Investing in Rare Gold and Silver Coins

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As economic markets struggle to stay afloat, rare gold and silver coins have become a popular investment option. Over the last two decades, rare coin investments are a common form of market trading. These coins are available in a wide range of price levels, grades and weight classes. The wide selection available has made rare coin investing an accessible investment option for people from all walks of life.

Rare Coin Investments
Many a hobbyist has taken to the collecting of rare coins. Also known as ancient coins, these treasures have been unearthed from the remains of ancient civilizations, such as Greece, Mesopotamia and Rome. Gold and silver coins were typically used as actual currency in ancient civilizations. Today, investing in rare gold and silver coins has become a solid investment opportunity for many.

America’s shift from the gold standard to a fiat currency system in the 1970’s placed the value of the dollar on shaky ground. Prior to this change, each dollar had a gold value backing, which made the dollar a solid currency model. With the fiat currency system, dollar values have no backing. This means every time the Federal Reserve prints out a new batch of money, what value the dollar does have goes down. For these reasons, the value of real gold and silver remains intact and even increases as the value of the dollar declines.

According to the Forex Empire news site, the recession of 2008 saw record numbers of new investors enter the precious metals market of which rare coins are a part. Investments capable of holding their value during bad economic times provide a hedge against falling dollar values. In effect, rare gold and silver coins actually gain in value during a slow economy as dollar values weaken. Add to this the “zero interest rate policies” employed by central banking systems and precious metals become even more “precious” over time.

When considering a rare gold or silver coin investment, a coin’s real value determines its soundness as an investment option. The rarity of a coin, its overall condition and market demand all have an influence on the actual value of a particular coin. A coin’s rarity depends on how many coins of its kind are in existence. Rarity is an important value indicator so much so that if a coin is rare enough, its condition or appearance may not detract that much from its market value. According to Investor Insight, a coin is considered rare if there are no more than 75 in existence. This guideline is based on the Sheldon Rarity Scale.

Rare coins may also be valued solely on their condition. This designation is known as Condition rarity. This means a coin’s value derives more so from its appearance than its mint or lineage. For example, a Morgan Dollar has a value of around $200. In near perfect condition, the value of a Morgan Dollar increases considerably.

Rarity and condition go a long way towards establishing a coin’s value, but ultimately market demand determines whether a coin will sell for what it’s worth. Because of their short supply, ancient coins from historic civilizations retain their value easily and will increase in value over time. In this sense, rarity does play a pivotal role in a coin’s value. As different kinds of coins fall in and out of favor with coin collectors and dealers, market demand for different kinds of coins will continue to fluctuate.

Determining the grade of a coin is all about examining its appearance for wear and tear and flaws. Not surprisingly, a coin’s grade will have a bearing on its market value. Rare gold and silver coin grading is something anyone can do with a little bit of knowhow.

Of course, coin dealers will offer their opinion on a coin’s grade, which may or may not be correct. According to Financial Web, more than half of the rare coins in the market are over-valued. An over-valued coin has been “over-graded”, which means it’s valued for more than what it’s worth. Once sold, an over-graded coin automatically depreciates since the buyer has paid more than what the coin is actually worth.

When the rare coin market first got started, coin grades fell into one of three categories: Good, Fine and Uncirculated with Uncirculated being the highest grade. In today’s rare coin market, the grade of a coin is often placed directly on it. This new system is based on the Sheldon Scale, which offers a standardized method for grading rare coins. The system uses a scale of 1 to 70 with 70 being the highest grade.

When shopping for rare gold and silver coins, a coin will have one of the following grades listed on its front or back –
• AG and G
• F12 for Fine
• VF30 for very fine
• EF45 and XF for extremely fine
• AU55 – AU58 for probably circulated
• M60 – M70 for Mint condition
The main difference between the grades has to do with a coin’s shine and luster, the number of scratches and marks it has and the amount of detail still visible on a coin’s surface.
rare coin investments
Market Risks
As with any investment opportunity, rare gold and silver coins come with their own set of market risks. Overall, rare coin investments provide predictable returns with minimal risk provided investors do their homework before making purchases.

According to the New York State Attorney General’s site, up until the 1950’s, coin collecting was merely a hobby in which collectors and random coin dealers traded and sold among themselves. Since that time, the rare coin market has its own business sector within the U. S. with over 5,000 coin firms and anywhere from 15 to 20 million investors. In spite of this massive growth, the market remains unregulated and highly speculative unlike other business sectors, such as the stock market. This means investors should be on the lookout for unscrupulous dealers and counterfeit coins.

When researching prices, the major publications listing rare coin prices provide what’s known as “bid” and “ask” prices for specific coins. These price listings are more oftentimes than not dealer-to-dealer prices. Bid prices are what dealers are willing to pay, while ask prices represent the price of a coin. On average, there’s at least a 20 percent markup between a coin’s bid and ask price. Since the market has little regulation in place, dealer prices for investors can vary considerably so don’t expect to pay the listed “ask” price for a coin.

Rare Coin Investment Advantages
When done right, the advantages of investing in rare gold and silver coins far outweigh the risks. As was evidenced by the 2008 recession, many who invested in the stock market saw dramatic losses in their investments, whereas the value of rare coin investments remained intact with many seeing increases in value for the duration of the recession.

Affordability offers another advantage with rare coin investing. Someone just starting out can pay as little as $100 to start off a collection. This opens up the market to both median and even low-income investors unlike the high costs involved with real estate, forex or stock investments.

As rare coins derive their value from their low supply, the demand for rare gold and silver pieces is likely to remain steady, especially when it comes to the ancient coin varieties. With more investors entering the market, rare coins will show actual value increases since the market itself is made up of a diminishing supply of coins.

Rare coin investments also receive a favorable tax treatment when compared to other investment options. Rare coin investors will only pay capital gains taxes when it comes time to sell, so no taxes are paid up until that point. This means an investor pays no taxes on appreciation values, so a $100 purchase that appreciates to $5,000 in five years time carries no taxation. For some investors, this appreciation factor can also come in handy when collateral is needed for a loan.

Monaco Rare Coins
The likelihood of profiting from the rare coins market increases considerably when working with an experienced, well-connected industry leader. Monaco Rare Coins is an established buyer, trader and seller within the rare coins market. With a worldwide network of dealers, wholesalers and auction houses, Monaco Rare Coins is positioned to offer the very best prices and payouts to rare coin investors and collectors alike.

As a supplier, Monaco carries a wide assortment of investment-grade coins, with an inventory valued at over $10 million. Through Monaco, buyers looking for specific coin types have access to many rare coins markets, which are otherwise unknown or inaccessible to less established dealers.
rare coins
The company’s vast industry experience is reflected its staff affiliations with national and international trade organizations, some of which include –
• The Professional Coin Grading Service
• The American Numismatic Association
• The Numismatic Guarantee Corporation of America
• The Professional Numismatic Guild

These affiliations connect Monaco advisers with the most up-to-date trends in the industry. With access to a worldwide network of dealers, can offer investors the very best payouts for their coins when it comes time to sell.

Sources – D – investoralert – coins.pdf