Lombra Report Proves Rare Coins Outperform Even Gold Bullion During Periods of Inflation
The study, updated through 2011, provides a comparison of the performance of gold and gold rare coins. Conducted by Raymond E. Lombra, Professor of Economics at Penn State, the study served as the investment basis for legislation that was passed by Congress and which provided for the inclusion of gold in Individual Retirement Accounts. The conclusions over the 33-year period covered by the Lombra Report are amazing:
- Rare coins are a better inflation hedge than gold.
- Rare coins are a better hedge than gold against falling prices for stocks and bonds.
- Rare coins produce significant profits even during periods when the price of gold is falling. For example, from 1988-1990, rare coins went up more than 100%; the price of gold fell from $500 to $360.
- The average annual return on rare coins was more than 185% greater than the return on gold.
- The return on rare coins in their best year was approximately 100% greater than the return on gold in its best year.
- The return on rare coins in their best three years was approximately 100% greater than the return on gold in its best three years.
Key Excerpts from the 2011 Lombra Report:
Evaluating Performance of Asset Classes Over Time
Average Annual % Returns 1979-2011
| Stocks |
12.3% |
| Treasury Bonds |
9.1% |
| Gold Bullion |
6.8% |
| Coins (all types — MS65) |
12.6% |
| Coins (all types — MS63-65) |
10.7% |
Correlation with Inflation 1979-2011
A Long Term View
| Stocks |
.19 |
| Treasury Bonds |
-.21 |
| Gold |
.24 |
| Coins |
.60 |
Note:
- +1.00 is a "perfect" correlation, meaning moves exactly in tandem.
- -1.00 is a "perfect negative" correlation, meaning moves exactly opposite.
- To hedge against inflation, highest positive correlation best.
Source: R. L. Associates, Penn State University
Investment Returns, Risk and Timing
A Long Term View: 33 Years, 1979-2011
