I saw this promotion on the Kitco site: Why Invest in the Rare Coin Program? "Rare Coins are a proven performer when it comes to showing consistent returns in both the best and the worst times. Rare Coins are immune from the swings of uncertain markets because their values are UNCORRELATED to the fate of the stock or bond markets. What’s more, Rare Coins are portable, easy to liquidate and perfect to build a legacy or protect your bottom line in the coming inflation. Let ASI, a more than 30 year leader in alternative assets, along with Douglas Winter, the world’s leading expert in pre-1933 U.S. Rare Gold Coins, guide you and hand-pick a portfolio for you or your organization’s profit sharing program." http://raretangibleassets.com/banne...nner&utm_content=leaderboard&utm_campaign=RCP The promotion here is that "the world's expert" on rare US gold coins, Doug Winter is the brains here that will make you oodles of money if you have lots of money to "invest". The reality here is that rare coins are just that, rare and expensive and if you buy them at retail prices as through this outfit, you are paying high retail and those stellar rises in price on these coins are by no means guaranteed, and you may just get an overgraded coin, that may not pass the acid test later when you go to sell. Also, there is no guarantee that it will continue to rise in value.
Yeah, they're uncorrelated to the stock or bond markets, but they are far, far, from being immune to the swings of uncertain markets. There have been countless cases of the coins they are talking about being purchased at record prices, and then a year or two, or three, later - being sold for half or less of that previous price. The coin market goes up and down sometimes worse than the stock or bond markets. The coin market is one of the most uncertain markets there is. But people trying to get you to buy coins, aren't going to tell you that.
I personally have found that the TPG practices of "market grading" and improper grading (especially on greater value coins) is a significant factor in the loss of "investment". You should try to get an auction house to reverse a sale when the TPG graded coin received is improperly identified. It generally isn't "going to happen". I've found that the offering of counterfeit graded coins has created a whole new facet for concern. JMHO
I would think if coins were good or even slightly better than terrible, investments, every investment firm on earth would have coin portfolios...but not one does. Says a lot.
Well there have been some: http://en.wikipedia.org/wiki/Coingate_scandal http://www.certifiedassets.com/inv/the-funds/coin-funds-overview/ (SP500 chart on this site is a joke, ends in 2009!) http://www.blanchardonline.com/beru/beru.php?article=3259 etc. All very bad and shady IMHO. There are coin indexes that can be helpful and/or interesting: http://www.pcgs.com/prices/Frame.aspx?type=coinindex&filename=index
Hard to make money investing in rare gold coins when once you sell you have to pay 28% in capital gains taxes on your investment. In a lot of cases your lucky if you coins have managed to keep ahead of inflation and even if your coins have done well, once you pay the taxes you'll find that your net hasn't kept up with inflation.
"Why do wealthy individuals invest in rare coins? This asset class can produce windfall profit opportunities for investors. For example, some years ago the chairman and CEO of Fidelity Investments, the world's largest mutual fund company, was one of the principal investors in a partnership that invested $348,380 in rare U.S. coins. The partnership was liquidated about four years later for $2,158,450. "But rare coins offer more than the occasional windfall profit. They are also an excellent diversification - a better hedge than gold and a much better long-term investment. A study by the chief investment officer for GE Private Asset Management Inc. concluded that rare coin returns have been highly attractive over the past 62 years, and that even a small allocation provides an excellent diversification for a well-balanced portfolio." KA-CHING! Usually the only people getting rich are the promoters and the "authorities" on rare gold who trade their names for a piece of the action.
Now that to me is a strange attitude. First of all, you have to be pretty well off to be required to pay 28% on your capital gains (I certainly wish I had that problem) and second, what can you possibly profit on that you don't have to pay capital gains on? Real estate! Stock! Small business! Paying taxes is what I call a high quality problem and there are plenty of ways to legally reduce your obligation by reinvesting your profits. Get a good accountant or sell your stuff for cash.
On the 28% tax statement, this keeps popping up, and though it is the law, I wonder what percentage of people pay it? I had a customer sold me at least a couple dozen $20 Saints and he wondered about the taxes, and I am sure he did not volunteer the 28%, between turbo tax, loopholes, CPAs who can reduce taxes every conceivable way, the tax rate can be greatly reduced. He bought his MS63-65 Saints directly from Camino/Blumert, and they more than doubled in value. If you made 10X with lots of trigger points for audits and those who report you to the government, that would really be a cause for concern. Every time gold jumps big time, the spikes in premiums in popular type coins get outsized, that would be a good investment option. The good thing with tangibles is you don't have to pay annual taxes on their inventory, you don't have something that will go to zero or will go in half likely like some stocks. If you have time, the market eventually recovers usually.
#1, it's not the law. Capital gains rates are progressive like all income taxes. You only have to pay the top rate if you make enough money to be required to do so and #2, you only pay capital gains on net profit. So if you aren't organized enough to keep track of your expenses, whose problem is that? And by the way, Mitt Romney made most of his multi-million $ annual income on dividends and capital gains and he only paid 14% on the whole shebang. I pay more than that in Social Security taxes. And while we're on the topic, old friend Ronald Reagan supposedly made the tax system more user friendly, but in fact he eliminated income averaging which only ever benefited folks with modest/middle class incomes and would have addressed the issue of paying large capital gains on windfalls - which now is a problem for real estate sales of commercial property, etc. dt
Lots of people fear the big, bad IRS so they try to do their transactions in cash, no tax consequences unless you are caught. Is it worth trying to play hopscotch with a unicorn?
