antique-coins

Coins require little in the way of maintenance, so long as they’re professionally packaged when first bought. “Never try to clean them yourself,” he cautions. “This will leave marks visible under a magnifying glass that can significantly devalue your coin.”

Like all collectibles markets, supply and demand factors play a key role in investment returns.

“With a growing body of buyers around the world, demand is soaring while supply of historic pieces is slowly dwindling,” says Wade. “The market for coins of real numismatic value, therefore, is set fair.”

New frontiers

Until recently, the majority of coin collectors came from developed countries. Nearly 50 million coin collectors in the U.S. account for more than $10 billion in annual sales, but the landscape is fast changing. BRIC nations are a growing force.

“India’s coin market is currently worth approximately $2.1 billion, with investment-led demand now accounting for 30% of gold coin sales,” he says. “We expect India to become an increasingly big player in the gold coins market.”

That’s partly because its middle class is on course to grow to 547 million by 2025, according to the National Council for Applied Economic Research, an Indian think-tank.

Allocation guidance

A 2011 report from Capgemini and Merrill Lynch Global Wealth Management predicted the affluent would devote 8% of their portfolios to alternative investments in 2012.

“We believe rare coins can play a small but significant role in that 8%,” Wade says.

Several indexes and benchmarks that track the return on investment of rare coins prove collectors’ interests go well beyond esthetics.

The U.S.-based Professional Coin Grading Service (PCGS) offers the PCGS 3000 Index, a basket of coins that represents the overall market.

The average coin on the PCGS US Key Dates and Rarities Index rose by 8% annually between January 1970 and August 2012.

And at the American Numismatic Association’s yearly convention, Fair of Money, a unique 1873-CC Seated Liberty No Arrows dime sold for $1.8 million in August 2012. That’s an 11.96% annual increase on its $891,250 sale price in 2004.

Apart from auctions and private sales, collectors can also trade coins through platforms such as the Certified Coin Exchange, a rule-governed trading system for coin dealers in the U.S.

However, if you don’t care to own a hand-beaten piece of history, there’s a passive way to access the market: through coin funds. Connecticut-based Certified Assets Management International and U.K.-based Avarae both run hedge funds that invest in rare and high-quality coins.


Originally published in Advisor's Edge

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