Risks Or Pitfalls Of Coin Investment

Posted by slang on December 24, 2008

Earlier articles are: benefits of coin investment and reasons for coin prices to rise showed that coins are indeed a good investment bet but we also need to be aware of the following risks or pitfalls of coin investment particularly rare coins:

• there are many counterfeits and altered coins in the market. This is especially when the coins are very rare which are worth forging. Some coins are deceptively realistic. Common coins have been altere to appear to be valuable collectors coin. e.g adding a mint mark or altering the cross to a dot ( 1920 cent George V Straits Settlements silver coin)
• coin values vary very greatly with grade.There are much risks in grade namely overgrading, cleaned coins,etc.
• like commodities markets which rise and fall, precious metal and coin price can be particularly volatile. This volatility creates both opportunities for sizable gains and dramatic losses.
• coins are illiquid assets. Higher value rare coins are often sold at auction. It can be sold quicker vide dealers but the buy and sell spread charge by dealers would virtually wipe away the profits you might have made, hence the need for a sizable appreciation.
• for coins to appreciate in value, they need a few years of gestation period. Experts advocate at least 5 and more years for coins to really appreciate in value
• another risk is the possibility of material loss re: theft or fire. By storing it in bank vaults/deposit boxes means higher storing cost/insurance.

In view of the foregoing, many investment advisors would recommend coin collectors/investors only to put in a modest fraction of their portfolios into coin investment(rare coins)

Check out on the Category on RARE COINS & STORIES