Risks of Collectible Coins
The problem develops when people who are not experienced coin collectors make purchases without having the items examined by an outside appraiser. Because the value of the quality of a coin can be subjective, buyers are often charged far more than the items are worth.
In addition, the price of gold and silver can fluctuate wildly. People often invest in precious metals when they feel insecure about world events or the stock market. They think owning gold and silver is a safe, secure way to protect their assets and many people like the idea of owning investments they can hold in their hands and keep in their safety deposit box or in a lock box at home.
However, the price of gold and silver bullion is frequently at its highest during times of uncertainty and international instability. Once events calm down and the world situation becomes more stable, the price of bullion drops and, along with it, the value of collectible coins.
Between the subjective nature surrounding the quality of a collectible coin and the wild fluctuations in the price of gold and silver, it is possible for investors to lose a large portion of their assets very quickly.
Thousands of Americans Have Lost Money in Collectible Coins
A U.S. Senate Special Committee on Aging report from 2014 estimated that over 10,000 Americans have been the victims of precious metal cons and the losses have amounted to about $300 million.
According to the AARP article mentioned above, investors are often the victims of "bait and switch." They see an ad for precious metals at near-dealer prices. When they contact the business, the sales people talk them into purchasing "collectible" coins rather than bullion. They are told the coins will appreciate faster. However, the mark-up for these coins is often so high that it is actually nearly impossible for the buyers to ever recover their purchase price, let alone make a profit.
How to Minimize Your Risk if You Invest in Collectible Coins
While there are reputable dealers, it is important that investors minimize the amount of their savings which is invested in precious metals. Some financial advisors recommend they limit their exposure to 5 percent or less of their total holdings. They should also work with either registered brokers or dealers who are accredited by the Professional Numismatists Guild (PNG). It is also important to do plenty of research and educate yourself. Don't rush into it. See more than one dealer and consider getting an independent appraisal of any coins you consider purchasing.
Senior citizens are the victims of scams more often than any other age group. Don't let your retirement get derailed by unscrupulous salespeople.
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