The first question I ask people is why they want to invest in rare coins. Is it because they heard that rare coins appreciate at a sizable rate? Did they hear those rare coins have outperformed just about every market over the past 50 years? Is it that they want to hold hard assets as part of their investment portfolio?
Most people respond that they like what they have heard from large rare coin companies whom they have spoken with. They like knowing that these coins go up in value every year. They like the fact that there are limited quantities of the “rare coins”. But too often, they are not aware that not all “rare” coins are rare. That is, just because someone says something is rare does not make it so.
Investing in rare coins can be profitable but you really must know what you are doing. Like any other profession, there are good service providers and bad ones. Some truly want to see you make prudent investments and then some only want to line their own pockets. The way to avoid losing your shirt is to be proactive.
Being proactive means learning about rare coins. Would you just buy a stock that someone tells you is a good deal without knowing what the company produces or the service they provide? Probably not, so you must do the same due diligence when investing in rare coins.
First off, find out what makes a coin rare. Is it rare because so few were made or because although millions were minted, few have survived? Is there a possibility that a hoard may be uncovered and the market flooded thus driving the value of your coin down dramatically?
When investing in rare coins, find out what the different grading services mean. Some services have no credibility and must be avoided at all costs. These coins are often over graded and worth a fraction of the asking price. What about population? The population is the number of coins that have been certified in a particular grade. Just because the population of a coin maybe 2 or 3 does not necessarily make it rare. It may be that enough people have not submitted their coins to be certified but there are in fact, hundreds of these coins waiting in the wings.
Every dealer has an opinion about what coins to invest in. Some dealers specialize in only one type of coin; hence they are partial to selling and touting that type of coin. If you intend to specialize in the same type of coin, such a dealer may be perfect for you. If you have no interest in forming a “collection” and instead are looking at investment potential, do not invest in one particular type of coin only. If that series falls out of favor with collectors and investors, the values will drop.
Investing in rare coins is not to be taken lightly. There is a lot of work involved in designing a well-balanced portfolio. If you have been thinking about investing in rare coins, or if you are presently working with a dealer but are unhappy, feel free to contact us. We would be glad to answer your questions and possibly work with you to achieve your goals.
