The Authenticity Of Coins
Numismatic and Semi-Numismatic coins can be a smart, profitable, and even interesting addition to your investment strategy for the long haul. In addition to their basic market value based on rarity and inherent value, they enjoy a tremendous double play for your investment: their value rises with the price of precious metals in general, but enjoys an extra advantage in that their intrinsic scarcity multiplies their profits sometimes many times its face value.
Any coin of interest to collectors and investors that sells for more than 15% above face value is deemed a Numismatic coin, (or Semi-Numismatic, for circulated coins of lower quality). These coins make excellent additions to your investment strategy, both for the significant profits many investors have enjoyed over the last several decades, as well as their value as rare specimens of cultural, political, and historic interest.
To enhance your investment in Numismatic and Semi-Numismatic coins, it is valuable to understand several key aspects of coin investment that help make it a profitable and highly strategic addition to your investment portfolio:
1.) Authenticity – each coin is encapsulated in a tamper-proof holder (or “slab”) only after its authenticity has been verified by a third party grading firm. As long as the coin remains undisturbed in the holder, it is guaranteed to be authentic by the company whose name appears on the holder (PCGS or NGC).
2.) Grading (determining the condition of a coin) is by nature a subjective art rather than an objective science. Although differences of opinions might exist concerning the grade of a specific coin, ICA requires the agreement of both its in-house numismatist as well as one of the two premier third-party grading services (PCGS & NGC). We believe this is to be a very conservative approach to determining the grade, and therefore the value, of each coin.
3.) Pricing is determined by a variety of factors, but most directly by simple supply and demand. A very active wholesale market, conducted both privately and at major public coin shows, combined with current auction and retail sales, helps determine the actual value of a coin. Price guides attempt to reflect the actual market, but can lag behind from time to time because of press requirements and the daunting task of information gathering.
4.) Liquidity – PCGS and NGC uniform grading standards have helped facilitate the market for rare coins. Rare coin investors can now buy and sell with ease and confidence in the value and condition of their investment. What’s more, uniform grading standards have helped investors track the value of their investment over time.
5.) While rare coin investment has shown substantial profits for many investors, like other investments, the positive past growth of coin values is not a guarantee of future performance.
6.) The appeal of one country’s coins over another varies with time and demand. Diversification is recommended.
7) Invest in what you like – it will be far more rewarding and interesting to you.
8.) Although the third party grading services have been certifying coins for some 20 years, the current “populations” (number of coins graded) are certain to increase in the future. The population numbers are very helpful in determining relative rarity, not actual rarity. It is very satisfying to own the current “finest graded” specimen of a date or series, but it is quite possible that another coin of equal or higher quality could surface sometime in the future. However, the population numbers of these coins, combined with their original mintage numbers, help investors determine their relative rarity – especially when compared to a U.S. equivalent.
9.) Rare European gold coins are a relatively new market, and therefor are not for everyone. Only those who already have a position in the precious metals should consider this investment. Because we would not suggest selling those coins for 10-20 years, short-term funds should not be used.
Because of the nature of building a rare European gold coin portfolio, investors need to realize that time will be required. ICA has developed some excellent European resources, but finding the specific quality and rarity that meet our criteria is a time consuming process. Contact one of our investment advisors at your earliest convenience to discuss a tailor made strategy. Since rare coins are by their very nature rare, and quantities cannot be guaranteed, ICA rarely has more than a few dozen coins available at a time, it is important to get your portfolio requests in early.
Call an investment expert at ICA to discuss making numismatic coins a part of your investment strategy at 1.800.525.9556.