Introduction

Unlike buying a stock certificate, bond, or placing your money in certificates of deposit, rare numismatic gold coins are fun assets to accumulate. Every coin has a unique story. A numismatic coin is similar to buying artwork that represents American history. When you hold a numismatic coin in your hands, you may not be able to put it down. You may find scarce-rare coins captivating as you reflect upon the history, artistry, and legacy of the coin. The scarce-rare coin market was started by collectors who bought coins for their beauty and historical significance. Due to the substantial profits realized by owners of the collections, individual and institutional investors started to enter the market. To the investor, scarce to rare United States coins represent a tangible investment with excellent long term price appreciation.

Today the market is dominated by collectors, investors and a combination of collector/investor. No matter where you fall into these designations, the following guide will introduce you to the scarce to rare coin market from a collector and investor perspective.

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Who was John Jay Pittman?

John Jay Pittman was a collector's collector. Pittman was a humble man who earned between $10,000 and $15,000 per year working for Kodak as a chemical engineer. He had a love for coins and invested half his salary into scarce to rare gold and silver coins. He purchased the most historically significant coins his budget allowed. Mr. Pittman invested about $100,000.00 during his life on coins. The first section of his holdings were recently sold at auction for $11,822,283.00. The second portion of his coins will soon be sold, and conservative estimates are that these coins will bring about $18 million. That will bring the value of his collection to $30 million.The growth rate of 30,000% is astounding.

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What can you learn from John Jay Pittman?

Mr. Pittman understood the wisdom of buying quality scarce to rare coins, holding them long-term and watching their value multiply upon resale. Remember, Pittman didn't have large amounts of money to buy coins and he also raised a family. Instead of buying stocks and bonds he preferred real wealth in the form of scarce to rare coins. His strategy was to buy true rarities and hold. He let the law of supply and demand, the dropping U.S. dollar and inflation transform his $100,000.00 into $30,000,000.00.

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Should I follow the Pittman's model?

Yes, buy coins for the right reason, at the right time, from the right broker, and then allow time to become your ally.

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What coins should you collect?

What to collect is entirely up to you. It will normally be a specialization that holds some interest for you and is within your budget.The most popular types of collections are world coins, ancient coins, and coins of a particular country. Some specialization within these categories is helpful. If collecting from a particular country, you can collect one or more series, a type set, commemoratives, errors, die varieties, paper money, etc. You may also want to specialize in certain grades of coins you collect.

Series

The goal of a series collector is to acquire one of each date and mint mark. For example, the U.S. Standing Liberty quarter was minted from 1916 to 1930 at the Philadelphia, Denver and San Francisco mints. A series collector wants all of these coins from all three mints.

Type
A type collector builds a set to obtain one of each series and major design variations within each series. An example would be U.S. gold coins.

Ancients
Some collectors seek gold, silver and bronze coins from the ancient world.

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How do you get started?

Coins can be fun and financially rewarding for the collector who makes the effort to study the markets. Spend some time reading numismatic books and researching the internet.

You can start collecting coins on a small basis. Contact Monetary Portfolio Consultants, L.L.C. for portfolio recommendations. However, beware, once you start collecting coins, you may find it addicting.

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Should I buy uncertified coins?

No. The problem of buying uncertified coins is the value of coins varies dramatically from one grade to another. The seller is often an overly generous grader with a vested interest. Many new collectors have horror stories about buying an uncertified MS-65 coin from a coin shop or at a coin show. When they go to sell the coin, the dealer now says it is a MS-63 or worse. The best way for a collector to avoid this scenario is to buy coins graded by the two top grading services, NGC or PCGS.

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What is the risk in buying uncertified rare coins?

Counterfeit and altered coins are common. Common coins may be altered to appear to be valuable collector coins by adding a mint mark. Only coins certified by NGC or PCGS offer a high degree of certainty for authenticity.

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What are slabs?

Certified coins, or slabs, are coins that have been graded and encased in a sonically sealed, hard plastic holder by a professional certification service. The holder protects the coin from wear or degradation and prevents switching an inferior coin for the one certified. Slabs were first produced in 1986. Slabbed coins are guaranteed to be authentic by the certifier. Certification services will not slab coins that have been altered, whizzed, cleaned, artificially toned or otherwise damaged.

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How are coins graded?

Here is an overview of American Numismatic Association (ANA) standard. ANA standards are widely used in the U.S. but are not the only system. Much of the rest of the world uses the grades Fair, Fine, Very Fine, Extremely Fine, Uncirculated and Fleur-de-coin.

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Uncirculated Coins

Coins with no wear are referred to as uncirculated or mint state (MS). Grades from MS-60 to MS-70 in one point increments are used for mint state coins. Criteria include luster; the number, size and location of contact marks; the number, size and location of any hairlines, and the quality of the strike and overall eye appeal.

An MS-60 coin may have dull luster and numerous contact marks in prime focal areas, as long as there is no wear. To merit MS-65, a coin should have brilliant luster (attractive toning is permissible), at most a few inconspicuous contact marks, no hairlines, and nearly complete striking details. Grades from MS-61 to MS-64 cover intermediate parts of this range. Truly exceptional coins may be graded MS-66, MS-67 or, if absolutely flawless, as high as the theoretical maximum of MS-70. Many consider MS-70 to be an unobtainable ideal.

