Precious Metal Coins - Something for Everybody Everywhere

Buying into precious metals has a different meaning to cultures in various parts of the world. The fundamentals for seeking the yellow and white metals come from different schools of value. Collecting gold and silver has an array of loyalists rooted in financial security, religious dogma, economic principal as well as its intrinsic beauty sought after by collectors. 

China’s appetite for gold and silver is legendary. Its renewed national economic principal for precious metals came last Fall when the largest state owned television company campaigned for its citizens to buy precious metals. China’s gold and silver appetite already out paces Western countries and this announcement underlines China’s belief in precious metals in the future as the ultimate store of value.

India also sees a future in precious metals. Its recent purchase of 200 tonnes by its central bank underscores its national policy for financial security. And India’s Hindu culture celebrates gold and silver on Akshaya Tritiya – Hindu Gold Rush Day. Hindus believe anything on this day will be replenished including the purchasing of gold and silver including collectible coins. India will always have gold and silver on its menu with more and more mouths to feed and its corresponding desire to protect its financial system with underlying hard assets.

In the United States, a recent legislative bill has been introduced in Congress to ban taxes on coins and bullion and repeal legal tender law – another sign of the value of gold and silver in our economic future.  If this bill passed it would encourage a system based on competing currencies that the United States has a rich history of before Congress passed legislation making the US Mint the legal currency issuing authority. This bill would also end capital gains taxes on collectible coins. The likelihood of this passing the House and Senate and being signed into law may be slim, yet it underlines the importance precious metals will continue to play in our economic future.

With the various economic forces and national policy for precious metals continuing to increase its importance, we believe the strong investment value of collectible coins will continue into the future. In our vaults now, which we believe has strong potential for increasing in value, the Canada 2009 $300 Summer Moon Mask 2oz 14kt Gold Proof Coin. Remember, there are no guarantees about whether or not a coin or any collectible, material thing or instrument in any asset class including collectible coins as an asset class will increase in value.

Is Impending Inflation a Reason to Seek Precious Metal?

The US dollar remains down against the euro and other currencies as of the end of November. A direct response to this has been increasing activity to buy gold as a hedge. The question: Is this recent gold run a short term bet or is the weakening dollar going to be followed by inflation? The worst of both worlds.

The most prominent hedge funds have shorted long-term US treasuries and are longing oil – an inflationary red flag signal. Other notable hedgies are betting on higher interest rates and are doing so with constant maturity swaps and other financial tools which underline encroaching US inflation. Still others are betting on gold –  make that inflation – such as Paulson & Co’s 4+ billion dollar investment in gold related funds. 

Some critics have used 'hyperinflation' to define the future financial landscape if federal spending continues. And impending inflation could be catalyzed if congress passes the current administration’s proposed Consumer Financial Protection Act. Under the guise of addressing the causes of a global financial crisis, this bill would impose regulation on small and large business and bring free markets more and more under Washington’s control when the credit default swaps, and sub-prime load problems that have hampered financial markets were likely government sponsored policies to begin with. See WSJ 11/27/09, Lack of Candor and the AIG Bailout.

What is for sure is the demand for gold will continue to increase as a reserve currency as opposed to a commodity. Federal printing presses are working overtime to pour more money into the system in the form of bail outs, stimulus and war efforts.  Demand for gold will likely outpace supply.

New to our vaults, and we believe a safe haven for a declining dollar, the Australia 2009 $200 Koala High Relief 1oz Gold Proof Coin. Remember, there are no guarantees about whether or not a coin or any collectible, material thing or instrument in any asset class will increase in value and past performance of a coin’s return is Not indicative of future results.

Bimetallic, Rare and Hard to Find - A Coin Mercantile Pick

We continue our investment recommendations this week in short because of the quality of new coins which we have recently secured. We have spent great time and resource to ensure our recent shipment from the Banco De Mexico. We continue to go to great lengths to import high quality limited mintage world coins which we can recommend to our customers.  As with all hard assets, there are no guarantees of future performance for any of our recommendations. Past performance is not indicative of future results. It is in our opinion that the Mexico 2003 $100 Mexican States Commemoratives Baja California 1oz Bimetallic 1/2oz Gold &Silver Proof-Like Coin is a good investment.

