Three Tips For New Investors In Rare Coins
Posted on: 2 September 2015
Do you place a high value on old artifacts? Are you someone who falls in love with an item simply because of the history that's associated with it? Are you more impressed by the story behind a piece than you are with the promise of what it may one day be worth? If so, investing in old coins may be right for you. If you're new to the financial investment marketplace, you'll quickly learn that other investments such as real estate or diamonds promise higher pay-offs than ancient coins. But if you know this, and you want to invest in coins anyway, there are precautions you should take to insure your investments:
1. Become a Research Ninja
Every savvy investor understands the irreplaceable value of research. If they don't, they won't be in the game for long. And research is especially important for someone wishing to make an eventual profit off of buying up old coins. Before you ever approach a dealer who advertises ancient coins for sale, make sure you understand the jargon associated with this type of investment:
- Melt Value -- A coin's melt value is exactly what you think it would be -- the amount the coin is worth if you were to melt it down. Coins that are high in silver or gold content will have a higher melt value, thus making them less affordable but a more solid investment.
- Numismatic Value -- The numismatic value of an old coin is what attracts many collectors. Separate from melt value, the numismatic value of a coin is determined more by sentimental factors: the year it was made, where it was made, the symbols on the coin, etc.
- Coin Grade -- According to the Numismatic Guaranty Corporation, coins are graded on a scale of 1 to 70, with 1 being poor and 70 being mint. The higher the coin falls on the scale, the more valuable it becomes. Some elements of coin grading are more subjective than others, and you should always get a second opinion before committing to a purchase.
- Spot Price -- The spot price refers to the value of gold on the current market. This is good information to have if you're planning to invest in gold coins.
- Spread -- The spread is the difference between the buying and selling prices of the coin.
2. Know Your Dealers
Never deal with an unknown entity when attempting to purchase ancient coins as an investment -- especially if your own knowledge of rare coins is limited. The best way to avoid losing your money is to only deal with someone who is a member of the Professional Numismatists Guild. These dealers must adhere to a strict code of ethics when it comes to buying and trading in coins. PNG is a nonprofit organization dedicated to the buying and selling of old currency, and membership is prestigious. Members who violate the code of ethics are subject to suspension or expulsion from the guild.
3. Have Patience
It can take decades for old coins that were purchased on numismatic value alone to inflate in price. If you're looking to turn a quick buck on your investment dollars, then vintage coins are probably not the best choice. If you're willing to bide your time and hang onto old currency until the perfect buyer is found, you could do quite well in this arena. Patience plays a big role in most investment portfolios, and dealing with ancient coins for sale is no exception.
Ancient coins make a fascinating investment for anyone who loves history. Their display value alone makes them sought-after collectibles. There's no reason you can't come out a winner when you invest in rare coins -- as long as you understand the rules by which you need to play.
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