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Tuesday, October 9, 2012

Why rare Gold Coins and Medals?

Why Rare Gold Coins and Medals?

As an asset class, high end art/collectibles tend to be the playground of the very rich.  It's controversial to even think of this as an asset class.  And even as gold soars and paper currencies are trashed still only the very rich  are particularly active and only at the high end of the hobby/business.

Detractors offer these criticisms of high end art/collectibles such as rare gold coins and medals:

1) They are very difficult to valuate.  In fact, It takes tremendous expertise to even understand
 why items should be valuable at all.

2) They are not particularly liquid.

3) It takes tremendous expertise to identify fakes, frauds, and compromised items.

4) There is no scientific way to evaluate future worth.

5) They take time, effort, care and cost to store.

All of these are true.  And all of these are actually the reasons that owning high end art/collectibles is so attractive to high net worth individuals.   Because all of these are reasons why this form of wealth is so difficult for the government to track and tax.  This form of wealth more than any other is "off the grid."

1) The barrier to understanding valuation of gold coins and medals is so highly attractive because the government can not value this form of wealth.  In fact it is very difficult for the government to even track this form of wealth.

2) Liquidity: High end gold coins and medals can actually be converted fairly easily into gold, dollars, euros or british pounds in New York, Los Angeles, London, Paris, Monaco, Zurich, Geneva, Frankfurt, Munich, Berlin and other places.  You just need to to know where to go and how to handle such a transaction.

3) Care of storage is a nuisance.  Big deal.

4) There is no scientific way to determine future value any investment. 

Yet high end rare gold coins and medals have a track record dating back hundreds and even thousands of years.  Tracking value over this period of time is very difficult.  But not impossible.  And far more significant than charts the track the value of standard investment vehicles over statistically insignificant periods of time such are decades.

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