Coin collecting is by no means a modern-day trend, but building a coin portfolio for investment purposes is vastly different from collecting as a hobby. There's a lot of important information you need to know about rare and gold coins before you can begin to diversify your portfolio with these alternative assets.
For starters, you should:
1. Know the coin's market history/cycle: How much has it sold for in the past? What is its average annual ROI? With rare coin investments, you need to think medium to long-term (3-5 years), but you also need to be realistic about your coin. If it doesn't have a good track record in terms of 'popularity' or trading, then it's unlikely to change in the future. This means you may be stuck with a coin that doesn't appreciate in value as much as you'd expect it to.
2. Know what influences a coin's price and grade: The official grading of a coin is determined by a number of factors, which also influences a coin's price. These include:
• The metal content that it's manufactured from
• Rarity/scarcity
• Preservation (condition)
• Supply and demand
• Historical significance
• Age
• Popularity
• Availability
• Investment potential
• Investors
• Mintage (when, where, how many?)
• Design
• Tax benefits
• Liquidity/portability
The market value of a coin is based largely on its official grade, which in turn makes it easier to track the performance. So ideally, you should aim to purchase only graded coins, or at the very least have your rare coins graded and appraised as soon as you are able to.
3. Know the story behind the coin you're buying: A coin with a unique and interesting history almost always has a higher market value. Is yours from a time period that is favourable for coin production? Is it from the era of an important leader? Does it have a very low mintage? Was it minted under exceptional circumstances, or manufactured with an unusual metal content? These are all factors which can add significant value to your rare coin investment.
4. Know about coin grading vs. investment potential: This depends largely on your budget and what you can comfortably afford, as well as what your investment requirements and expectations are. Unless you have enough numismatic knowledge to make your own decision, it's best to speak to a certified coin dealer who will be able to advise you on what graded coins are best suited to your investment profile and budget. They'll also be able to advise you on the market performance and potential of any coins you're interested in.
5. Stick to the '50 Year Rule': Although this is by no means set in stone, it's an approach used by many serious collectors and investors. What it means is that you shouldn't invest in a rare coin that isn't at least 50 years old. This is because it won't yet have an established track record and it would be difficult to predict future market performance.
While these tips will go a long way towards helping you make an informed decision about the type of rare coin you want to invest in, you might still be uncertain about how you're going to find the coins you want. South Cape Coins can help you source the rare coins you're looking for, and can help you build a valuable coin portfolio that suits your requirements.
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