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Brian's note: Here at DailyWealth, we're wrapping up the year with a series of essays on silver, which could rise hundreds of percent in the years to come. If you haven't yet bought the precious metal, be sure to read yesterday's essay. And if you're looking for a cheap, easy way to buy silver with a bonus "collectible component," read on...

How to Get an 83% Discount on a Rare Silver Coin

By Tom Dyson, publisher, The Palm Beach Letter
Tuesday, December 28, 2010

Van Simmons started collecting rare coins when he was 12 years old...
Back then, coin collecting was a tough business. You had to be an expert, or you'd get ripped off.
The old coin market was a bit like the diamond industry is today. To value a diamond, you have to be an expert with a magnifying glass. You have to know about flaws and colors and cuts and clarity. Then you have to know everything there is to know about history and prices. Only then do you have any idea what a stone is worth.
The rare-coin market used to be the same way. You needed a magnifying glass and 30 years experience to judge the value of a coin. Professionals had a large advantage over nonprofessionals. Mainstream investors stayed away from the rare-coin market. They thought the market was a fraud.
Then Van Simmons came along. In 1986, Van co-founded a business called PCGS or the Professional Coin Grading Service. This service revolutionized the coin industry. It made coin prices transparent.
Van hired rare-coin experts and asked them to grade billions of dollars worth of coins. After they had graded the coins, the experts sealed them in airtight plastic wallets. The plastic wallet acted like a guarantee of authenticity. Novice investors could trade coins with other novice investors without knowing anything about coin grading. PCGS became a very successful business... and today it's still the top grading service in the world.
Outside coins, Van also collects pocketknives, Winchester and Colt antique firearms, American Indian memorabilia, antique fly-fishing rods, marbles, classic surfboards, old skateboards, and much more. Van has a library in his house. He packs its shelves with price guides for collectible objects.
He's too humble to say it, but he's one of the most important people in the collectibles business.
I spoke to Van last week and asked him for a coin recommendation. I told him I wanted something affordable. "That's easy," said Van. "Morgan Dollars are a great deal."
The Morgan Dollar is a silver one-dollar coin. The U.S. minted Morgan Dollars between 1878 and 1904... and in 1921 for one year. The coin contains 0.77 ounces of silver.
"I just bought another 100 myself," said Van. "I love them. But they are getting hard to find."
In 2003, when silver was $4 an ounce, you could have bought a common-date Morgan Dollar for $125 in mint condition (MS65).
Today, silver is around $30 an ounce, 650% higher, yet you can buy the same mint-condition Morgan Dollar for only $170. To give you an idea how much these coins could be worth in the future, in 1985, Van Simmons paid $1,000 for one of these. Now, you can buy at an 83% discount to that price.
Rare coins do not move in tandem with gold and silver prices. In the last bull market, the silver price peaked in 1980, but the Morgan Dollar didn't peak until 1985. The same thing is happening today. Everyone is focusing on silver bullion. They're overlooking silver coins.
I don't know when the next bull market in rare coins is going to start, but I'd rather buy something that's only up 35% from its lows of the last 10 years than something that's up 650%.
Besides, if Van Simmons is buying them for himself, they're good enough for my portfolio...
Good investing,
Tom Dyson

Further Reading:

Here at DailyWealth, we believe silver has the potential to rise hundreds of percent over the coming years. And we believe investors who stay current on what's happening in the silver market have an enormous advantage over average investors who don't give the asset a second thought.
So each day this week, we'll share a great silver idea. We hope you find them useful... and that you'll use them to make substantial gains over the coming years.

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