Collectors/Dealers: In light of the recent Noe revelations, how would you construct a coin fund?

RYK

From the latest reports, it would appear that the Ohio "Coin Fund" was nothing more than a crackout operation. This may or may not be true, and we might never know what the nature of the operation was. That aside, how would you construct a $50M (or $5M, or $500,000, etc.) coin fund if you were in charge.

I can honestly say that since I know little outside my small box of interest, I have no idea. While I am sure that I could easily spend the money on coins that I would want to own, I have no idea about the return potential of such coins.

Barry

I wouldn't, nor would I invest in one.

The SEC or some other government entity should get involved in oversight of these kinds of funds. There's just too much potential for abuse. In addition, there should be regulations preventing the "little guy" from investing in a coin fund, just as there are net worth requirements to invest in hedge funds and other alternative investments.

mrearlygold

One of the important aspects of rare coin ownership is the issue of privacy . You don't have any when you invest in a fund. ( ownership or privacy!)

Further, the rare coin business is perhaps one of the last bastions of free enterprise in this country. To mingle with some overseen, government regulated and reported "thingamajig" doesn't make any sense to me.

I would have no interest.


Tom

coinguy1

<< <i>From the latest reports, it would appear that the Ohio "Coin Fund" was nothing more than a crackout operation. This may or may not be true, and we might never know what the nature of the operation was. >>

I believe that to be inaccurate. The fund also bought, sold and made markets in various coins as part of its operation.

Julian

The Ohio funds were not designed for long term capital growth.

They were created to be another dealer, although one with much more capitalization than 99% of most dealers.

The funds were designed to buy and sell coins and not have to sell the coins if the price was unacceptable. Most dealers eventually find the need to sell coins, strictly for cash flow. However, with essentially really deep pockets, this group could hold until they got the optimal price.

A capital growth fund would essentially be a long term collection, such as those formed by John Pittman and the Garrett family, to name just a couple.

Collections normally do not need to be sold. They can be properly marketed when the time comes.

The only problem with a capital growth fund is the timing. IMHO, there cannot be absolutes placed on the timing of the dissolution. That decision must be left to the fund management.

I guess that the fund could trade on the open markets based on the inventory, but that would probably create other problems. In reality, it would have to be a total dissolution for investors to liquidate their investment. Partial liquidations could take place, as well.

For the most part, no one can tell the future value of coins, but if history is of any value, coins should increase in value.

Remember, numismatics is a luxury. No one has to collect coins, or anything else for that matter.

TommyType

It probably has little to do with actual numismatics....

But I think ANY investment fund requires meticulous record keeping and inventory controls. One of the apparent problems with the Ohio fund is that this is either severely lacking....or some unethical behavior is involved.

Trime

Julian's comments make sense to me.
However, "passive investments" are usually dependent on good and honest management.
When the public is asked to invest then oversights should be added.