Stability over the Long Term
Rare coins have been actively traded for profit since the 17th Century. The legendary House of Rothchild (famed European banking family) actually got its start dealing in rare coins. Meyer Rothchild, the founder of the banking empire, began selling rare coins and medals at Frankfurt's great spring and autumn fairs. Between fairs, he ran a mail-order coin business. Starting in 1771, he published the first of many printed coin catalogs, which he sent out at regular intervals over the next 20 years. To this day, many prestigious European banks maintain active numismatic departments.

In the modern era, the trading of coins has been enhanced by the creation of a well-established market structure for determining the quality and quantity of rare coins in the marketplace. In 1986, the Professional Coin Grading Service (PCGS) was established. About one year later, a worthy rival, the Numismatic Guaranty Corporation (NGC), came into existence. These two firms established a uniform coin-grading standard that has gained almost universal acceptance throughout the world. Additionally, there are two highly efficient computerized trading networks (patterned after the NASDAQ) that provide a live Bid/Ask market for coins on both a "sight" and "sight unseen" basis.

The underlying financial dynamic that drives value in the rare coin market is actually very simple: there is a defined, limited supply of these numismatic rarities while demand (in the form of the number of collectors interested in acquiring them) has continued to grow. For over three hundred years, demand has steadily increased while the supply has remained fixed. The basic principals of supply and demand work in rare coins as they do in any economic venture and there is no reason to believe that this dynamic will change. While prices will fluctuate in the short term, rare coins have a long, well-chronicled history of appreciating handsomely in value over time.

Superior Capital Appreciation

• 12 Piece Gold Set: The 12 Piece Gold Set is an industry index that is used frequently within the world of rare coins for financial evaluations. It is an index like the DJIA is an index, meaning it is designed to represent the composite performance of a given market. It consists of the 12 U.S. Gold coins that have been most commonly traded over the last 50 years. It's important to note that being commonly traded does not mean that they are the best performing coins in terms of appreciation in value. In fact, there are several pieces in the 12 Piece Gold Set that have not performed well over the time periods presented and Superior would not recommend buying them today. Unlike the DJIA, however, these 12 pieces are a constant over the entire time period being analyzed.
• Dow Jones Industrial Average: The Dow Jones Industrial Average consists of 30 companies. The 30 companies in today's DJIA are not the same as the 30 companies in 1970, though. Some companies have been dropped and others added for a variety of reasons, including poor financial performance. For example, Johns-Manville was dropped when it entered bankruptcy and Chrysler was dropped when it approached bankruptcy. As a result, the DJIA actually presents the performance of stocks in a better light because poor performing companies have been dropped from the index. Of course, the DJIA does not include stock dividends, which might be re-invested and increase the overall performance of the equities.

Coins are the "quantifiable collectible." Well-established third party sources provide data on quality (through coin grading services) and quantity (through population reports) of coins available. You can also readily access public information about recent sale prices for virtually any type of coin. Rare coins are also a very liquid investment as there are several NASDAQ like trading networks available for selling coins as well as regularly scheduled auctions and coin shows.

In summary, rare coins offer you tremendous profit potential, a proven track record of appreciation, and an infrastructure for buying and selling that rivals the equities market. No wonder so many financial advisors agree that rare coins should be a part of any appropriately diversified portfolio.

Rare Coins as a Hobby

A Unique Blend of Art, History, and Finance
Since the dawn of civilization, coins have been highly esteemed for their beauty and appeal as a solid store of wealth. For thousands of years, gold coins in particular have maintained their value. In fact, gold's purchasing power has remained in tact since the 17th century. The ancient Greeks adored coins and were the first to promote coinage to the station of an art form. Coins were regarded as miniature sculptures and were created by the finest artisans of the time. Romans admired the Greek coinage and followed suit to further enhance the art form.

The ultimate, modern rendition of this ancient art form is the 1907 Roman Numeral $20 gold piece. Designed by famed sculptor Augustus St. Gaudens, the creation of this coin was inspired by the high relief motif of the ancient Greek and Roman coins. Theodore Roosevelt personally commissioned St. Gaudens to sculpt the gold piece despite vehement opposition from congress and Chief Engraver Charles Barber. With every coin, there is a story. Learning the stories associated with the art and history of each coin is part of the timeless fascination of coin collecting.

The Virtues of Being A Collector First and an Investor Second
It is possible to invest in rare coins purely as economic vehicles and enjoy excellent financial returns from that investment. History has shown, however, that the greatest financial returns have been achieved by those who regarded themselves as collectors first…and investors second.

In rare coins, the whole is truly greater than the sum of the parts. Establishing a strategy for a collection and then patiently and systematically acquiring the best pieces that match your strategy can yield extraordinary results.

Consider the story of Baltimore banker Louis Eliasberg, a legend among rare coin collectors. Louis Eliasberg, Sr. began collecting coins about 1925. He pursued the hobby casually during the growth years of his finance business. In the 1930's he began in earnest to develop a world-class collection. Mr. Eliasberg invested a total of $400,000 in his collection from 1925-1950. His heirs were the beneficiaries of his exceptional foresight and patience. The collection, sold in portions from 1982 to 1997, yielded $44.5 million dollars!

