 Why You Need To Buy and Sell Gold Coins (Part 1)
by Steve Renner
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The Value of Gold in a Era of Paper Assets, Stocks, Bonds and
Mutual Funds...
The facts behind the increasing demand for gold and silver, rare
coins, and historic collectibles from the U.S. Mint...
No other substance on Earth embodies the unique characteristics of
gold. Its yellow luster and beauty are unsurpassed. Since the earliest
days of man, it has been admired, molded, shaped, and worn as a symbol
of wealth and good taste.
The romance and lure of gold is enhanced by its historic use as a
storehouse of wealth. Gold's value is intrinsic. Its value is a measure
of the true wealth and the stability of national currencies the world
over. Throughout history, every paper currency has become totally
worthless over time; yet gold remains.
The precious metal gold cannot be created or destroyed or altered. It
forever remains one of the most liquid investments with no geographic
boundaries. Gold is bought, sold, traded, and stored in most parts of
the free world with complete privacy. Likewise, U.S. gold coins enjoy
many of these unique advantages.
In a world where paper currencies come and go, where paper money can
be depreciated 25% to 30% overnight, the price of gold cannot be
manipulated by any single nation or borrower. On the contrary, gold is
the foundation of today's world monetary system.
Acquiring U.S. gold coins put you in great company through American
history. Prior to 1933, all U.S. paper currency was backed dollar for
dollar by gold reserves. Today, paper dollars are backed only by a
government promise, nothing more.
For investors who value gold, they recognize the safety, privacy and
instant liquidity of U.S. gold coins. As official legal tender, each
coin has a guaranteed weight and gold content.
Numismatic coins, especially the pre-1933 U.S. gold coins are highly
sought after by astute collectors and investors for more than their pure
gold content. The Saint-Gaudens, the Liberty series, and the Indian Head
U.S. gold coins are admired and collected worldwide for their historical
significance, beauty, and rarity.
Unlike gold that is minted by the tons annually, U.S. Gold coins
minted prior to 1933 have a fixed and limited supply. No more will be
minted ever and the older they get, the more highly prized they become
as important pieces of American history.
We hope your visit will encourage you to add more rare and valuable
U.S. gold coins to your collection and to learn how to build sets that
will appreciate in value and be greatly admired for many generations to
come.
Why You Need To Buy and Sell Gold Coins (Part 2)
How to Collect Rare Coins For Fun and Profit
Time has proven that collectors tend to make the most money in rare
coins because they search out "undervalued coins" and buy during market
lulls. Buying in today's market climate offers you superb upside profit
potential.
PUT IN PERSPECTIVE - Rare coins have an extremely limited, fixed
supply which has historically increased in value when demand overwhelms
availability. This fact is documented in the enclosed "Dow-to-Gold
Report." It clearly shows how rare coins go up as well as down in price
with varying market cycles. We believe the most successful Rare Coin
portfolios were built in down markets by systematically assembling a
variety of choice, rare, and desirable coins, with a three to five year,
or longer, holding period in mind.
HAVE A PRECISE FOCUS - Thousands of coins have been issued over the
past 200 years. Very few collectors are experts on more than a few types
of coins. For that reason alone, it's important to build a relationship
with a firm that employs a team of knowledgeable Rare Coin Specialists
and Numismatic Experts that are recognized as pillars of authority
throughout the industry. Together, we can help you define your areas of
interest, your investment goals, and our team of specialists can then
guide you to a specific area of U.S. Coins designed to be both
profitable and extremely enjoyable.
THE FOUR FACTORS FOR SUCCESS - To profitably build a balanced and
diversified Hard Asset Portfolio, you need to know the driving forces
behind the U.S. Rare Coin Market:
* STRONG DEMAND - We recommend U.S. Rare Coins that have a broad base
of both active investors and collectors. The more wealthy,
sophisticated, and avid the base of buyers in an area, the more
successful your portfolio should be in the long run.
* SMALL SUPPLY - We recommend U.S. Rare Coins of the highest quality
for the date that you can afford. These are always the hardest to find,
most desirable collector coins and have historically been top market
performers. In our opinion, these coins are always in demand by
collectors and will be the easiest coins to liquidate later, and turn
the best profits.
* STRONG PERFORMANCE HISTORY - Take the time to review the price
history of any rare coin you purchase. Rare coins that have a good
history of 200% to 300% price increases during recent bull markets,
usually offer your an excellent profit potential in the next hot market.
