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What You Need to Know Before Investing in Collectible Coins - Bank Clip

What You Need to Know Before Investing in Collectible Coins

Engaging in collectible coin investment can range from a fun hobby, rummaging through boxes at estate sales, to actually researching and only investing in rare and extremely valuable coins. No matter your level of commitment to investing in collectible coins, the best advice is to research before putting down your hard-earned cash. Here are some tips to ensure you’re making the right collectible coin investment.

The size of the rare coin market is very large.  According to a recent report by the Professional Numismatics Guild, the aggregate prices realized for U.S. coins sold at major public auctions in 2016 totaled $341,815,542. The totals were $439 million in 2015; $536 million in 2014; and $393 million in 2013.

Research
Research is particularly valuable when you choose to turn a collectible coin into an investment that can yield rewards in the future. Check into the credentials of the dealer selling the coin and make sure to take the coin to a reputable grader to properly assess the coin’s value. Also, spend some time researching the targeted coins you intend to purchase.

One way to conduct this research is to read trade magazines, such as the Coin Dealer Newsletter and Certified Coin Dealer Newsletter. You’ll be able to find out the market price for the coin, which can help you ask the right questions about mark-up from the dealer. Also, be sure to check out the coin in person, if possible. This way, you can evaluate it for yourself and make an educated decision on whether or not to purchase it.

Historic Value
Many collectors of rare coins look at them for their historic value. While the precious metal contained in the coins is typically low, the value of these items can far exceed their melt value due to historical significance. Collectors refer to this as ‘numismatic value’ which accounts for the type of coin it is, when and where it was minted, and the condition of the coin, also known as a grade.

Usually, professionals will grade a coin on a scale of 1 to 70; the two largest grading services are Professional Coin Grading Service and Numismatic Guaranty Corporation. However, keep in mind that this is a subjective criteria, which means that different dealers will grade the coin differently. This is significant because the addition or subtraction of even one grade point can increase or decrease the value of the coin by thousands of dollars. Therein lies the risk – and opportunity — in coin collecting!

Profiting from Collectible Coins
Collectible coin dealers make money by marking up the price of the coin. Therefore, it will take many years before a coin collector can make a profit on a particular piece. Collectible coin collecting will not yield a fast profit, so be aware that your money will be tied up in the collection until the market value rises. Before buying from a dealer, ask the dealer about any buy-back programs they may run; this could be a good way to sell the coin once you are ready to.

“The best $100 I spent recently was buying an ancient Roman silver denarius coin graded by NGC.  It circulated during the times of Antonius Pius. It is rich in history and it eerily reminds you that there are many similarities between the United States and the Roman Empire,” says Anthony Allen Anderson, Director of Sales and Marketing at GSI Exchange, a precious metals company based in Calabasas, California, specializing in helping investors plan for a safe and secure retirement with a precious metals IRA.

Always seek a second opinion before investing in collectible coins and be sure to become knowledgeable about the market prices for the coin’s value. Don’t be afraid to walk away from a dealer who isn’t sharing enough information with you.