’s wallet suddenly becomes worthless, that doesn’t have to spell the end of the world. Additionally, the portability factor is important. True, it isn’t always super simple or a no-brainer of a task to transport large collections, but moving one’s rare coin investments to a new venue – offshore for the tax breaks and so forth, for example – is certainly easier than attempting the same thing with a plot of land!

The two things which are most responsible for making rare coins the valuable commodities they are, however, are their rarity and the fact that they are in the vast majority of cases comprised in whole or in part of precious metals, usually gold or silver. Rarity and the “gotta have it” factor are somewhat subjective, but gold, silver, and other precious metals have been synonyms for and the last bastions of wealth since time out of time. People trust them and value them the world over, and that means investors can, too.
precious rare coin investing
Rare coins investment is a serious undertaking. It involves the gain and loss of a person’s money, and as such, the prudent are cautious. As with other business transactions and investments, there are things one can do that will help minimize risk and maximize safety. For example, reading trade publications centering on the rare coins market can, in much the same way as classic cars, give a collector or investor an idea of contemporary market conditions – demand, price, circulation patterns, and so forth. Getting things in writing is always a good idea, too. Things such as a coin’s specifications, including its melt value, grade, and more, applicable return or buy-back policies and the like do matter, and can sometimes be the difference in getting fleeced or not.

In addition, an investor ought to employ a tax advisor when undertaking this sort of venture, since some jurisdictions consider the sale of precious metals bearing investment instruments taxable income. It should also go without saying that one should avail him or herself of modern technology and Google any potential investment participants in an effort to ascertain their credibility, be they merchant or customer

Rip-offs. Scams. Con jobs. Just pick your term and go with it, because the idea and the point is the same, whatever you call it: Some people are not very scrupulous. It’s true that honest mistakes do happen in rare coins investment, but these are a tiny fraction of what makes up the shady underbelly of this market. So, what should an investor be wary of? A few things, actually.

The first red flag to look out for is what may generally be called false grading. This “procedure” serves to inflate a coin’s worth beyond its real value. Schemes employed by unsavory dealers to grade their wares falsely include on-site / in-house grading, the use of un-regulated, un-known, or simply unsavory third-party graders, and/or the use of forged, counterfeit, or otherwise fake certificates of grade, authenticity, and so on.

Another danger sign to look out for is raw-value inflation. Dealers need to make a profit, sure, but some merchants go beyond a reasonable mark-up over wholesale and attempt to make a killing unjustly. The insidious thing about this is that such a practice is often accompanied and supported by accurate, legitimate grading of the coins in a dealer’s possession. In short, a coin’s credentials will often be solid and accurate, but the asking price will be well above the value a coin ought to command.

Both of the preceding examples of shady dealing can best be combatted by the investor doing his or her share of leg-work, even if it’s all done online. Research, due-diligence, and no small bit of street smarts are key to not getting scammed. Be prudent, and remember that it’s true what they say: If the deal sounds too good to be true, it almost always is.

The third and final scam tactic some dealers will try on buyers is the issue of false buy-back / return guarantees. If a buyer is unhappy with his or her purchase, the less-than-reputable dealer may simply fail to honor their commitment in this regard, or append steep fees or commissions to the act. An investor in rare coins, as in all assets, should be very careful in their evaluation of the character of a potential new dealer.

The good news is, however, that for all the doom and gloom above, many – most, really – dealers are above-board, and genuinely care about the people they deal with. Don’t be scared off, then… just be careful.

Rare or numismatic coins, also called collector coins or historic coins are the coins discussed in this article. Their value is based on a combination of their rarity (and thus their demand), their condition, and various other factors. Their value as a collectible / investment may or may not be greater than the value of the precious metals they contain.

  • BID: The price a dealer or other investor is willing to pay for bullion, coins, or other investment instruments. Somewhat fluid.
  • ASK: The price at which dealer or other investor seeks to sell a coin, bullion, or other investment instrument. Somewhat fluid.
  • SPREAD: This is the difference between a commodity’s buy/sell or bid/ask price. Its amount and variability depend almost entirely upon market conditions.
  • BULLION: This is the actual precious metal – gold, silver, etc. – that a coin is made of, either in whole or in part. It also comes in bars, ingots, and the like.
  • MELT VALUE: If a coin or coins were to be melted down and the bullion extracted, this is the price that the owner of said coin(s) would receive, less applicable fees, surcharges, and other incidentals.
  • SPOT: The cash price for gold, silver, or other precious metals on the open market, paid on a “cash for deliverables” basis.
  • PREMIUM: This is a seller’s mark-up over spot. In other words, this is a seller’s profit margin.
  • TROY OUNCE: The unit of measurement for all precious metals. It equals approximately 1.09 “regular” ounces.

You can get additional information on this at one of the industry resources.

As the reader can see, the rare coins investment market is both intricate and broad in scope. It can’t be learned or mastered without effort, but the fact that it is not an easy or lifeless undertaking is what gives it the appeal, which draws in so many investors. If you, the potential investor, have the fortitude and dedication to learn the ropes in this fascinating field, there is almost no end to the stability, portfolio diversification, wealth-building, and out-and-out fun you can experience. With the above information, the potential investor ought now to have a solid grasp of the very fundamental points required for entry. The only obstacle now between him or her and what amounts to a life of treasure hunting is his or her own drive, ambition, and enjoyment of the craft and science of rare coins investment.


Rare Coins Investment: A Primer
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