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California Numismatic Investments

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So what does a model PCGS certified rare coin portfolio look like? Actually there are so many variations on this idea that the exact answer will not suit everyone, but my choices are a good place to begin especially if you are new to rare coin investment. To begin let me offer four reasons I believe everyone should at least consider placing a portion of their hard asset investment money into this specific area: First the US paper dollar is vulnerable to uncontrolled government spending, worldwide political unrest, and liberal politics, all of which threaten its value and therefore your buying power. Certified rare coins have historically protected owners against this devaluation in paper money. Second, the rare coin area is one of the few places left which offer complete privacy and favorable tax considerations. Third, certified rare coins are still a relative secret when it comes to the public at large, so I believe past price appreciation is only a beginning. And Fourth, unlike the very volatile gold market these coins provide a financial blanket of protection and at the same time may offer a better night's sleep. The bullion portion of your hard asset portfolio is very important but is simply a choice between the US Gold Eagle, the South African Krugerrand or other low premium bullion coins. But what about the correct rare coin choices which provide diversification? We offer a few rules to make sure you place your rare coin investment money in areas with readable price history, good market depth, and prices which are affordable to as many investors as possible. These are not the most expensive or rarest coins available but they represent value, are blue chips in their own right, and make a wonderful beginning to the correct certified rare coin approach. As for price movements you will find that sometimes bullion coins will lead the way and sometimes rare coins take the led so a little of both is a good bet.

WHICH ARE THE VERY BEST COINS?

Which coin should I buy for long-term investment and capital gains? That has to be the most asked question in this store over the past two decades. In fact no person knows for sure, but there are parameters, which will lead you in the right direction. Road signs, if you will, to follow in choosing the right PCGS certified rare coin. Such rules produce these "blue chip" choices that are the favorites of professionals and especially suited to new investors.

Are these rules of the investment road difficult? Absolutely not, and in many cases they are just common sense. But beware because some investors throw these simple rules to the wind. So here are a few guide lines to keep in mind which could dramatically increase your chance of profiting in the next rare coin boom.

THE RARITY VERSUS DEMAND SECRET

You would think that such things as rarity and price are pretty basic, and everyone would agree as to their importance when it comes to choosing the best coins. But just the opposite is true for a number of reasons. First, the investor should understand that rarity by itself is not the best way to approach investing. Rarity is good, but if there is no demand for a coin its rarity will be of little value. So it's of paramount importance to link rarity with demand. Before you add a rare coin to your portfolio be sure it is popular. Some of the best investment coins may not be rare, but their popularity is so great that everyone wants an example. This can create an upward pressure on price and positive momentum is better sustained.

WHICH GRADE IS BEST?

Most investors know that all investment coins must be PCGS (The Professional Coin Grading Service) certified because this greatly enhances worldwide liquidity. Yes, there are other grading services, but PCGS is the leader. So if a friendly coin dealer tells you to consider other services show caution. Coins graded by The Professional Coin Grading Service are, on average, worth more when selling, and enjoy a wider market. So why settle for less? After all it's your money and it's an investment rule.

That being said, consider what makes grade or condition so important. All rare coins today are graded using the Sheldon Scale from 1 to 70. The higher the number the better the condition and the rarer the coin. As rarity and popularity increase, so does price. So the cornerstone of coin investing is relative condition. We are talking about how perfect the coin is in terms of marks or abrasions. Remember that desirability and rarity drive this market. Investors strive for coins in superb condition, and will pay for quality.

Now we know the better the condition the more money a coin is worth, but where do we draw the line as far as cost? Most investment coins fall between MS63 (Choice Uncirculated) and MS67 (Superb Uncirculated). The rule is to invest in the highest grade you can afford, but not get carried away. There must be a balance between the price of a coin and its condition. In smaller gold coins, for example, MS63 and MS64 grades seem appropriate, while in larger $20 gold coins grades of MS65 and MS66 are a better choice. In most silver coins, however, a grade of MS65 or MS66 represents good value relative.

INTERESTING STORIES ARE IMPORTANT

An investment coin with a story is always better than one without. Stories and the history behind them are important because they bring these real treasures to life. Not just for you, but for the next buyer of your coin. The more compelling the coin story the better your opportunity for profit. It's like location in real estate. An interesting or historical fact that relates to your coin is like ocean front real estate. It creates demand and insures attention. This provides more bidders which may push prices higher over time.

WATCH PRICE HISTORY CAREFULLY

Price history, or what a rare coin sold for in the past, is important. Most rare coins today have accurate price charts that go back to 1986. Ask to see them before you invest. This rule should never be forgotten because it gives the buyer a great way to judge price and allows a reasonable guess as to where the coin is heading given another round of inflation.