While past performance is no guarantee of future value, undesirable
coins are losers in any market. It is of utmost importantance to
remember that each rare coin must stand on the value of its own
individual merit related to grade, price, eye appeal, and rarity.
* GENUINELY RARE - Finally, we recommend you acquire a selection of
Genuinely Rare United States coins. There are fundamentally two ways to
determine a coin's rarity. That is "Condition Rarity" and "Absolute
Rarity." Condition Rarity is a coin that is rare in higher grades. Some
coins are common in worn, circulated grades, yet there could be only
five coins known to exist in higher mint-state grades of MS-63 to MS-65.
Absolute Rarity is a coin that is rare in any grade. These are truly
desirable gold coins that are hard to locate and acquire in all grades.
These few coins that are Absolutely Rare in any grade are the "Blue Chip
Recommendations" of the U.S. Rare Coin Market.
Why You Need To Buy and Sell Gold Coins (Part 3)
Putting Rare Coin Market Cycles to Work for You...
Until recently many people believed U.S. stocks would go up forever.
However, recent crashes in high tech stocks and the overall stock
market correction left many investors with huge losses. Clearly, market
cycles are changing.
The return of high inflation, combined with a slowing economy,
suggests it's more important than ever to move into safer, more
profitable investments in the coming market cycle.
Balance and Diversify Your Portfolio - We believe you can profit
handsomely by diversifying your portfolio with investments currently
undervalued. Everyone agrees gold, hard assets, and commodities have
been out of favor in the past decade. For many reasons, we feel these
sectors are most likely to be top performers in the next market cycle.
Move To Hard Assets in Bad Economic Climates - For that reason, it's
important to consider moving into hard assets, gold, and U.S. Rare
Coins. Prices are attractively low today compared with past market
highs. The table below details recent cycles for the U.S. Rare Coin
Market showing increases ranging from 348% to 1,195%.
$1,000 Invested in Rare Coins Worth $57,977 - Collectors Universe
researched the U.S. Rare Coin Market carefully based on a study of 3000
Rare Coins. The graph above shows $1,000 invested in rare coins in 1970
would be worth $57,977. The conclusion is that U.S. Rare Coins have
produced superior profits over gold bullion or Dow Stocks.
Buy Rare Coins During Market Lulls - Since January of 1970, the U.S.
Rare Coin Market has had eight very definitive market cycles. There have
been three complete Bull and Bear Market cycles since 1970. To maximize
profits, collectors prefer to acquire coins that are currently
undervalued. They hold their coins and wait until a Bull Market when
investors move in and bid up coin prices- then they sell and take their
profits.
The most profitable period for the U.S. Rare Coin Market showed
increases of 1,195% from December of 1975 through March of 1980. This
market cycle parallels a time of high inflation in the U.S., rising gold
prices, and a very weak economy- a market cycle that appears to be on
the horizon ahead.
Other Rare Coin Market cycles since 1970 showed increases of 665% and
348%. Past performance is no guarantee of future value, but it is an
indication of just how volatile and profitable collecting U.S. Rare
Coins can be in uncertain economic climates when there's a flight to
safety from stocks to hard assets.
Why You Need To Buy and Sell Gold Coins (Part 4)
Throughout history, many coin collections have produced substantial
long-term profits for their owners. This is particularly true for coin
collectors of this century. Indeed, Harold Bareford reportedly purchased
a collection of U.S. gold coins for $13,832 in the early 1950s which was
resold at auction in 1978 for $1.2 million. A more substantial
collector, Louis Eliasberg, built a collection that cost about $300,000.
In 1982, it brought $12.4 million at auction.
This investment performance has been well documented by sources as
diverse as The Wall Street Journal, Consumer Reports and a host of
industry periodicals and guidesheets. What these reports have shown is
that carefully selected portfolios of rare coins have had a high rate of
long-term appreciation.
Of course, past performance is no guarantee of future results and
investments in rare coins do involve risk. While the market performance
of different coins varies substantially and no representation can be
made that an individual investor's portfolio will enjoy results similar
to those that have been documented in the various independent reports
and surveys, those reports and surveys illustrate the impressive returns
that carefully selected rare U.S. coins can produce.
