Company Launches Coin "Investing" Venture

Coin World this week has a front page article on Certified Assets Management launching a venture on making certified coins more of an investment vehicle--seeking to acquire up to $250 Million in certified coins.

This has been tried before as a Wall Street style venture. Any bets on whether it will succeed?

 

Log in or Sign up to hide this ad.

This is the sort of thing one can expect to see close to the end of a bull market.

 

I bet it will succeed in making the fund managers rich while everyone else, including the coin market loses.

 

That is what happened the other times it was tried.

I disagree a touch with Doug that investment in rare coins is not possible. The problem is that its too expensive, relative to the coins value and possible appreciation, to get a decent return back. Also, at the end of the day its still subject to the whims of the auction when you go to sell what kind of return is possible.

So yes, I agree ctrl, I think the dealers who handle this will enjoy decent salaries, but as an investment it will be subpar.

Chris

 

I thought that too sir, but rare coins aren't really in a bull market today. Its kind of unusual timing, given they are still down some from their 2007 highs. Its kind of an unusual time for such a new venture, unless they think spillover from PM investors will give this fund a boost.

 

Maybe it depends on the timeframe, and what this particular investment fund intends to purchase.

 

I wonder how it'll work exactly? If I were wanting to invest in coins I'd probably just go and buy what I thought would appreciate over time. I surely wouldn't pay for the coins and someone's opinion in the form of a broker, who's guess is no more right or wrong than mine. Seems rather shady.
Guy

 

When Merrill did it the fund was really sold to those who had no expertise in coins aas a way to diversify assets. They hire a dealer to pick out coins that he feels will appreciate, hold for a period, and then cash in. Problem is, the fees paid to the dealer, and auction fees, take away most of the profit.

Without the "return" of personal satisfaction, I simply do not think rare coins are a good investment. To me, this "personal satisfaction" return is tremendous, so I continue to collect.

 

Agreed. And is a bad think for the market.

 

Type gold has been moving in cycles. Currently it is not terribly strong. MS63-66 $20s, $10s and $5s are generally liquid coins, as long as the big boys need them, the telemarketers are promoting them, and that is usually true when gold moves higher like today. Heritage is having an excellent year, as well as the top grading companies and other big companies. It is profitable for them as long as the market maintains its bull status because people are taking notice around the world of spot prices.

There are a lot of areas that are not undergoing a bull market, esoteric small coins, rare dates that are 100% sight seen, and even then an inside game, with buyers offering under greysheet unless the coin is on a want list. For those who have gotten cash windfalls through whatever means, coins and other investments are a way to feel like they are rich, and the sales pitch is geared toward making them feel like big shots.

I agree with the general assessment here that this angle has been tried before and it is the usual program, but there are new aspects, such as CAC, the "plus", "secure" and "star" grading additions. A good salesman/woman can be quite persuasive, touting the company's high ethical standards, years in business, membership in trades organizations, and slick sounding name. Dealing with the best sales people can be unnerving and hard to end the call.

Bullion remains the safest way to go with tangible assets. But some generic gold coins are also safe, but ultimately there is no certainty when it comes to investing.

 

Chance of it succeeding is minimal it offers no advantage of GLD or SLV.

 

I disagree with that sir. There have been periods where collectible coins greatly exceeded the returns of bullion. While many here may buy both, they are very different markets. When PM was in a long slump, high grade large cents and the like went up quite appreciably.

Chris

 

A 250 million dollar risk on wallstreet ain't what it use to be but such a venture could be significant to the coin collecting industry. It all lies in the fund's perspectous and the constraints placed on acquisition of assets there-in. If the fund were to get off the ground and grow; coins that meet the criteria of the fund would rise to a premium value. So as a collector when purchasing a coin and determining price to pay we'll have to give significant consideration to its qualities and value relative to the fund.

 

I don't believe the company will be paying the high prices being asked by sellers of the 25th anniv. sets ! LOL

 

I don't believe the company will be paying the high prices being asked by sellers of the 25th anniv. sets ! LOL

 

Yes its a great point. The Merrill fund was pointed to as one of the causes of the rapid rise in 65 prices, and its bust when the Merrill fund stopped buying and liquidated.

I definitely believe it would affect the market, since collectible coins really are a small, thinly traded market. Such a new entrant would have to cause extra volatiility.

 

What "investment" coins will the fund be buying?

Fairly easy to figure out based on past patterns and current buy want lists from the market makers and big boys.

Gold type coins in the right grades, preferably CAC and no problem coins.

Key dates in various series.

What will they be not buying?

Esoteric coins that have a history of not gaining appeal with investors. The key is that when the mailman delivers the coin to the investor, he/she will get excited by the historical appeal of that special piece.

Look for the greysheet to make prominent this story with a full paragraph this week.

"A market maker in the coin industry has teemed up with a Wall Street fund to create a special 250 Million dollar investor coin fund. Expect other notable Hedge Funds to take notice, and possibly follow their example with even bigger ventures. This is extremely bullish for the coin industry(?)".

 

i think its do-able... its like anyother in vestment but maturity levels would be based on what market trends?? and buyers eagerness to pay for blown up prices..


a group like this would bee looking for platinum , rodium, and gold mainly not nes. high value but in demand peices and then focus on other things like out side of u.s., all coins must be graded...

and take it from there and even canadian and american.

 

It is highly speculative to "invest" in some areas; others are a lot less risky. Heritage sent out a broadcast that they are offering PCGS/NGC MS64 $20 Libs. for $2395. A good deal for dealers willing to buy in quantity. They will sell them with a mark up to customers, the premium could surge in the next few months for a win/win for both dealers and "investors", it could go down too. As the bullion price goes up with these very same coins being sold to buyers in Europe and elsewhere, they get graded and a fair number get high mint state grades. At some point those hoards are bound to diminish.

One advantage with numismatic coins as investments is that there is no social security matching with the sales and purchases of these coins unless they are done by dealers. This is a sales gimmick, and in reality, any profits are fully taxable at 28% last I checked.

Too many of us have bought into the "investment" angle and have then tried to play the game of trying to get as much of our money back that we have invested, a hard, hard game, with say an ICG, ANACS, SEGS or other "certified" rare coin that may have the merits of the grade assigned, but is unlikely to cross to PCGS or NGC. And NGC is not currently crossing any but PCGS certified coins, so you have to do the raw submission and take a big chance.

If I were advising an investor I would tell him/her to only buy into the really safe areas, and ask, frankly, what is the ultimate aim with buying certified coins? If it is strictly to make money while enjoying the hobby, I would say they need to buy a book on the coins of interest, spend some real time researching current auction records on those coins, and then get prices on coins meeting the appropriate criteria.

 

Well, to me, collectible coins are simply not an asset worthy of investment. I am not saying bad things about coins, they simply have these bad points:

1. Thinly traded market. No capacity for true volume, not scalable.
2. Too subject to whims of an auction for returns. One bad auction night can wipe out years of planning
3. No inherent value. There are no returns on coin other than price appreciation, and their only value above face value or melt is collector willingness to pay.
4. US coins have limited appeal outside the US.
5. Very high relative cost of selecting asset, purchasing and disposing of it.
6. Non-fungibility. This means every coin is unique, which makes valuation difficult.

These facts tell me its not a market that financial assets should go into. One or two of these issues possibly could be overlooked, but in total its just too limited to be willing to trust returns from.

Some may point to the art market as a similar market. The differences are scope and worldwide demand. The rare art market is 100 times the size at least of coins, and has international appeal. Also, the interest of prospective buyers is much broader than coins.

Chris