Why You Need To Buy and Sell Gold Coins (Part 4)
Throughout history, many coin collections have produced
substantial long-term profits for their owners. This is
particularly true for coin collectors of this century. Indeed,
Harold Bareford reportedly purchased a collection of U.S. gold
coins for $13,832 in the early 1950s which was resold at auction
in 1978 for $1.2 million. A more substantial collector, Louis
Eliasberg, built a collection that cost about $300,000. In 1982,
it brought $12.4 million at auction.
This investment performance has been well documented by sources
as diverse as The Wall Street Journal, Consumer Reports and a
host of industry periodicals and guidesheets. What these reports
have shown is that carefully selected portfolios of rare coins
have had a high rate of long-term appreciation.
Of course, past performance is no guarantee of future results
and investments in rare coins do involve risk. While the market
performance of different coins varies substantially and no
representation can be made that an individual investor’s
portfolio will enjoy results similar to those that have been
documented in the various independent reports and surveys, those
reports and surveys illustrate the impressive returns that
carefully selected rare U.S. coins can produce.
Capital gains on coins can only be taxed at liquidation, when
the profits are actually realized. There is no taxation on
phantom or undistributed profits as there are with some
investments. And unlike most other investments, there is no
federal income tax liability on so-called “wash sales” or
like-kind exchanges which enable investors to trade their rare
coins for other rare coins of equal or greater value
Unlike paper investments, rare U.S. coins have real tangible
value you can feel each time you hold one in your hand.
Therefore, they offer two ways to build wealth. Carefully
selected coins truly offer the best of bullion and numismatics
in one investment. They contain the intrinsic security of
bullion and can also offer extraordinary profit potential
regardless of what precious metal spot prices do. Still,
precious metal content is only a relatively small factor in
determining the value of many rare U.S. coins whose value is
almost solely based on condition, demand and rarity
Historically Significant Beauty
Rare U.S. coins are a part of our history–direct links to
America’s rich heritage–as timeless and valuable as history
itself. For two centuries, U.S. coins have been symbols of
American stability, as well as reflections of national pride.
Throughout our nation’s history, coins have spotlighted our
national heroes, paid tribute to our great achievements and
commemorated significant events. These truly historic works of
art commemorate past sacrifices made in the name of freedom.
Rare U.S. coins acquaint investors with historical figures and
events, no matter how far removed by time. The satisfaction of
actually owning a piece of history from a bygone era makes
investing in rare U.S. coins truly unique. Each coin has
traveled a different path through history. As a result, each is
a unique embodiment of the hopes and dreams of our founding
The overwhelming majority of U.S. coins ever minted were
circulated. Many coins were lost through attrition and others
were damaged by use, thus eliminating any potential for
numismatic value. The few surviving uncirculated coins are in a
much more pristine condition.
Investment quality coins are primarily those coins rated in the
11 uncirculated grades, 60 and above, on the American Numismatic
Association’s 70 point grading scale. A coin’s grade is a
measure of its condition or state of preservation. The higher
the grade, the better the condition.
Uncirculated coins fall into two broad categories: Proof (PF or
PR) and Mint State (MS). Mint State coins were originally meant
for circulation but never were circulated, so they remain in the
same condition today as when they were minted. Proof coins were
never meant for circulation, thus they received very careful
handling and were specially struck at least twice on highly
The beauty of a coin can attract collectors as well as
investors, and hence increase demand for a particular coin or
set. This increased demand can result in rising values. Eye
appeal is affected by several factors including the beauty of a
coin’s design, the minting process used, the fullness and
sharpness of its strike, the toning, the brilliance of its
luster and the amount of wear and number of blemishes on the
Portfolios or Collections?
The age-old description of coin collecting as the “Hobby of
Kings” is both accurate and misleading… accurate in conveying
the outdated perception that coin collecting is restricted only
to the very wealthy, misleading in that the number of collectors
has steadily increased and has been estimated by the American
Numismatic Association to include as many as 7-10 million coin
buyers in the United States alone. Typically, the coin collector
collects coins for their rarity and historical value. Collectors
view their coins as rare art and as the tangible remnants of the
cultural and economic forces that created them.
The investor begins from a different starting point–the fact
that coins of proven rarity have shown remarkably high rates of
appreciation. He sees the economic results of the pleasures of
collecting and makes his original purchases with profits as his
However, we have found that the line between those of our
clients that are collectors and those that are investors has
become increasingly blurred. Collectors can’t help but be
pleased when coins that they sell bring an attractive profit.
Investors begin to see their coins as works of art and become
knowledgeable about the circumstances of their minting and the
era in which they were circulated.
Both collector and investor come to realize that their
intellectual curiosity, aesthetic sensibilities and enjoyment in
our country’s past can be used to create a collection that
becomes an important store of value, a way to accumulate wealth
that can be passed on to future generations–or used to fund
their own retirements.
Frequently Asked Questions...
Whats the difference between a 'proof' coin and an 'uncirculated' coin? and what is more valuable?
A proof coin is made for coin collectors. It is a special planchet and made with special dies. The planchet is also struck more than once to bring up the detail that is on the dies. An uncirculated coin is a business strike that has no wear the correct term these days is mint state. The coin could have been touched and even found in change as long as there is no wear. It depends on the number of coins produced as to value and how many business strikes actually survived in mint state. As an example some of the modern commemorative 1/2 dollars as well as dollars had very low mintages in uncirculated and a lot in proof, so the Unc. ones are more valuable. When it comes to the silver eagles the proofs have more value for they have a lot less minted than the Unc's. There is no easy way to say what is more valuable for it depends on mintage's as well as survival rates of the mint state ones (uncirculated). Another factor is how many people are collecting the series. One must do his or her home work when investing in coins. It is more fun to collect coins and over a period of time one usually does okay if they also have the key and semi keys to a series.
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