Research
Why are U.S. Investment Grade gold coins such a great investment?
While U.S. Investment Grade gold coins could easily stand on their looks alone, there are many reasons why experts value them as a solid investment:
- Historical significance and timeless beauty
- Always in high demand
- Significant return on investment potential
- Limited availability
- Increasing value
“The contention that gold is a better hedge against inflation than, say, rare coins, is not supported by the data, despite the recent increases in gold prices.
Including rare U.S. coins within an existing portfolio could improve investment performance.”
Lombra, Raymond E., PhD., The Investment Performance of Rare U.S. Coins, Penn State University, Analysis by R L Associates, February 2011
Lombra Report Proves Rare Coins Outperform Even Gold Bullion During Periods of Inflation
The study, updated through 2011, provides a comparison of the performance of gold and gold rare coins. Conducted by Raymond E. Lombra, Professor of Economics at Penn State, the study served as the investment basis for legislation that was passed by Congress and which provided for the inclusion of gold in Individual Retirement Accounts. The conclusions over the 33-year period covered by the Lombra Report are amazing:
- Rare coins are a better inflation hedge than bullion
- Rare coins are a better hedge than gold against falling prices for stocks and bonds.
- Rare coins produce significant profits even during periods when the price of gold is falling. For example, from 1988-1990, rare coins went up more than 100%; the price of gold fell from $500 to $360.
- The average annual return on rare coins was more than 185% greater than the return on gold.
- The return on rare coins in their best year was approximately 100% greater than the return on gold in its best year.
- The return on rare coins in their best three years was approximately 100% greater than the return on gold in its best three years.
Key Excerpts from the 2011 Lombra Report:
Evaluating Performance of Asset Classes Over Time
Average Annual % Returns 1979-2011
| Stocks | 12.3% |
| Treasury Bonds | 9.1% |
| Gold Bullion | 6.8% |
| Coins (all types — MS65) | 12.6% |
| Coins (all types — MS63-65) | 10.7% |
Correlation with Inflation 1979-2011
A Long Term View
| Stocks | .19 |
| Treasury Bonds | -.21 |
| Gold | .24 |
| Coins | .60 |
Note:
- +1.00 is a “perfect” correlation, meaning moves exactly in tandem.
- -1.00 is a “perfect negative” correlation, meaning moves exactly opposite.
- To hedge against inflation, highest positive correlation best.
Source: R. L. Associates, Penn State University
Find out how to profit during inflation and diversify your existing portfolio by adding Investment Grade Gold.
Buy Now or call a Blanchard Account Representative today at 1-800-880-4653.
Raymond E. Lombra, Ph. D.
Professor of Economics and Dean for Research, Graduate Studies and College Advancement at Penn State University, Professor Lombra has authored, co-authored and contributed to numerous economic and financial books, publications and periodicals. Lombra is a consultant to the House Banking Committee of the U.S. Congress, the Federal Reserve System, the Congressional Budget Office, the Joint Economic Committee, Prudential Bache, Morgan-Stanley Dean Witter, the International Monetary Fund and the U.S. Treasury. His many honors and awards include election to Who’s Who in Economics.
