Among the various tangible asset alternatives, two stand out – rare coins and precious metals. Both are lasting tangible assets with an impressive record of extraordinary returns. A balanced portfolio of rare coins and precious metals offers 8 important benefits that can enable individuals to increase and protect their wealth in a variety of economic and political circumstances in the years to come.

Benefit One - Outstanding Investment Performance

Rare coins have demonstrated remarkable long-term performance. This performance is a result of simple fundamentals in the rare coin marketplace. The last rare coin to be minted left the coin press decades ago. So supplies can be described as static, or even diminishing, as coins are lost or taken off the market and put into museums or long-term collections and family estates. Meanwhile, demand is accelerating.

New stockpiles of gold and silver are being mined every year, but no one can make any more rare coins. This finite supply is one of the keys to rare coins’ successful track record. This track record can be demonstrated by a variety of both empirical and anecdotal evidence. Chart 1 shows the outstanding appreciation of a broad index of key dates and rarities index of rare U.S. coins over a period of nearly 35 years Next, Chart 2 shows the same index over a period of 10 years. Finally, Chart 3 shows this index over the past 3 years. Each of these charts graphically demonstrates a pattern of consistent growth and performance over varying periods of time.

But, in addition to these indices, there are actual real-world examples of exceptional coin market performance. For example, Chart 4 shows that record auction prices for some of the world’s rarest coins have consistently risen since 1974.

In addition to the illustrious examples depicted in Chart 4, there are numerous other real-world examples of outstanding rare coin market performance.

Whole collections of rare coins accumulated over time have also produced handsome returns for their owners, as these real-world examples show:

•The John Jay Pittman Collection: John Jay Pittman was a chemical engineer for Kodak who happened to have a great passion for scarce gold and silver coins. However, he was not an exceptionally wealthy man and, over his entire lifetime, he spent a total of about $100,000 on his collection. Astonishingly, that collection sold at auction in the late 1990s for nearly $30 million!

•The Harold Bareford Collection: From 1947 to 1954, Harold Bareford spent $13,382 on his coin collection. In 1978, that collection sold at auction for $1.2 million!

•The Eliasberg Collection: From 1925 to 1976, Louis Eliasberg accumulated the greatest coin collection on record. His cost basis was $300,000. The collection sold at auction for $12.4 million in 1982! All of the examples detailed above demonstrate the incredible, proven track record of rare coins as an outstanding long-term investment.

Benefit Two -Diversification

Rare coins belong in every investment portfolio because they tend to “zig” when most other investments “zag.”

As explained in the introduction to this report, true diversification requires that a collector compile a portfolio mix of assets that are not positively correlated with one another. Tangible assets, gold collections in particular, are negatively correlated to stocks, bonds and the U.S. dollar. This means that they can help reduce the overall portfolio volatility of the typical portfolio.

A high-profile example occurred in 2002 when the 1933 Saint-Gaudens Double Eagle shattered auction records by fetching $7.6 million at the same time that the U.S. economy was struggling and the U.S. stock market was staggered under the weight of corporate malfeasance scandals and the September 11th attacks.

Rare gold coins are superior to gold bullion. Historically, rare gold coins have shown a much higher rate of return than gold. This is because rare coins do not need a rising gold price to turn in bull market performance. However, there has never been bull market in gold in which rare coins did not also have a bull market.

Rare coins have performed well when gold has not:

• From 1987 to 1990, gold fell from $500 to $360 per ounce. During this same period, the rare coin market went up 300%.

But rare coins can even outperform bullion in a gold bull market:

• In its record setting year, 1980, the price of gold rose from $550 to $850 per ounce . But in that same period, the market for rare gold coins climbed by 1,000%.

(Graph 1) Graysheet and its supplements as published in Coin World

Benefit Three - Privacy

Rare coin transactions are truly paperless. And, as collectibles, there are no broker reporting requirements for rare coin purchases. In today’s environment of frivolous law suits and instant availability of personal information over the internet, rare coins can be a great benefit as a truly private purchase for those who do not want everyone else to know what they own.

Benefit Four - Liquidity

Certified rare coins are the most liquid collectible assets all.

Select common and scarce coins trade electronically – sight unseen – on an electronic exchange, very similar to NASDAQ. In addition to this network, there are literally thousands of coin dealers across America that can provide owners of rare coins even more power to liquidate and trade their coins. Finally, millions of dollars worth of rare coins trade each year at hundreds of coin shows, conventions and auctions held from coast to coast.

The electronic trading network and other aspects of the high liquidity of the rare coin market have been made possible by the advent of independent grading and certification by the two major grading services, PCGS (Professional Coin Grading Service) and NGC (Numismatic Guaranty Corporation). These excellent firms were founded in the 1980s and immediately transformed the numismatic industry.

Since their founding they have graded literally tens of millions of coins.

Benefit Five - Portability

Rare coins are extremely portable, tangible storehouses of wealth. They are an ideal way to concentrate a great deal of wealth privately in a small package. Coin owners can easily place thousands—even millions—of dollars of wealth in their pocket for easy, concealed transport from financial center to financial center, or for any reason.

Admiration and enjoyment of superb and valuable objects and works of art have long been one of man’s great qualities. This kind of passion is what motivates collectors to bid millions of dollars on a Picasso.

But you would never be able to discretely and securely walk the city streets of America carrying a Picasso. Rare coins, on the other hand, are perfectly suited for discrete transport.

Benefit Six - Affordability

Unlike many collectible assets, rare coins are well within the reach of most people. Even though some rare coins have traded at auction for millions of dollars, anyone can start a collection of truly rare coins with just a few thousand dollars.

Benefit Seven - Intrinsic Value

Gold and silver rare coins offer the additional security of their intrinsic value. Unlike paper assets or collectible investments such as art, stamps, rare documents or currency, gold and silver coins can never become worthless.

Benefit Eight - Beauty & History

In addition to the “crass profit motive,” rare coins are characterized by a different, ethereal value. This value should not be taken lightly because it forms the basis of coins’ appeal to collectors, who are the foundation of the entire numismatic market.

Once a collector acquires a coin, he or she often finds it difficult to part with it. Once they hold the coin in their hands, it becomes very hard to decide to sell it. This phenomenon is significant for the buyer because it means that many collectors will retain their collections almost indefinitely. This contributes to rare coins’ merit as assets by further limiting the available supply on the market.