RARE COINS: AN INVESTMENT FOR ALL SEASONS 

By John H. Tischler. President, The Eccentric Collector, LLC

Collecting coins is a wonderful hobby, but did you know that it can also be a smart investment? 

If you are like most people, you are saving for your retirement by investing money in stocks, bonds or mutual funds, through either an IRA or 401K.  You are hoping that these investments, in addition to your Social Security benefits, will provide you with a comfortable retirement.  Sadly, it often does not work out that way. The stock market tends to rise and fall on people’s perception of the economy and company values.  The value of securities are supported primarily by confidence in the value of the underlying asset and by expectations of future success.  As long as this confidence lasts, the stock can both hold its value and rise.  Once they are gone, the bottom falls out – just ask someone who used to own Enron or Conseco. 

When the economy or companies go bad, people tend to begin frantically buying items that have intrinsic value and rarity. These items include gold, silver and platinum (they do not include Beanie Babies, Yu-Gi-Oh cards, state quarters or the like). This frantic purchasing behavior is commonly known as “the flight to quality.”  While the value of these "hard" assets tend to rise in poor economies, they can still fluctuate dramatically from week-to-week, day-to-day or even hour-to-hour.  For example, look at the Platinum figures in the chart below.  The current price is $916.  But if you look at the High and Low prices for the day (known as the “trading range”), you will notice that Platinum is highly volatile.  During this day, the value of platinum has fluctuated between $934 and $897. A trading range of $37! So on any given day, the value of a commodity can fluctuate significantly and you can make or lose big money. 

So how can you benefit from the surging prices of metals without jumping on an emotional and financial roller-coaster? 

The answer is to own rare coins. 

• Rise In Metal Values – When the values of gold, silver and platinum increase, the intrinsic values of coins composed of these metals tend to increase as well. The value of rare coins can rise exponentially when the metals are flying high.
• Scarcity – While coin values tend to rise as the metals rise, they can also rise when the metals stagnate or even head downwards. Why?  Because people like to own genuinely rare items.  Coins have a fixed mintage.  Once the presses stop turning out a given coin, that is all there will ever be on the market. Public companies, by comparison, can issue and split stock at will – dramatically changing their market value. The savvy investor that understands the power of owning rare coins, selecting coins with low mintages in the very best quality they can afford, can look forward to significant near and long term profits and security.
• Purchases Of Rare Coins Not Reportable By Dealers – Most sales and purchases of coins are not reportable, unlike other investments which are reported to the IRS each year. The sale of bullion may be reportable if you purchase over 24 ounces at once.
• Coins Are A Fun Investment – Coin collecting is a wonderful lifelong hobby.  Unlike stocks and bonds, coins can be enjoyed for their beauty and can be a great opportunity for parents and grandparents to spend “quality time” with children

In conclusion, you may want to consider putting 10% to 20% of your portfolio in rare coins.  They are likely to do well when your other investments are doing poorly, and rise as the economy prospers.  Seek out a reputable coin dealer for help in selecting the right coins and consult with your investment advisor to discuss how rare coins will fit into your overall investment strategy.