ALWAYS USE MARKET CYCLES

Using market cycles to your advantage is probably your most powerful investing edge available today. And the price chart or history of any particular coin will tell you where in the cycle you are and provide clues as to decisions. It just makes sense that if a rare coin can be purchased for substantially less than it sold for in the last big price move that there is great potential for future price action.

People who develop a buying strategy are much better equipped to profit because hey appreciate a long-term plan, which takes advantage of natural "up" and "down" markets. These types of folks make the best investors because they are not too concerned with the latest investment fad. They do their homework and stick with rare coins with a proven track record. A coin, which is rare today, will be rare tomorrow. Here is another rule to keep in mind: "Don't wait to buy quality coins. Buy quality coins and wait." Patience in this market is golden, and history has shown that the big money payoff comes to those who invest over the long term.

So can we guarantee a profit? Of course not, and CNI will be the first to say that past performance does not guarantee future profits. But we believe that the past performance of coins, just like stocks, is worth watching. It is a great indicator of many things, including where the public has put its money in the past. Such information can be insightful and valuable.

THE KEY IS LOOKING FOR VALUE

Price history is important in your judgment as to whether a coin represents value. Like stocks some rare coins today can be purchased for less than their old highs which indicates to us that a value buy should be considered. On the other hand there are coins which are trading on their highs, not that we would dismiss these possibilities, but we want to identify both sides of the spectrum and then balance your holdings. We are old time traders and suggest that value centers around blue chip certified coins which can be bought or sold for the right price.

And always follow The 50 Year Rule: This approach is powerful because it keeps the investor focused. Never invest in any rare coin which is not at least fifty years old because without an established track record the outcome becomes unpredictable.

CHOOSE COINS OF SIGNIFICANCE

It may sound funny but you would be surprised at how faddish rare coin investment can be if you don't have the facts. Stay away from unproven trends and new coins with unproven records. Stick with the tried and true, remembering that what was rare and popular forty years ago will also make the grade forty years from now. What is not rare and desirable today will not change in the future. The following list of 10 PCGS graded rare coins are a good start for someone new to rare coin investments. These rare coins will move you past all mistakes made in buying modern issue junk and start you on the right path to understanding rare coins as an investment hedge. As you learn more, your rare coin library will also grow and the fascinating field of rare coins will grow to include earlier coinage including pre-civil war, territorial gold examples, patterns, and colonials.

We recommend purchasing rare coins graded by PCGS (The Professional Coin Grading Service), America's Number One Grading Standard. You can learn more about PCGS with the PCGS Grading Process Video.

THE CNI TOP TEN RARE COIN CHOICES

1. The 1907 $10 Indian gold piece No Motto variety in PCGS MS63 is an exceptional investment coin. The $10 Indian design was minted from 1907 through 1933 and today is considered a classic in coin design and artistry. This particular $10 Indian gold piece is special because in 1907 the motto "In God We Trust" was not included in the design. Thus a famous variety was created. It is 30 times as rare as the With Motto variety yet costs less than 3 times more. This first year of issue traded like hotcakes in 1989 and is still elusive today! In PCGS MS63 it sells today for $3250 so it's packed with value and big upside if you are patient.

2. The PCGS MS63 $2 ½ Liberty gold piece is another favorite. This series was struck between 1840 and 1907 and is an American classic. It is the rarest coin of the 8 piece gold set, yet sells for less than half of the more expensive $5 Indian and has a lower population! In last years market we stopped taking orders on 8 piece gold sets because we could not find enough examples of this coin. Now add that nice $2 1/2 Liberties in PCGS MS63 are difficult to find because they were heavily used in the commerce of their time. In 1989 the all time high for this jewel was $2500 so today's price of $675 makes it a "must have". This is a fine example of how inside information can be used to make a great investment choice which is within the reach of most people.

3. For the money you can't beat the 1926 $2 ½ Sesquicentennial commemorative gold piece in PCGS MS64 at $1250. This coin celebrates the 150th anniversary of American independence and provides an unexpected premium. In 1989 it traded for $5000 so today's price represents excellent value. And here are two more compelling reasons to make this gold coin part of your holdings. First, an amazing 77% of the original mintage was melted! Second, many of the remaining examples were mistreated making high grade coins like this one difficult to find. Now consider that this coin was designed by John Sinnock who also designed the Roosevelt dime and the Franklin half dollar so its pedigree is impeccable.

