ircbs rare coins and bullion gold guide

Rare U.S. Coins and Bullion

A practical guide to hard asset A practical guide to hard asset investmentsinvestments

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Gold bullion and coins

Gold bullion basics• Gold bullion comes in several forms: bars

(also called ingots) and coins. 1. Bars/Ingots are from 1 gram to 1

kilogram.

2. Coins are from 1/10 oz. to 1 oz.• Most gold bullion is sold to the public in coin

form.

Gold bullion basics• The most popular gold bullion coins are

the American Eagle, the Canadian Maple Leaf and the South African Kruggerand.

• All three can be purchased in weight from 1 oz. to 1/10 oz. coins.

• Other gold bullion coins, but not as popular, are the Chinese Panda, the Australian Nugget and the Austrian Philharmonic.

Gold bullion basics• Some foreign gold coins that were once

used as currency are also considered to be “bullion” coins. They are not recommended for investment purposes.

• These coins are the Belgium 20 Franc, English sovereign, Mexican gold peso, Italian 20 Lire, Russian gold ruble and French “roosters” and “angels” among others.

Gold bullion basics• The price of gold at any moment during

the market is commonly called “spot”.• The issuing country charges a premium

over the “spot” price for manufacturing and profit.

• The major bullion dealers charge an additional premium for handling, shipping, insurance and their profit margin. Usually 6% to 10% depending on purchase size.

Silver bullion and coins

Silver bullion basics• Silver bullion comes in several forms: bars

(also called ingots) and coins. 1. Bars/Ingots are from 1 oz. to

100 oz. 2. Coins are from 1 oz. to 1 Pound• Most commercial silver bullion is sold in

bar form. Consumers primarily purchase silver bullion in 1 oz. coin form.

Silver bullion basics• The most popular silver bullion coins

are the American Eagle and the Canadian Maple Leaf. These coins are minted only in 1 oz. size.

• Another silver bullion coin, but not as popular is the Australian Nugget.

• Private mints such as Englehard and Johnson Matthey and others produce 1 oz. silver coins called “rounds”.

Silver bullion basics• Pre-1964 U.S. silver coinage, dimes,

quarters and halves are also used as “bullion”. These coins contain 90% silver. These coins are packaged in $1000 face value bags that weigh approximately 55lbs. The common term for them is “junk bags” of silver.

• There is approximately 715 troy ounces of silver in a “junk bag”.

Silver bullion basics• Common date, circulated U.S. Morgan or Peace

silver dollars also serve as a bullion-based asset and contain 90% silver.

• U.S. coinage that contains 40% silver and Canadian coinage containing 80% are less common and not recommended for investors.

• Large promotional silver bullion items (the one pound silver “$100 Bill” for example) are to be avoided due to much higher cost per ounce of bullion.

Silver bullion basics• The price of silver at any moment during

the market is commonly called “spot”.• The issuing country charges a premium

over the “spot” price for manufacturing and profit.

• The major bullion dealers charge an additional premium for handling, shipping, insurance and their profit margin. Usually 6% to 10% depending on purchase size.

Advantages of Gold and Silver Bullion

• Bullion is highly liquid.• Bullion has lower buy/sell “spreads”

than other hard asset metals.• Bullion prices tend to be more stable

over the long term, reducing portfolio volatility.

• Gold bullion provides more concentrated value per ounce.

• Bullion is accepted in IRAs.

Disadvantages of Gold and Silver Bullion

• Bullion prices can be very volatile over short term periods.

• Bullion in large quantities is difficult to store and to transport.

• Bullion reduces portfolio volatility, however, portfolio performance is also reduced.

• Bullion long-term performance is very poor.

Certified Rare U.S. Coins

Rare U.S. Coin Basics Rare coins for investors must have all

four of the following features: 1. United States coins only 2. Pre-1934 (gold coins) Pre-

1955 (copper, nickel and silver coins)

3. Condition of MS/PR63-68 only 4. Certified by NGC or PCGS

Rare U.S. Coin Basics• After double digit inflation beginning the last

2 years of Carter presidency (1979 - 1981) rare U.S. coins increased in value by 700 % in 18 months.

• After the October 1987 Market Crash, rare U.S. coins increased in value by 267% in the following 18 months.

Rare U.S. Coin Basics In a recent independent study conducted

at Penn State University on gold and U.S. rare coins, among major findings were:

“Considered individually, stocks and coins had the highest

rates of returns over the past 25 years”

“The returns on Treasury bonds and rare U.S. coins are inversely related over the entire 25-year period. The returns on coins are more highly correlated with inflation than any other asset class, including gold. Taken together, this evidence suggests the potential for considerable gains from appropriate diversification.

Rare U.S. Coin Basics A further significant finding in this

study was the following: “Utilizing the tools of modern portfolio

analysis, an extensive analysis of efficient portfolios was conducted for a wide variety of weighting schemes, and for various sub-periods over the last quarter century. The results indicate that including a modest amount of rare U.S. coins within an existing portfolio could improve investment performance by either increasing returns without significantly increasing risk or by reducing risk without adversely affecting returns significantly.”

Performance Comparison$10,000 Invested in Gold Bullion Vs Rare U.S. Gold

Coins Vs S&P 500 Period: January 1975- January 2004

Advantages of Rare U.S. Coins

• Rare U.S. coins are very liquid. There is a large marketplace of buyers and sellers.

• Rare U.S. coins enjoy independent certification, electronic pricing and the largest empirical database of any hard asset investment.

• Rare U.S. coins reduce portfolio volatility and increase portfolio performance over long-term periods.

• Rare U.S. coins are private transactions.• Rare U.S. coins are very portable and easy to

store.

Disadvantages of Rare U.S. Coins

• Liquidation of rare coins (other than wholesale) can be time consuming. Auctions can take from 1 month to 3 months for liquidation.

• Buy/sell spreads in rare U.S. coins are higher than bullion, requiring a longer holding period.

• Rare U.S. coins generally do not perform well in short term periods.

• Rare U.S. coins are presently not approved for IRAs.

For Further Information Contact:

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972-644-6117www.ircbs.com