The Atlantic Collection
 

An older friend (82 years) has asked my opinion about an investment opportunity and I�d like to know what you folks think. He currently owns some older Swiss francs that he purchased from Goldline, which illustrates the differences in our objectives. I�m interested in the bullion coins; he paid a big premium for numismatic value. I�ve taken delivery of my PMs; the good folks at Goldline hold my friend�s gold coins for him.

Now, Goldline, always on the hunt for new sales opportunities, has sent him a very slick brochure touting the virtues of collecting uncirculated paper currency from the 1880s (the Atlantic Collection). He proposes to buy some and once again have Goldline hold his purchase for him. After some deliberation, I have the following advice for my friend:

1) I still don�t like his not taking delivery of his purchase.
2) Unlike his gold coins, this paper currency�no matter how rare�has no intrinsic value. It�s paper after all!
3) The market of currency collectors is very thin compared to the much deeper market of numismatic coin collectors. I�m reminded of The Antiques Road Show: so your object has been appraised, now all you need is a buyer.
4) Investments in numismatic coins, and paper currency for that matter, carry hefty premiums and may require fairly long periods of time before the investor can sell at a profit. Just how long does my 82 year old friend think he�s going to live any way?!

So, what have I missed? Do you folks share my view? What should I tell my friend?

Re: The Atlantic Collection
 

Tell him to be afraid - very afraid!
Sounds to me like he has more money than sense.
Convince him to put his $'s in "hard" assets, and take delivery.
Anything else is no more than a promise and, just like a promise, can be broken.

Re: The Atlantic Collection
 

advise him to take delivery, better yet, demand he take delivery, this man has more years under his belt than i, and i wouldn't let anyone hold my property at my advanced age, does he have family? does he realize the hassle involved in their receiving these goods in the event of his ultimate demise?

as for the currency, is he a numismatist? or is he just falling for a line of hooey?

different people collect different things, if he truly enjoys collecting currency, i say fine, not everyone is a bug. but as you state currency is a very thin market w/ a very thin demand, sounds like he's being drawn into a one way deal, he dies, and the company holding his assets profits.

and at 82, can he really afford to wait out the PM markets.

Re: The Atlantic Collection
 

His only surviving relative is his older sister. He would leave everything to her. Is there a hassle if he names her beneficiary on the account?

No, he is not a numismatist! Just greedy, I think. And because he has had some small good fortune with his stock market investments, has let it go to his head. If he were really knowledgeable about collecting coins and currency, I'd tell him to collect to his heart's content. But then, if he were really knowledgeable, he wouldn't be asking my opinion.

He's still in good shape (for 82). But he's fought off bladder cancer, suffers from macular degeneration, and no one lives forever. I'm going to suggest that he follow the sage advice to invest in what he knows best and beat a hasty retreat from unfamiliar territory.

Re: The Atlantic Collection
 

Explain this to your friend......

If Goldline were to go into bankruptcy, he would likely be named as a creditor and be lucky to receive anything more than pennies on the dollar for what he has invested.

Best route for him would be to liquidate everything he has with Goldline (including the semi-numismatic coins) and turn it into the lowest premium bullion material that he can obtain, probably Krugerrands and/or U.S. junk silver bags. These will give him the most bang for his disillusioned bucks, and physical delivery is ALWAYS preferrable to any kind of storage arrangement.

Back in the 70s, many, many, MANY numismatic and bullion dealers went belly up due to their "storage programs", many of which were caught using customer funds to play the markets, and ultimately LOST due to bad business and investment decisions.

Storage programs are just another paper game in which YOU are more often than not, a "creditor" rather than an "owner" where your material is concerned.

ALWAYS take delivery so that YOU have full control over your investment.

Numismatics and Paper Currency are a fool's game unless you are very knowledgable of the markets and the material involved. You are looking at 25% (and often much more) profit margins off the top, and purely arbitrary market values at best, often on items that have no real "collector rarity" beyond the marketing hype spewed by the promoters. There are alot of scams played out as legitimate promotions in the collector's market, and that's one of the best reasons to stick with the better known (and most marketable) bullion material if you don't have the knowledg required to tackle the numismatic dealers on a level playing field.

Re: The Atlantic Collection
 

Merlin,

what i mean by a hassle is she will need to provide a death cert., prove she is the bene., etc. plus seeing as how NO ONE has seen these bills, would you enter into a blind transaction? this is especially profittable to deal with relatives of the deceased! no lookee, no knowee, give 'em anything, tell 'em this is what the dead guy bought.

at the very least PM is a commodity, it holds it's value as a metal, and is not based on someone's whim.

Re: The Atlantic Collection
 

Reminds me of that Brilliant Uncirculated (NOT!) Walking Liberty Half I purchased at a coin show at a local hotel 25 years ago from a "dealer," only to find out later that my $500 purchase was worth maybe 1/10 what I paid for it -- a very painful but oh so very valuable lesson. Thanks, folks, for all the good advice. I'm sure I'm on the right track with advice for my friend.

Re: The Atlantic Collection
 

Mr. Shiny, I agree with what you say. Especially since the revolution of independent, third-party grading that has transformed coin collecting has not yet been fully accepted by currency collectors, where condition is every bit as important as with coins.

Re: The Atlantic Collection
 

At his age, he may be letting Goldline hold his material because he is (sensibly) aware his own faculties are perhaps not the sharpest any more, and certainly not getting any sharper. In old age it is entirely reasonable to want to rely on others when feasible.

I'd urge him to investigate with the trust departments of local banks (and with reputable law firms, as a second choice) to see if for a reasonable fee they would hold his PM in a local safe deposit box and "manage" the holdings to whatever limited extent he's comfortable with.

This isn't ideal -- and for a young & active person I certainly wouldn't suggest it -- but for an aged person it helps to insure against a host of calamities: hiding material and forgetting where, or forgetting to advise intended heirs, or losing it through theft, or being swindled by con artists, or reaching advanced loss of capacity and just pizzing it away on some senseless impulse purchase, etc. etc.