Tax Benefits
Capital gains on coins can only be taxed at liquidation, when the
profits are actually realized. There is no taxation on phantom or
undistributed profits as there are with some investments. And unlike
most other investments, there is no federal income tax liability on
so-called "wash sales" or like-kind exchanges which enable investors to
trade their rare coins for other rare coins of equal or greater value
Intrinsic Value
Unlike paper investments, rare U.S. coins have real tangible value
you can feel each time you hold one in your hand. Therefore, they offer
two ways to build wealth. Carefully selected coins truly offer the best
of bullion and numismatics in one investment. They contain the intrinsic
security of bullion and can also offer extraordinary profit potential
regardless of what precious metal spot prices do. Still, precious metal
content is only a relatively small factor in determining the value of
many rare U.S. coins whose value is almost solely based on condition,
demand and rarity
Historically Significant Beauty
Rare U.S. coins are a part of our history--direct links to America's
rich heritage--as timeless and valuable as history itself. For two
centuries, U.S. coins have been symbols of American stability, as well
as reflections of national pride. Throughout our nation's history, coins
have spotlighted our national heroes, paid tribute to our great
achievements and commemorated significant events. These truly historic
works of art commemorate past sacrifices made in the name of freedom.
Rare U.S. coins acquaint investors with historical figures and
events, no matter how far removed by time. The satisfaction of actually
owning a piece of history from a bygone era makes investing in rare U.S.
coins truly unique. Each coin has traveled a different path through
history. As a result, each is a unique embodiment of the hopes and
dreams of our founding fathers
Condition
The overwhelming majority of U.S. coins ever minted were circulated.
Many coins were lost through attrition and others were damaged by use,
thus eliminating any potential for numismatic value. The few surviving
uncirculated coins are in a much more pristine condition.
Investment quality coins are primarily those coins rated in the 11
uncirculated grades, 60 and above, on the American Numismatic
Association's 70 point grading scale. A coin's grade is a measure of its
condition or state of preservation. The higher the grade, the better the
condition.
Uncirculated coins fall into two broad categories: Proof (PF or PR)
and Mint State (MS). Mint State coins were originally meant for
circulation but never were circulated, so they remain in the same
condition today as when they were minted. Proof coins were never meant
for circulation, thus they received very careful handling and were
specially struck at least twice on highly polished planchets.
The beauty of a coin can attract collectors as well as investors, and
hence increase demand for a particular coin or set. This increased
demand can result in rising values. Eye appeal is affected by several
factors including the beauty of a coin's design, the minting process
used, the fullness and sharpness of its strike, the toning, the
brilliance of its luster and the amount of wear and number of blemishes
on the coin's surface
Portfolios or Collections?
The age-old description of coin collecting as the "Hobby of Kings" is
both accurate and misleading... accurate in conveying the outdated
perception that coin collecting is restricted only to the very wealthy,
misleading in that the number of collectors has steadily increased and
has been estimated by the American Numismatic Association to include as
many as 7-10 million coin buyers in the United States alone. Typically,
the coin collector collects coins for their rarity and historical value.
Collectors view their coins as rare art and as the tangible remnants of
the cultural and economic forces that created them.
The investor begins from a different starting point--the fact that
coins of proven rarity have shown remarkably high rates of appreciation.
He sees the economic results of the pleasures of collecting and makes
his original purchases with profits as his only motive.
However, we have found that the line between those of our clients
that are collectors and those that are investors has become increasingly
blurred. Collectors can't help but be pleased when coins that they sell
bring an attractive profit. Investors begin to see their coins as works
of art and become knowledgeable about the circumstances of their minting
and the era in which they were circulated.
Both collector and investor come to realize that their intellectual
curiosity, aesthetic sensibilities and enjoyment in our country's past
can be used to create a collection that becomes an important store of
value, a way to accumulate wealth that can be passed on to future
generations--or used to fund their own retirements.
Why You Need To Buy and Sell Gold Coin (Part 5)
Grading coins
The condition of a coin is commonly summarized by a grade. Because
the value of collectible coins often varies dramatically with grade and
overly generous grading is not uncommon, reasonable grading proficiency
is an important skill for collectors. The material presented here is
intended only as an introduction to the subject. Grading is a skill that
can only be developed over time through referrals to grading guides,
consultation with experienced collectors and dealers, and lots of
practice.
Published standards set objective criteria for grading, yet some
amount of subjectivity is inevitable -- even expert graders will often
assign slightly different grades to the same coin. While you can often
ask an experienced grader for an opinion, being able to make your own
reasonable assessment of grade is your best protection.
