After the financial disaster of 2008 and 2009, investors are still wary of investing in traditional stocks and bonds. More investors than ever are seeking creative ways to invest that aren’t as risky and potentially damaging as investing in the stock market. For many investors, the perfect option comes in the form of investing in precious metals.
Unlike stocks and bonds, precious metals offer a lower level of risk for investors because an investor is choosing to place their money in something that is a commodity. Also, precious metals tend to continuously go up in value, even as the stock market or the economies of the world may be experiencing downturns. Investing in precious metals is also an optimal way to invest against inflation, because the value of metals will generally go up as inflation goes up.
This consideration is of particular importance to many investors right now, as many analysts and economists are expecting inflation to become a growing trend as the Federal Reserve continues quantitative easing measures.
There is a variety of ways to invest in precious metals, and one of the most lucrative and interesting is investing in rare coins.
What to Know Before Investing in Rare Coins
When investing in rare coins, there are serious considerations that aren’t relevant to more traditional forms of investing in stocks and bonds. Prior to choosing rare coins as an investment opportunity, it’s vital that the investor do a substantial amount of research. Rare coins have a specific value, and often coins are graded by professionals in order to assess their value. Most graders will look at a set of criteria that includes the overall appearance and condition of the coin. Since these are subjective criteria, there’s always the possibility of different grades being issued by different graders, and this leaves the investor open to a high level of risk because of the potentially lost value from differing grades.
Another important aspect to consider in the investment of coins is that they should be viewed as a long-term investment strategy. Most coins aren’t going to make the investor a profit until at least a period of 10 years have passed because collectible coins are typically sold at a markup.
It’s also advisable, if possible, to invest in coin sets as opposed to single coins. Coin sets are more in demand by other collectors and investors than random coins, and this will provide the investor with a higher profit when the collection is sold.
The Demand for Collectible Coins
Analysts anticipate that the demand for collectible coins will continue to grow, particularly as there is immense uncertainty in economies around the world. European countries are in the midst of grappling with austerity measures, and the United States may be in the same situation in coming years.
Typically, the demand for coins is driven not only by the price of precious metals, but also by the needs of other investors. A particular coin’s value may rise significantly if it is highly sought after by investors.
Investing in rare coins is a viable solution right now because countries around the world are experiencing recessions and the possibility of impending inflation. Coins are one of the few investment opportunities that will either hold their value or rise in value despite the economic climate.
Another factor that drives demand for rare coins is the public’s overall feeling of trust in the Federal Reserve. Many Americans report feeling an all-time low level of trust toward the Fed, which makes now an ideal time to contemplate investing in rare coins.