Current Advantages of Rare Coin Investments

• Ability to acquire rare coins during period of market lows

  The rare coin market at the president time is at a historical low. Tangible assets have been affected by many factors, both in the past and today. Frankly speaking, rare coins, were often unable to effectively compete with a record stock market (has anything?). And inflation, although always present, has been relatively low for years, until the first quarter of 2000, when it suddenly and officially doubled to 5.7% p.a. Prudent investors should easily be able to see the wisdom in buying high quality tangible assets at or near their lows, vs. overpriced paper assets, at or near their highs.

  As contra-cycical assets, rare coins are presently favorably priced due to still too high stock prices, as well as representing the perfect diversification to balance out paper asset risk. Some high quality rare coins can be purchased for 40-50% of their previous market highs. Other tangible asset areas experienced the same declines, (rare stamps, art, rare colored gems, etc.). However, rare coins are among the most liquid and negotiable of all tangibles, with a longer and better performance record. Coins will not have to return to their previous highs to achieve stellar results, especially for those with the wisdom to buy low.

• Certified U.S. rare coins are the easiest tangibles to verify.

  With the advent of certification by PCGS/NGC, the buyer now has the same ability as the professional dealer or experienced collector to determine exactly what the condition of his rare coin is, as well as the approximate price. The tamper proof case contains the exact information about the coin contained within. The Certified Coin Dealer Newsletter is one source for the weekly wholesale price. The procedure is as simple as looking up the price of a stock. Certified coins guarantee the buyer that the coin is genuine and not altered or counterfeit. It is important to understand that the wholesale price shown in the CCDN is the average "sight-unseen" price offered by dealers, and does not reflect any premiums for rarity or coins at the high end of the grade, or those with extraordinary eye appeal.

• Rare coins provide tax advantages

  Unlike stocks or bonds, rare coins can be traded tax-free/tax-deferred, under the IRS like kind exchange rules. If you buy at the low point of their cycle, and see an oppurtunity to realize significant gains, you have the option of selling your coins and realizing that profit, which is taxable, or trading in your coins on others that have lagged the market. In this way, you can build your own coin funded, tax-free/tax-deferred, pension fund that can be used to pay for college, retirement, or whatever else you wish to accumulate money for. In all cases, it can be critical that you save money for your future and that of your family, and coins are a fun, tax advantaged method of accomplishing this worthy goal.

• Coins can also be used to reduce estate taxes.

  You can gift up to $10,000 a year per gift-giver, and to as many people as you want to recieve your money (husbands and wives can gift up to $10,000 each year to each of their children or grandchildren). If you give coins worth $10,000 today that were once worth $40,000, the growth potential of your gift to your loved ones is obviously magnified significantly. In addition, it has been our experience that a gift of rare or semi-rare U.S. gold coins is greatly appreciatied, and often treasured for many years compared to paper asset gifts that are typically liquidated ASAP.

• Rare coins are a discreet and private transaction

  Trading in rare coins is not specifically regulated by any agency of the government, which means that you can easily obtain that rare benefit called "privacy". Howerever, it also means that you should only buy from a reputable, highly recommended and bonded dealer. LCC is bonded for $500,000 per employee and our inventory is insured for $2 million. Rare coins can be bought and sold in any amount within the privacy of a consumer purchase, with no mandatory reporting requirements such as exists with certain bullion products including "junk silver". There is no title or registration required.

• Rare coins provide excellent portfolio diversification

  Due to the ever-changing economic conditions, not one particular asset will fully serve the needs of a portfolio objective. Diversification and proper asset allocation will provide a strategy to cope with various investment climates. Coins have demonstrated strong performance in periods of high inflation, and due to the large collector base, can perform well during periods of economic recovery.

The Use of Rare Coins in Financial Plans

"The #1 Investments, 1974-1998, have been rare U.S. coins and stocks"

The use of rare coins as a financial planning tool has many applications to different types of investors. Some examples are:

• Maturing Certificate of Deposit Owners

Rare coins offer a "hard asset" alternative to traditional paper assets. Many CD owners find that a portion of these proceeds are suitable to diversify into a tangible asset, especially during periods of increasing inflation or uncertainty, such as we are currently experiencing.

• Individuals Aged 50+ and Preparing for Retirement

  Rare US coins have a fine long-term history of performance and may provide an excellent vehicle for diversification in growth portfolios. A recent, independent study by Dr. Raymond Lombra from Pennsylvania State University, has shown that the highest performing assets over the period 1974 to 1998 were stocks and rare U.S. Coins.

• Individuals Looking to Gift Assets and Reduce/Eliminate Income Taxes

As a result of the Tax Reform Act of 1986, there was a change in how individuals may make gifts to minors. Prior to TRA '86, the donor could reduce his income tax liability and reduce the size of his estate by gifting assets to minor children. Any income generated by the gift would be taxed at the child's lower rate. Also, the death estate was reduced by the gift provided the donor did not die within a two year period following the gift. The effect of TRA '86 was to simply allow the reduction of the net death estate period following the gift. The effect of TRA '86 was to simply allow the reduction of the net death estate by the use of gifting. However, the income stream from these gifts is still taxed at the donor's maximum rate. Since rare coins produce no current income or yield, the tax impact for donors is greatly reduced when rare coins are used in gifts for minors.

• Gold or Silver Bullion Owners Looking to Exchange Assets

  Many holders of physical bullion are looking to increase the growth potential of their hard asset portfolio. By converting to all, or part of their existing bullion holdings into rare U.S. coin portfolios, they can enjoy a much higher historical rate to return. For those clients who are fortunate enough to be able to include them in their portfolio/asset mix, rare coins are an investment that provides history and beauty as well as growth, especially when acquired at the low point of their cycle, or during periods of surgiving inflation, such as we are currently experiencing. As with so many investments, timing can be everything.

These are but a few of the applications in which rare coins can be utilized. It is recommended that you consult your financial advisor. Rare coins should only be part of an overall financial plan. The recommended amount is usually 5% to 15% of the total investment portfolio (excluding the value of homes, autos, or illiquid assets such as long-term leases and nonperforming real estate). As with any investment, rare coins may not be suitable for all clients, but for some, rare coins have an irresistible allure, and for any number of excellent reasons.