Proof Coins: Investing In Proof Coins For Diversification
It is easy to get excited about proof coins, seriously. What is not to like about proof coins? After all, you are dealing with coins that have precious metals in them. Whenever you have precious metals, you always have some level of protection.
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Sure, the price of silver and gold might not always keep going up. Still, at the very least, if inflation spikes up, there is a market crash tomorrow, or there is some calamity, you are sure your coins will have some value.
The tremendous advantage that investing in precious metals brings to the table is clear, as they are not going anywhere. They will always have value. Gold and silver are rising and will remain essential to any portfolio.
At the very least, people will use them for jewelry. At the very least, industries would use them as raw materials for industrial products. These two uses are why precious metals tend to have a base value. This base value sets the floor value for the particular precious metal.
It cannot seem to get below that base value because of the huge demand that underlies that value. It is easy to get excited about proof coins because you get protection by investing in precious metals that constitute them. You are also investing in proof coins.
In other words, you are investing in three sources of value: Precious metals, collectors' items and special collectors' items. Despite all its attractions, you must clearly understand what you are getting into.
While it may seem like a good idea to get into proof coins now, it might not be a good idea in the future. Keep the following discussions in mind so you can make an informed decision.
See also: Most Popular Gold Coins to Buy
What Are Proof Coins?
Proof coins are specially produced coins that are stamped twice. Typical coins are stamped once. So if you look at a particular U.S. coin, you would see its specific level of detail and clarity because it has been stamped once.
However, proof coins are stamped twice so that these coins are very-very detailed. The overall look of the coin is clear, lines are crisp, and the designs shine through. Whenever you have such beautiful coins, there will be a huge collector's demand for such coins.
Ever since these coins were created, there has always been a big demand for them. Proof coins have value because not only do people collect regular coins, but proof coins are not regular coins. There is a lot of debate on whether
In other words, they have added a layer of collector's appeal. Many people were looking to diversify their investment portfolios by investing in precious metals. Investors may diversify a portion of their portfolio by investing in proof coins.
They are betting that the extra collector's value of these coins, along with the precious metal component of the coins, will result in higher gains as time goes by.
Betting on proof coins may not always be a good move. It all depends on the underlying economy and underlying collector's market.
Higher Initial Price From Government
When you invest in proof coins, especially platinum proof coins that special mints produce, you have to keep in mind that you would have to pay an extra premium for them. Don't forget about silver and why silver is going up now in the markets alongside gold.
However, suppose you play your cards right. In that case, the extra you would have to pay is nothing compared to the amount of money you would make by investing in these collectors' items. Keep in mind that the U.S. government produces proof coins, but they are not meant for circulation. In other words, they are just meant for collectors.
There are certain mints that the U.S. government has approved to produce commemorative coins, so keep your eyes on those types of coins. Focus on the User put together a list of private mints that rank the best in the world.
Grading rules still apply
When dealing with any collector coins, you still have to deal with grading rules. Grading determines the value of your coin. Even if you have a coin from the 1700s, if the grade of that coin is very-very bad, the value might not be as high as you would like.
Even if you have a gold coin or even if you have a silver coin, if the grade is very-very low, you might have a coin that does not have much value, although it contains precious metal.
There are vast numbers of silver coins in America that have such low grades that they are called junk silver coins.
In other words, their only value is the amount of silver that they contain. You have to keep in mind that these rules also apply to proof coins. Just because they are not circulated does not necessarily mean that they are immune to grading rules.
You have to ensure that your proof coins are in proper containers, stored properly, and as much as possible, they are not handled. The more people handle coins, the higher the likelihood that these coins will get worn down, have cuts, and be exposed to elements. These actions can erode the overall appearance of proof coins and reduce their value.
Invest Wisely in Proof Coins
As mentioned above, you have to diversify your portfolio in many ways than one. It is not enough to diversify your stock holdings in terms of different industries. Diversifying your stock holdings by investing in bonds or commercial paper is not enough.
It is not enough to invest in precious metals. Within this diversified portfolio, you have to do other levels of diversification. For example, in the precious metal components of your investment portfolio, do not put everything on gold, do not put everything on silver, and do not everything on platinum.