4. I also recommend the 1908 No Motto Saint-Gaudens $20 gold piece in PCGS MS65 at $2150. This coin was struck in two years as opposed to the more common With Motto type struck for 23 years! It is 3 times as rare but its current price level represents no premium over the normal price of the With Motto. Its high in 1989 was $5000 so today's level looks very inexpensive. President Teddy Roosevelt felt that inclusion of the motto "In God We Trust" would offend the Almighty and so by Presidential decree he left it off the first coins struck. The public was outraged and believed him to be an atheist so his position was quickly reversed, creating a famous story.

5. The 1909-S VDB Lincoln Cent in PCGS MS65 Red is a powerful investor's coin, one which goes against the trend. Its price today is at an all time high but the coin is so popular it does not matter! If you collected coins as a kid, this was the one you could never find! The initials VDB stand for the designer Victor David Brenner and were only included on a short run of cents in 1909. Now a classic 20th Century rarity, with a terrific price record this famous rare coin has it all. It sells for $6000 today and will always be a numismatic treasure. This coin has always been a win-win situation, but there is one draw back: There is never more than one in stock and in many cases this fellow is wait-listed so be patient.

6. Another classic of the 20th Century is the 1921 Peace Dollar in PCGS MS65. When the Peace dollar replaced the Morgan dollar in 1921 the mint tried to produce the coin in high relief. A great idea, but in practice such relief was difficult to strike and bankers complained the coins did not stack well. So a lower relief was used beginning in 1922. The 1921 Peace dollar is a one year type, not often seen and is a spectacular looking coin in the bargain! Today it can be purchased for $2000, a bargain considering it traded for $7000 during the last big run in prices. Its designer Anthony de Francisci was an Italian immigrant who used his wife as a model for Miss Liberty.

7. Investing with the goal of completing a set of coins is another fundamental good rule. Sets in this business provide an extra punch of added value. That is why I have included my favorite set of 20 coins: Called the Walking Liberty Short Set this collection contains 20 different half dollars from 1941 through 1947 in PCGS MS65. Selling for $4230 today this powerhouse traded for $20,000 in 1989. The total number of possible sets would be limited to the lowest PCGS population date in the set which is the 1941-S (1137). This combination is tough to beat.CLICK HERE to read my complete report on the Walking Liberty Short Set including individual dates, mint marks and the many reasons I like this area of rare coin investment.

8. The 1883 No Cents V Nickel in PCGS Proof-65 at $775. Often called the Racketeer Nickel because the word Cents was initially left off the coin in 1883. The mint believed the Roman Numeral V on the reverse would indicate the coin was a nickel to the public. In fact a few enterprising promoters seized the opportunity by plating these coins gold and passing them off as a "new" $5 gold piece. The most famous of these stories comes from one Josh Tatum, a deaf mute who simply handed the gold plated coin to a merchant and waited change. Later prosecuted, Mr. Tatum beat the case in court because he could not talk and therefore did not represent the coin as a gold piece! He made himself famous as well as the saying "Don't Josh me...".

9. The 1917 Type 1 Standing Liberty 25 Cent Piece in PCGS MS65 Full Head at $1050 is also an excellent choice. This coin has a most interesting story associated with it in that when its designer Hermon A. MacNeil first conceived Liberty's image he portrayed her holding a defensive shield in her left hand and an olive branch in her right. This magnificent first design, now called a Type 1, showed an exposed breast of Liberty, and a rather Victorian public demanded something more modest. He then covered her with chain link armor and created the more common Type 2 variety. During the last run this coin saw a high of $2500.

10. The Peace Dollar in PCGS MS66 at $590 is also a winner for a number of reasons. First, all high grade silver dollars have immense public appeal and recognition. Silver dollars have been a number one choice for collectors and investors since people began to look at hard assets to protect their savings. Second, if you compare Peace dollars to Morgan dollars you will find the later Peace dollar is actually much harder to find in this very high grade. I like PCGS graded MS66 Peace dollars because this coin traded for $5000 in 1989 so today's price is like getting an 86% discount from old highs. Another example of how smart investors put this undervalued market to work for them.

Keep in mind that not all of these PCGS certified rare coins are available and prices can change quickly because of low populations and strong collector or investor demand. I also have long-term price graphs which show excellent entry pricing and good timing as well. For now however I would suggest you call me (1-800-225-7531) with additional questions. This will give me an opportunity to provide straight-forward answers including a few curves in the road for even the best rare coin choices involve some risk. The call is free and the discussion will further explain why holding these significant coins have historically protected wealth especially during a currency or inflationary crisis. Then you decide.

Ken Edwards
1-800-225-7531
California Numismatic Investments
www.golddealer.com

P.S. I appreciate how busy everyone is these days so I have added my email (kenedwards@golddealer.com) for your convenience and will answer your questions in writing or if you prefer will return your call at a convenient time. Thanks for reading.

Copyright © 2011 CNI, Inc.- The Top-Ten Report