Rare Coins - 3 Things To Consider Before You Invest
Collecting US gold coins and rare quarters can be an excellent way to invest your money, not to mention a great hobby in itself. However, if you’re thinking about investing then there are a few things you’ll want to consider first. Here are three things that every new investor should know about buying rare coins.
1) Secure Your Financial Future
When you’re searching for rare US gold coins and rare quarters, you should always remember that they are an investment for the future. Although the most rare coins will also be the most expensive, the likelihood is that the value will only continue to rise while you own the coin. Buying coins made from precious metal also means that they have a value in themselves, irrespective of the rarity of the coin design. This means that every coin you buy is a financial investment, should you decide to sell your collection in the future.
What this also means is that you’ll want to take extra care to ensure that what you’re buying is genuine, and that the coins have been well preserved. It definitely pays to get hold of a good coin value guide and study it in detail. Learn all you can about what makes a coin a good investment, both in terms of rarity and its aesthetic value as a work of art. This preparation will help you to make the very best decisions on what to buy.
2) Always Be Careful
No matter where you’re buying rare coins from, always be careful. Don’t rush into decisions, and use your common sense and instincts. If a dealer has only been in business for a short period of time then you’ll want to be extra cautious, and never be afraid to ask them as many questions as you need to put your mind at ease! There are professional coin organizations, so check independently whether your dealer is a member of any. Lastly, if you’re really not sure about the value of a particular coin then don’t be afraid to get a second opinion.
3) Where To Buy From
When it comes to buying US gold coins, there are a number of different places to get them from. In your local area, try seeking out coin auctions and local dealers. But don’t stop there! You can find even better deals by heading to the internet and looking at auctions and dealers who have put their collections online. Just ensure that they include plenty of photographs and answer all of your questions.
Risk Comparison: Options Versus Equities - Part 1
While future articles will return to focusing on the option Greeks, a recent comment regarding risk really piqued my interest. The age old discussion about risk versus reward, equities versus options, and the fundamental difference between Nassim Taleb’s “Black Swan” risk and what most people perceive as ordinary risk.
In a perfect world, financial markets are by design a discounting mechanism of a cash flow stream, risk versus reward, and a psychological environment where the difference between profits and losses is merely perception. In the end, trading is all about the mastery of risk mitigation and leveraging probability.
I am an options trader, not because I do not like equities or futures, but because I fear the perception of their so-called safety. Most academics and the average investor believe that financial markets, specifically individual stocks follow a Gaussian, or log normal distribution. While various economists and statisticians have argued this point for decades, to understand that price distributions are in fact not strictly Gaussian.
Price distributions are capable of exhibiting more than the predicted occasions of price inhabiting the extreme regions of the distribution curve. Understanding these concepts is critical in order to have a robust understanding of risk. This type of phenomenon is called “fat tail” risk; statisticians refer to it as leptokurtosis. It is this degree of risk well beyond the normally distributed range to which Taleb has characterized as “Black Swan” risk.
In financial markets, having accepted that these fat tails do in fact exist and exist with a frequency far beyond what is intuitively apparent, risk becomes significantly harder to quantify. When risk becomes more difficult to quantify it can be said that investors and traders have significantly more exposure to a catastrophic event than they realize.
In basic terms, the financial world we live in today is wrought with fat tails. Government integration and manipulation of financial markets, the Federal Reserve’s (supposedly independent) direct engagement into the bond market, and specifically treasuries and mortgage backed securities creates an environment in those markets where distributions are not statistically normalized. Geopolitical risk such as the potential for an Israeli air strike against Iran places unconditional risk on a variety of risk assets, at the forefront light sweet crude oil.
If one considers all the various risks extant, risk today seems excruciatingly high. Professors on Minyanville have recently called into question whether paper assets like the Gold ETF GLD is accurately priced. It is widely believed that there is significantly less physical gold versus gold-backed paper. This adds yet another element of uncertainty to an increasingly uncertain environment.
What would happen to the gold ETF GLD if an analyst announced that the GLD ETF no longer had access to physical gold? What would happen to the valuation? How can they maintain adequate capital levels inside the ETF if gold demand rises while physical supply diminishes? The answer is contraction in the NAV price of the gold ETF. In real terms, the ETF owns less gold than the paper supposedly represents and price must come down to indicate this discrepancy. Make no mistake, the market will be happy to provide the swift and unforgiving necessity of adjusting to parity.
