California Numismatic Investments
1-800-225-7531
OUR “TOP TEN”
RARE COIN CHOICES WHICH CAN PROVIDE INFLATION PROTECTION AND PRICE APPRECIATION
WHY INVEST TODAY?
You should invest in certified rare coins today because the US paper dollar is vulnerable. Uncontrolled government spending, worldwide political unrest, and liberal politics threaten the American way of life. With higher energy costs, higher housing costs, and higher wages the only reasonable conclusion is that inflation is right around the corner. We also know that hard assets like precious metals and rare coins are the ultimate protection against paper money. The bullion end of the question is simply a choice between the US Gold Eagle, the South African Krugerrand or other popular bullion coins. But what about the right rare coin choices? That choice is a big part of protecting you against inflation. Why? Because history has shown a much larger price appreciation for well chosen
high grade rare coins with solid fundamentals.
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 proven parameters, which anyone can follow that will lead you in the right direction. Road signs, if you will, that I follow to choose the right rare coin investments. Such
rules produce these “blue chip” choices that are the favorites of professionals.
Are these rules of the investment road difficult or secret?
Absolutely not, and in many cases they are just common sense.
But beware because many informed investors somehow throw these
simple rules to the wind. So here are a few relationships
and guide lines to use before investing your hard-earned money. Rules that if carefully followed will dramatically increase your chance of profiting in the next rare coin boom. A boom, which I believe, is right around the corner, if history is any guide.
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. Why? Who cares if a coin is rare if no one appreciates its rarity? 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. Thus upward pressure on the price is easy to understand, and price momentum better sustained.
WHICH GRADE IS BEST?
For those just starting let’s consider a few fundamentals. Most investors know that all investment coins must be PCGS
(The Professional Coin Grading Service) certified. 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 modern 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 always 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 modern investment coins fall somewhere between MS-63 (Choice Uncirculated) and MS-67 (Superb Uncirculated). The usual rule is to invest in the highest grade you can afford. But let’s not get carried away. There must be a balance between the price of a coin and its investment grade. In smaller gold coins, for example, MS-63 and MS-64 grades seem appropriate, while in larger $20 gold coins grades of MS-65 and MS-66 are a better choice. In most silver coins, however, a grade of MS-65 or MS-66 represents good value relative to old highs.
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 more importantly 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 relating to your coin is
like ocean front real estate. It creates demand and insures
attention. This in turn provides more bidders which tend to push
prices higher over time.
WATCH PRICE HISTORY LIKE A HAWK
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 research provided by The Professional Coin Grading Service smoothes out this road to a great degree:
“The rare coin market moves in very definitive cycles. Since 1970, there have been three complete Bull and Bear market cycles. The list below gives the average price movement for US rare coins from each market top to bottom.”
Jan of 70 to Aug of 74 Bull Market Prices Up 348%
Sept of 74 to Dec of 75 Bear Market Prices Down 23%
Dec of 75 to March of 80 Bull Market Prices Up 1195%
April of 80 to June of 82 Bear Market Prices Down 47%
July of 82 to June of 89 Bull Market Prices Up 665%
July of 89 to Dec of 94 Bear Market Prices Down 74%
Jan 1994 to Jan 1999 Mixed Market Up 13%
Feb 1999 to Dec of 2001 Bear Market Down 11.3%
Feb 2001 to Present Bull Market Up 28.4%
People who develop a buying strategy are much better equipped to profit. They appreciate a long-term plan, which takes advantage of natural “up” and “down” markets. These types of people make the best investors because they are not too concerned with the latest inside discovery. They know it is better to stick with tried and true methods. A coin, which is rare today, will be rare tomorrow. Here is another excellent 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 proven time and time again that the big money payoff comes to those who invest over the long term.
The long term approach insures the investor and collector will
take the most advantage of an increasing audience and by
definition a decreasing pool of available material.
So can we guarantee a profit? Of course not, and I will be the first to say that past performance does not guarantee future profits. But I 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 is insightful and valuable.
THE KEY IS LOOKING FOR VALUE
Price history is important in your judgment as to whether a coin represents value. Today many solid rare coin investments can be purchased at
30% of their old 1989 highs! In other words there are
terrific values out there which represent discounts of 70% of
old highs. On the other hand there are coins which are
trading for more than their 1989 boom year prices! We
suggest that true value centers around blue chip certified coins
which can be purchased for less than their old highs.
And always follow The 50 Year Rule: This approach is
simple and powerful because it keeps the investor focused. Never
invest in any rare coin which is not at least fifty years old.
This is important because it takes such time to establish a
sound track record regarding demand and price. Armed with this
information it is easy to see if your getting a pig in a poke or
a true rare coin with significant value.
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 be the same in the future.
THE CNI TOP TEN RARE COIN CHOICES:
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