There are several reasons why we believe this coin has good investment potential.  This coin epitomizes rarity.  Only 600 coins of each of the 32 coins in this series titled “180th Anniversary of the Unification of the Mexican Republic into a Federation” 2nd Stage Bi-Metallic were ever made.  Furthermore, the Banco De Mexico seldom produces coins that are bi-metallic, particularly for an entire series composed of gold and silver.  In addition, these coins are Extremely difficult to acquire.  Other than the mint (Banco De Mexico) that struck these coins and Coin Mercantile, we know of only one other source on the planet that actually has any of these coins in stock, for acquisition of this coin or the others in this series.  And they are beginning to sell out.  There may be other suppliers, but we cannot find them.  In addition, the design of this coin and the others coins in this series, posses an absolute unique design. They are not only bi-metal gold and silver, but each coin contains ½ oz of gold in the center of each coin and 12 grams of silver in a concentric ring around the gold center.    Finally, this coin and all coins in the series are beautiful which commemorate architecture, art, science, flora, fauna, regional costumes or geographical sites of interest, indigenous to Mexico.  We love this coin and all coins in this series and believe over an intermediate or long period of time this coin and the others in its series, have the potential to increase in value.  Always Remember, there are no guarantees about whether or not a coin or any collectible, material thing or instrument in any asset class will increase in value and past performance of a coin’s return is Not indicative of future results.

Picking Coins for Investment

When picking coins as an investment, there are many factors to consider before making a purchase. Buying hard assets, just like any other investment class, is a combination of being informed and buying at the right time. Each one of our coins is hand selected and we feel each will give you the best possible out come when making a purchase. There are no guarantees of future performance for any asset class, including collectible coins as an asset class.

There are several reasons why we believe the Russian 2008 190th Anniversary of the Federal State Unitary Enterprise "Goznak" 1818 Approval of Paper Currency as Legal Tender - 5oz Silver Proof has good investment potential.  First, to point out the obvious, the mintage is very limited, as only 1,500 coins of this issue were minted during its release in 2008.  Secondly, the Bank of Russia rarely produces coins with gold gilding, let alone 5oz silver coins with gold gilding.  In addition, the theme of Russian currency has always been and continues to be one of the most, if not the most popular, non-animal, themes in Russian coins.  Furthermore,  the coin sold out very quickly when it was issued in 2008.  Finally, the coin is beautiful and commemorates an important event in Russian financial history.  Remember, when buying collectible coins or any asset class, there are no guarantees and past performance of a coin’s return is Not indicative of future results.

Silver is lining its own future

As gold continues to get a lot of press, silver quietly widens its undervalued gap in relative value, lining its future with, yes, silver. As the precious metal market chatters a buying message, it is apparent silver's indifference to adjust to gold’s bull run is going to come to an end.

Unlike gold, silver is widely used as an industrial commodity. Its use in jewelry and electronics has declined in the recent recession and new applications as an anti-microbial and other new to market uses has silver slated for a heavy rebound.

An historic price adjustment will bring this statistical disparity to a close. The silver/gold differential will revert to the mean, to the benefit of owners of silver assets. The bottom line: silver’s price performance historically holds a close correlation to gold’s price performance.

In early 2008 gold's market value was averaging $1000 per ounce and silver peaked at approximately $21 per ounce at the same time. Gold today is at or near record levels and silver took a fall to approximately $10 per ounce at the beginning of 2009 and has precipitously rebounded to $17.50 per ounce today.
Silver is lining its own future.

Coin Mercantile’s silver coins are priced very competitively and we have a unique selection of modern world silver coins. It is our strong believe that silver on a per ounce basis is likely to double in the next few years with global population growth driving and accelerating the world’s demand for precious metal commodities. Silver, in our opinion, will be one of the greatest beneficiaries.

