Are Coins A Wise Investment?

by James Hendrickson on October 14, 2019 · 0 comments

The value of a coin is comprised of its bullion value and its numismatic value. The bullion value represents the physical metal in the coin. The numismatic value applies to rare coins. Coins may be categorized as bullion or numismatic.

Types of Coins to Invest In

Numismatic coins may be considered more valuable if they have not been in circulation for years. This contributes to the rarity of the coin which can increase its price. Most investors typically look to invest based on bullion value as only a small amount of rare coins are traded.

Investors may purchase gold and silver coins if they are worried about quantitative easing carried out by the Federal Reserve. In such an event, the value of dollars would reduce. History shows that paper currencies that are not redeemable in gold or silver become worthless.

Gold coins have played important roles in traditional investment plans. Gold acts as a great hedge against inflation. The value of gold usually increases as the value of other investments decline. Gold coins may be purchased through platforms such as Lear Capital, a household name in precious metals IRAs.

Opportunities for Profit

One of the most significant disadvantages of buying gold coins is that they do not provide dividends like stocks do. This may render gold coins unsuitable for investors who have an inclination to purchase dividend stocks for the consistent returns. It typically takes years before significant returns can be realized from gold coins. For investors with preferences for shorter-term investing, this may serve as a reason to not invest.

The performance of a coin in the past over a long period of time can help to forecast the returns that could be made from it in the future. Over a 45-year period, it has appreciated at a better rate than stocks and bonds. However, stocks and bonds outperformed gold over a 15-year period.

Gold is still below its all-time price high of $2,000 an ounce which was reached in 2011. Despite this, many remain confident in it as a hedge against inflation and market risks.

The prices of metals like silver can be very volatile when compared to gold. The lower market liquidity of silver and demand fluctuations are reasons for the significant difference in volatility.

An investor should consider themselves as a coin collector first and a coin investor secondly. It is important to have a balanced portfolio that is able to withstand any swings in the market trends.

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