When would diversification be considered achieved

[KMAG100]

I saw a great post on tips to coin collecting. I'm rather new to collecting, so I was wondering?

 

http://blog.ha.com/2014/02/mark-felds-coin-collecting-tips/.

 

I was wondering on item 10. When would it be considered a collection to be a well diversified collection? Can a person only collect modern bullion coins from U.S. and still achieve a diversified collection? What would in your opinions a diversified collection look like?

[RWB]

When I have one of each.

[physics-fan3.14]

I was wondering on item 10. When would it be considered a collection to be a well diversified collection? Can a person only collect modern bullion coins from U.S. and still achieve a diversified collection? What would in your opinions a diversified collection look like?

 

If you are just talking for investment purposes, and you are interested in bullion, then you probably won't get more liquid than modern US bullion pieces. A diversified precious metals strategy would invest in multiple different metals (the US mints silver, gold, and platinum). More diversified might incorporate a few pre-1933 gold pieces (61-62 Libs, or 63 St. Gaudens).

[coinsbygary]

The way I read #10 was in buying coins as an investment. That advice is the same as if you were investing in the stock market. Don't put all your money into one stock, but diversify your investments into a variety of stocks. That way if one stock falls, it doesn't drag down your entire portfolio.

 

Coin-wise you might consider that the difference between American gold eagles and the gold bullion coins from other nations. However, buyer beware, its all gold and if one goes down because of the spot price, they all go down. Same with silver bullion. When it comes to diversifying coins within a collection for investment purposes, you should only buy coins that have more of a numismatic value rather than a value tied to the precious metals market.

 

What diversification looks like is as varied as there are coins in the world. What I can tell you is my own experience. First I don't buy coins primarily for the increase in value I anticipate. I buy them as a collector because they have a specific interest to me. That said, if you are talking investment, then buy the highest quality possible within your budget. Then plan on not selling them for a very long period of time. After all you're probably buying them at retail value and when it comes time to sell you'll be selling them at wholesale. Thus you have to wait until the wholesale value of your coin when you bought it rises beyond the retail value you paid to make a profit.

 

To better explain diversification, let's say I diversify my collection between Morgan's and type coins and subsequently the Morgans go down in value but the type coins don't. Then in that case my entire collection isn't dragged down by the softness in the Morgan market. But really, as a collector, I never think about that when I buy because I only buy what I like with an eye towards quality.

Gary

[MarkFeld]

I saw a great post on tips to coin collecting. I'm rather new to collecting, so I was wondering?

 

http://blog.ha.com/2014/02/mark-felds-coin-collecting-tips/.

 

I was wondering on item 10. When would it be considered a collection to be a well diversified collection? Can a person only collect modern bullion coins from U.S. and still achieve a diversified collection? What would in your opinions a diversified collection look like?

 

I posted a reply to your question, within my blog, a brief time ago, as follows:

 

Question:

"..when would you consider diversification achieved? Would it be as simple as modern gold vs modern silver, or modern world coins vs modern US coins? or Spot bullion vs government issued (currency) bullion? Not sure I asked the question well, but I hope you can get the jest of my question. Should the focus be on coins with underling precious metal compositions ensure floor on price as its relative spot prices of precious metal the coin is comprised of?"

 

Answer:

"Different types of coins and segments of the market can perform very differently from one another. But my guess is that “modern gold” and “modern silver” tend to move in tandem, at least if the coins in question trade largely based on their bullion value, as opposed to their rarity. So I would not necessarily consider that diversification.

 

On the other hand, I would think that modern world coins vs. modern US coins would at least be more likely to move independently of each other. Again, that could apply if their values are based largely upon scarcity and not their precious metal content.

 

It’s up to you to decide whether you should acquire coins with a focus on underlying precious metal composition, which serves as some type of price floor. However, I refer you back to tips #1 and 19 – please let them be your guide."

 

 

 

[coinman_23885]

I posted a reply to your question, within my blog, a brief time ago, as follows:

 

I didn't know that you had a blog. Do you intend to make regular coin posts or was this a one time thing?

[MarkFeld]

I posted a reply to your question, within my blog, a brief time ago, as follows:

 

I didn't know that you had a blog. Do you intend to make regular coin posts or was this a one time thing?

 

Thus far, it has been extremely sporadic. That may or may not change.

 

Edited to add: I misspoke previously and apologize. More accurately, it is a Heritage blog (not my own), in which I am one of the contributors.

[KMAG100]

Thanks to everyone for their input.