Investing in Rare Coins and Gold Coins

Tuesday, 18 Jan 2011 03:09 PM

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You can invest in coins just as you invest in stocks, commodities, currencies, and commercial real estate. The coin-investing market is also influenced by the forces of supply and demand - much in the same way the markets relating to assets like stocks and commodities are influenced.
 
Before initiating a "Buy" on coins:
Before investing in coins, you should make sure that the coins are genuine. For this purpose, you can approach either:
  • The Professional Coin Grading Service (PCGS)
  • The Numismatic Guarantee Corporation (NGC)
Both of them furnish a written guarantee of their conclusions on the authenticity and condition of the coin. These two organizations are well-respected service providers in the rare coin industry. Investment in gold and silver coins is generally preferred. U.S. coins are more liquid than coins from other countries. As an investment option, coin investing may fare well or poorly, based on a variety of factors. Here are the two main categories of coin investment:
 
Rare Coins:
A rare coin is rarely found and can be considered rare because of its:
  • relatively low mintage (fewer coins minted or made)
  • low survival rate
  • because holders do not want to sell them
Rare coins can be bought at an auction. Coin shows, garage sales, and dealers may also buy and sell rare coins. Genuine and truly rare coins are seldom traded on any exchange. Purchase of rare coins mostly takes place between knowledgeable dealers and avid collectors. However, please know that by investing in rare coins, you are investing in an illiquid asset.
 
Gold Coins:
Investing in gold coins is safe and sensible. Your investment in stocks may take a hit because of the poor quarterly results, but nothing of the sort will affect your investment in gold coins. Sensibly, one can invest in gold coins up to 30% of one’s total capital allocation. However, ensure that you buy gold coins from reliable sources. Impure gold will not generate the desired level of return. Investing in rare gold coins can make even more sense since the collector’s value of the coin will enhance the natural value of the gold in the coin.

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