Rare coins serve as a stellar hedge against inflation!

By Mark Ferguson for CoinWeek – MFRareCoins.com

If you are an investor who believes high inflation is imminent and who, as in the past, sees rare coins as great inflation protection, now is a good time to get into the coin market. Based on a blockbuster World’s Fair of Money, produced by the American Numismatic Association in Chicago in August, the rare coin market is a bit tumbled. Gold has pulled back far from its then high of $ 1,900 an ounce, softening external investor psychology for gold and rare coins. However, there is still a lot of catching up to do on the part of connoisseurs for rare, premium quality coins. But even though the trade has softened a bit, it is still very active and a good time to buy.

In the 1970s, when we were going through our final period of high inflation, during the Jimmy Carter years, investors threw money at coin dealers and said, “Buy me some rare coins.” Dollars were buying to nearly $ 3,000 in 1980 – really! And that wasn’t the exception – it was typical! Market values ​​were skewed as the investor-driven coin market moved away from the fundamentals that make the market what it is – a collector-based market.

Even then, huge dealer profits were reinvested in rare coins, which further boosted the coin market, because after all, we know and do that with our money as coin dealers – invest in inventory. After those heady days, the coin market experienced a bubble, but only after fortunes were made in the coin market. The losers were late or took a flyer without knowing what they were doing. Getting to know the coin market is the key to success.

Will there be another out of control coin market? It could very well be, and we have a lot more positive fundamentals for the coin market this time around. In the mid-1980s, PCGS, the Professional Coin Grading Service, and NGC, Numismatic Guaranty Corporation, were founded. Today they are the backbone of this industry in terms of coin grading, which is one of the fundamental foundations for grading rare coins. This has greatly enhanced consumer protection and confidence in the possession of rare coins, unlike in the days prior to this era when individual coin dealers valued their own coins for sale. It is easy to see the abuses and legitimate differences of opinion between dealers and collectors during these days of self-assessment based on individual interpretations of the standards set out in the Coin Valuation Guidelines.

PCGS and NGC have given collectors, investors, and even traders more confidence in owning expensive rare coins, and because of these services, it is much easier for anyone to buy and sell coins these days. However, the third-party certified coin valuation has enabled even inexperienced coin dealers to quickly enter the market and set up a shop. So choose your dealer wisely. In addition, on the wholesale or dealer-to-dealer side of the coin market, there are dealers who are market makers for certain coins. This was the case prior to the advent of certified coin grading, but unlike then, some of these market makers today buy many rare coins on an “invisible” basis, without even looking at them, simply by relying on the certified ratings provided by the auditing services forgive. This does not apply to all certified rare coins, but this factor is present in the market for certain selected rare coins.

Another big factor in the coin market that has become a big backbone of the industry that wasn’t open to the public in the 1970s is the internet. This tool provides a great resource for collectors and investors to find out about rare coins that the market did not have during the recent surge in inflation investment. It has also enabled much larger online coin trading through auctions and inventory listings for dealers and even collectors who have been able to sell their coins online themselves. But there is a learning curve for new collectors and investors, and even for seasoned collectors looking to venture into new collecting areas. What greater source could there be for this information besides the Internet? Again, the coin market did not have this useful tool during the inflationary investor market of the 1970s.

Coin price guides have also improved since then, and the internet offers collectors, investors, and traders another great research tool – an easy way to access auction records of rare coins. However, sometimes researching auction records is an easy task and sometimes it takes a lot of sophistication to know what is going on in the coin market. As a market analyst who set all rare coin values ​​for the largest price leader in the industry during the bull market for coins in the 2000s, I believe that rare coin pricing is the next frontier as it gets as best as possible over the course of the year Time must be perfected In the years to come, coin valuation has been perfected since the mid-1980s. To get the best help, you should know your dealer and their level of experience.

The rare coin market, while not perfectly perfect, is probably the most structured and efficient of all existing collectors’ inflation hedging markets. People can trade rare coins within a relatively narrow trading range compared to other collectibles, and there has always been a ready market for coins at a certain price level, even in a declining market. Rare coins have always been very liquid at the right price points.

Of course, as a lifelong rare coin dealer who has also made some professional digressions into coin valuation for PCGS and coin prices for Coin Values ​​magazine, I’m geared towards the rare coin market. But take a look at Stock Brokers and Real Estate Agents, for example. They are focused on their own areas of activity and often talk about other markets, such as rare coins and precious metals. What do we hear today? “The gold bubble has burst!” But haven’t we heard this from traditional investment advisors in the past decade, as the price of gold has continued to rise, outperforming most traditional investments?

Yes, the gold bubble is likely to burst at some point in the future, and maybe again for rare coins, but not until the economy moves through the coming inflationary years and fundamental changes are made to reduce the global debt bubble. But until those days are over, rare coins are likely to prove to be great inflation hedge in the years to come. Government spending cuts are needed, but we have not seen Congress develop the backbone and cohesion to make it happen. Reduced living standards and protests will result in the necessary cuts, and even banking and housing crises and social protests could occur before the necessary austerity measures are taken. Sound familiar? We are already seeing the beginning of all of this.

The national debt continues to grow. There are spending deficits every year that add to this debt, and the temporary way out of this problem to contain social unrest and financial crises has been to print more money. This cannot go on indefinitely, of course, but it will likely take years, which will result in increasingly higher inflation in the future. It’s already starting. For example, as I write this, today’s Wall Street Journal had several reports of higher inflation in this country and around the world. Gold and rare coins have served as excellent hedge against inflation during an inflationary spiral like the one we are now entering.

Mark Ferguson was a coin grader for PCGS, a market analyst for coin values ​​and has been a coin dealer for more than 40 years. He has written for the ANA, Coin Dealer Newsletter, Coin World, Numismatic News, Coin Values, The Numismatist and currently has a weekly column on CoinWeek. Mark can be reached at Mark Ferguson Rare Coins (www.mfrarecoins.com).

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