While the above offers basic examples of fat tails, the increased statistical variation has a name. The name of this type of condition where fat tails surround us and atypical logarithmic distribution takes place is called kurtosis. As a side note, since recent and forthcoming articles are going to focus on the Greeks, kurtosis comes from the Greek word meaning υρτός, kyrtos, or kurtos. (Just thought I’d throw that in there for a synergistic moment)
A scenario similar to the condition in which we find financial markets today could likely be summarized as a period of time where Leptokurtosis has become prevalent. Leptokurtosis is a statistical phenomenon where a population’s distribution, in our case equities, has a rather pronounced peak around the average. This peak is representative of a population that is rife with fat tails, higher variance, and a propensity for abnormally large swings in the standard deviation of returns.
What does all this mumbo jumbo mean? It means that when fat tails are present within a leptokurtic distribution, risk literally can become infinite. Fat tails and leptokurtosis are just a few of the many statistical economic studies that have caught the eye of many academics, specifically in the areas of advanced statistics, mathematics, and . . . economics. Distributions, kurtosis, and fat tails are the science behind behavioral finance. To most people this subject matter is boring, however it is only boring if you have never experienced the gut wrenching expression of these phenomena in the market; after that experience, the subject becomes transfixing.
The average investor believes that when they buy a stock the likelihood of it declining significantly in a short period of time is relatively minimal. We have been conditioned by Wall Street snake oil salesmen that due to inflationary pressure, over long periods of time equities must rise as a function of inflation. Everything is a buy in the long term, plus it makes for a great story to build a business model around that the retail crowd buys into. While this may be true in the long run, we live finite lives which do not have the luxury of allowing behavioral mean reversion over geological periods of time.
Right now risk is excruciatingly high. We have a variety of risks and uncertainties that are plaguing financial markets. The statistics behind the market today would likely exemplify the excessive risk built into the current system. So how exactly does this relate to options you might be wondering? I trade options instead of individual stocks to reduce risk. Options offer a variety of ways to hedge risk, even after a trade has been initiated. Options allow for manipulation where as with stocks and futures there is little one can do besides fully hedge a position.
The reason I utilize options instead of futures or equities for swing trades is because by definition they are insulated from outlying events such as an unexpected act of war or a natural disaster which could interrupt the flow of commerce for an extended period of time. Options are inherently less risky than stocks because of the leverage built into them. Since all moneys invested in the market are subject to Black Swan risk, the ability to control an equivalent position with dramatically less capital commitment is a core risk reduction strategy.
Yes, a trader can lose his/her entire investment if they own an option naked. Experienced option traders that buy and sell calls or puts naked and then hold them for extended periods of time is likely an anomaly. Experienced option traders will use some form of a spread to mitigate their risk further. Additionally, most online brokers offer option traders access to contingent stops which are based on the underlying asset’s intraday price.
Fat tails and leptokurtosis are the result of financial markets reacting violently to unexpected events, similar to what happened this week when the jobs number was much worse than expected or to the still unknown factors which precipitated the recent “flash crash”. Large price swings similar to what we have seen recently are usually attributed to higher volatility. Higher volatility for prolonged periods of time is just another symptom that points to fatter tails and leptokurtic distributions. Reliance on the Gaussian, log normal distributions likely have some of the “machines” on Wall Street in a situation where their models do not work.
Option traders leaning long into the close on Wednesday that utilized specific types of spreads had limited risk. They did not have to worry if the market gapped their stop. Their risk was limited from the moment they initiated the trade. In contrast, an equity trader that went long before the close on Wednesday could have exited if they had access to the premarket, however if they didn’t the gap down found them losing more than they originally set out to lose. The market gapped over their stop, leaving them vulnerable to further downside. The unquestioning reliance on stops to close positions in times of Black Swan events is flawed at its core because it denies the very existence of unknown and unknowable risk.
This is just one example of how equity traders who routinely hold positions overnight are exposing themselves to potentially unidentifiable levels of risk in today’s market. If we are in a period where leptokurtosis and subsequent fat tails in the distribution prevail nothing is impossible when risk is being calculated. By statistical definition, a period where a fat tail(s) exist indicates a period where risk is extremely high.
Log normal modeling software will significantly underestimate the true risk in financial markets. What trading software and price models are you using in your analysis? If you are using a gut feel or one type of stock chart to help guide your decisions about risk, you could potentially be mischaracterizing risk by as much as 5-7 standard deviations. 5-7 standard deviations is scary my friend, the kind of scary that days that have nicknames that start with “black” are made of.
