Ken Smaltz (www.keeperofthecoins.com)
Ken Smaltz (www.keeperofthecoins.com)

Remember when Hummers were cool? And lest any of us forget, so were those dollar-sign pendants sparkling with diamonds not too long ago.

I have always regretted seeing those trinkets that can only depreciate in value, which people invest hard-earned money into as a reward for their success.

Many of us have that quintessential image of young, chart-topping musicians and pro athletes showing off with expensive cars and flashy jewelry to up their cool factor.

People have playfully called it “bling.” But the sad reality is this type of bling often becomes worth much less than what was paid for it, and that is most certainly not cool.

Bling that retains its value

Just as I cringe from watching past icons make spending habits that once seemed like a good idea, I also breathe a sigh of relief knowing that nowadays, making smarter investments is officially the new cool.

There are signs on every corner that people are looking for more intelligent ways to invest their money, and not just in the places you’d expect such as 401(k)s.

The savviest realize the power of investment, and are learning that rare coins, fine art and wine, instead of wasting money on traditional “bling,” provide a way to enjoy a luxurious life with beautiful objects and collectibles that accrue in value.

Comparing coins with “bling”

Don’t get me wrong. I appreciate my fair share of life perks. Anyone who knows me knows my affinity for great watches.

But, my point is, why wear thin layers of gold on run-of-the-mill jewelry when you can hold onto valuable coins, precious metals, or esteemed art objects, and watch them appreciate from generation to generation?

Not only do commodities like coins increase in value, but they can pose less risk in terms of investing than stocks. Items like coins, wine and fine art can provide a safe haven from the volatility of the stock market.

They may not be totally portable, but they can always be enjoyed in an appointed home, another asset likely to increase in value if purchased wisely.

Why not expand your way of thinking about buying “bling”?

Intelligent bling versus market investing

The stock market is a great investing tool, but not without its challenges.

Stock investors saw unusual market volatility in 2008 following the savings and loan crisis. There were record 100-point swings in both directions on the S&P 500 index, with the market finally petering out at a 45.5 percent loss near the year’s end, the greatest year-to-date loss since 1931. The index reached a 13-year low by March 2009.

Meanwhile, fine wine investors saw their share of peaks and valleys in the wine market, but the changes were far less volatile in 2008 than in the stock market, according to data from the Liv-ex Fine Wine Investables Index. Since December 2008, the wine index has steadily climbed.

With a fluctuating economy and the devaluation of the U.S. dollar, rare coin investing, likewise, is one of the best ways to ensure wealth protection during monetary, economic and social crisis.

Although the number of serious coin collectors in America is under debate, since 1999, the U.S. Mint reports that more than 136 million Americans collect coins to some extent.

Celebrities buy into intelligent bling

This new trend in investing has definitely caught the attention of America’s well-to-do.

Celebrities including basketball star Dennis Rodman, hockey icon Wayne Gretzky, actors Jack Black and Nicole Kidman, Los Angeles Lakers owner Jerry Buss and film director Penny Marshall invest in coins.

There really is a “cool” factor to investing in rare coins, too. As one of the top coin dealers and an advisor on coins and collections in the United States, I can easily say that rare coins are a great alternative to regular bling that truly shines.

Advantages over traditional stocks

Among other advantages, the rare coin market is the most private and thinly traded of all financial markets. One can conceivably become a market player with about a $1 million investment.

Rare coins provide numerous financial benefits to investors. Consider the following:

  • There are no forms to fill out when you buy or sell investment rare coins.
  • They can be easily traded and gifted.
  • There is no annual dividend tax to pay because coins do not pay dividends.
  • The capital gains on your rare coins can only be taxed at time of liquidation.

Rare coins have entered a new renaissance with thousands of new collectors entering the market and vying for a limited number of rare coins.

During a recent Sotheby’s auction, a 1933 St. Gaudens rare gold coin sold for $7.59 million. One of only five 1913 Liberty Head V Nickels sold for $3 million dollars in 2001. Experts predict the Liberty Head V Nickel will sell for more than $10 million before the end of the decade.

These record prices are just the beginning in a new wave of gains.

Are you willing to ride the wave? Along with purchasing art, wine and other things of beauty that increase in value, these types of investments are important for African-Americans to consider. I like to think of it as smart investing in the “New Bling.”

Ken Smaltz is a rare coins dealer and owner of K. Smaltz Inc. K. Smaltz Inc. is one of the the first African-American-owned rare coin companies in the United States.