COLLECTOR GOLD VS BULLION

 

Anyone who's been in the precious metals market for a significant period of time will have some level of interest in the collector market.  

For most Americans that means short print modern bullion issues - proofs, enhanced finished coins, specially produced limited issue images.  These often sell at large premiums to bullion.  There's no real track record as these issues are at most a few decades old, so no real analysis is possible.  I think if you can get them relatively close to bullion there's little harm in them and some possible upside.  For this you have to get them directly from the national mints or in bullion auctions at Heritage or Stacks where you can bid a bit over melt.

But those with a relatively thorough education may be tempted by the historical coin market.  British, French, Spanish, Italian, Dutch Latin American, Medieval, Byzantine, Roman and Greek coins.

All of these markets are booming and have been booming for over two decades.  And they've recently moved up noticeably slong with the rest of the hard asset market.

The one thing you really need to succeed in these markets is a strong knowledge of the History of the period and region that inerests you. You can always momentum trade.  But if you buy a coin that has particular Historical importance and it is in attractive condition, over time you'll do well.  And many who play in these markets don't have a sound historical background, so that will give you an edge.

The second thing is condition.  A coin must be atrractive and it must be unaletered.  If it is certified unalatered (it has a numerical grade from NGC or PCGS) it is as good as unaltered.  As far as atractive is concerned, there again, you need to trust your own eye.  If a coin has been awarded a Star or perhaps a fine style designation, that will give it some bump in price, but even with thses designations, if the coin is unattractive, over time, it won't go up all that much in price.  Because, most oftern, those buyers at the top of the historical markets do have some aesthtetic training (and coin graders do not.).

The third thing is the market itself.  There is a tremendous amount of momentum trading and a lot of that comes from particukar groups chasing particular coins.  For example the Japanese love the German Salvator Mundi medallions in gold.  But if there is a credit crisis in Japan, the value of those medallions will plumet because all the buying is there.  Similarly the Japanese love Queen Victoria.  But so do the British, and so do many Americans, so if there is a credit crisis in Japan, the value of Victoria coins should be stable.

The only way to understand these aspects of the market is to be in the market full time for years.  Otherwise it is smart not to momentum trade, but rather buy areas you truly relate to historically and aesthetically,

Finally a word about Ancients.  These are becoming inceasingly popular.  I love the area personally,  But to do well here financially it is best to have a very sound historical background.  There are a lot of rare coins compared to other eras.  But many of them will never appeal to those other than numismatic specialists,  Those that appeal for broad historical reasons are safest.  And here, again, your own eye is paramount.  You have to know the diffence between a coin engraved by a master and a coin engraved by some schmuck who got a job at the mint.  Do not rely on the holders for this.  They're good for the preservation grades but aesthetially they mean little to those with real money in this numismatic area.

And finally it is best to specialize.  Don't diversify until you master an area.  Beause all the edge goes to the specialist.