The passion for collecting may not strike you full force initially. You may wish to begin gradually, both in your education and your coin acquisitions. If that's the case, Superior Galleries may be the perfect fit for you. Superior is firmly committed to assisting its clients every step of the way toward a satisfying and profitable experience in the numismatic marketplace.

As with any investment, investing for the long-term and making quality investments are crucial to success. Superior's advisors also believe that you should capitalize on short-term profit opportunities when they arise, however.

Rare Coins Compared to Other Collectibles
Rare coins stand out as a superior investment when compared to other collectibles, especially for someone looking to diversify their investment portfolio into the world of collectibles for the first time. Unlike paintings, sports memorabilia, or many other forms of collectibles, the rare coin market is characterized by well-established standards for determining the quality of a given coin and a stock market like infrastructure for ensuring the liquidity of your investment.

The Quantifiable Collectible
Not only is there a long history of capital appreciation, rare coins are also the "quantifiable collectible." Most of the key attributes that determine value in rare coins, including the quality of the coin and the number in circulation (supply), can be readily determined.

The grade, or state of preservation, of a coin plays a critical role in determining a coin's value. Rare coins are graded on a numerical scale from 0 to 70. Zero represents basal state and 70 represents an uncirculated (or mint state) specimen that is perfect in every respect. The higher its numerical grade, the more valuable a coin is to collectors. A one-point difference, not even discernable to the untrained eye, can easily mean thousands of dollars of difference in value. Therefore, the importance of consistent grading, according to a universally accepted standard, cannot be overstated.

The Professional Coin Grading Service (PCGS) was founded in 1986. About one year later, the Numismatic Guaranty Corporation (NGC), a worthy competitor, was formed. These two firms established a uniform coin grading standard, which has gained almost universal acceptance throughout the world. In addition to establishing the grades for individual coins, both the PCGS and the NGC publish a monthly survey of all the coins that they have graded. In combination with a coin's grade, these "population reports" are extremely important tools for establishing the value of a given coin. The grade and the population report provide the investor with the baseline information regarding the supply side of the supply and demand equation. Other coin grading services have emerged subsequently but these two services are the industry giants and Superior advises against relying upon grading from other services to establish market value.

Superior's strategy for creating value for its customers is predicated upon identifying coins that are truly rare (limited in supply) for which there has been strong historical demand. Such a strategy minimizes the risk associated with unexpected fluctuations in supply (new coins from a particular series being graded for the first time) or fad driven spikes in demand. Furthermore, Superior advocates investing only in high quality coins, those that have a high grade from PCGS or NGC. In summary, Superior recommends that you can achieve optimal results by using this data to invest only in highly graded coins that the population reports indicate are truly rare (fewer than 1,000 coins in their total graded populations) and for which there is proven demand from collectors over a long period of time.

PCGS and NGC are roughly analogous to Moody's or Standard and Poor's in the bond rating industry. Their data are completely unbiased but their data may not be completely accurate and the data, in isolation, is not sufficient to determine long-term market value. For example, PCGS and NGC have no way of determining if a coin has been removed from its holder and resubmitted, thereby increasing the population without an additional coin being graded. Furthermore, PCGS and NGC do not know how many coins in a particular series have never been submitted for grading. These ungraded coins represent a potential change in supply. That is among the reasons Superior advises against investing in coins for which there is a large initial circulation, even if the grades and population reports indicate that a coin might be rare. The risk or more coins from that large, initial circulation being submitted for grading, thus increasing supply unpredictably, is simply too great.

Liquidity
The advent of certified grading led to another important development in the rare coin investment environment, the formation of the Certified Coin Exchange (CCE) in 1990. This nationwide, computerized trading network for rare coins functions much like the over-the-counter stock markets do today, assuring liquidity among market makers. CCE is also the number one source for instantaneous pricing information. Live Bid/Ask quotations are available on both a "sight" and "sight unseen" basis. Subsequently, other reputable exchanges have been founded, including Coin Net and Eureka Trading Systems.

Furthermore, there are dozens of well-advertised auctions yearly; Superior is a leader in the auction field and can assist you in realizing the top value when selling your rare coins. Finally, well-attended coins shows take place on an almost weekly basis across the United States. In their totality, these channels result in rare coins being the most liquid collectible of all.

Long Term Track Record
Rare coins have been valued since antiquity and have been actively traded for fun and profit since the 17th century. The rare coin market continues to thrive today. Worldwide, it is estimated that there are in excess of 100 million collectors, with as many as 10 million of those in the U.S. alone. Coin collecting is not a passing fad. In contrast, sports cards, comic books, and other forms of collectibles are relatively recent phenomena…and they have no intrinsic value whatsoever!

From the King of Siam in the early 1800's to King Farouk of Egypt 150 years later, rare coins have been enthusiastically collected and traded. Given this and the mature market for establishing value and facilitating trading, collectibles have been correctly dubbed "the collectible of kings and the king of collectibles." If you choose to diversify your portfolio into only one form of collectible, Superior Galleries believes your best choice is clearly rare coins.