Why Is Rare Coin Diversification Important?
Diversification is a good practice for all investments, including rare coins. With a given amount of money to invest, it may be wise to purchase three or four rare coins rather than invest everything in one coin. Some coins become popular and some may not move up on price for years. Diversification helps protect against buying a “forgotten” coin. Another possible issue is the sudden discovery of a lot of mint state coins when the investor thought he or she had one of only a few. Here we are talking about shipwreck gold coins.
In 1846, the SS New York went down in a hurricane off the Gulf of Mexico. The ship was carrying gold coins minted in the South at New Orleans, Dahlonega and Charlotte. The Dahlonega and Charlotte Mints were established to mint coins from the first American gold rush but in later years did not mint large quantities. Thus there are typically few mint state rare gold coins from these mints in many years. With the recovery of rare gold coins from this shipwreck, a large number of rare Southern mint coins were inserted into the market in very good condition, diluting values for other similar coins.
The recovery of gold coins from the SS Republic off the coast of Georgia brought nearly 500 early Double Eagles to the rare coin market. The rare coin market works on supply and demand and adding more mint condition rare coins to the market does have the effect of depressing prices.
For reasons like these, diversification of rare coins is just as important as in any other investment. Whether from a shipwreck or Grandpa’s old coin collection found in the attic, having a variety of coins can keep an investor’s portfolio from sinking.
Shawn Penny
Senior Staff Writer - Rare-Coin.org
