Coins as an Investment - Coin Collector's University - ACSB.com

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An Introduction & Guide to Coin Collecting

Are Coins A Good Investment?
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About Coin Collector's University

Coin Collector's University was created by the Numismatists & coin enthusiasts at American Coin & Stamp Brokerage. Our goal is to help answer the most commonly asked questions about coin collecting. We understand the more you know about coin collecting the more rewarding & enjoyable it will be. We understand because coin collecting is not only our business, it's our passion.

-- Rich, Allen, Mark
& the staff at ACSB

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Are Coins a Good Investment?

This material is not investment advice. It is only an introduction to coins sometimes purchased as investments and the risks inherent in this form of investing. More extensive research is highly advisable before making a decision to purchase any coins for investment purposes. The authors of Coin Collector's University are not responsible in any manner or extent whatsoever for the results of any reader's investment decisions.

Risks of investing in coins

Bullion coins

Rare coins

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Risks of investing in coins:

All investments entail risks. While coin collecting is a rewarding hobby and is sometimes financially profitable, anyone purchasing coins with the expectation that they may be a good investment should understand and be prepared for the risks inherent in such investments. Novices to this hobby should do extensive of research before investing any substantial amount of money into coin collecting.

Beware: Counterfeit and altered coins are not uncommon. Various techniques have been used to produce counterfeits. Some are deceptively realistic. Keep in mind that even professionals with many years of experience can be fooled some counterfeits.Common coins have been altered to appear to be valuable collector coins, e.g. by adding a mintmark. Coins certified by one of the major grading and authentication services offer a high degree of certainty for authenticity it is in no way a guarantee. In the absence of reliable independent authentication, the purchaser should know the diagnostics of genuine specimens of the coin and counterfeits.

Coin values often vary markedly with grade. The buyer must know if the coin is reasonably graded or has any problems, such as cleaning, to determine if the seller's price is fair. The risk of overgraded and problem coins is reduced with certified coins and bullion coins (see topics below) but never eliminated. The grade assigned by the certification service is only an opinion, and it is not uncommon to find certified coins which, in the opinions of other experts, are overgraded.

Markets for all commodities rise and fall. Precious metal and coin prices can be particularly volatile. This volatility creates both opportunities for sizable returns and for dramatic losses.

* Because the risks of investing in coins are higher than for many other types of investments, they are not suitable at all for many investors. Even for those investors willing to accept higher risks in exchange for possibly greater returns, at most only a modest fraction of the portfolio (perhaps 5 to 15%) would be recommended by many investment advisors.

Are Coins A Good Investment?
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Bullion coins:

Coins composed primarily of a precious metal and with no significant value beyond that of the metal are one form of bullion. Prices for bullion coins vary with the spot price of the metal. Many investors prefer coins to other forms of metals, such as bars, because coins do not need to be assayed when sold.

Several governments produce gold bullion coins. Examples include the South African Krugerrand, the Canadian Maple Leaf, the Chinese Panda, and the American Eagle. Each sells for a small premium above the value of the gold in the coin.

Silver and platinum bullion coins are also produced by some mints. For example, the U.S. mint has made Silver Eagles (containing one ounce of silver) each year since 1986. Uncirculated silver eagles sell at a premium above spot silver.

Common date circulated silver coins are also bought and sold as bullion. U.S. dimes, quarters and half dollars dated 1964 or earlier are 90% silver and were made with 0.723 ounce of silver for each dollar in face value (as some metal may have been worn off from circulation, 0.715 ounce/dollar is often used to estimate the amount of silver still present). These coins are often melted and refined to other forms.

Kitco.com is an excellent website for up to the minute information on spot prices.

Are Coins A Good Investment?
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Rare coins:

Investments in rare coins are made with the expectation that their numismatic value will increase. Technically, "rare" means very few examples are known (no more than 75 to earn that designation on the Sheldon Rarity Scale, but coins with much higher populations are sometimes promoted as "rare coin investments."

Coins sometimes purchased for investment purposes include ancients, Morgan dollars, Walking Liberty halves and older gold coins. High grade coins are usually preferred.

An investor might include some rare coins in his or her portfolio if there is reason to expect demand from collectors and/or investors for those specific coins to increase. A smart investor has done his or her homework and understands the risks inherent in coin investments and takes appropriate measures to minimize them.

Are Coins A Good Investment?
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Disclaimer

Coin Collector's University attempts to address the most commonly asked questions about coin collecting. It is intended only as a general guide to the hobby. The information found in this website should not be misconstrued as an actual course in Numismatics and is in no way intended for use as investment advice. Inclusion or mention of a product, dealer or company in this FAQ does not constitute an endorsement or recommendation.

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