PROFESSIONAL NUMISMATIATIS GUILD - PUBLICATIONS 1

What You Should Know Before You Buy Rare Coins For Investment

Sponsored by:
PROFESSIONAL NUMISMATISTS GUILD, INC

For over two thousand years numismatics, or the study of coins,
tokens, medals, and papaer money has been a fascinating pursuit
for many. In addition to providing hours or enjoyment and entertainment,
coin collecting offers unique educational experiences spanning
a variety of subjects from history and geography to chemistry
and exomonics. For this reason numismatics has been often been
called America's number one hobby.

In recent years, another reason for involment and interest in
rare coins has arisen; that of the opportunity to make a profit
on their sale after owning them for some period of time, often
several years or more. As an investment, some rare coins have
shown dramatic increases over the years, rewarding those knowledgeable
individuals who have purchased wisely. However, if you are new
to the field of numismatics, there are a few things which you
should understand and keep in mind when purchasing rare coins
for investment. This artical will discuss and explain some of
them.


Make Sure Coins Are Right For You

Coins aren't a prudent investment for everybody. If you think
you'll have a need for the money you put into coins within several
months or even several years, it's probably best to avoid them.
Coins are a long term investment, with the best gains coming over
a period of five years or more. Coins are a hedge and should be
part of a diversified portfolio. Putting all, or even most of
your money in one place is rarely a wise move. Insure you can
comfortably meet your ordinary living expenses before you commit
any funds to long term investments such as coins.


Be Sure of What You're Buying, And Whom You're Buying It

When purchasing rare coins for investment, one of the most important
considerations is their grade, or their state of preservation.
The value of rare coins is highly dependent on their grade. Often,
very small differences in quality translate into very large differences
in value. For that reason, several independent services have been
established which render and impartial opinion on the grade of
a coin. These services then seal the coin in a plastic container,
with its grade indicated. The process is called certification
and it may provide your best protection against buying a coin
that is overgraded (and consequently overpriced). Three companies,
among others, which offer widely recognized and respected grading
opinions are the Professional Coin Grading Service (PCGS), The
Numismatic Guaranty Corporation (NGC) and ANACS (Amos Numismatic
Authentication and Certification Service). If you are considering
the purchase of rare coins, you may want to buy coins which have
been certified by one of the above mentioned companies.


Watch Out For "Modern Rarities"

Many newly minted coins are marketed through advertisements and
direct mail pieces as semi-numismatic coins or private rarities.
Usually, these take the form of commemorative coins struck for
a special event or to honor a specific politiacal or folk hero.
They are sometimes (though not always) minted by small island
nations and packaged in special presentation boxes with certificates
of authenticity or some other variety of credibility. The U.S.
Mint also produces many new commemorative coins. These pieces
are sometimes touted as good investments because of their theme
or restricted low mintage. While occasionally some of these do
appreciate in value, the majority of these modern issues (including
many of those of the U.S. Mint) have ended up valued at close
to their bullion (or melt value), leaving the owner with an expensive
box and certificate. If you like the subject theme represented
by these coins, admire the beauty of the design or would like
to own them as a souvenir or to show support for their particular
cause, by all means buy them. But if your goal is capital appreciation
or making a profit, you're better off avoiding this type of material.


Beware of Bargains

The biggest and costliest trap many new investors get cought in
is the bargain prce, good deal or the "something for nothing"
offer. When purchasing coins (or anything else for that matter)
for investment, be aware that there is no Santa Claus. No dealer
gives something away substanially under its true market value.
Every dealer is in business to make money and should be allowed
a reasonable profit on each transaction. But to beleive that a
dealer will sell you an item for less than its wholesale value
is naive to say the least. If you are offered merchandise priced
"under the market," ot's probably safe to assume that
the goods are overgraded, overpriced or misrepresented in some
way.

Do not misinterpret the message here. It pays to comparison shop.
If you are buying certified coins, there may be some price variations
between different dealers. Simply because one dealer can or will
work on a slightly lower profit margin does not indicate that
anything is wrong. Remember that in most cases certified coins
offer substantial protection against buying flagrantly overgraded
coin. If one dealer is selling his certified coins at 5 or 10%
less than another, that is no cause for suspicion. But is a dealer
is offering unceertified uncirculated or proof coins, or certified
material from services other than those mentioned in this brochure
at prices "below wholesale," it may be too good to be
true. Reputable dealers seldom have significant price variances
on investment quality coins that are also available from other
dealers.


Learn About What You're Doing

There's no substitute for knowledge. Like stocks, bonds, artwork
or real estate, numismatics is a highly specialized field with
its own terminology and "rules or the game." In the
past, the greatest financial gain has accrued to those who have
taken the time to read books about coins and learn the basics
before making a large investment. Plunging in, based on the promises
of a telephone salesman who solicited you, is a formula for disaster.

On the other hand, taking the time to learn about rare coins,
attending a few shows at which coins are sold or traded, doing
some research on the subject and carefully evaluating your financial
goals and personal interest can open the door to an exciting,
fulfilling hobby and could very well pave the road to future financial
gain.


Select A Reputable Dealer

Here Are Some Guidelines To Help You Select A Dealer

Check the reputation. Ask the trade organizations. Consult
the hobby press. Ask other dealers and collectors. Don't be fooled
by fancy brochures and flowery advertising. A few phone calls
could be the best insurance you've ever purchased.
Consider dealer longevity. Examine very carefully any dealer
who has been in business for less than five years.
Before you agree to buy anything over the telephone, ask yourself
of what you are being promised could objectively be true; then
think again. Any one who promises you a 20% return in 6 months
or less is unlikely to be albe to deliver it.
Ask about guarantees. Reputable dealers are likely to show
how they back up a guarantee since they are interested in developing
long term relationships and not a one shot sale.
Check organizational memberships. Often these organizations
will intercede if ther is a problem with a member dealer.
Asl for and check bank references.
Attend a major coin show. There is a major coin show some
where in the nation nearly every week and there most certainly
will be one within driving distance of you in the next six months.
While there, get to know some of the dealers on a personal level.
Above all, ask questions.


Copyright 1993, 1994 by the Professional Numismatists Guild,
Inc. All Rights Reserved Prepared by Heritage Capital Corporation,
Steve Ivy, member.
This information is a public service of:
Professional Numismatists Guild, Inc
