What the Difference Means to You

Gold bullion is really a one-trick dog at a pony show. It appreciates only with the SPOT price and there is no real evidence that it enjoys the gradual, inflationary increase that other collectibles often demonstrate over time. As an investment, it is only likely to skyrocket in the event of a catastrophe in the financial markets and occasionally in periods of high inflation, unless the government decides to keep a lid on its price to protect paper assets. At present, it is obvious that "the lid is on" as inflation has doubled, oil has tripled, and gold hasn't gone anywhere but gradually down in price (CNN on 5/31/2000 revealed a poll that showed that "Americans think that high energy prices are here to stay," which means higher inflation).

Rare coins, on the other hand, can thrive in many types of market conditions. Like bullion coins, they usually react positively to increases in metal prices, although the scope of the increase is generally significantly grater, making them far more effective historically as an inflationary hedge. A core of collector interest also influences the coin market, such as when the economy is good, and people have more discretionary income to spend on what they want or like. During periods of prosperity there is a stream of new money coming into the market to help sustain and raise prices. During the last 10 years, many, many price records have been set for great rarities that were purchased by collectors and investors who used new wealth from various paper asset investments. With recent stock volatility, these investors seem to have been wise to protect some of their gains with rare tangibles.

The bottom line - rare numismatic coins have several avenues of profit potential, while gold bullion has only one.

Introduction

The role that tangible assets have in asset allocation and diversification in financial portfolios has been a question pondered for decades.

There is no one-correct answer to this, although it is always wise to diversify regardless of what the economy is doing, or is expected to do. At present, we are back into inflationary waters, so astute investors and advisors are again examining the inherit potential in undervalued tangible assets that typically increase in price in such an environment.

Tangible assets are forms of wealth accumulation that have existed long before stocks, bonds, mutual funds, and other paper equity assets. Wealth has been measured in gold, silver, gems, art, animals, real estate, rare coins, and other real assets for ages. Recent research, from 6/4/00 in the New York Times, reveals that stock performance might be overstated by as much as 5% p.a. for the last 50 years according to professors at MIT and the University of Chicago.

In addition, stocks, bonds, mutual funds and the link, investors show their status with expensive tangible assets. Besides the obvious that include homes, automobiles and yachts, wealthy clients acquire art, jewelry, antique furniture, rare stamps, rare coins, oriental rugs, Tiffany lamps, Misessen porcelain, Faberge eggs, and numerous other physical assets.

The asset that is discussed in the following pages is among the oldest of pursuits in history. Coin collecting pre-dates the birth of Christ and has existed in every society for centuries. Presidents, emperors, top business moguls, billionaires and millionaires have treasured coins for centuries and, happily, virtually everyone can afford to collect rare coins today, especially with many coins selling at or near their historical lows.