An overview of American Numismatic Association standards follows. ANA
standards are widely used in the U.S. but are not the only system used.
Much of the rest of the world uses the grades Fair, Fine, Very Fine,
Extremely Fine, Uncirculated and Fleur-de-coin.
Numerals used in coin grades have been taken from the Sheldon scale
(see Glossary).
Uncirculated Coins
Coins with no wear at all are referred to as uncirculated or in mint
state (MS). Grades from MS-60 to MS-70 in one point increments are used
for mint state coins. Criteria include luster; the number, size and
location of contact marks; the number, size and location of any
hairlines, and the quality of the strike and overall eye appeal..
An MS-60 coin may have dull luster and numerous contact marks in
prime focal areas, as long as there is no wear. To merit MS-65, a coin
should have brilliant cartwheel luster (attractive toning is
permissible), at most a few inconspicuous contact marks, no hairlines,
and nearly complete striking details. Grades from MS-61 to MS-64 cover
intermediate parts of this range. Truly exceptional coins may be graded
MS-66, MS-67 or, if absolutely flawless, as high as the theoretical
maximum of MS-70. Many numismatists consider MS-70 to be an unobtainable
ideal.
Terms such as brilliant uncirculated (BU), choice BU, gem BU, select
BU and premium BU are still used in lieu of numerical grades by some
dealers, auctioneers and others. Correlations between these terms and
the numeric MS grades are difficult at best, because of inconsistent
usage and in some cases overgrading.
Market values for many uncirculated coins vary dramatically from one
grade to the next. Remember that whether a coin is described with a
numerical or an adjectival grade, it's only someone's opinion. Until you
are comfortable with your ability to grade uncirculated coins, make
liberal use of other opinions, such as those available with slabbed
coins or from experienced collectors and dealers you trust, or
concentrate on circulated coins.
Circulated Coins
For circulated coins the grade is primarily an indication of how much
wear has occurred and generally does not take into account the presence
or absence of dings, scratches, toning, dirt and other foreign
substances (though such information may also be noted).
ANA grading standards recognize 11 grades for circulated coins
(listed here with brief, generic descriptions):
AU-58, very choice about uncirculated: just traces of wear on a coin
with nearly full luster and no major detracting contact marks
AU-55, choice about uncirculated: small traces of wear visible on the
highest points
AU-50, about uncirculated: very light wear on the highest points;
still has at least half of the original mint luster
EF-45 or XF-45, choice extremely fine: all design details are sharp;
some mint luster remains, though perhaps only in "protected areas"
EF-40 or XF-40, extremely fine: slightly more wear than a "45";
traces of mint luster may show
VF-30, choice very fine: light even wear on high points, all
lettering and design details are sharp
VF-20, very fine: most details are still well defined; high points
are smooth
F-12, fine: major elements are still clear but details are worn away
VG-8, very good: major design elements, letters and numerals are worn
but clear
G-4, good: major design elements are outlined but details are gone;
for some series the date may not be sharp and the rim may not be
complete.
AG-3, about good: heavily worn; date may be barely discernable While
coins more worn than AG are rarely collected, two additional grades are
nevertheless used to characterize them:
F-2, fair -- very heavily worn; major portions may be completely
smooth
P-1, poor, filler or cull -- barely recognizable While not included
in the ANA standards, intermediate grades like AU-53, VF-35, F-15 and
G-6 are used by some dealers and grading services. When a grader
believes a coin is better than the minimum requirements but not nice
enough for the next higher grade "+" or "PQ" may be included (e.g.
MS64PQ or VG+) or a range may be given (e.g. F-VF).
Split Grades
When there are significant differences between the obverse and
reverse sides, a split grade may be assigned. Split grades are denoted
with a "/". For example, "F/VF" means that the obverse is F and the
reverse is VF.
The overall grade is often determined by the obverse. An intermediate
value may be appropriate when the difference is significant, especially
if the reverse is lower. A coin graded MS-60/61 would be considered to
have an overall grade of MS-60, and another at MS-65/63 could be
considered to have an overall grade of MS-64.
About the Author
Steve is the CEO of cashcards-goldlynks rare/gold coin club. Check
out his page at
http://goldlynks.tripod.com. You can sign up for a free email
course on buying and selling rare/gold coins for profit by sending email
to goldcoinsinfo@yahoo.com.
Membership to the coin club is free -- to join:
http://goldlynks.tripod.com |
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