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Has the ship come in for modern issue numismatics?

Collectors have spoken! Modern proofs have proven to have the ultimate demand. One theory is that newly minted coins are particularly popular to internet buyers. Another theory is that the "new" collector is most comfortable with coins they recognize. Perhaps most importantly, collectors can obtain these coins in extremely high grades that would impossible with older coins. Modern issue coins have breathed new life into rare coin collecting.

Modern issues and other "novelty" coins being minted today have mintage's that seem tiny when compared to the regular issue coins being produced. Demand is so strong, people actually fight to get the pieces/sets. This represents a complete shift in ideology from only a few years ago. And judging by the demand, it is obvious that modern issue coins have become truly accepted by everyone.

Why collect rare (numismatic) coins?

There are many reasons for collecting rare (numismatic) coins:

1. Gold is an asset that is not simultaneously someone else's debt. The same is true for numismatic coins.
2. Numismatic Coins allow for complete privacy of ownership.
3. Numismatic coins are exempt from confiscation.
4. Numismatic coins offer complete portability.
5. Numismatic coins offer one of the best hedges against inflation and frequently outperform the stock market.
6. The value of high grade numismatic coins generally rises as inflation rises.
7. Numismatic coins will rise when the price of their bullion content rises, but will generally do so at a higher rate. For example, when gold rises $15 to $20 per ounce it is not unusual to see a $20 gold coin go up anywhere from $75 to $150 (or more) each!
8. While coins will generally go up as gold bullion rises, there have also been periods where numismatic coins have performed very well when the bullion markets were stagnant or even bearish. Rare coins collectors often enjoy the ultimate double play!

Is now the time to own precious metals?

Gold posted a 16-year high when it broke above the $440 an ounce mark on Tuesday 11/17/04 as investors continued to seek the safe haven of precious metals. To date, gold is up 70% from the $258 low to Tuesday's close. The track record for gold over the past few years is impressive.

• Gold generated 24% profits in 2002.
• Gold added another 21.2% in 2003.
• Over the past 12 months, gold is up 16%.

Precious Metals Act As Insurance against Inflation

During their December 2004 meeting, the U.S. Federal Reserve concluded that interest rates were still too low to curb inflation. The Fed made this assessment after raising rates five times within a 10-month period!

Consumers Tapped Out

SOURCE: Dow Theory Letters

August 4, 2004

On the consumer front, I believe consumers are close to, if not actually, tapped out. The multi-year spending spree of the American consumer could be coming to an end. That means that it's up to the US government to try to spend us out of the potential slump. But, I've repeated this counter intuitive statement. The irony is that the government is not spending enough, at least not enough to hold his bear market for stocks in abeyance.

Unfortunately, the rush for dollars is putting pressure on gold. Gold's time has not yet come. But it will. There;s no easy way to time the move in gold. It will come suddenly, and violently, as faith in paper collapses. Gold is the insurance we have to have, and I honestly don;t attempt to time it. I just want to own a certain portion of gold, and that;s it. This whole economic situation is far bigger than just walking away with some stock market profits.

Coin Expert Launches Fund in Unusual Niche

By Chidem Kurdas, New York Bureau Chief

Tuesday, August 31, 2004

NEW YORK (HedgeWorld.com) — Bulujian Capital Management LLC, Beverly Hills, Calif., a registered investment adviser in operation since 1992 and manager of a fund of funds, has started a hedge fund that will invest in rare coins.

"The rare coin market is on fire," said manager Razmig Bulujian. "We believe we are in the early stages of a secular bull market." He cites several factors: increasing bullion prices due to artificially low interest rates; concern over the twin deficits; rising geopolitical uncertainty; and other developments such as the growth of eBay, which provides an additional sales channel.

BCM Numismatic Capital Partners LP, which Mr. Bulujian believes is the first hedge fund in this niche, will build a portfolio limited to certified U.S. gold, silver and copper coins graded by two independent services, the Professional Coin Grading Service and Numismatic Guarantee Corp.

Mr. Bulujian emphasized that third-party graders such as PCGS and NGC have developed standardization, and thanks to that there now is a market where coins can be traded without being physically inspected. A small number of dealers still dominate, however, and relationships are important. He entered this world in 1981 as a 17-year-old, when he started running a coin business with his father.

After a stint at the Drexel Burnham Lambert office in Beverly Hills, he joined the Industry Council for Tangible Assets, where he helped lobby Congress to authorize the U.S. Mint to re-issue 90% silver coins. After that he worked at Merrill Lynch, which had a rare coin fund at the time.

But third-party grading services were not well developed yet, said Mr. Bulujian, who characterizes the coin bourse today as more like the New York Stock Exchange. Asked how the new fund's portfolio of rare coins will be valued, he said an independent committee of established numismatists would provide the auditors with portfolio valuation.

Having experience managing BCM Multi Strategy Fund, LP, set up for the Asquith Family Office, he advocates long/short investing as less risky than long-only mutual funds. "We are applying the lessons learned to our new fund," he said.

Mr. Bulujian expects BCM Numismatic Capital Partners returns to have little or no correlation to the direction and volatility of major equity indexes. The fund will seek to hedge its long exposure in coins with futures, futures options and short sales of precious metals and midcap to large-cap listed mining companies. It also may engage in asset-based lending to dealers, using certified coins as collateral.

The fund's distributor is Grant Bettingen Inc., a NASD broker-dealer headquartered in Irvine, Calif. Fees are set at 2% for management and 20% for performance.

This story brought to you by HedgeWorld.com.

Copyright 2004 all rights reserved.

Disclaimers: The information provided on this site is for the private use of our readers. The information herein is obtained from a variety of sources that the authors believe to be reliable, but we cannot guarantee accuracy or that information has not been condensed or may be incomplete. All opinions expressed by the authors and those expressing opinions are subject to change without notice. Future predictions, projections, or financial assessments could prove to be incorrect. The reader should take into consideration that our firm is offering for purchase a gold, silver, platinum based collectible. Accordingly, the reader should independently verify our opinions and conclusions and seek out information from a variety of news sources before making any purchase decisions. It is perhaps most important to always remember that past performance is no guarantee of future results.