Investing in Rare Coins: What You Need to Know Before You Start

The act of buying rare coins as an investment is as simple and straightforward as purchasing any other product. However, it’s imperative that you perform preliminary research to mitigate potential risks. 

We’ll be the first to tell you that collecting rare coins as a strictly financial endeavor isn’t for everyone. Compared to precious metals like gold and silver, rare coins are much more volatile, and there are numerous factors to consider beyond the coin’s metal composition and price.

That said, acquiring low-population, collectible coins can lead to significant monetary returns if you’re prudent with your strategy. Tracking down elusive coins is a whole lot of fun, too—investing in rare coins can be rewarding in more ways than one! 

As always, you can depend on the experts at Endeavor Metals to point you in the right direction. Here’s what you need to know before pursuing your first numismatic acquisition.

1. Bullion vs. Rare Coins

First things first—it’s important that you understand the differences between bullion coins and numismatic coins. 

Bullion coins are vehicles for investing in precious metals. While they can become collectible over time, that’s the exception and not the rule. 

The value of bullion coins is derived from their intrinsic worth based on their precious metal content—a 1 oz gold coin is worth the spot price of 1 oz of gold plus a slight markup fee called a premium.

When you’re investing in rare coins, metal content isn’t as relevant. An extremely rare 1 oz gold coin is worth far more than the spot price of 1 oz of gold. In the next section, we’ll explain how to determine the value of rare coins as an investment.

2. How and Why Rare Coins Are Valued

Rare coins are collectibles, just like art, stamps, comic books, antiques, and so on. Their value primarily comes from their rarity (available supply), scarcity (market demand), and condition (grade).

For example, the first American Gold Eagle coins were released in 1986. Approximately 720,000 ¼ oz coins were made available to the public, and only 114 have a perfect PCGS MS70 grade (we’ll discuss coin grading in the next section).

When you’re investing in rare coins, you must consider the coin’s overall context. Yes, an MS70 1986 American Gold Eagle is made of gold, but its value is substantially higher because of its incredibly low surviving population, historical significance, desirability among collectors, and pristine condition.

3. The Sheldon Coin Grading Scale

The Sheldon Coin Grading Scale is a universally followed, 70-point ranking system that determines a coin’s condition based on its assigned grade. William H. Sheldon invented the scale in 1949, and it has remained the same ever since, aside from a few slight adjustments made in the ‘70s.

The scale runs from 1-70—the higher the number, the better the coin’s condition. Points are given based on the coin’s strike, luster, surface preservation, tone, and eye appeal.

When investing in rare coins, it’s crucial that you only buy coins that have been graded according to the Sheldon Coin Scale by an established third-party grading service, such as the PGC, PCGS, or CAC. 

The Sheldon Scale lets you know what you’re buying. While you can use it to evaluate coins casually, proper grading requires a level of expertise most collectors don’t possess. 

4. Embrace the Hobby

Even if you’re strictly seeking out rare coins as an investment, taking the time to embrace the hobby side empowers you to make informed decisions. You might even find that your investing strategy turns into a lifelong passion.

Just like any other investment, investing in rare coins requires that you do your due diligence. That means learning about the coin’s historical significance, following its price movements, and feeling out its market demand. 

Beyond just investigating specific coins you’re considering adding to your portfolio, we highly recommend learning numismatic terminology. Speaking the language helps you be a savvy investor.

Find common numismatic terms here: How to Start a Coin Collection: 5 Tips for Beginners.

5. Work With a Trusted Seller

If a deal seems too good to be true, it is. Like any other collectible, it’s absolutely imperative that you only buy from a reputable source.

This is especially true when investing in rare coins, as even a tiny surface scratch or mark that may be undetectable to the human eye can significantly impact a coin’s worth. 

Unfortunately, there are unscrupulous sellers that will try to pass off damaged or even fake coins as the real thing. And, you might not even realize you’ve been swindled until you try to sell it down the line. 

There are systems in place that remove the risk from buying rare coins as an investment, but only if you go through a well-respected business. Check reviews, vet your sources among the community, and research the seller’s guarantees. If there are any red flags, move along.

Grow Your Coin Collection With Endeavor Metals

Investing in rare coins can be intimidating for beginners, but don’t let that stand in your way. Endeavor Metals is a Tier 1 US Mint precious metals dealer and a trusted seller of numismatic coins. We can guide you on your journey—every step of the way.

We belong to numerous prestigious organizations, including the American Numismatic Association and Certified Acceptance Corporation (CAC), among others. We have an A+ accredited grade on the Better Business Bureau and a 4.9 Google star rating.

Our products are competitively priced and backed by a 7-day, 100% money-back guarantee. We proudly offer some of the world’s most prestigious rare coins, including gold, silver, platinum, and palladium pieces.

If you have questions about investing in rare coins or need help tracking down a coin, contact us for a free consultation. We’ll provide personalized, unbiased guidance as you consider rare coins as an investment. Diversify your investment portfolio into a tangible asset with endless growth potential.