What About the Future of the Gold Marketplace?
If you have been searching for information on selling gold jewelry, there is no doubt you have seen major changes in the search engine results. It almost looks like the results change by the minute. But why is this happening? There are definitely a lot of big changes going on in the commodities market. The price of oil seems to be on the way up, yet again. It looks almost like 2008 all over again.
But what does that mean for the price of gold in the near future? Well, if you have been watching the cable financial programs lately, you know that the price of oil and most other commodities are up. But why is this happening, and why does it seem to happening so quickly.
Well it’s all based on consumer confidence. Most of the experts say that we are out of the recession that we have been in for a few years now. But have you noticed? Are you making more at your job? I for one am not.
Consumer confidence and the price of food at your grocery store can be based on the strength of the dollar against other currencies around the globe. But how does that effect the price of gold and oil?
Take a look at the monetary policy here in the States. What in the world is the FED thinking by devaluing the dollar? It just makes no sense to me. All of the turmoil in the oil producing countries has driven up the price of oil causing weakness in the dollars. And this effect has caused the price of gold to spike again. The key to making money in this market is to understand how that relationship can work for you.
All of this means that the value of gold is on the way up again. I thought that the $1300 to $1400 range was the end of the line for gold. But I was simply wrong. Now is the time to sell gold jewelry so you can cash in on all of that profit potential.
All People Are Attracted To Gold
Gold is absolutely singular among precious metals as regards the duration of its use, its multiple functions and the amount consumed over time. People’s passion for gold arose at first from its stunning bright aspect, due to which they called it ‘aurum’ in Latin, namely ’shining dawn’. It was already used in the Chalcolithic by artisans, who were attracted by its appearance and, further, by ancient Egyptian craftsmen, who devised not only the first gold coins as gifts, but also created such immortal works of art as the gold tombs of pharaohs, full of incredible gold ornaments and jewels. The same passion for this beautiful precious metal was apparent in the Europeans’ fascination for Americas, where they hoped to find innumerable gold treasures.
As to the uses it has had so far, this precious metal has been the material of choice for jewels, coins, artistic or industrial applications. We can still admire the most stunning gold coffin ever made belonging to Tutankhamen or the European queens and kings’ rich and elegant crowns and clothing items, epitomes of craftsmanship and physical proof of humans’ lasting admiration for gold.
They used it as currency for a long time, gold not only looking gorgeous, but being also a store of value. In the sixth century B.C., gold started to be used for trade, in the forms of coins. While gold coins no longer serve as money nowadays, they are, however, precious due both to the precious metal they consist of and to their rarity, being at the same time collectible. They also represent a safe investment, as profitable as high-purity gold bars, for those that are looking for diversifying their assets as a hedge against financial crises.
If its gorgeous look and anti-oxidation characteristics make it perfect for jewelry and coins, its ductility and conductivity make it equally so for a wide range of contemporary industrial applications, be them in the electronics industry or nanotechnology.
That everyone enjoys having gold is proven by the high demand for it, more and more people buying gold in whatever form, from jewelry to coins or bars or to electronics goods.
Acquiring A Mentor For Online Proprietary Trading Is Key
On-line proprietary trading is usually an art of doing business. Rules differ and alter quickly. The unique procedure for business is a person may or may not deliver the results with the other. Despite the fact that books can offer pointers but it’s a different thing in the real world. Experienced traders make the perfect way to obtain strategies for this type of business. You can find fragments of indicators obviously which one can use to be able to see what is happening? This will likely signal the trader to keep or otherwise not the transaction.
One of the most utilized factors in on-line trading is faith and confidence a sort of credibility you spent to that situation. This is quite delicate. It is the skill a person has gotten over years of online trading. You sense through discernment to stop or not to stop negotiating. This particular distrust red light increases and immediately there’s a continuing warning device-detector inside the on-line investing. In the end, it’s up to the particular trader to decide his fate.
When the proprietary trading starts and you go through the various condition of stocks already in the market you must have the impression to go and target distinct classes of stocks as well as clients. In case you sense that you are just forcing your self then this is a negative warning since you are not in control. This “mood” cannot signal the green for any specific daytrading and would ultimately have an effect on the implementation of deals since the business-tunnel has been take off from having immediate access to business and could have forfeit good-active trading signal.
