WHY FIRST FIDELITY RESERVE

  
Sound Strategies vs. Speculation:

Why rare coins? Why not bullion? Why not gold stocks? Why not a gold ETF?

When one thinks of buying gold they many times think of Metal Content. Although this is one way to amass a “small nest egg” of precious metals, it also comes with Speculation. Now, when we talk of Speculation in the precious metals market, we are not saying the “roar” of collapse that can be found in other investment arenas… instead, we are talking about the “noise” that comes with the ups and downs of everyday trading.

Let’s face it, gold has been around since the beginning of time and is not going anywhere. This being said, many people do not trust that the powerful array of market forces underpinning gold’s bull market is not being manipulated by markets that are out of their control. But, if one holds his gold in the form of rare coins, he has a kind of a built-in insulation to market “noise” due to the fact that rare coin prices historically tend to move systematically gradually and don’t flicker up and down according to the daily headlines as bullion does. This is why rare coins are the great diversifier.

Rare coins meet all of the strategies for owning precious metals – financial insurance, wealth preservation, investment potential, and wealth building. They gain value disproportionately based not only on the metal but the demand of investors and collectors as well.

So... back to the original question...WHY WE IGNORE SPECULATION IN PRECIOUS METALS?

Some of the most exquisite artistry in our history is captured in our coinage –miniature sculptures in gold. For many collectors, just the pursuit of rare coins itself is an exciting adventure. “The hunt…The chase…Always looking,” says a California collector who paid over $8 million for some of President Andy Jackson’s personal coins. “It’s kind of like an Indiana Jones thing – always looking for something new you haven’t seen yet and that you haven’t been able to acquire.”

Individual coins and collections have been routinely setting records over the past few years. A few years ago, a California man shelled out $8.5 million for a set of 10 coins given by the King of Siam to President Andrew Jackson. A few months earlier, the finest known specimen of 1913 Liberty Head nickel sold for $4.15 million, the highest price ever paid for one of the legendary nickels and the second highest reported price for any rare coin. In 2002, a 1933 Saint-Gaudens $20 gold piece set the all-time record price for rare coins at $7.59 million. These are just a few examples of recent record-setting prices.

Not every rare coin sets a price record every time it changes hands. But rare coins do tend to hold value once they’ve reached a price level NO MATTER WHAT BULLION DOES. That’s not true in every case, of course, but applies in general. Over the last ten years, the key dates and rarities index has almost tripled, with not one significant downturn. Most of that sharp rise has come since 2001, coinciding precisely with the beginning of the great bull market run for gold. As people began to jump on the gold bandwagon again, rare coins shared the glow and should continue to do so.

How do rare coins stack up against the stock market? -- Let’s take a look.

If you had invested $10,000 in the Dow five years ago and left it there, today it would be worth…$10,000 (well, not even that…you’d have to subtract broker and fund management fees). Zero growth in five years. Even worse, at one point (spring 2008) you would have lost 13% to 30% of your investment if you had panicked and thrown in the towel then.

On the other hand, if you had put your ten grand into a market basket of rare coins, you could have about $19,500 now, almost double your value in five years. So ask yourself, where’s the smart place to put your money?

The Continuous Market

Making money is by no means the only reason to collect rare coins (though it’s surely not a bad one!). There’s more to rare coin collecting than making a profit. Rare coins are the pinnacle of coin collecting, the elite strata occupied by the best of the best. Okay, so that’s an ego thing. But there’s nothing wrong with wanting to be in the best company. What does this mean to those who choose Rare Coins over Bullion—A Continuous Market!

Everything on the planet is pushed up and down by Supply vs. Demand. Rare coins are highly desirable for the very simple fact that they are rare. The available supply is finite. By definition, no more of them are being made. The number that exists today is all that ever will exist. In fact, the number continually decreases through attrition as some rare coins are lost, damaged, destroyed, or taken off the market through donation to museums. Adding to the appeal of ever decreasing supply on the market is the ever increasing demand of collectors.

As recently as the late 1990s, the total estimated number of coin collectors stood at about 6 million. In late 2007, the U.S. Mint announced that the base of coin collectors in the United States had exponentially exploded to a record number upwards of 140 million. Such a vast base of new collectors bodes well for the long-term prospects of coin collecting.

What it comes down to is that, there are many good reasons to buy proven, safe, and non volatile rare coins and NO reasons to try to guess about speculation!