The Value of Rare Coins in Investment Portfolios
Coins have been in the news lately as the U.S. Mint produced the last penny last week, after over 230 years of continuous production. This sudden penny shortage has caused a scramble for many retailers, with some stores even offering more than face value for consumers’ cents. However, hoarding regular pennies probably isn’t a sustainable investment strategy.
Advisors and experts with experience in collectibles say that the right rare currency can be quite valuable. Lucas Wennersten, owner and founder of 49th Parallel Wealth Management in Scottsdale, Arizona, has a client with a substantial coin collection worth between $200,000 and $1 million. Wennersten mentioned that coins and other collectibles can add a level of diversification for the right client, stating that gains on rare coins can be significant.
Bullion versus Numismatic Collecting
Coin investments can be split into two types: bullion and numismatic. Numismatic coins are rare and collectible, deriving their value from factors such as scarcity. On the other hand, bullion coins derive their value from their precious metal content, typically gold or silver.
Gold coins, particularly those with significant underlying metal value like U.S. gold dollars and British sovereigns, are favored by collectors. However, the more a coin is valued above the price of the gold itself, the riskier it becomes. Numismatic coin collectors often go for proof coins or limited editions, which can be highly valuable.
How to Ensure Authenticity and Avoid Scams
Many investors prefer to buy coins that have been independently certified by third parties for authenticity and condition. It is essential to work with reputable dealers who can demonstrate knowledge and passion in the field. Avoiding online purchases where authenticity and pricing are harder to verify is also advisable.
Jonathan Dane, from Defiant Capital Group, recommends highly liquid coins with low markups for purchases, prioritizing liquidity and pricing transparency over novelty. Paul Williams, managing director of Solomon Global, emphasizes buying from reputable dealers and avoiding scams in the space.
Overall, rare coins can be a valuable addition to investment portfolios, offering diversification and potential for significant gains. As with any investment, conducting thorough research and working with trusted experts is key to maximizing returns and mitigating risks.
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