Investing in rare coins and numismatics is very exciting but more importantly can be very profitable. Everyday Dallas Gold and Silver Exchange matches novice collectors, rare coin investors and professional numismatists with the high quality rare coins and precious metals that meet their portfolio's needs.
Dallas Gold and Silver Exchange and related companies as part of DGSE Companies Inc (NYSE-AMEX: DGSE), have been involved in all financial aspects of the rare coin and currency industry for over 75 years including research, trading, buying and selling. We have built thousands of successful relationships over our many years in the trade. A strong following with collectors, dealers, and investors which include some of America's most wealthy families has enabled us to maintain an impeccable reputation. This gives our clients an advantage in these markets when either purchasing or selling. Our abilities and honesty are well known on several continents through personal relationships, affiliations, and expert representation. We proudly offer the same to you!
7 Major Advantages of Rare Coin Investment
For a long time the rare coin market was driven by collectors, not investors. Many of these collectors became interested as young people through organizing their pocket change by the dates and mintmarks on a coin board. A small percentage of these youngsters developed a long lasting fascination with coins and began collecting rarities that did not exist in their pocket change and had to be purchased from dealers or other collectors.
The modern rare coin market is significantly different from what it was even 50 years ago. The introduction of the independent third party grading services has added a significant layer of security for the collector and investor alike. By ensuring that everyone can equally judge the state and condition of a coin, these independent grading services have leveled the playing field and allow even the most novice numismatist to understand the value and investment quality of rare coins.
1. Rare Coins are a Hedge Against Inflation
We have not experienced high inflation for almost 20 years and, for some, it may be a distant memory. However, most experts agree that the United States is showing all the signs of once again heading towards a higher inflation rate. The Consumer Price Index is consistently rising, the federal deficit is exploding, the long-term decline in the value of the dollar is persistent, oil prices continue to rise, the money supply is increasing and unemployment is creeping upward; all signs that inflation will continue on a multi-year upward trend.
Inflation can have a devastating effect on the majority of the other investment options available today. Rare coins and bullion stand as one of the few examples of investments that actually perform better when inflation is on the rise.
2. Tax-Deferred Appreciation
Rare coins enjoy very favorable treatment from a tax standpoint. Investments in rare coins can grow as tax deferred assets. By taking possession of your coins at the time of purchase and retaining them for at least six months, you will be taxed at the lower capital gains rate. Additionally, under certain circumstances, rare coins can qualify under section 1031 as a "like-kind" exchange allowing investors even greater flexibility for portfolio growth.
Unlike the vast majority of other major investments, rare coins are not subject to federal disclosure rules. As long as the coin you purchase carries at least a 15% premium over its metal content, there are absolutely no reporting requirements for either a purchase or a liquidation of your investment. This allows an investor to construct a rare coin portfolio in almost complete privacy. Few other investment options can match this characteristic.
Many investors believe that their portfolio contains "Portable Assets," but the definition intended to apply here is "assets with significant, concentrated wealth that are moveable across state or international boarders without disclosure, registration or export/import duty." Most significant portfolios are often totally dependent on assets that require some disclosure or registration for transportation. Nevertheless, the most prudent investors always seem to have assets that are portable so that wherever the individual desires to travel, assets with significant and concentrated wealth are available for use.
To move rare coins is as simple as transferring your wallet. A single rare coin, packaged in a third party plastic holder is about the size of a credit card, about as thick as your pen, and typically weighs less than two ounces. A single rare coin can have a concentrated wealth in denominations that you select: thousands of dollars, tens of thousands, hundreds of thousands and even over a million dollars.
Responsible wealth planning and protection plans often include significant preparation for the transfer of wealth from generation to generation. Assets that are bearer instruments, are concentrated in value, are small and light weight, and are easily shipped globally make perfect assets to facilitate wealth transfer.
With the advent of the independent grading services such as NGC and PCGS, rare coins have become one of the most liquid of all collectibles. Since 1963, the rare coin industry has benefited from a published weekly dealer to dealer price sheet (The Coin Dealer Newsletter) for all important U.S. coins. No other collectible market has a pricing structure published as frequently or as accurately as rare coins. Most coins can be sold in a few hours to a few days, if needed. In addition there are major auctions and coin shows every month that allow even more flexibility for liquidating your investment when the appropriate time comes.
Rare coins are as liquid as a single telephone call to Dallas Gold and Silver Exchange. We are always interested in buying your rare coins and we have the capital in order to immediately purchase your collection.
Even with all the other advantages of investing in rare coins, one must remember that appreciation is the ultimate goal of any portfolio component. Your investment strategy must allow you to withstand many different economic environments and hard assets such as rare coins and bullion are an essential part of any well rounded portfolio. Maintaining appreciation throughout your entire portfolio is the planning goal, and achieving this goal requires assets in the portfolio with different characteristics. This allows appreciation in certain areas when others may be performing at a lower level
Rare coins and bullion have consistently out performed almost every major equity index over the last 40 years, including the S&P 500, the DJIA and the NASDAQ 100. Even more compelling is the fact that hard assets have traditionally faired even better during periods when inflation is on the rise, the dollar is weakening, real estate prices are dropping and other commodity prices such as oil are rising. The graphs below clearly demonstrate how hard assets, such as rare coins and bullion, serve as an effective diversification tool and have significantly outperformed the equity markets for almost 40 years.