I think there’s a huge opportunity to profit here. As gold and silver keep rising, people are going to realize the advantages of owning physical gold and silver… Sooner or later, the rare coin market is going to attract the attention of investors.

The buying power of the dollar is collapsing. I received these statistics from David Hall and Van Simmons this weekend…

The average inflation rate of these basic items over the last four decades or so has been 5.5%. Let’s look at some more recent examples…

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“Three years ago, a 20-ounce Diet Coke from the vending machine in our company’s lunchroom was 90 cents,” writes David Hall. “Today, after three price increases from the vendor in three years, it’s $1.25, a 45% increase in just three years.”

“I have a friend who lives in Las Vegas. He’s a mathematical. He likes to keep track of prices at the grocery store. A year ago, a gallon of milk at his grocery store was $2.99. Today, same store and same brand of milk, that gallon costs $4.17. He likes McCormick Black Ground Pepper. A year ago, a container of the pepper was $2.99. He ran out of pepper a week ago and bought a replacement, same size container, same brand, and same store. The price… $6.99!”

These stories are compelling. They point to an acceleration of inflation. I can’t prove this acceleration, but with all the money the government is printing to pay for Iraq, to refund taxes, and to bail out Wall Street, it makes sense inflation would accelerate. 

These statistics remind me why I love investing in rare American coins. I wrote about the Morgan Dollar last week in DailyWealth. Today a Morgan Dollar costs $170. In 1985, these coins were selling for $1,000 each. It’s the same way with all rare coins. Take a mint condition Saint Gaudens $20 gold coin from the 1920s. In the mid 1980s, it sold for $5,000 each. Today you can get these coins for $2,000.

While all other goods inflate, rare coins have deflated. It doesn’t make sense. Unlike a loaf of bread or a pack of baseball cards, there’s no way to increase supply of these coins… at any price. They haven’t been produced since 1933. When you buy these coins, you buy a piece of American history. And they are beautiful, too… like little pieces of art. You’d think they would have kept pace with inflation better than gasoline. 

I think there’s a huge opportunity to profit here. As gold and silver keep rising, people are going to realize the advantages of owning physical gold and silver. Beauty and history aside, they are portable, liquid, and you can buy and sell them with cash.

Sooner or later, the rare coin market is going to attract the attention of investors. They’re going to find supplies are incredibly tight and the prices of these coins are going to shoot back up to their historical records.

If I’m wrong… and there isn’t any inflation… well how can you lose money buying a rare Morgan Dollar for $170?

Good investing,

Tom