Rare Coins “As good as Gold” and better!
Seasoned fighters know that nothing compares to landing the classic one-two punch. Similarly, rare coins embody the perfect combination of precious metal value and the added bonus of numismatic or collectible worth, which transcends their inherent metal content.
When bullion markets heat up, interest in coins often skyrockets. During the recent gold market boom, gold coins outperformed bullion due to a drastic surge in demand for physical gold that far outstripped supply. As a result, the premiums for these coins soared well above their actual gold value.
On the flip side, The Coin Dealer Newsletter reveals that between July 18, 1980, and April 19, 1985, gold prices dipped by 48%, while a common date Liberty Head $20 Gold Piece in MS65 condition appreciated by 134%. In the same period, silver prices plummeted by 58% as the 1923 Peace Silver Dollar skyrocketed by a staggering 1338%! This highlights the dual advantage of investing in rare coins.
Moreover, rare coins enjoy protection from government seizure. In 1933, President Franklin Delano Roosevelt prohibited private gold ownership, forcing Americans to relinquish their gold coins. Although the President still has the authority to ban private gold bullion ownership, by law, U.S. Gold Coins minted prior to 1933 are exempt from such restrictions.
Additionally, rare coins remain one of the few investments that can be discreetly accumulated. They are not subject to the extensive disclosure and reporting requirements that burden other assets, granting them unparalleled privacy for investors.
HOW EXACTLY IS THE VALUE OF A RARE COIN DETERMINED?
Supply/Rarity: Assessing the existing quantity of surviving specimens.
Demand: The number of collector/investors seeking that coin.
Precious Metal Content: How much pure gold, silver, etc. does it contain.
Quality: The grade or state of preservation of the coin. Is it a worn down clunker or a gem that looks like it just rolled of the presses.
This final point underscores a crucial aspect. Before 1986, the rare coin market encountered a significant hurdle due to the lack of standardized grading. This inconsistency led to considerable negotiation between buyers and sellers.
The advent of guaranteed third-party certification for rare coins enabled sight-unseen trading, unlocking a new realm of possibilities for the industry. Collectors, dealers, and investors could now engage in the numismatic market with unprecedented confidence, allowing major brokerage firms to join and considerably broaden the market base.
The two globally recognized firms that certify coins are the Professional Coin Grading Service (PCGS) and the Numismatic Guarantee Corporation (NGC). These organizations have effectively eliminated much of the ambiguity in determining a coin's grade, facilitating the establishment of a worldwide network comprising thousands of dealers. Within this network, certified coins are readily traded and instantly liquid, ensuring a more efficient and reliable market.
