GoldResearch.net: How To Buy Rare Coins

After acquiring Investment Grade (Mint State) gold you may wish to further diversify with rare gold coins.

Economy In Turmoil

Investors in the U.S. stock market have lost more than $9 trillion since its peak a year ago. The unwinding of leverage by hedge funds and other institutional investors that has slammed both financial assets and commodities is crushing markets around the world.

Since 2002, we've been telling our clients that the price of gold was going up – a lot. We believe that the current bull market will end only when gold surpasses its 1980 high of $850. In today's dollars, that would mean a price of more than $2000 per ounce! We've still got a long way to go.

However, gold shouldn't be the beginning and the end of your hard-asset portfolio. Just as you diversified your portfolios of financial assets by buying gold, so should you own other tangible assets that increase your opportunity for profit at the same time that they reduce volatility.

Professor Harry Markowitz, a Nobel Prize winner and the father of modern portfolio theory, defined the concept of the Defensive Asset Class. Assets within the class have similar risk/return characteristics, are positively correlated with each other and are traditional inflation hedges that are negatively correlated to stocks – they do well when stocks do poorly. Historically, the principal Defensive Asset has been gold. However, a recent study, which was originally done for the Joint Committee on Taxation of the House and Senate, showed that U.S. rare coins were a better hedge than gold and produced better investment returns.

That study, updated through 2007, 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 28-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.

In 2008, rare coins outperformed the stock market and gold during a year of severe economic turmoil:

Rare Coin Performance

Investment studies have shown that rare coins of true quality and rarity, properly priced and selected, can be excellent long-term investments. Rare coins have historically offered the opportunity for both substantial capital appreciation and asset protection during inflationary cycles and periods of economic disruption. For example, some years ago, the Chairman and Chief Executive Officer of Fidelity Inve stments, was one of the principal investors in a partnership that invested in rare U.S. coins. The partnership was liquidated approximately 4 years later for a profit of more than 500%.

But rare coins offer more than the occasional windfall profit. A study by the Chief Investment Officer for GE Private Asset Management, Inc. concluded that rare coin returns have been highly attractive over the last sixty-two years, and that even a small allocation provides a good diversification for a well-diversified portfolio.

See example - The Rarest of the Rare: The John Jay Pittman 1843 Proof Gold Set

Advantages of Investing in Rare Coins

Top Investment Performance

Throughout history, many coin collections have produced substantial long-term profits for their owners. This is particularly true for coin collectors of this century. For instance, Harold Bareford reportedly purchased a collection of U.S. gold coins for $13,832 in the early 1950's that was resold at auction in 1978 for $1.2 million. A more substantial collector, Louis Eliasberg, built a collection that cost approximately $300,000. In 1982, it brought $12.4 million at auction.

This investment performance has been well documented by sources as diverse as The Wall Street Journal, Consumer Reports and a host of industry periodicals and guidesheets. These reports have proven that carefully selected portfolios of rare coins have had a high rate of long-term appreciation.

Of course, past performance is no guarantee of future results, and investments in rare coins do involve risk. While the market performance of different coins varies substantially and no representation can be made that an individual investor's portfolio will enjoy results similar to those that have been documented in the various independent reports and surveys, those reports and surveys illustrate the impressive returns that carefully selected rare U.S. coins can produce.

Diversification

Rare U.S. coins are an ideal investment for the prudent investor. Many financial advisers recommend that investors place 10% to 20% of their discretionary funds in tangible assets to maintain a properly diversified investment portfolio. Rare U.S. coins have proven to be an excellent hedge against the effects of inflation. Although renowned for their performance in periods of high inflation, rare U.S. coins have generated strong long-term price gains in virtually every period of economic growth over the past thirty years. They can also be very useful in reducing the overall volatility of an investment portfolio because, on average, they tend to move in the opposite direction of paper investment vehicles. Thus, rare U.S. coins can provide investors with security and peace of mind.

Liquidity

With the advent of the independent coin grading services, Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC), rare U.S. coins have become the most liquid collectibles of all.

On a typical trading day, thousands of certified rare U.S. coins are bought and sold--sight-unseen--on an electronic numismatic exchange. At any given time, thousands of coin dealers nationwide can provide buy or sell quotes for virtually any rare U.S. coin.

This degree of liquidity is possible because of independent grading by NGC and PCGS. No other collectible can offer such outstanding liquidity.

In addition, there are other liquidation options such as selling directly to a dealer and public auctions. Blanchard and Company, Inc. can facilitate any auction transaction at favorable rates.

Privacy

Rare coins are one of the few remaining investments that can be accumulated privately. Because coins are highly liquid and easily transportable - and because an investor can take physical possession of his holdings - coins are attractive to investors who do not care to let the rest of the world know what they own.

Intrinsic Value

Unlike paper investments, rare U.S. coins have real tangible value that you can feel each time you hold one in your hand. Therefore, they offer two ways to build wealth. Carefully selected coins truly offer the best of bullion and numismatics in one investment. They contain the intrinsic security of bullion and can also offer profit potential regardless of the performance of precious metal spot prices. Still, precious metal content is only a relatively small factor in determining the value of many rare U.S. coins whose value is almost solely based on condition, demand and rarity.

Affordability

Premium quality rare coins are still affordable to the private investor. Despite their record of consistent price gains and the million dollar collections often sold at auctions, rare coin portfolios with outstanding track records and promising futures are available in a wide range of investment levels.

Compared to other collectibles such as Old Masters paintings and investments such as real estate, rare U.S. coins are very affordable.

Historical Beauty

Rare U.S. coins are a part of our history--direct links to America's rich heritage--and as timeless and valuable as history itself. For two centuries, U.S. coins have been symbols of American stability, as well as reflections of national pride. Throughout our nation's history, coins have spotlighted our national heroes, paid tribute to our great achievements and commemorated significant events. These truly historic works of art honor past sacrifices made in the name of freedom. Rare U.S. coins acquaint investors with historical figures and events, no matter how far removed by time. The satisfaction of actually owning a piece of history from a bygone era makes investing in rare U.S. coins truly unique. Each coin has traveled a different path through history, and as a result, each is a unique embodiment of the hopes and dreams of our founding fathers.

To add rarities to your portfolio, you can call toll free (888) 552-4825 and an experienced Account Executive at Blanchard and Company, Inc. will guide you through the process.

Ownership of U.S. Gold Coins has created great personal satisfaction and wealth. Blanchardonline.com is the web site of Blanchard and Company, Inc.– America’s Rare Coin & Precious Metals Firm®. Blanchard and Company, Inc. is the largest retailer of rare coins in the United States and has preferential access to coins and collections. We recommend that you buy U.S. gold coins in the highest grades you can afford and hold them for the long term. The company has provided over 375,000 consumers with assistance in gold, platinum, silver and other coin and bullion related investments.

How To Buy Rare Gold Coins