Lombra Report Proves Rare Coins Outperform Even Gold Bullion During Periods of Inflation

The study, updated through 2008, 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 29-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 200% 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.

Evaluating Performance of Assets Classes Over Time

Average Annual % Returns 1979-2008

Correlation with Inflation 1979-2008

A Long Term View

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: 30 Years, 1979-2008

Raymond E. Lombra, Ph. D.

Professor of Economics and Dean for Research, Graduate Studies and College Advancement at Penn State University, has authored, co-authored and contributed to numerous economic and financial books, publications and periodicals.

Professor Lombra is a consultant to the House Banking Committee of the U.S. Congress, the Federal Reserve System, the Congressional Budget Office, the Joint Economic Committee, Prudential Bache, Morgan-Stanley Dean Witter, the International Monetary Fund and the U.S. Treasury. His many honors and awards include election to Who’s Who in Economics.