Rarities: The “Growth” Stocks Of the Coin Collector’s World

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Who doesn’t wish they had bought Apple stock back in 1980 at $22 per share. With the numerous stock splits the company has seen, long-term investors reaped tremendous returns.

In the coin world, rarities are the “growth” stocks for investors.

Many investors who turn to physical gold and silver coins as a diversification strategy start out with gold bullion coins, like the American Eagle. This is a sound investment in today’s world where central bankers continue to devalue paper money in search of economic growth.

Long-term investors in search of the “growth” stocks in the rarities world can consider diversifying their portfolio even more with rarities. Rare coins are best suited for the long-term investor, such as five years or longer, and they have the most significant growth potential.

For investors who choose to allocate 20-30% of their overall portfolio to hard assets, we at Blanchard and Company recommend a further breakdown. See Figure 1 below.

Numismatic Rarities And Bullion Grade Gold (1)

In today’s technological society, cash may be on the verge of extinction in some corners of the world. A recent BBC report revealed that in the Netherlands it is increasingly difficult to use cash for day-to-day transactions. Attitudes about this, however vary widely by country and culture.

While the Dutch may be moving toward a cashless society, in Germany the bedrock of the European economy 75% of payments are still made in cash. Nonetheless we live in a world of debit cards, Apple Pay and other methods to pay with the swipe of your finger. The case can be made that this increases the value of rare coins even more. We live in a world where paper money and coins are being degraded by central banks easy monetary policies and also by government mints.

Most common coins minted today for daily usage aren’t even worth the value they purport to hold. A dime cost 3.9 cents to make, and a quarter 9 cents in 2014, according to a Wall Street Journal Report. The U.S. Mint made $289.1 million that year on seignioragethe difference between the value of the coin and the cost to make it.

The changing technology around money transfers creates an even higher level of allure, appreciation and rising value for many rarities. The numbers bear it out. Rare coins are increasing in value. See Figure 2 below.

Rare Coin Values _rev

Continued strength in U.S. gold coins has propelled the Index to new heights. The Index moved further into record territory in October, when it gained another 0.69 points to 395.06. The Rare Coin Value Index is based on the combined percent change in retail prices for 87 rare United States coins and is updated monthly. Chart source: US coin values advisor.

After all, central banks can’t print rare coins..

Build a Coin Set

If you haven’t already, consider building a rare coin set. Complete rare coin sets often sell for more than the total value of the individual coins comprising them, and such sets tend to be more liquid than collections of unrelated coins.

The strategy: the two most common sets are built around either:

  • Coin type this includes coins sharing a specific characteristic such as design, designer, or denomination.
  • Coin series – this includes each date and mint of a particular coin. Sets can also be organized by die variety, historical period, mint mark, year, or first and last year a coin was issued.

Many coins are passed down from father to son. Get your daughter involved too. Pull out some of your favorite coins this weekend and show your kids. Explain the history behind them. Tell them the story. Then, also explain what they are made of pure gold or silver. Show them how coins can help them to learn about historic places, important people and interesting eras through the designs and backgrounds of the coins.

Rare coins offer history, true value, a strong investment and even can help strengthen family bonds.

Call Us Today and Get Started

There are still bargains to be had they are known as “sleepers.” Our portfolio managers can help you learn more and identify smart investment moves. Call us today at 1-866-764-9135 and start building your set today.