At the time of original publication, the article described the following: On the morning this article was written, the original author was driving to work and considering the appointments ahead: regular customers, newcomers, and sellers. Regular customers generally knew Atlanta Gold & Coin’s methods and its approach to different types of coins. Many new customers, however, were purchasing coins for the first time and looking for direction. Before an initial transaction, Atlanta Gold & Coin often spent a half hour or more discussing coin and bullion investing with people new to the field. Years of purchasing coin collections had also offered insight into how other coin dealers conducted business—some approaches were good, and some less so. Those observations prompted the article’s comparison between coin dealers and investment advisors.
Investment Goals/Objectives
The original article said that investment advisors typically begin by asking “What are your investment goals and objectives?” This was also the first question Atlanta Gold & Coin posed to new customers at the time. Many first-time customers wanted coins as a hedge against inflation, financial crises, growing national debt, trillion-dollar annual deficits, and currency devaluation. Some also worried that the monetary system could collapse and barter might be needed until a new currency was created. The article characterized these buyers as clearly interested in bullion and said low-premium gold and silver coins suited their investment objective.
At the time of original publication, the article described the following: Conversely, the article described people interested in coin history, completing a type set, and owning rare, obsolete, or distinctive coins. Although they wanted purchases that held value and perhaps appreciated later, their main objective was not necessarily investment but collecting. These were presented as genuine collectors and possible candidates for numismatic coins. The article said a coin dealer should spend time educating such customers about available coin types, rarity, and historical importance, while making no promise that coins would continue appreciating as they had previously.
Risk Tolerance
At the time of original publication, the article described the following: The original article viewed risk tolerance as a frequently overlooked part of buying coins, but one that should be covered at the beginning of a transaction. People who had only recently followed gold, silver, or numismatic-coin prices could assume prices simply rise. Customers were often surprised to learn that gold reached $1,900 per ounce in August 2011, silver had recently topped $49 per ounce in April 2011, and platinum’s all-time high was $2,300 per ounce in March 2008. These figures illustrated that precious metals can be highly volatile. The numismatic market had likewise experienced rises and declines, highlighted in the following article from Mark Ferguson. Establishing realistic expectations and explaining investment volatility was presented as an important responsibility, much like an investment advisor’s role.
Time Horizon
The original article said the time horizon for any investment—stocks, bonds, bullion, or numismatic coins—should be discussed because it often shapes a customer’s approach. People with short horizons were said to be better served avoiding bullion or numismatic coins, just as they might avoid stocks, unless part of their funds had been set aside for speculation. Atlanta Gold & Coin was often asked where gold and silver prices would go over the coming months and said it did not know. The article advised readers to disregard anyone claiming to know, because many factors can move gold and silver values in the short term. It nevertheless expressed a view, with what it described as reasonable certainty, that gold and silver should be higher five to ten years later, especially if record annual deficits, national debt beyond annual GDP, and loose Federal Reserve policy continued.
Summary
In closing, the original article identified several similarities between investment advisors and coin dealers. First, it said a coin dealer should discuss a new customer’s investment objectives before steering that person toward a particular investment. Second, the dealer should determine whether the individual is risk-averse or a risk taker and whether they can handle the volatility associated with different investments. Finally, a person’s time horizon should be understood before bullion or numismatic coins are purchased. The article concluded that following these guidelines could help align a coin dealer’s interests with those of customers.
