Diversification:
The Key To Tangible Asset Investing
Mint State Gold and Gold Commemoratives
The rare coin market is, in many respects, driven by a smaller, simpler set of factors than a precious metals market. While many of the same economic factors can influence both rare coins and precious metals, the supply/demand fundamentals for the two are substantially different. Increases and decreases in supply are huge factors in determining the gold price.
... rare coins offer
unique tax and
privacy advantages.
The supply of rare coins, on the other hand, is relatively fixed so even small changes in demand can significantly influence prices. Moreover, the coin market is affected by economic conditions that are peculiar to the United States, while gold is affected by worldwide considerations.
The differences between the rare coin and precious metals markets make rare coins an ideal way to diversify your tangible asset portfolio. In addition to top investment performance, rare coins offer unique tax and privacy advantages. They are often described as the ideal investment for investors who do not wish to have the rest of the world know what they own.
Remember to only buy rare coins graded and certified by the Professional Coin Grading Service (PCGS) or Numismatic Guaranty Corporation (NGC). These are the leading independent grading services whose standards are accepted industry-wide. “Raw” uncertified rare coins entail unnecessary risks.
Coins in this category bridge the gap between gold bullion and the ultra-rare condition census coins. Similar to bullion, these coins offer a high degree of liquidity, and the large issues, such as $20 gold pieces, possess significant intrinsic value, giving investors unique “double-play” potential.
The market for Mint State Gold and Gold Commemoratives is influenced by pure supply/ demand factors quite independent of the price of gold. For example, collector motivation can also be a significant source of demand for these coins, a factor completely absent in the bullion market. This collector demand is what has generated the powerful rare coin investment strategy known as set building.
But perhaps the most unique benefit of investing in these coins is the protection they offer against government restrictions on private gold ownership.
The United States has had bans against, or financial disincentives for, the private ownership of gold. America has seen four different gold confiscations, the last of which occurred during the Great Depression in 1933. From 1933 until 1975, U.S. citizens could not legally own gold. However, what few people realize is that, when the freedom to own gold was restored in 1975, the president retained the power to require individuals to surrender their gold.
Rare gold coins are an excellent crisis hedge because the relevant laws exempt from confiscation provisions any gold owned in the form of “numismatic coins,” defined as “gold coin having a recognized special value to collectors of rare and unusual coin, including all gold coins made prior to April 5, 1933.” So, in this case, rare gold coins provide your tangible asset portfolio with a different kind of diversification to protect you from a truly different kind of risk.
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