Rare coin investing has grown in popularity in recent years, spurred by a consumer interest in investment tools that are more literal than theoretical. That interest itself was generated after years of stock market uncertainty, driven by a deep global recession. Today’s investors, having learned an important lesson during the last decade, are now more sensitive than ever to thorough diversification as well as the ability to physically hold onto some of their investments in case of hard times. Rare coins are a great way to accomplish this, and that’s even truer as the industry begins to grow at its fastest rate in recent history.
Getting started with rare coin investing is actually pretty easy, but prospective investors owe it to themselves to learn a bit more about the industry’s operations and regulations before they dive in and begin purchasing coins from reputable online dealers. Before making a move into this exciting and expanding method of investing, consumers should review answers to some of the most commonly asked questions relating to rare coins, dealers, and long-term prospects for growth.
1. Why Would I Invest in Rare Coins Instead of Traditional Investments?
Most people are moving into rare coins for one of two reasons. The first, and perhaps most popular, is that they simply wish to have an investment that they can hold onto and store in their own home. Rare coins can be purchased online from a number of great dealers, and they’re then shipped directly to customers for safekeeping. There is no need to constantly deal with a big bank or another agency that might cause literal and financial headaches. It should also be noted that these coins are financially stable, and that they represent a great way to insulate a more traditional portfolio against losses during stock market declines.
Other rare coin investors are actually avid collectors or those with a historical interest in the coins that they’re purchasing from a dealer. These buyers consider the investment nature of the coins to be a benefit, as they’re far more interested in the historic value of each purchase. Their enthusiasm helps to drive coin prices up in the first place, putting a premium on older coins and those that are hardly ever seen in public.
2. Why are Rare Coins a Sure Investment Compared to Others?
The coins purchased by consumers for investment purchases are those that are often at least a half-century old. Some coins date back to the 18th or 19th centuries, while others date back even further and originate in Europe and throughout other parts of the world. These coins generally do not decrease in value because their historic nature never decreases. Indeed, as time goes on, old and historic coins become even more old and historic. They also get harder to find, and that places a premium on them that can be used as investment income.
Because these coins tend to grow steadily and reliably over time, they serve as a really great “offset” for investment loses incurred by a portfolio through stock market investments or other traditional avenues. Furthermore, they represent a way for a consumer’s money to stay relative fixed, with slight growth, and without dealing with major financial institutions.
3. Is the Industry Tightly Regulated by the Government?
Every rare coin dealer, like Monaco Rare Coins, has to follow fair business practices as set forth not only by the federal government, but also by the state where they operate. Foreign dealers must abide by the laws that govern businesses in the country where they are based. In terms of financial regulation and oversight, however, the federal government is not as deeply involved in rare coin investing as it is in traditional stock market investments. That’s partly because many people purchase these coins as a collector’s item rather than as a financial instrument.
Even so, the government’s limited involvement is backed up by major industry organizations that verify everything from the coin grading process to the prices offered on every coin and the interactions between the dealer and their customers. These organizations do not lend their accreditation to every dealer, and so their seal of approval should be used as a way of ensuring a company’s trustworthiness and sound business practices.
4. Is the Rare Coin Industry Subject to Any Downturns or Losses in Value?
Yes, it is. The good news, however, is that downturns in the rare coin investment industry are extremely rare and generally not as severe as the downturns experienced by global stock market indexes and other mechanisms. Most of today’s rare coins are pegged to the value of a smaller set of coins within the PCGS3000 index. This index measures the value of coins, the historic nature of coins, and their overall grading, and determines a rate of growth for the broader industry.
The index is not immune to downturns. A few decades ago, it suffered what is perhaps its most severe period of contraction during its history. For the past few decades, though, the PCGS3000 has been on an upswing with steady, reliable, bubble-free growth for rare con investors.
5. Is Coin Rarity or Coin Composition More Important Overall?
The key thing to remember when searching for coins to purchase as part of an investment portfolio is that this type of investing is done based on rarity. The composition of a coin does have some bearing on its overall value, since bullion and precious metals are both quite expensive when compared to the materials used in everyday currency. The composition of a coin does not determine its rarity or long-term growth potential, however. In fact, at a base level, all the composition does is make the coin more expensive initially.
When shopping for rare coins, focus on coins that are very old, hard to find, and in great condition. This will ensure that each purchase made is one that can grow soundly over time into a better performing investment mechanism.
6. Is There an Ideal Time to Get Started with Rare Coin Investing?
Now. There is never a bad time to get started with this industry, especially as it becomes far more mainstream than in previous eras. With so many great options available to consumers, including rare coins that might even have personal or emotional meaning, making the move from traditional investments to rare coins is a solid choice no matter when it’s undertaken.
Be sure to do plenty of research and to deal only with the most reputable companies in the industry. Create a portfolio that is broad and diverse, historic and worth showing off. With careful attention to the details of buying, collecting, and interacting with dealers, great returns on each rare coin purchased can be earned in relatively little time.