Building a Gold Portfolio

Investors who have the aspiration of protecting themselves against economic disasters must first build a foundation of gold bullion coins and/or pre-1933 European and United States gold coins. Once you have completed this foundation, adding rare coins to your portfolio as a growth vehicle is permitted historically, rare coins have participated in major precious metals rallies, particularly if the rallies were induced by inflation. During the 1920s in Germany, when hyperinflation destroyed the mark, substantial assets were saved – and profits won – by numismatics investments.

At minimum, rare coins are considered an investment for three to five years, although many with a more speculative bent have made the time perspective shorter. The market usually moves in fits and starts. Steady appreciation is as rare as the coins in which you are making your investment. Nonetheless, in the end, coins have an extraordinary record and historically behave in a very similar way to the stock market. If you enter it with the attitude that you are in it for the long run investment, you probably will find that you are doing just fine. There are no guarantees though. On the other hand, if you do not have the psychological and financial staying power, you will probably learn the most unwanted lessons from the market that you would have ever wanted to receive.

The rare coin market is divided into sectors, very similar to the stock market. There are commemorative coins, nineteenth-century coins, twentieth-century coins, small-denomination gold coins, silver dollars, and a long list of similar groupings. These sectors tend to attract and repel interest, much like stocks. A sector can remain stagnant for many years before it moves in either direction. Once it starts moving, the action can be quick and strong. A sector can very often, double in one year and then get into stagnancy again, or even go down just as quickly. If you have a weak heart, this market is not for you. If you go into the investment knowing that the period of holding is at least three to five years, you will find that there is a good chance that you will be in the market when it spikes. There is the chance that you won’t see any appreciation for the first couple of years. You will possibly experience a doubling on the third year, which makes for a good profit. The keys to success are patience and tenacity.