written on Jan 16, 2008

Why Rare Coins?

People collect coins for many reasons. Sometimes for their astonishing beauty, perhaps their intrinsic value, perhaps their profound historical relationships, or just the pleasure of assembling antique forms of money. In many cases, the broad interest in collecting coins can turn into a near-obsession. Caesars, kings, Presidents, and everyday folks have assembled great collections. This powerful impulse to collect is a driving force in the rare coin market and can create a wealth of opportunities for the investor. The challenge is finding rare, desirable coins, with investment potential, at the right price.

What is the most important key to success when investing in Rare Coins?

Without question the single most important factor in your rare coin portfolio success is to work with a trustworthy expert. While chasing down coins at shows or on the internet may be fun for the hobbyist, such tactics are almost always show a poor return. A qualified expert numismatist (rare coin expert) with his finger on the pulse of the market is more likely to guide you to a much higher probability of a pleasing return on your rare coins.

Can I build my numismatic portfolio myself via internet auctions?

It’s possible, but keep in mind that professional coin dealers examine in person the coins which are offered at shows and in major auctions. Why do we get on airplanes, travel across the country to examine coins at trade shows or sit in a dark room to look at auction lots? The answer is simple: A picture on the internet is simply no match for the coin in your hand and a pair of experienced eyes. Many novice investors and bidders have yet to learn this important numismatic fact.

How long should I expect to hold my Rare Coins?

Building a superior rare coin portfolio takes time and patience. It’s not an investment for those looking to turn a “quick buck” or who hope to leave a legacy by impulsively buying the latest offerings via major media outlets. The successful coin connoisseur accumulates coins over several years and is prepared to hold them 5-10 years or more.

How have rare coins performed in the past?

Rare coins have outperformed both the Dow Jones Industrial Index and the price of Gold bullion. The CU3000 rare coin index is up over 6,500% since January 1970 and about 20% since 2003. The Dow Industrial is up about 1,400% since 1970 excluding dividends. Gold bullion is up about 1,500.00%.

In other words $1000.00 invested in the right rare coins in 1970 would be over $65,000.00 today!

Why is the outlook so good for rare coins?

Shrinking supply and a healthy ever-increasing demand combine to put continuing upward pressure on the prices of rare U.S. coins. The United States Mint is simply not making anymore Three Dollar gold pieces or Morgan Silver dollars. The increasing collector base is largely due to the U.S. Mint’s State Quarter program. Millions of new collectors have entered the market since 1999 and some of these have graduated to buying investment grade coins. The new Presidential Dollar program which began in 2007 is likely to create even more collectors that will in turn create a serious shortage of quality coins.

What are Certified Coins?

Many rare coins have been graded and authenticated by third party grading services. These coins are examined and placed in plastic holders called “Slabs”. But not all “slabs” are equal in the rare coin market. Some companies have better track records for resale than others. Gibraltar Coins recommends that the serious investor only buy certified coins for an investment portfolio. We have found that coins certified by PCGS (The Professional Coin Grading Service), NGC (Numismatic Guaranty Corp.) have, in our opinion, the best track record for grading consistency and resale.

What is a Population Report?

Companies that certify coins keep very detailed records of the coins that pass through their hands. Each one publishes a “Population Report”. This report gives experts a much clearer picture of how many coins of a particular type and grade still survive. Sometimes, a coin may have a high “mintage” (how many were originally made) but a “low pop” (numismatic lingo for a coin that is so rare that not many have been certified in that grade). A qualified expert knows when to turn his attention to investment grade coins that are “Low Pop.”

What grades of Coins should I look to purchase?

Well, that is a more complicated question than it seems on the surface. Coin “grades” (meaning ‘quality’ or ‘condition’) are determined within a seventy-point grading scale. A grade “G-4”, although described as “Good”, is actually a pretty low grade. An MS65 (Mint State 65) is considered a Gem quality coin. But an expert buyer knows how to weigh the quality with the relative rarity of a particular coin. For example, the U.S. Mint produced exactly 3,789 1870-CC Twenty Dollar Gold Pieces and NONE have been certified in uncirculated grade (meaning the uncirculated “population” is zero). Thus a purchase of an XF-40 (Extremely Fine 40) grade of this item would be a tremendous purchase for a coin of that magnitude. On the other hand, a 1909-S-VDB Lincoln cent - while still considered a rare coin, is readily available in higher grades. An MS-64 or even MS-65 would be better suited to many portfolios than an XF40.

Should I buy Modern Coins as part of my Portfolio?

In our opinion, older U.S. rare coins with a proven track record and genuine scarcity have greater long-term potential with less risk than many mass-marketed modern productions. Most mass-marketed modern coins are bought by collectors rather than investors and many of them have huge populations. Even moderns with low populations run the risk of an instant change when large quantities are found and certified. Which would you rather own, an 1861 Twenty Dollar gold piece that may have been in the pocket of a Civil War soldier, or a coin that was made 10 years ago?

Do I have to be wealthy to be a successful rare coin investor?

John J. Pittman was a chemical engineer for Kodak and never earned more than $15,000 per year. He loved rare coins and invested about half his salary into investment grade rare coins. He took a second mortgage on his house to buy coins from the King Farouk collection in 1954. He invested about $100,000 during his lifetime on rare coins. Mr. Pitman passed away in 1996 and his holdings were recently auctioned for over $30,000,00.00 (Thirty Million!) dollars. Mr. Pittman’s discipline and understanding of quality has assured that his family will never have to worry about money again.

Not everyone can have this level of success, but we certainly can learn from Mr. Pittman’s example.

What can Gibraltar Coins & Precious Metals do for me?

Allowing the considerable knowledge and expertise of the experts at Gibraltar Coins to work for you will give you a considerable advantage over impulse buyers and “blind-man’s bluff” investors. The numismatic experts at Gibraltar coins attend most major coin conventions and many major auctions. Victor Ingraffia, President of Gibraltar Coins, is always on the hunt for undervalued rare coins to enhance the numismatic portfolios of Gibraltar Coins’ clients. He has been a coin collector since 1969 and a full time professional numismatist for almost 20 years. He has carefully examined many thousands of coins over his career and has a discerning eye for quality.

How much will I have to spend?

You can begin building a quality portfolio for as little as $500.00 per month, though in many cases Gibraltar will wait until sufficient equity has built up in your rare coin account to acquire an investment quality coin for you. While a collector may simply want to fill in as many spaces in a book as his dollar will allow, the successful investor will focus on superior and genuinely hard-to-acquire specimens. Cheap coins tend to remain – well – cheap. You ought to own quality rather than quantity, and Gibraltar Coins and Precious Metals is in the perfect position to make that goal a reality for you.

Contact us to get started in a custom Rare Coin Accumulation Program!