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Wednesday, February 5, 2020

Keys to Building a Successful Portfolio With Rare U.S. Coins

Poor Man Survival

Self Reliance tools for independent minded people…

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9 Keys to Building a Successful Portfolio With Rare U.S. Coins

NOTE:  This is a continuation of alternative income/wealth building ideas…I don’t agree with all that Rich says…I buy “junk silver” mostly.  One except: American Silver Eagles.  See my follow up blurb at the bottom of this article.

What should I buy?

For anyone looking to start building a portfolio of early U.S. gold, that is typically their first question. The answer varies for every client.

Sometimes, the answer is dictated by wallets… How much are you willing to allocate to rare coins?

Sometimes, the answer is dictated by interests… Is there a particular era or location that has some personal meaning to you?

Sometimes, the answer is dictated by supply… What is the very best coin available on the market today in your price range?

I could go on, but I think you get the point. There are myriad possibilities. As a result, there are myriad collections.

Whatever your answer is, you can tilt the scales much in favor of your success by following nine easy guidelines…

9 Steps to Success

Keep in mind — with so many options available to you in the collectible space, chances are you won’t tick every box on this checklist every time. That’s OK. But the more steps you include in your buying decisions, the better your chance for success.

1. Buy Graded Coins

Prior to the 1980s, the rare coin market was like the Wild West. It was not uncommon to buy a coin from a dealer where they assigned a grade and priced it accordingly, only to sell back to the same dealer in the future and find they have “adjusted” the grade down since you bought it.

Of course, the lower grade would negatively affect your sell-back price.

With the advent of Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corp. (NGC), the guesswork — and the dealer shenanigans — have been removed from this market. There is now transparency and trust in grading as a result of these disinterested third-party grading services.

Ensure all of your collectible coins are graded by PCGS or NGC.

2. Rarity Trumps Everything

By far, the most important factor affecting the future appreciation of any coin in your collection is rarity.

The rarer a coin is the greater the potential for its price to rise. This is simple supply-and-demand price pressure. Collectors will pay more to own a unique (one of a kind) or nearly unique coin.

3. Buy the Best You Can Afford...

As a follow-on to “Rarity Trumps Everything,” it goes without saying that you increase your chance of success by buying the best you can afford.

When it comes time to make your purchase, given the options available in the marketplace and the limitations of your cash position, buying a lesser coin if you have the ability to buy one better would be a mistake.

4. ... Prior to a Big Jump in Price

The one exception I would make to buying the best you can afford is if the best you can afford comes with a substantial jump in premium from the previous grade.

For example, if you see a $20 Saint Gaudens gold coin is available at a small increase in premium when you compare MS62 with MS61... and when you compare MS63 with MS62... and when you compare MS64 with MS63… BUT when you compare the MS65 with the MS64 and the premium skyrockets, you should consider stopping at the MS64.

5. Choose a Theme or Set to Provide a Framework

When you have a road map, it is much easier to navigate. Oh, wait… I’m dating myself.

When you have a GPS, it is much easier to navigate.

The same is true with rare coins. Given your cash allocation, personal preferences or interests, consider building your portfolio around a particular scope of collectability to start.

Some to consider are…

  • Date Sets — All of the different years in which a particular coin was minted. Date sets can be all in the same grade or with no consideration given to grade
  • Mint Sets — All of a particular coin struck by the different mints (Philadelphia, San Francisco, Dahlonega, etc.)
  • Type Sets — All of the different types of coins minted in a particular year or at a particular mint ($20, $10, $5, $3, $2½, $1, etc.)
  • Historical Significance or Story — All the coins bound by a certain period or location, such as Civil War-era coins, Gold Rush coins or coins minted in New Orleans.

6. Layers of Collectibility

In the end, rare coins are only worth what somebody will pay you for them when it comes time to sell. The way to increase the interest in or desire for your coins is to attract a larger group of potential buyers.

One great way to do that is by adding layers of collectability. If you have a date set, you will attract buyers who collect date sets. But if you have a date set of all the coins issued during the Civil War period, you have now increased the pool of potentially interested buyers.

The more layers of collectability, the larger your pool of buyers and the more likely you are to get more money for your collection.

7. Look for BIG, Bold Gold

One clear trend in the United States is that of buying big, bold gold. Buying patterns suggest Americans prefer larger coins versus smaller ones. Buying what most collectors look for allows you to give them what they want when it comes time for you to sell.

8. Ask for Help

Unless you are an expert numismatist (rare coin enthusiast), don’t go it alone. There are tons of gray areas out there — and not everyone has your best interests in mind.

Reach out to specialists in this area with a long history of serving their clients well. “Learning” by making expensive mistakes is probably the No. 1 reason investors and collectors alike abandon their rare coin collections prematurely.

9. Most Importantly… Have Fun!

Like anything in life, the more you enjoy it, the better your chances of success. I tell my kids all the time… “Do your best and have fun.” I am convinced if you don’t have fun, you will succeed far less than you could have if you did, and you are certainly more at risk of quitting whatever it is you were doing.

We have worked with countless rare coin clients over the years. All initially come to us claiming to be in one of two camps… investors or collectors.

But I have yet to meet an investor who did not end up appreciating the quality and history of the coins they collected. And I have yet to meet a collector who did not want to make a profit when it came time to sell.

P.S. Rare, early U.S. gold is a fascinating addition to your investment portfolio. Click here to open an account and start investing today with the vast collection on offer from our partners at ASI. You’ll be surprised how fun making money can be.

Yours in freedom,

Bruce ‘the Poor Man’


Postscript & Other Relevant Posts


Coins considered junk Silver coins today, like the 90% Silver Washington Quarters that circulated from 1932-1964, are also a great way to increase your Silver holdings. Canvas bags of 400 Silver Washington quarters contain 71.5 oz of 90% Silver, making the Silver coin perfect for investment portfolios. And of course, Silver dollars are favorites thanks to their iconic designs, including Lady Liberty and American eagles. 

35% Silver war nickels give you the opportunity to own Silver at a low-premium cost. Produced by the United States from mid-1942 to 1945, these "War Nickels" were made from 56% copper, 35% Silver, and 9% manganese. 


How to start a neighborhood barter club


A Final Note…

  >>We watched Pres. Trump give his speech last night.  We were all impressed.  The major downside was the childish behavior displayed by Pelosi & many of the Dems…disrespectful & divisive as usual.  It’s no wonder to us as to why it’s been so hard to get anything done in Congress.  The response from Gov. Whitmer was disingenuous at best as Trump has done more for MI than she has.

Here’s an exclusive image we got of Pelosi before makeup last night!

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Bob said...

Have collected for 30 years [buy, sell, trade] and this hobby has saved my financial bacon a few times & will be the key to my retirement.

Sam said...

Ironic-read this after a friend stopped by to sell me a variety of silver rounds and coins! I grabbed them, of course.

Lucy Y. said...

Wow! I knew Nancy was scary!