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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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