Rare Coin Portfolios Outperforming Equities |
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By: ABC Posted: 2006-08-30 01:29:49 |
| For some investors that answer might include adding some highly liquid certified rare US coins to their investment portfolio. Why? Over the past 35 years investment grade rare US coins have enjoyed a 12.7% compounded annual rate of return. And that’s just the tip of the iceberg. According to industry research, rare US coins tend to perform well during periods of high inflation. As such they may hedge interest rate sensitive investments such as bonds and bills. Adding coins to an investment portfolio also tends to lower overall portfolio volatility - an important consideration for those with investments in small and mid-cap stocks or those who have allocations in private equity. “On a ten-year moving average basis, rare coins returns are negatively correlated with equities, thus providing a potential hedge against major down ticks in stock markets,” noted Gary Knaus, President of Numismatic Investments Corporation, whose firm specializes in selling research-based portfolios of prospectively undervalued rare US coins to accredited investors. So just how have coins been performing of late? “Investment grade coins we identified as undervalued have collectively gone up 13.83% over the past ten months,” stated Knaus, “and those portfolio coin returns were substantially higher than for equity markets over the same period.” Those increases were also higher than for the rare coin market as a whole, which had a 5.49% return over the past ten months. A concern for anyone looking at alternative investments is liquidity. Investment grade certified rare coins shine in that regard. Coins that have been certified by the two major independent grading services are readily marketable and can be sold directly to dealers or via auction. Coins even trade on a site-unseen basis on the two independent electronic dealer networks, which at any one time typically have $800 million in open dealer bids. Like real estate, rare coins can qualify for tax-deferred 1031 exchanges. This allows coin investors to swap rare coins that have appreciated in value for rare coins that may be undervalued without incurring realization of a gain. What about the future of the rare US coin market? “We are seeing trends in market activity that support industry growth for the foreseeable future,” noted Larry Whitlow, president of Larry Whitlow, Ltd., a leading rare coin dealer based in Oak Brook Terrace, Illinois. While no one has a perfect crystal ball, sophisticated investors may do well to take a closer look at this attractive and interesting asset class. About Numismatic Investments Corporation Numismatic Investments Corporation performs extensive and ongoing mathematical modeling of US coin series to identify prospectively undervalued rare US coins. The firm sells portfolios of US rare coins - K-Score Portfolios™ - based on predicted performance relative to the coin market. Each portfolio is unique and tailored to individual client investment preferences and choices. The firm does not carry an inventory. Coins are acquired on an order-by-order basis. |
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