|
Why Rare US Coins
Strong Historic Returns
The long-term returns on US rare coins investments have been nothing short of spectacular. In 1970 if you had invested in a portfolio of DJIA stocks and a portfolio of rare coins, your coin portfolio return would have exceeded the DJIA by more than 400%. Even over shorter investment horizons, rare coins typically perform at a level comparable to equities while providing both tangible asset diversification and reduced portfolio risk.
Growth Market
Over the last three decades the US coin industry has transitioned from a mom & pop market with fewer than 100,000 participants to a multibillion dollar industry with millions of collector/investors and 10,000 coin dealers. The current value of rare coins held by collector and investors is estimated by the American Numismatic Association to be $40 billion.
Limited Supply
It is generally accepted that upwards of 95% of original mintages were lost due to mishandling or melting. The small surviving population of coins forms the backbone of the investment market for rare US coins. With the vast majority of surviving rare coins having now been certified, it is estimated that there are fewer than 7 million investment grade rare US coins in existence.
Highly Liquid
Unlike most other tangible assets and collectibles, certified coins have high liquidity that is provided via a vast number of coin dealers as well as two independent electronic trading networks, the Certified Coin Exchange (CCE) and Certified CoinNet. These trading/information services are independent of each other and have no financial interest in the rare coin market beyond the service they provide. For example, on a typical day the Certified Coin Exchange has bids outstanding for $800 million in certified rare coins.
Tax-Deferred 1031 Exchanges
Rare coins are typically eligible for tax deferred exchanges under IRC Section 1031. This allows investors to swap appreciated coins for prospectively unvalued coins without realizing a gain at the time of the exchange.
Certified Authenticity and Condition
Beginning in 1986, the market in rare coins became more investor attractive with the creation of nationally recognized, independent certification/grading services. These companies do not buy or sell rare coin products. They are independent third party service companies whose sole function is to certify authenticity, determine grade, and then encapsulate each rare coin. Coins are sonically sealed in a hard plastic holder with the appropriate certification and bar coding information sealed within, which creates a unique, trackable item. This encapsulation serves also to preserve the coin in the same condition as when it was certified.
|