If you are investing this way, you are being lazy. You are not doing the hard analysis that is needed. Why? Different precious metals go up and down in price. They follow different trajectories.
Silver has shown a lot of promise because it is appreciated higher than gold. Sure, silver is worth less than gold. Still, in terms of appreciation and ratio of values, silver looks quite attractive—the same as platinum. Platinum often goes in cycles.
Are Classic Proof Sets or Mint Sets Better?
Throughout the height of the coin collecting boom of the mid-1950s during the early '60s, a collector might easily buy proof sets or mint places right in the U.S. Mint. The buyer would flip them around to the closest coin dealer to acquire a profit of maybe 50 cents to a buck.
The market had been hot, and coins were anglers. There was nothing to reduce buying mint sets and proof sets.
Compared to their issue costs, the mint sets and proof sets of the 1950s have held more than time.
In the case of mint sets and proof sets made between 1960 and 1964 have defeated inflation at present levels. Value percentage gains seem much stronger for all those areas when silver bullion costs reached near-record highs around 1980 and more in 2011.
Granted, buying coins and other mint products only from the gain angle seems to go against the spirit of amassing. But many hobbyists prefer to invest their hard-won cash on things that endure a fantastic prospect of increasing in value with time.
What's the Best From an Investment Standpoint? 1951-64 mints or 1950-64 evidence sets?
In summary, mint sets and proof sets represent a business of the coin market. More notably, proof sets and mint sets from the early 1960s have observed comparatively little upward cost activity besides fluctuations in the bullion market.
A return through the decades informs the story. The collections have followed an identical course. Like all silver-proof sets, these modern-day prices are nominally comparable to early 1980s figures. Still, they are worth less than 50% of the initial value due to inflation.
Formerly proof sets and mint sets haven't fared much better. In 1980 one could buy a 1950 proof. That set will cost $550 now. The 1955 boxed bundle and flat package evidence sets haven't performed well through the years.
These ranges, which sold for $85 and $90 respectively in 1980, can now be bought for $130 and $100. However, inflation has diminished this minimum value by approximately half.
Proof sets from the same age do not demonstrate the financial gains of this mint set counterparts.
Yes, investors have cut heaps of classic evidence sets to submit person gem and cameo forecasts for grading, but the collector marketplace is relatively modest.
Even collectors who build a series of coins do not usually have evidence issues in conventional date-and-mintmark places, mainly due to price. Many conventional coin record manufacturers do not make loyal products for pre-1968 evidence coinage.
Looking forward in amount, the marketplace for 1950-64 proof sets and mint sets are relatively mixed, along with the investment benefit entering the 1951-58 uncirculated sets.
Buyers can find chances with the latter 90 percent silver mint sets and proof sets when silver costs are reduced or seem poised for future earnings.
Will proof and mint sets from the golden era of coin collecting ever be genuinely rewarding? There are a few glimmers of hope.
Now may be the opportunity to act for the diehard collector that requires a comprehensive run of proof sets and uncirculated sets spanning back into the 1950s. At the same time, there is still comparatively ample supply, and prices remain largely cheap.
Buyers must invest significant time looking for spot-free places, which can be challenging to find for some years but not impossible. Any 1950s or '60s evidence coins using frosted cameo devices are worth the attempt. However, premiums on such sets usually are greater.
Uncirculated set buyers must prevent diamonds with nicks, scratches, unsightly toning, or other evident surface defects.
Choice boxed evidence sets from 1955 and before and uncirculated sets before 1959 in their cardboard holders are worth a superior. They could be long-term winners because attrition lowers the supply of first sets from years ahead.
What About Piedfort Coins?
Premiums tend to be considerably higher than the typical weight-proof coin. They are usually produced with low mintage amounts, making them especially desirable to coin collectors and investors.
We advise collectors only to buy newly issued piedforts if they have a specific interest in possessing and collecting them. Avoid buying them mainly as an investment unless the premiums are reasonable.
When pursuing a diversification strategy, you must pay close attention to the investment life cycle and investment qualities of particular metals you are getting into. It is not enough for you to take positions in precious metals.
You have to pay attention to whether it makes sense to get into proof coins, stay with bullion, or invest in regular coins. It makes sense to analyze whether you should go to precious metal miners or ETFs.
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