Big Money’s Problem With Gold Coin Investment

There is one overarching reason that big money does not invest in rare gold coins: they can’t rig the game. While the gold bullion market bounces around aimlessly in the wake of their every whim, the value of rare gold coins maintains a relatively steady keel.

The numismatic value of rare gold coins rises steadily with demand. Even if investment participation were to stay fixed at today’s level, growing population would still drive up demand. As with any other asset, growing demand attracts growing investment interest and that has been steadily driving up the price of rare gold coins for decades.

The investment potential of rare gold coins, however, is most often either dismissed out of hand or grossly exaggerated. That’s because people tend to think in terms of extremes while the truth almost always lies somewhere in the middle.

A gold coin as common as a Lincoln-head penny, for example, would have virtually zero numismatic value so it’s worth would be set by the current spot price of gold. At the other extreme, the numismatic value of an exceptionally rare gold coin renders the price of its gold content completely irrelevant.

For investment purposes liquidity is paramount so there must always be sufficient prospective buyers for any given gold coin willing to pay the desired price. The ideal coins strike a balance in rarity that assures growth while maintaining liquidity. That makes the rare coin market unsuitable for exchange on the scale of big money traders, and therefore protects the market from manipulation and disruption by insider derivative schemes.

Trade in numismatic gold coins is the closest thing to the free market ideal we have today, and that makes them perfect for household investors. Even though they will never be immune to catastrophic changes in the gold price, rare gold coin investments have proven time and again to hold their value through the often inexplicable gyrations of the bullion market.

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