With the mind of an investor, try our collector picks like the heavily in demand and pictured here 2009 China Silver Proof Kilo 60th Anniversary of the Founding of The Peoples Republic of China. And through the eye of a collector, consider the 2006 Spain 50 Euro Christopher Columbus- 5oz Silver Proof. A silver lined future is a bright one for the foreseeable future.

Historical Performance of the CU 3000 Numismatic Coin Index

Coins are timeless in the sense they have been used and accepted as legal tender for the thousands of years. Coins can be valuable objects and depending upon one’s coin selection are often considered a solid investment in the future as well as a practical investment in history. Do Not assume that every coin will increase in value, or hold its value, or that one coin is as good an investment as another. Achieving an Investment return for your coin portfolio depends upon your coin selections and the degree to which your coin portfolio meets quantitative and qualitative criteria which have historically been and at the time of sale, continue to be indicative of monetary value creation and increase over time. Always Remember: There are no guarantees that your coin portfolio will increase in value or provide you with an acceptable rate of return over time. However, statistics and coin indices such as the CU 3000 Coin Index have demonstrated that a well diversified coin portfolio can produce compelling investment returns over time. According to the CU 3000 Index (a standard for measuring numismatic coin performance):

Since 1970, the average annual return was 10.9%, compared to 6.9% for the Dow 30 stock

From 1981 to 1989, the index gained a total of 660%, well above other, larger asset classes

Of the 15 recessions since 1919, numismatic rare coins have performed well compared to other investments

REMEMBER: Past Performance is No Guarantee of future results

Peak Gold Signals a Terminal Fall in Gold Supply

Similar to peak oil, peak gold is defined as the time when maximum gold extraction occurred from the height of worldwide gold production. The total amount of gold in the world is estimated to be 242,000 tonnes by the United States Geological Survey. A tonne is one metric ton. Based on this USGS 2006 survey about 152,000 tonnes of gold have been mined since the beginning of man’s prize for the yellow metal. The halfway point of gold extraction, the top of the curve for all gold reserves in the world that has been extracted, would be 121,000 tonnes believed to have been extracted by the year 1993. If these estimations are correct, less than 90,000 tonnes remain in the world. Gold experts have backtracked when peak gold would have taken place, measuring the amount of total gold, at the height of production. These estimates conclude peak gold occurred sometime in the years 2000-01.

Collectible Coins Asset Class Characteristics

• Precious metal numismatic coins are a hard asset that historically have shown to often be insulated from declining values of paper currencies (e.g. the deterioration of the U.S. Dollar)
• Numismatic coins have historically been an excellent store of value and hedge against inflation
• Numismatics tend to have much less volatility in their prices than bullion (high circulation) coins which in contrast have almost a one-to-one relationship (1.0 correlation coefficient) with the movement of underlying spot precious metal prices. Numismatics have historically shown to have much greater price stability compared to bullion coins during both increasing and decreasing precious metals markets
• If structured properly (a disciplined and methodical approach meeting appropriate quantitative and qualitative criteria) numismatic coins can be an excellent asset class in which to diversify one’s portfolio

Collectible Coins as an Asset Class

Treasured as a store of value for thousands of years, precious metal coins are an important and secure asset. Paper currencies may come and go, but gold and other precious metals endure. They have maintained long term value for thousands of years, and are not directly affected by the economic policies of individual countries and don't depend on a "promise to pay." Collector Coins have demonstrated extremely favorable characteristics as an investable asset class, including relatively low volatility and stable, consistent returns over extended periods. In fact, the long-term average returns have exceeded many, more widely used asset classes, such as stocks, bonds, real estate, and commodities.

What is Coin Collecting?

Coin collecting and the study of money is called numismatics. Coins often reflect the social, artistic, economical, and political trends of the time period in which they are designed and made. Numismatics looks at coins from an economic, historical, political, artistic, cultural and metrological point of view in order to place both intrinsic and monetary value on a coin.

Throughout the centuries, different cultures have preferred coins over paper money and some have used both. By their very nature, coins are highly durable, convenient, mobile, and accurate modes of payment and investments.