Terms such as brilliant uncirculated (BU), choice BU, gem BU, select BU and premium BU are still used instead of numerical grades by some dealers and auctioneers. Correlations between these terms and the numeric MS grades are impossible because of inconsistent usage and in some cases over grading.

Market values for many uncirculated coins vary dramatically from one grade to the next. Remember that whether a coin is described with a numerical or an adjectival grade, it's only someone's opinion. The safest way to collect is to buy slabbed coins from experienced collectors or dealers you trust.

Circulated Coins
For circulated coins the grade is primarily an indication of how much wear has occurred and generally does not take into account the presence or absence of dings, scratches, toning, dirt and other foreign substances.

ANA grading standards recognize 11 grades for circulated coins:

*AU-58, very choice about uncirculated: just traces of wear on a coin with nearly full luster and no major detracting contact marks
*AU-55, choice about uncirculated: small traces of wear visible on the highest points
*AU-50, about uncirculated: very light wear on the highest points; still has at least half of the original mint luster
*EF-45 or XF-45, choice extremely fine: all design details are sharp; some mint luster remains, though perhaps only in "protected areas"
*EF-40 or XF-40, extremely fine: slightly more wear than a "45"; traces of mint luster may show
*VF-30, choice very fine: light even wear on high points, all lettering and design details are sharp
*VF-20, very fine: most details are still well defined; high points are smooth
*F-12, fine: major elements are still clear but details are worn away
*VG-8, very good: major design elements, letters and numerals are worn but clear
*G-4, good: major design elements are outlined but details are gone; for some series the date may not be sharp and the rim may not be complete.
*AG-3, about good: heavily worn; date may be barely discernible
*F-2, fair -- very heavily worn; major portions may be completely smooth
*P-1, poor, filler or cull -- barely recognizable

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What are proof coins?

Proof coins are specially manufactured for sale at a premium to collectors and sometimes for exhibition or for presentation. Proofs are generally distinguishable from ordinary coins by their mirror like fields, frosty appearance, and sharp details.

Proof coin dies are polished to produce a smooth surface and used for a limited number of coins. Planchets are hand fed to the coin press, where they are struck at a high pressure. Modern proof coins are usually packaged in clear plastic.

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Should I handle my coins?

All collectible coins should be handled carefully to avoid the possibility of causing wear or introducing substances that may lead to color changes. Monetary Portfolio Consultant holders will provide adequate protection for ordinary handling. Fingerprints may reduce the coin's grade and consequently its value. Handling on the edge only is mandatory when examining coins. Of course, if you collect slabbed coins, this is not an issue.

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Should I clean my coins?

Never clean coins. You may think they'll look nicer shiny, but collectors prefer coins with an original appearance. Cleaning a coin may reduce its value by half or more.

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How should I store my coins?

Most collectors and investors store their coins in a safety deposit box at the bank or utilize home safes. A constant, moderate temperature and low humidity are preferable for long term storage of scarce to rare coins.

The airtight holders provided by Monetary Portfolio Consultants, L.L.C. or slabs from NGC or PCGS are all you need to store your valuable coins.

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How can I protect my collection from loss by fire or theft?

Most homeowner insurance policies exclude coins and other numismatic items from coverage. A rider can be obtained for an additional premium. You must maintain excellent records about your collection and store a copy away from the coins.

The heat from a fire can melt your coins. Make sure your home safe provides protection from fires or keep your coins in a bank safe deposit box.

You should prevent theft by using measures to prevent a burglar from entering your home, such as lighting and locks. Be discrete about being a coin collector or investor. The more people you tell about your coins, the more likely that information will eventually reach the wrong person. If you regularly receive coins and/or promotional materials in the mail, consider getting a post office box and having all scarce to rare coin mail sent there.

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How do I ship coins?

Registered mail is the safest way to ship valuables. Coins should be packaged securely for shipping. Place the coins in a sturdy box with bubble wrap, foam, Styrofoam peanuts or newspaper. This will fill the extra space and the coins will not rattle around.

To reduce the chances of the package being stolen, do not use any words in the address or return address suggesting it may contain something valuable. For example, use MPC rather than Monetary Portfolio Consultants, L.L.C.

Mail the coins via the U.S. Postal Service is generally preferable for shipping coins. Packages delivered by the U.S. Postal Service should be sent registered mail. A registered package must be signed for by every postal employee who handles it, as well as the recipient. Postal regulations prohibit padded envelopes and all but paper tape (which does not include masking tape) for registered shipments.

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How are coins priced?

Coin prices are a function of supply and demand. Market prices rise when demand outstrips supply and falls when demand for scarce to rare coins weakens. Demand is ultimately established by the interaction between collectors, investors and dealers.

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Can I buy coins wholesale?

Probably not. As a general rule, you will buy from dealers who need to make a profit on every coin to remain in business. However, large collectors and investors with a substantial monies to place into a portfolio may be able to buy near wholesale levels. Actual prices may be somewhat higher or lower published price guides. This is to be expected and varies depending on the demand for the coin(s) at the time of the transaction.

