Proof Coins: Investment to Diversify Your Portfolio
It is very 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.
Sure, the price of silver and gold might not always keep going up, but at the very least, if inflation spikes up or there is a market crash tomorrow or there is some sort of calamity, you are sure that your coins will have some sort of value.
This is the tremendous advantage that investing in precious metals brings to the table. Precious metals are not going anywhere, they will always have value. Gold and Silver are going up and will remanin true as an essential part for 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 the reason why precious metals tend to have base value. This base value sets the floor value for particular precious metal.
It cannot seem to get below that base value because of the huge demand that underlies that value. With that said, it is easy to get excited about proof coins because not only do you get protection by investing in precious metals that constitutes these coins, 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 need to have a clear idea 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 at some time in the future. Keep the following discussions in mind so you can make an informed decision.
What are proof coins?
Proof coins are specially produced coins that are stamped twice. Stamped twice? What is the big deal? Well, typical coins are stamped once. So if you look at a particular US coin, you would see its certain level of detail, certain level of clarity that is because of the fact that 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 very clear, lines are crisp, the designs really shines through. Whenever you have such beautiful coins, there is going to 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 proof coins are better than uncirculated coins or not.
In other words, they have added layer of collector’s appeal. This is why many people were looking to diversify their investment portfolios by getting to precious metals, diversifying precious metal’s portion of their portfolio by investing in proof coins.
They are betting that the extra collector’s value these coins along with the precious metal component of the coins, will result in higher gains as time goes by.
This may not always be a good move, it all depends on underlying economy and underlying collector’s market.
Higher initial price from government
When you invest in proof coins, especially platinum proof coins that special mint produce, you have to keep in mind that you would have to pay extra premium for them. You must not forget about silver and the reason behind why silver is going up now in the markets alongside gold.
However, if you play your cards right, the extra that you would have to pay is nothing compared to the amount of money that you would make by investing in these collectors’ items. Keep in mind that the US government produces proof coins, but they are not meant for circulation. In other words, they are just meant for collectors. Read up on Obama and His Foolish Spending Record?
There are certain mints that US government has approved to produce commemorative coins so keep your eyes on those types of coins.
Grading rules still apply
Whenever you are dealing with any kinds of collector coins, you still have to deal with grading rules. Grading determines the value of your coin. Even if you have a coin from 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 really does not have much value despite the fact that it contains a precious metal.
In fact, there are huge numbers of silver coins in America that have such low grades that they are called junk silver coins. Read more - Investing in Junk Silver Coins: Top-to-Bottom Analysis.
In other words, their only value is the amount of silver that they contained. You have to keep in mind that these rules also applied to proof coins. Just because they are not circulated does not necessarily mean that they are immune from grading rules, no.
You have to make sure that your proof coins are in proper containers, they are 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. This can all erode the overall appearance of proof coins and reduce their value.
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. It is not enough to diversify your stock holdings by investing in bonds or commercial paper. Don't miss - Is the US Dollar An Inevitable Bubble Waiting to Pop?
It is not enough to invest in precious metals. Within this diversified portfolio, you have to do further levels of diversification. For example, in precious metal components of your investment portfolio, do not put everything on gold, do not put everything on silver, do not everything on platinum.
If you are investing this way, you are basically being lazy. You are not doing hard analysis that is needed. Why? Different precious metals go up and down in price, they follow different trajectories.
In fact, silver has shown quite a bit of promise because it is appreciated higher than gold. Sure, silver is worth less than gold, but in terms of appreciation and ratio of values, silver is looking quite attractive. The same with platinum, platinum often goes in cycles. Read more.. Why Platinum Bullion Investments Beat Inflation.
If Proof Coins Are Worthwhile, Are Classic Proof Sets or Mint Sets Better?
Throughout the height of this coin collecting boom of this mid-1950s during the early '60s, a collector might easily buy proof sets or mint places right in the U.S. Mint and 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 and have held more than time.
In case of mint sets and proof sets made between 1960 and 1964, have defeated inflation in present levels, and value percentage gains seem much stronger for all those areas when silver bullion costs reach near-record highs around 1980 and more lately in 2011.
Granted, buying coins as well as other mint products only from the gain angle seems to go against the spirit of amassing. But a lot of hobbyists prefer to invest their hard-won cash on things that endure a fantastic prospect of increasing in value with time.
Hence the question is: what's the buy from an investment standpoint?1951-64 mints or 1950-64 evidence sets places?
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 of the story. The collections have followed an identical course. Much like all of the silver proof sets, these modern-day prices are nominally comparable to early 1980s figures but are worth less than 50% of the prior value due to inflation.
Formerly proof sets and mint sets haven't fared much better. In 1980 one, by means of example can buy a 1950 proof. That place will cost $550 now. The 1955 boxed bundle and flat package evidence sets haven't performed well through the years, either.
These ranges, which sold for $85 and $90 respectively in 1980, can now be bought for $130 and $100, but keep in mind, inflation has diminished this minimum value by approximately half.
Proof sets from the exact same age do not demonstrate the financial gains of this mint set counterparts largely because that specific evidence market may not have too large a secondary sector.
Yes, investors have cut heaps of classic evidence sets to submit person gem and cameo forecasts for grading, but the collector marketplace is quite modest.
Even collectors who build a series of coins (Franklin half dollars, by way of instances) do not usually consist of evidence issues in conventional date-and-mintmark places; largely due to price, but also because 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 is relatively mixed, along with the investment benefit entering the 1951-58 uncirculated sets.
To put it differently, 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 sets and mint sets from the golden era of coin collecting ever be genuinely rewarding? This really is a question only time can answer.However, as evidenced, there are a few glimmers of hope.
For the diehard collector that requires a comprehensive run of proof sets and uncirculated sets spanning back into the 1950s, now may be the opportunity to act while 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 are normally greater.
Uncirculated set buyers need to 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 and could wind up being 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. As they are normally produced with low mintage amounts this makes them especially desirable to coin collectors and investors.
If you're thinking about starting a group of piedfort coins we would suggest checking out our site first. We often purchase piedfort coins on the secondary market that enables us to offer them at a lower premium than the original issue price.
We would advise collectors to only buy newly issued piedforts if they have a specific interest in possessing and collecting them, and not to buy them mainly as an investment unless the premiums are reasonable.
So, when you are trying to pursue a diversification strategy and precious metal components of your investment portfolio, you have to pay close attention to 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, it is not enough.
You have to pay attention to whether it makes sense to get into proof coins or stay with bullion or invest in regular coins. It makes sense to analyze whether you should go to precious metal miners or go to ETFs.