Coin Investment 101: What To Consider Before Investing

Coin Investing 101 / Austrian 1 Ducat Gold Coin

Nowadays, when you hear about someone investing in coins it most likely means that they’re putting their money into cryptocurrency. Although this has become very popular in recent years, you shouldn’t forget about regular coins, as they can make for great investments as well.

However, keep in mind that you will see high returns only if you know exactly what you’re investing in. Here are some of the most important things you should consider before putting your earnings into coins.

What type of coin is it?

When you want to make a purchase, you will have two options – bullion and numismatic coins.

  • Bullion Coins: Bullion coins are created for investment purposes. Basically, they are struck from precious metal, which gives them their value. They always have a defined weight and content.

In case you’re new to collecting, it’s recommended that you start with bullion coins. Not only are they cheaper than numismatic coins, but they also represent a safer investment. It is generally known that the price of precious metals always goes up following big market corrections, which is exactly why collecting bullion coins can pay off.

  • Numismatic Coins: Nevertheless, truly high returns on your investments are possible only with numismatic coins. Essentially, they represent rare gold and silver coins, the value of which is determined by a number of external factors such as rarity, collector’s demand, timing, and more. With rare coins, you really have to know the market in order to ensure you make the right decision. This means that you shouldn’t just dive into collecting numismatic coins.

It’s worth mentioning that mints designed for the manufacture of coins don’t sell their product directly to the public. Instead, they are made available through a network of official distributors. In case you’re interested in finding out what type of coins you can buy today, you should check out what distributors like Gainesville Coins have to offer.

Investing in certified coins

No matter what you want to buy, there will always be some people who’ll try to fool you. This is why the golden rule in coin investment is that you should be wary of any offer that sounds too good to be true.

In case you want to start collecting numismatic coins, you should always make sure they are certified. The rare coins that you want to purchase should be certified by either the Numismatic Guarantee Corporation or the Professional Coin Grading Service.

Know that it’s really hard to determine whether a coin is fake unless you have extensive knowledge about the coin in question. This is why you need to make sure each coin you add to your collection is certified by one of the aforementioned services.

Avoiding price bubbles

Just like with any other free-market, there will sometimes be price bubbles in the numismatics coin market. After all, supply and demand determines the prices of these coins. It’s important to understand that unforeseen demand for a certain coin may trigger a sudden rise in price. This rise in the price of an asset above its normal market value is defined as a price bubble.

The problem with price bubbles is that they eventually burst. In other words, the price of the asset is bound to go down at some point. Therefore, you shouldn’t put a lot of your money into a coin that is suddenly becoming more expensive. Keep in mind that you can never predict when a price bubble is going to burst, which means that you’ll likely end up losing money. But by completely ignoring price bubbles in the rare coin market, you won’t have to worry about suffering losses.

Where to sell your coins

Investing in coins is one thing, but you also have to know where you can sell them when the time is right. In case you have some semi-rare coins that aren’t worth a lot but want to make a profit, you should consider selling them online. Otherwise, your best bet would be to go to a coin show and present what you have there. After all, you can never know who might walk up to you and offer you a huge sum for a coin in your collection.

Bottom line

In case you’re looking for long-term investment options, you should definitely consider coins. Putting your money into bullion coins is pretty straightforward. If you want to see higher returns and get into the world of numismatic coins, you’ll need to be careful with every investment you make. Nevertheless, when you find the right one, it’ll surely pay off.

Coin Investing 101 / Austrian 1 Ducat Gold Coin
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