Rare coins have been a popular investment vehicle for hundreds of years. Since the age of the Romans, people have seen the intrinsic value that rare coins possess. Many invest in coins for their precious metal content, which can lead to significant profits due to the drastic rise in precious metal prices in recent years. Others choose to invest in coins for their historical significance and rarity, which can command a hefty premium in the coin marketplace. Either way, rare coin investments provide a solid return on investment and a bright future for savvy collectors.
Rare Coin Investment Basics
In order to begin investing in rare gold and silver coins, it is first important to understand how the coin markets work. Rare coin prices appreciate when an influx of new money is introduced to the rare coin market in an attempt to purchase coins that are in a limited supply. Inversely, coins depreciate in value with an increase in coin selling activity, thus massively taking money out of the coin market. Rare gold and silver coins are considered a sound investment during inflationary periods in which they historically perform very well. Similar to works of fine art, rare coins are a collectible that give their owners not just monetary gain, but years of enjoyment.
Developing an Investment Plan
Obviously, not all coins appreciate in value with an upward trending coin market. It is common sense that before any rare coin investor makes a coin purchase that they first develop an investment plan. The most important part of any rare coin investment plan is selecting the right coins. An investment plan must also incorporate various methods and circumstances in which they will sell their coins.
Before investing in rare gold or silver coins, you must first determine your investment purposes. For example, are you going to purchase the coins in hopes of selling them off when the market increases their value, or are you planning on holding on to the coins to pass down to future generations. In other words, are you, as an investor, more interested in being a rare coin collector or a rare coin investor? If you are more interested in buying rare coins and selling them when they increase in value enough to turn a significant profit, than you would probably want to invest in bullion coins instead of numismatic coins that have collector value. By investing in bullion coins, you can easily monitor precious metal prices on a daily basis. Unless you find a steal of a deal, you will likely do best by holding on to numismatic coins for a significant length of time.
After deciding on the intentions of your rare coin purchasing, you will need to decide upon the amount of money you want to invest. Do you want to make a large purchase with an upfront lump sum investment, or would you prefer to make periodic payments? Perhaps you would prefer a combination of the two?
Then, you will need to consider your particular area of interest within the coin market. Some prefer investing in rare gold coins, while others prefer silver dollars. Still, other rare coin investors and collectors enjoy historical coins, such as early-minted U.S. coins. It all comes down to your particular interests and comfort level. Are you more interested in collecting a few very rare numismatic coins with historical significance, building a complete coin collection, or buying and holding a large amount of coins in bulk?
The More Rare the Better
When in the rare coin market, it is essential to opt for coins that cannot easily be found on the market. Like anything else, the old adage of supply and demand rings true. Buying a coin that you can find multiples of, whether at a coin show or a coin shop, will come back to haunt you when you decide to sell. Buyers will be able to shop around for the best prices, thus driving the prices down. If you go to multiple coin auctions and see the same type of coin being sold at each and every auction, then you obviously do not want to purchase that particular coin.
If you keep running into this overabundance problem, it would be a wise idea to change your shopping or investing strategy. Instead of buying coins that are widely available, you should purchase coins that only appear in the marketplace every now and then. This way, when you decide to sell your coins you will have multiple people competing for your coins. This increased competition for a limited product will drive prices up, offering you the chance to sell your coins at a premium.
Investment Length and Current Market
It is also important to consider how long you want to keep your rare coin investments and what current economic trends are taking place when you want to sell. For instance, if you want to sell you should consider whether the present economy is producing wealthy investors who are only interested in adding rare coins to their collection, or if it is a wider buyer’s market. Typically, if middle class individuals are spending their money on rare coins, then the wealthy are also.
Individual Trends in the Coin Market
Just like the overall economy, individual coin markets go through trends as well. Taking these trends into consideration will greatly help your rare coin investments. One such trend to examine is looking at the buying preferences over the previous decade or so. For instance, the strong economy of the early 21st century produced many wealthy individuals who took an interest in purchasing as many high-end early American coins that they could get their hands on. In such a market, you should be looking at economic circumstances that might sustain or reverse this trend.
Using the example above, only the pre-steam press coins that were minted prior to 1836 were popular, as commemorative coins struck between 1892 and 1954 never gained much popularity. Thus, their prices remained much lower and consistent than earlier coins whose prices skyrocketed. Also, keep in mind that the prices for particular coin series (like high grade Buffalo nickels) and high-end silver dollars tend to rise and fall over the years. It is important to be aware of the current coin market at all times. This will help you buy when the prices of particular coins drop and sell when the prices increase.
Should You Use a Dealer or an Agent?
In addition to knowing what kind of collector or investor you want to be and knowing the economic/coin markets, you need to consider your coin purchasing abilities. Knowing your strengths and weaknesses is important for anything in life, but especially rare coin investments. You need to seriously consider whether or not you know the best resources for purchasing or selling coins. You will also need to be able to spot economic and coin market trends. On top of all that, you need to have the ability to scrutinize the grading for every coin you might be interested in purchasing. For example, are you able to recognize if certified coins are high-end, solidly graded, or barely make the grade? Also, are you able to travel around to various coin shows and events, or would you benefit from a trained agent who travels around to all the national events?
Anyone new to rare coin investing should seriously consider using the services of an experienced dealer or agent. Before acquiring a dealer or agent, you should make sure they have a good reputation in the industry. It is wise to check out forums and online services to find out if they are the right dealer or agent for you. Just like a stock market investor, it is very easy to make mistakes when investing in rare coins. However, unlike stocks, coin investors usually do not find out about their investment mistakes until years later when they attempt to sell their coins. This makes it all the more important to choose an experienced and trusted dealer or agent as your representative.
There is definitely no shortage of available rare gold and silver coin dealers to choose from. A trusted and experienced dealer will help guide you on your rare coin-investing journey. The experts have years of knowledge and experience in the rare coin field, and pride themselves in offering the most trusted services in the industry.
The world of rare coin investing is challenging but deeply rewarding. There are many things to consider when planning your rare coin investments. Some investors have trekked blindly into the realm of rare coins and made significant mistakes. Others have made wise investments and profited greatly. Choosing to work with a reputable coin dealer will save you from years of learning and help ensure every rare coin investment you make will be a profitable one.