Coin investing as a hedge against inflation has become something of a tradition in the past few decades in the United States. Back during the Carter years when the economy took a major downturn, and inflation became a huge problem, smart investors flocked to buy up rare coins and bullion. $300 worth of coins purchased in 1977 increased in value tenfold in just three years. That’s right; by 1980, that same coin collection was worth $3000.
Today, we’re seeing a resurgence in coin investing for similar reasons. If you simply put your money into savings, it will collect some interest, but it will not grow with the rate of inflation. The total worth of that money if you just save it will decrease by large measures in the next few years. However, if you invest it wisely, you could increase your net worth by a great deal.
A Coin Bubble
Like the real estate bubble that put the United States into its current economic slump when it burst a few years ago, back in the eighties, the coin market experienced runaway growth for a few years, only to burst and lose value when the economy began to recover, and inflation slowed. Is that likely to happen again? Should you be wary of coin investing? Actually, according to analysts, while a bubble is possible, it’s very unlikely, and coin investing is considered to be a very stable and safe investment if you’re willing to let that investment mature over years.
One reason that coins are considered stable is the standardization of quality grading that was put in place during the 1980s. This standard grading, by the Numismatic Guaranty Corporation (NGC) and the Professional Coin Grading Service (PCGS), has given consumers more confidence in their coin purchases.
As an investor, if you do just a bit of research, you’ll be able to determine whether a dealer is likely to over-grade a coin and charge an inflated price for an inferior product. Knowing this, you can invest wisely and rest assured that your rare coins will appreciate as time and diminishing supplies carry on. Your coin won’t ever increase in grade, but as it increases in rarity, it will increase in value.
Coin Authenticity and You
As is the case with fine art, rare coin counterfeits are a factor when you consider investing. Forgeries do exist, and they carry no more value than the metal they’re stamped from. That metal may not even be pure silver or gold, so falling victim to an untrustworthy dealer who over-grades or sells forged coins could cost you a lot of money.
If you buy an over-graded coin, you can at least rest assured that you can get back the value of its metal. You can also wait and hope for an increase its numismatic value – the price that a collector would be willing to pay for it – as its rarity increases. However, if you buy a counterfeit coin, you’ve just kissed that money goodbye, as it will never appreciate in value with rare coin collectors, and it may not even appreciate for its metal content.
That’s not to scare you away from coin investing. In fact, you can be more sure than every before of your investment thanks to online resources and access to reputable dealers and experts. Thanks to the Internet, you can look at many images of the coins you are interested in so that you know you’ll get authentic coins. You can also look at customer reviews of coin dealers online before you purchase from them. You’ll know before you buy that your coin investing experience will be positive. No investment is every completely guaranteed, but coin investing is one of the safest, most reliable investments on the market.