Whenever bad situation like this occurs, you should check your system. The software should be constantly checked for updates and efficiencies. Stocks are certainly not static objects yet active virtual figures flashing before your screen. Only one person, with years of trading education, can easily understand their meaning. They are similar to clouds above passing with continuous shapes and colors. There’s nothing permanent. So there must be a consistent effort to quickly reload your software program with newest updates that you can get in the market, because this gives you a sure head-start. You are aware that time and tide don’t wait, therefore you must always be in control be among the finest traders in the marketplace.
If you think that your mood is usually negative and usually has got the tendency to approve offers later, that sensation is threatening. You may lose very good chances for not necessarily being sure about yourself. Should this happen, one of the good stuff to try and do is definitely attend seminars and be educated. It’s better to learn more skills from those pros who have been there and people who have succeeded in proprietary trading. They know what best indicators and exactly what are not. In short don’t get into this business with out basic fundamentals and general understanding of this particular business. If you need your career to succeed then take into account obtaining excellent fundamentals. It’s bad to know that to many people their cart comes before the horse. Apply it the other way around.
Though it is very important to be factual and sensitive to protect your hard-earned money, I am sure you’d probably agree to stabilize it with currently being positively sure. Be careful about your attitude, do not get trapped with a great deal of speculation and pure probabilities. In short, get it done with scientific discernment using excellent training, reliable software, attending important seminars, and excellent observation skills to proprietary trading indicators online.
Buying Gold Is One Of The Safest Investment Plans
Everyone knows that investors buy gold in times of economic turmoil. Those times of economic turmoil are now. Some investors are luckier than others because they may have bought gold much earlier, and at a better price. But, it’s never too late to consider precious metals as an investment, and buying gold bullion is the most popular way to safe harbor wealth.
The best way to buy gold and the best time to do it is when its value has declined. Since the trend is for its value to increase, buying early and at a better price reaps the best dividends. Yet because gold is a fairly safe investment, returns on your investment may be limited. However, if you’re looking for a solid investment, then gold is the natural choice.
Buying gold bars, bullion or coins is not a difficult process at all because you can do it easily. The best way to buy gold is through certain gold selling institutions and companies that offer those services, such as brokers, trading houses and dealers. Yet why would you want to buy gold in a stable market when you can make a greater return on stocks? Additionally, why would you want to buy gold during economic upheaval when no market seems to be safe from recession? You are able to protect your investment from the local economic instabilities when you invest in gold.
The main reason to buy gold is obviously because of its value. In 2009, for example, the price per ounce of gold was up over 23%. When comparing between stocks and gold, the market favors the latter, with a much greater stability not only during 2009, but even now. It is expected that one ounce of gold will reach $1300 towards the end of 2010. In this way, the choice to buy gold represents a safety net against the losses you may encounter in other forms of investments.
Most investors see buying gold as a security measure against the long term instabilities of the market. The price of gold is resistant to short term political upheaval and economic conditions. It is a naturally occurring precious metal, so it cannot be manufactured or duplicated in any way. This means that there will always be a high demand for gold. Using a bank, mint or gold dealer is the best way to buy gold. Remember to talk to a gold expert and ask questions before making an investment.
Is Gold Too High To Buy?
With stocks going up and down now, gold has outperformed the stock market in the last couple of years. Gold has been on a tear the last 6 months to reach all time highs and it makes you wonder whether it is now time to pull back some of your gold investments.
Gold is customarily considered a hedge against uncertainty and the world condition at present is most assuredly uncertain. Gold have never declined to zero and that is something that cannot be said for stocks, many of which have lost incredible valuations. For those owning gold, they must be thankful to have made an investment that has performed so well.
People with money to invest have to make choices that are increasingly tough in this very bad economic environment. It is difficult to find any investment that is truly safe and pays any sort of reasonable return. If you want to put your money in government guaranteed treasury bills or bank certificate of deposits, you are now getting next to nothing in interest. It is also debatable just how safe anything with the government is since it is technically bankrupt.
Gold has been seen as safe but at these high prices you have to be careful not to be investing your money at the top. Just like stocks, gold has experienced big drops over time and that could happen again here. Just because it has always recovered from any dips is no guarantee that it is totally safe.
Financial advisors will usually tell you to disseminate your money in gold, stocks, and other investments. This obviously helps to safeguard against losing all of your money, should something happen in one area in which you have invested. So don’t be afraid to add gold to your investments while keeping some of your money in other areas as well.
