Diversifying Your Portfolio With Metals
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Diversification is necessary to achieve a balanced investment portfolio. It allows the negative performance of some investments to be cushioned by the positive performance of others. Diversifying your assets among stocks, bonds, cash and precious metals is a sound strategy. Further diversification within the tangible assets sector can secure even more substantial benefits. In comparison to gold, all major currencies have lost ground over the past ten years. Precious metals or bullion have outperformed every major investment index over the same time period. To diversify within the tangible assets category, distribution across three investment sectors is advised. This distribution is the most profitable in the long term as each asset class comes with its own financial benefits. Different coin types can serve short, medium and long-term holding strategies to maximize security. Consider the following distribution model to take advantage of the opportunities these three asset classes offer.
Step I: Short-Term Growth Potential
IPM recommends that 30-40 percent of tangible asset allocation be in bullion and investment grade gold, with a minimum hold of one to three years. The value of modern-issue bullion type investment coins mirrors the metals market value or “spot” price. IPM’s recommended holdings include the American Eagle Gold, Silver and Platinum and American Buffalo Gold. These coins enjoy legal tender status from the United States Mint, allowing them to be traded almost anywhere in the world thus making them one of the most liquid forms of investment available. Investment grade gold represents a safe, conservative holding. IPM also recommends American- issue $20 gold coins issued prior to 1933. Each contains nearly an ounce of gold and their value closely reflects gold’s spot price plus a modest premium. The $20 Saint Gaudens, considered an entry-level rare coin, has historically acted as a safe haven and hedge against inflation. They are considered a more attractive investment if collected in sets.
Step II: Medium-Term Growth Potential
IPM recommends that 15-25 percent of tangible asset allocation be directed to mint state and proof graded coins with a hold of three to six years. These include $25 American Gold Eagles, $20 Liberties, Gold Buffalos, and modern issue Mint State 70 and Proof 70 coins with high grades and low mintages, as well as most historic gold and silver coins. Some modern-issue coins can behave like rare-collectible coins and can build collector or numismatic value in a relatively short period of time. The U.S. Mint production of its most popular coins numbers in the millions. However, some of the fractional, smaller denomination coin specimens can be difficult to procure because the lesser demand for smaller sizes results in lower mintages. This creates a significant unmet demand. Many historic U.S. coins minted between 1890 and 1933 fit this category.
Step III: Long-Term Growth Potential
The third investment sector is the most aggressive. It is recommended that 30-40 percent of tangible asset allocation go to pre-1933 gold and silver coins and modern-issue low population graded coins, with a hold of six to ten years. IPM recommends coins such as the Ultra High Relief St. Gaudens, ultra rare modern issue Mint State 70 and Proof 70 coins, and high grade rarities from the pre-1933 era, such as coins from the New Orleans Mint. These coins are not only investments but are considered pieces of history as well as works of art. Historically they have proven to yield the highest long-term returns. This sector is strongly subject to the ebb and flow of supply and demand, leaving these coins open to sky- rocketing prices, regardless of the current bullion market. These coins can form the cornerstones of a serious collection, a diverse portfolio, and a unique family estate. Elite modern-issue American Eagle coins have appreciated by as much as 10,000 percent and historic strikes can command an incalculably higher value. Because some of these markets are in their infancy, custodians of such specimens must have the patience necessary to wait through the cycles of collector markets for fresh demand to emerge.
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Gold, Silver and Platinum American Eagles are guaranteed in content, purity and ...