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Should I buy from a dealer or at a coin show?

A reputable dealer will guarantee the authenticity of the merchandise. They will be knowledgeable enough to form reasonable opinions on grades, to detect problems that may be missed by less experienced persons and will usually be willing to share knowledge with the public, especially customers.

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Why should I invest in scarce to rare coins?

Here are the major reasons to invest in certified scarce to rare coins:

Profit Potential
The scarce to rare coin market is a hard asset market in which supplies are decreasing and demand is increasing. No matter how much physical gold and silver is mined this year, there will be no more scarce to rare U.S. coins minted. Although we cannot guarantee profits and part performance is not a guarantee of future profits, if you had invested $10,000 in 1979 in scarce to rare coins, it would be worth about $60,000 today.

Liquidity
Since 1986, the introduction of independent grading services and sonically-sealed coins has created a sight-unseen market in which "bids" and "asks" are placed on coins without inspection. Scarce to are coins are now traded on independent electronic networks via member coin dealers. The electronic trading networks operate precisely the same as the NASDAQ, with published bid and ask prices.

Intrinsic Value
Unlike paper investments such as stocks, bonds, and CD's, scarce to rare U.S. coins have real, tangible intrinsic value that you can feel when you hold them. Gold and silver scarce rare coins offer two ways to build wealth- the intrinsic security of precious metals plus profit potential regardless if gold and silver spot prices increase or decrease.

Privacy
Scarce to rare coins are one of the few remaining investments that can be bought and sold privately. This may be important to you if you do not want the rest of the world knowing your business. In today's sue crazy society and in the age of instant credit reports, there are many legitimate, legal reasons to keep your wealth private. Most investors should preserve their capital and safeguard the privacy of a portion of their holdings.

Asset Protection and Wealth Preservation
Under current federal law, gold bullion can be confiscated by the federal government in times of national emergency. Scarce to rare coins do not fall within the provisions permitting confiscation because they are viewed legally as collectibles. Although gold confiscation is not an immediate worry, you should protect yourself with the least possibility of government interference or intrusion.

Portability

Scarce to are coins are portable collectibles. They are a very concentrated form of wealth, easy to store and transport. They possess a very high unit value in a physically small size. One million dollars in scarce to rare coins can easily be stored in about the same space as a wallet or checkbook.

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I have all my money in the stock market. Do I need diversification?

Top investment strategists agree that the key to a successful investment portfolio is diversification. Through changing economic and political conditions, through volatile financial markets, and through periods of rising interest rates, investors cannot longer on one single type of investment to help them achieve their financial goals. Scarce to rare United States coins are renowned for their long-term price performance, especially during periods of high inflation, and can provide long-term stability to a properly diversified investment portfolio.

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Is coin collecting or investing risky?

All investments entail risks. While coin collecting is a rewarding hobby and maybe financially profitable, anyone purchasing coins with the expectation that they may be a good investment should understand and be prepared for the risks inherent in such investments. The markets precious metal and scarce to rare coin prices can be volatile. The difference between dealer buy and sell prices can be substantially higher than the commissions charged by brokers for other types of investments. An appreciation of the coins must occur before coins can be sold at a profit. Coin collecting or investing is not suitable for everyone. Place only a modest fraction of your total portfolio into scarce to rare coins.

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What are the most common scarce to rare coins investments?

Investments in scarce to rare coins are made with the expectation that their numismatic value will increase. The most common coins purchased for investment purposes include ancients, Morgan dollars, Walking Liberty halves, Franklin Halves and old gold coins. Stick with high grade coins.

Look for coins where demand from collectors and/or investors are likely to increase. Monetary Portfolio Consultants, L.L.C. has a list of recommended coins for beginning collectors. Simply email us.

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Where can I buy books about scarce to rare coin collecting?

The best source is:
http://www.coinbooks.org/

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Conclusion

No one knows what the future will hold. It is impossible to predict if by collecting or investing in scarce to rare coins, your portfolio will repeat the success of John Jay Pittman. A great deal of collecting and investing is timing and luck. The buying, the possessing, the occasional viewing of your coins in your safety deposit box at the bank, should give you a feeling that is indescribable. The true goal of collecting is the pride you incur with owning some of the finest scarce to rare coins presently available in the world. Building a collection of fine scarce to rare coins should be fun.If you buy, sell, and trade properly your coin collection or investment should grow and grow. In a sense, it is almost a forced savings plan, but often viewed as considerably more fun than looking at a bank savings account balance. As time passes your coin portfolio may grow in value. If economic conditions change and inflation heats up, watch out, your portfolio may be worth a fortune. These two conditions, time and inflation, made John Jay Pittman's $100,000 investment worth $30 million.

However, even if you are not the next Mr. Pittman, the thrill of the chasing fine coins and the thrill of ownership is unparalleled in the collecting arena. The rest is just gravy. Good luck and have fun.

Whether you are a collector of scarce to rare coins or strictly an investor, Monetary Portfolio Consultants, L.L.C. would be pleased to have you as a client.

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