Collector’s items are some of the most valuable forms of investment. Typically, the original item costs less than the worth it will gain over time, when it increases in rarity and demand. Rare coins are one popular variant of investments in collector’s items. Next to their worth created by their rarity, they are typically made of high value materials like gold, silver, or platinum. Here are some good reasons why investing in rare coins can be a profitable idea.
Different Forms of Rare Coin Investing
Websites like rarecoin offer you all the information you need to figure out what makes a coin a good investment and give you the option to purchase promising items. They list valuable coins that are suitable for the two types of investments when it comes to rare coins: investing in the coin’s significance or investing in the coin’s materials.
● Bullion Coins
Bullion coins are often sold by official financial institutions as a form of investment. Like gold bars, they were minted recently and contain a high concentration of gold or other rare metals. You invest in the material and market value of the metal. The worth of this type of coin is very close to the material’s value on the stock market.
● Numismatic Rare Coins
When your investment strategy is collecting numismatic rare coins, you are collecting coins that have a high value because of their age and significance. It covers a wide variety of coins that can be valuable for many different reasons. Here, you need to put in research and figure out which coin is or will be interesting to collectors in the future.
What Determines the Value of Rare Coins?
How valuable a coin is can be determined by multiple factors:
In times of crisis, financial experts tell you to invest in gold, because unlike stocks, it has a material worth. It has and will never lose its value entirely. Materials like gold aren’t only in demand because of its popularity, but also because it has many important uses. For example, medical implants and instruments are made of gold in many cases because our body rarely reacts to it negatively.
While there might be fluctuations in the material’s value, there’s more to it than an intangible value on paper, like it is with stocks or money. If you buy a coin with a high concentration of gold, you can always sell it for its material value, if it never happens to become a collector’s item.
If you invest in numismatic rare coins, the rarity is a critical factor. There are typically two factors that determine the rarity:
- Minting – Some coins are minted in small numbers, for example commemorative coins that were intended to be collector’s items from the very beginning.
- Time – Some coins with a specific denomination or design just happen to get lost over time. Some people might have decided to melt the coin and create something else with the material.
Some coins have historical significance. That can be true for a specific commemorative coin. It could also be an event that has changed the coin’s value unexpectedly. Like stocks, the demand for a coin can be influenced by the things that happen in the world. Coins that feature a significant person as a motif will typically increase in value, if the person dies or an anniversary comes up.
Like with most collector’s items, the better the condition, the higher the value. This is especially true for coins that were intended to be commemorative collector’s coins in the first place. With coins that were intended for circulation, damages are more likely. This means you could make a lot of profit if you happened to have one of the few undamaged coins.
The Overall Demand
The aforementioned factors can be combined to calculate the demand of a coin. Typically, a rare coin with historical significance that is old but undamaged will give you the highest profits when you sell it. However, like any collectors’ scene, the demand is driven by a variety of things that can be as petty as a general trend or taste in motifs.
Marketplaces will let you know which coins are in demand currently. The art of investing in rare coins is finding out what will be in demand in the future, and buy it while it is still cheap.
Why Invest in Rare Coins?
Rare coins as an investment have many benefits:
- Anonymity: You don’t have to register for a service to buy rare coins, and you don’t have to notify any authority about your purchases.
- Material Value: The coins have a material value and, compared to stocks and other investments, will never lose their value entirely.
- Easy to Store and Transport: Storing and transporting the small items is easy. For the appropriate security measures, a safe deposit box is a great solution. But you won’t have to instruct any kinds of transfers from one provider, service, or account to another, you simply pack the coins in a bag and move them where you want to.
- Solvent: Coins are easy to sell and turn into money, compared to other investments like real estate.
- Affordable but Profitable: Rare coins that you buy expecting a rise in value over time are affordable and can be bought with as little as a couple of thousand dollars. The collector’s value added to the material value makes it possible to double this value multiple times.
Rare coins can be bought for their material or their collector’s value. The material value, a coin’s rarity, significance, condition, and demand will decide over the profit you can make. Typically, the coins are a long-time investment. You buy a coin that you expect to rise in value now, and will be able to sell it for much more money in the future. On top of this benefit, buying, storing, and selling coins is effortless.