Is buying Gold, Platinum or Silver American Eagle Proof coins (US Mint) a good investment?
August 10, 2010 by
Filed under Silver Investment FAQ
I imagine this would depend of the how the price of gold, platinum or silver does in the marketplace, but would there also be a collectors’ interest even if the prices of metals took a downturn?
Basic way of making money:
Buy low, sell high.
Look at the current cost of gold and silver and compare it to the last 50 years. Is it low right now? If you’re buying “high” then it’s not a good investment.
Buying coins is rarely a good investment. If you want gold or silver as an appreciable asset… you need something with good liquidity…. something that’s easy to sell. The appreciation of coins based on the numismatic value is a gamble at best.
Buying precious metals should be a very small part of your portfolio. Not more than 3%… max 5%. I do less.
If you must do this buy the appropriate ETF… like GLD or SLV. You can buy or sell these in a milli second… during trading hours. Total commission…… with a on-line broker, not more than $15.
No big spreads & no storage issues.
Gold and silver (adjusted for inflation) have been steadily losing value for 600 years….how can that be? We are digging more out of the ground faster than the world population is growing!
“Precious” metals are NOT an “investment”! Here’s the data;
http://www.sharelynx.com/chartsfixed/600yeargold.gif
http://www.sharelynx.com/chartsfixed/600yearsilver.gif
(Think about it…if gold & silver were such “good investments”, why would the folks who sell them be spending SO MUCH MONEY on advertising? When was the last time you heard a radio or TV ad for Rolls-Royce?)
I have made a point of collecting American Eagle proof coins since they appeared as well as standard mint sets, proof sets, and certain new issues and commeratives. Why? I think there will be an appreciation to equal that I could expect from my stock investments over the same period of time. Will there? As you said, a lot of that depends on the price of precious metals but you do have fixed number of coins and increasing numbers of collectors. You could review past history of appreciation but with the increasing number of different issues from the mint, I am not sure it is the same game. I suspect the many new issues will increase interest in and demand for the Eagles but only time will tell. In the interim, they are beautiful art objects. But I do limit the number as I don’t see them as anything but a realistically probable bet…
As in all investments there is risk. Precious metals are verry volitile. IN confident times were the trust in currency is good metals will fall. In bad times metals rise. Should there be a world disaster were the economies are destroyed metals will be the ony thing. I do not think that likely but you never know. Part of your portfolio should have a small part in metals.
The coins you are talking about have collectors value and you pay for that. Your hope is that the collectors value will go up. It has in the past 50 years if for inflation only it keeps you even. The collctors value of these new coins will depend on how many they produce. If they produce thousands of them the collectors value will be small. If limited bigger. So anything you do is a risk. You have to be comfortable with that risk or do not do it. Also you have to be able to afford the loss if it occures.
No one has a crystal ball and this is the best advice I can give.
I’m not an expert, but I play one on the Internet. Traditionally US mint coins aren’t as good investment (not pure enough), although I think they are working on that. Really, it matters what type of investment you are looking for. You’ll need to really deeply research it if you want to make it a cornerstone of your investment strategy. But if you just have a fraction and offset it with another investment (that typically goes up when coin values drop) it can be fine.
Problem is, the seller wants to make a percentage, at least 20%, so you’re starting out your “investment” 20 to maybe 50% in the hole. Not an auspicious start! Same thing when you go to sell.
And trading in metals or commodities is very risky– all it takes is one revolution in Africa and they might dump their metal reserves on the market, kaboom go prices.
There’s also the rule of thumb, if an “investment” is advertised on the radio, it’s not a good investment. Good investments are scarfed up immediately by big investors. If it has to be advertised, it’s almost certainly not a good investment.
Also remember that nobody can predict the future. The Hunt brothers lost like $700 million speculating in silver a few years back. If guys that do this full time all their lives can lose a huge bundle, how likely are you to do any better?