A Brief Introduction To Rare Gold And Silver Coin Investment

A Brief Introduction To Rare Gold And Silver Coin Investment
5 (100%) 13 votes

Rare coin collecting and investing possesses the rare duality of being not only a challenging and engaging hobby, but a lucrative investment as well. Since the advent of monetary and exchange systems precious metals have been used as a form of currency. Gold and silver have withstood the turmoil of war, economic depression and revolution while holding their value. Gold and silver are even relatively unaffected by the crippling effects of inflation. Governments can print an infinite amount of banknotes, devaluing the currency with each run of the press until a single note is near worthless. They cannot however, mint an unlimited amount of gold and silver coins. Precious metals are a finite resource and therefore hold stable even in the most volatile of economic times.

In the technologically advanced investment world of today a great deal of metals investing is done entirely electronically. A buyer purchases a specific amount of a metal, which is then held for them by the company. At no point does the investor have physical control over the bullion, for all basic purposes it exists only on paper. Not only is this a giant leap of faith, but also investors can become entangled in a web of red tape and fees when it comes time to sell. Holding and storage fees can be charged along with fees to transfer or sell the bullion. When market conditions as favorable for selling the actual process of liquidating the metals can be delayed and result in more fees being charged, often as a percentage of the final sale amount. Purchasing gold and silver coins however provides an investor with several advantages over purchasing phantom bullion.

A coin gives an investor a tangible piece of equity, they control its every movement. They can choose where to store it, when to buy and when to sell. Assets can be liquidated in favorable market conditions at a moment’s notice with no shortage of buyers. In addition to physical control coin investors get a boost of added equity with numismatic value of their coins.

An ounce of gold trading at trading at $1400 on the market is worth just that. A 1oz coin minted in .999 gold on the other hand can be worth significantly more than market value depending on the style, mint location and date. While the bullion value of a coin grows over time the numismatic value increases with it. Another added benefit is that while the bullion price of the metal can fluctuate with the market, numismatic value remains fairly stable and increases with time.

An 1895 Morgan Silver Dollar minted in New Orleans has a composition 90% silver, 10% copper and a face value of one dollar. In well-worn and circulated state however it has a value of several hundred dollars. An 1895 O Morgan Silver Dollar in an uncirculated mint state can fetch prices upwards of $100,000, with one recently selling at auction for $575,000 in 2005. While this is an extreme example, it is not uncommon for rare coins composed of gold and silver to exponentially exceed their melt value.

Investing in rare coins can be an exciting prospect, but it is not one to be jumped into lightly. Despite the best intentions of a majority in the metals investment community there are individuals and companies that will prey on investors. This can range from something as simple as sending payment and never receiving the coins all the way up to elaborate bait and switch schemes. The coin market is unfortunately flooded with foreign counterfeit Morgan Silver Dollars marketed as replicas and reproductions that to even experienced eyes can appear genuine.
rare coin investments
Plating of coins is another issue that abounds in the rare coin market. Coins composed of common metals like nickel and steel are electroplated with a fine layer of gold or silver making them appear genuine. Another all too common issue experienced by investors is receipt of damaged or cleaned coins. A coin that has been cleaned loses up 90% of its numismatic value almost instantly as a result and the cleaned state significantly complicates its sale. Damaged coins present a similar problem. A coin that has been damaged even in a seemingly minor way can not only be significantly reduced in value, but often made ineligible for grading as well. Professional grading by a numismatic grading service not only verifies the authenticity of coin for future buyers but can dramatically increase its value as well. A damaged coin will often be deemed unfit for grading and returned in a dreaded “body bag”; a holder used by grading services to return a coin they have refused to grade.

The foolproof method for avoiding issues in coin investing is to make all purchases through a reputable and established dealer of rare coins such as Monaco Rare Coins. Using a professional dealer gives an investor a massive advantage over purchasing coins from a faceless buyer on auction sites or Internet forums. A verified and authenticated bullion and coin dealer has reached that status because of their reputation. They have a vested interest in the satisfaction or every single sale. Rare coin investors are notoriously fickle and demanding; a single negative experience by a customer can have far reaching and lasting effects. Numismatic circles are fairly small and word of negative experiences travels quickly among them.

Rare coin investments can have decent returns over a relatively short period of a few years and astounding gains over longer periods. 10 years ago gold was trading at less than $350 per troy ounce and silver at less than $4.50 per troy ounce. Today gold has increased in value approximately 400% to around $1400 per troy ounce and silver nearly 500% to around $22 per troy ounce. In that decade span there were periods where gold and silver closed and even higher prices for a brief time.

The stability of precious metals and coins in particular has increased demand hugely and opened investors up to price hiking and quality issues. All of these can be avoided by establishing a professional relationship with a reputable and trusted dealer of gold and silver coins. Using a reputable company removes the stress and anxiety of unknowns while ensuring fair prices. This leaves the investor to enjoy their purchases and watch the market, capturing the true spirit and purpose of rare coin investing and collecting.

Works consulted;