Going to a coin shop might not be your first idea of how to invest, but it might prove to be a surprisingly effective one. There are many reasons why individuals and businesses see coins as effective investments. Take a look at four of the most common arguments for buying and selling coins.

Diversification

Just as people buy shares of stocks, commodities futures, cryptocurrencies, real estate, and many other things as investments, coins can be added to your portfolio. You never want to have too much of your investments tied up in one thing, and diversifying into coins can alleviate some of the pressure. Likewise, coins come in many varieties, with opportunities in everything from rare coins to silver and gold.

Inflation Hedges

One of the arguments for investing in certain real goods is that they can help you hedge against potential increases in dollar inflation. If you're worried that rising government spending might weaken the U.S. dollar, coins can provide a stronger store of wealth. At a gold coin shop, you can find the traditional inflation hedge of gold, for example.

Generally, inflation hedges work best when little to none of something is going to be produced. A coin from the days of the Spanish Empire, for example, isn't going back into production tomorrow. Conversely, new dollars are made every day, both physically and digitally.

Portable Liquidity

Coins travel. They're small and durable, and that has made them popular ways to transport liquidity from place to place since ancient times. If you're looking for a way to move liquidity without relying on electronic systems, coins are an agreed-upon solution. Just as you can buy from a gold coin dealer in the U.S., you can bet there will one on the other side of the planet willing to exchange a coin for whatever local currency you need.

Possession of Real Metals

Many financial products essentially virtualize investment in metals, including shares of gold-pegged, exchange-traded funds. The problem with these investments is that they don't put you in possession of the real metal. Functionally, they are virtual currencies that are just dollar-denominated against whatever the current price of gold is.

Possession of the coin functions as a more aggressive hedge against extreme catastrophes and long-tail risks. If electronic banking and investing are compromised by system collapses, for example, you'd rather possess at least some coinage to ride the situation out. This also amplifies the benefits of the other three arguments because you'll have liquidity, diversification, and a hedge sitting right in your hand.

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