5 strategies for successfully investing in coins

Have you decided to invest in rare coins? We offer you 5 strategies for successful investment! It is not an easy task to successfully invest in rare coins and it is impossible to master it in a short period of time. For example, renowned numismatist-collector John J Pittman Jr. has been collecting his first-class collection for many decades. It was sold in 1997 for over $ 30 million.

David W. Akers, who sold the Pittman coin collection, aptly summed up this thought in the words "John's wealth is not in his wallet, but in his vast knowledge." Pittman hunted for extremely rare coins and relied only on his limited budget. For example, in 1954 he bought a proof print of a gold five-dollar coin of 1833 (Capped Head gold $ 5 half eagle) for $ 635, and sold it in 1997 for a fabulous $ 467,500!

Over the past few decades (if not over a century), the coin market has undergone significant changes. In 1986, professional independent grading services appeared that level the game in the authentication and authentication market and introduced standards for determining the status of coins - grades. They do not obviate the need to study the specific series of coins you are interested in, but help to significantly reduce the high risk associated with the purchase of rare specimens. Finally, the advent of the Internet brought open access to a wide range of coin collecting knowledge and the ability to shop for rare specimens online. And yet, this does not negate the search for information through books, obtaining information from dealers and participants in numismatic exhibitions.

1. Make a Bet on Portfolio Balance

As with any investment, diversification is the key to mitigating risk. Your portfolio of rare coins should include many types in order to minimize market fluctuations and maximize profits. It may contain, for example, infrequent coins of the USSR or the Russian Empire in the best preservation that you can afford, because the value of the coin often depends on the level of preserved, and over time, such coins will become more and more rare. You may also want to invest in precious metals by adding gold bullion coins to your asset. Traditional gold coins (from the gold St. George the Victorious to the $ 20 Double Eagle) will also add variety to your portfolio.

Of course, you constantly hear stories about people taking risks and making a quick profit, but this does not happen often and carries a huge risk. Targeting quick money is an investment mistake and you better avoid it. The most successful investors have a long-term vision, acquired over the years, if not decades, of their activities. They spend this time collecting information about the coins they want to get hold of, and studying the state of market prices for literally each of them. This strategy allows you to "spot" coins of truly exceptional value.

2. Acquire knowledge before purchasing a coin

The most sound investment advice for investing in rare coins is reflected in the ancient adage "Buy a book first, buy a coin later." The knowledge gained through education will be a guarantee that you competently, fully aware of the actions you take, make investment decisions. Focus on specific coin series or collection types that you will be collecting. Then study and use what you learn to assess the quality and fair market value of specific coins.

There are enough books on the topic of collecting in the world, and there are enough of them to fill an entire library. And every month there are more and more of them. Therefore, there probably already exists such a book with the knowledge you need to make an investment decision. These books, first of all, include all sorts of catalogs of coins such as Konros or Wolmar, which are definitely worth studying before opening the wallet.

In addition to everything, there is a ton of information on the Internet on rare coins for which you will consider buying. But do not forget that not everything that is written on the Internet is necessarily true. However, it can be an excellent source of information for determining the market value of the coins you are researching for investment. Plus, there are price guides such as The Gray Sheet, the Redbook, and listing of auction results. Depending on the rarity of the coin, the results of the auctions offer the most transparent estimate of its price, since transactions are carried out with the participation of a considerable number of those present.

When figuring out the market value of a coin, don't just compare the grade on the sealed coin holder with the reference numbers in the guide you are using. Remember, weak is a guarantee of authenticity, and assessing a condition is subjective. Consider the quality of the coin you are evaluating and decide for yourself whether it meets your quality standards and whether you agree with the condition score indicated on the weak.

3. Avoid Price Bubbles

The volatility of the rare coin market is as high as that of any other free market. The final price of a product is determined by the price-demand ratio. Finding treasures or discovering stocks of coins can drastically change their market prices. For example, the discovery in the 70s of hidden reserves of silver dollars by the US General Services Administration (GSA), when thousands of purse bags were opened for sale on the open market, turned many rare Morgan dollars into “common” dollars. That is, the sudden influx (sharp increase in supply) of many rare "Morgan" has dropped their price on the level of regular silver dollars.

Conversely, a sudden unforeseen demand for a particular series can cause a sharp spike in its price. After the excitement subsides, prices return to their usual level. This became most noticeable with the emergence of the practice of collecting collections of weakened coins (which were evaluated and registered in one or several registries), which allows collectors to anonymously put such collections into circulation and compete with others for the title of the best.

Mainly, this situation affects coins with the assessment "condition rarity" (condition - rare), the prices of which can be very high one day, and the next become much lower.

For example, in March 2013, a 1995-W Proof Silver Eagle (proof, "silver eagle") with the Proof-70 DCAM grade of the renowned grading service PCGS was auctioned for $ 86,654.70 (including a 10% down payment). More than 1,600 coins were awarded the Proof-69 DCAM grade by the PCGS service and their usual selling price is about $ 4,000 each. Since it was the first coin to be awarded the perfect condition, there were over 100 offers from collectors to add it to their collection. Since then, over 200 coins have received the perfect Proof-70 DCAM grade from PCGS and are now selling for approximately $ 20,000. And that equates to a buyer's loss of $ 60,000 after that bubble burst.

4. Dealers and Coin Shows are an integral part of the rare coin acquisition process

Coins, unlike stocks or bonds, are not traded as commodities. Microsoft's stock is no different from any other similar stock on the market. Two of Saint-Gaudin's 1907 gold Double Eagles may appear identical or even have the same grade, but there are subtle differences that make one coin better than the other.Most of the rare coins are sold and bought on private sites, and not at public auctions. Therefore, part of a smart strategy is to have a professional numismatist working for you and helping you build your rare coin collection.

Large exhibitions are great places to find rare investment grade coins. Note that not all rarities are listed on the coin dealer's price list and working with a reliable seller will help you get coins that will satisfy your investment priority. Admit it - dealers are active participants in the numismatic market and understand its smallest nuances. And this circumstance can help you a lot and guarantee an advantage.

5. Buy only high quality certified coins

If you are not at all familiar with the subject of collectible coins, and you do not have time to study this difficult topic, all rare coins that you purchase must be certified by a Professional Coin Grading Service such as PCGS and NGC. There are many more independent grading services out there, but these two are the most reputable.

Someone once said, "I don't know how to describe the quality, but I recognize it when I see it." The same applies to rare coins. You can look at two identical coins with the same grade of the same service and one will look better than the other. This explains why the coin with the best "eye appeal" has a higher price tag. If the dealer has assigned them the same price and you agree with the grades assigned, you probably want to invest in a coin with more attractiveness.

Look for a coin with a quality that matches the grade you want. Recently, the Certified Acceptance Corporation (CAC) has begun certification of already weakened (sealed in weak) coins. You can tell them by the CAC sticker on the weakest. A green sticker means compliance with the grade, a gold one - a candidate for an upgrade and clearly indicates the premium quality of the coin for the currently assigned grade.

And finally, beware of counterfeits and coins that have been abraded or harshly dry cleaned. In 2010, the Professional Numismatic Guild (PNG) defined doctrine as “an act or participation in an act aimed at changing the surface of a coin or its appearance, usually done with the aim of reducing or hiding defects, and thus presenting the quality or value of the coin as more high in relation to its actual state or value ”. It includes actions aimed at hiding small scratches, applying compositions of various substances, using laser engraving technologies, changing dates and mint marks. Experts in certification services almost always notice such changes and refuse to certify such coins.