This article was originally printed in the latest issue of Numismatic News.
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Coin collectors often see the numismatic hobby as one that is embodied by a friendly dealer at a local coin shop, or a 30-table Sunday coin show at a local VFW Hall.
But they also know numismatics is big business.
One of the major players on that side of the scale is Goldline International, a Santa Monica, Calif., based firm with over 300 employees and $500 million a year in revenues.
The firm is headed by Mark Albarian, who has been president of Goldline since 1992.
Though the firm he heads is large, his personal roots connect him to the smaller side of the hobby.
Collecting and Investing Strategies for U.S. Gold Coins
“I was a coin collector at about 5 years old. When I was going to college in 1979 I started working for a coin dealer. I got so excited I made it a permanent occupation,” he told Numismatic News in a phone interview Oct. 29.
His career included working in numismatic lending and heading his own rare coin business.
What kind of company is Goldline? Is it a bullion company that also does numismatics, or a numismatic company that does bullion?
“I thinks it’s both those things,” he replied.
“We offer semi-numismatic, numismatic and bullion coins. It is more a matter of what fits the client’s needs,” he explained.
For numismatic credentials he cited his firm marketing gold and silver coins from the S.S. Republic to “bags and bags of coins that were in Binion’s Horseshoe Casino.”
“We really do everything.”
But what particularly interests Goldline’s customers these days has much to do with the precious yellow metal that has been setting a string of records lately.
“Our clients right now seem to be interested in gold coins where the gold value is a large percentage of the overall value,” Albarian said.
These coins include the Liberty and Saint-Gaudens $20 gold pieces, gold British sovereigns and Swiss and French franc gold pieces and proof and uncirculated gold and silver American Eagles.
Their focus on gold and its record prices are two factors that probably have influenced the firm’s growth in sales.
“The average order size has moved up recently,” Albarian explained.
“It was $3,000 when I started,” he said, and “$10,000-$20,000 now.”
That’s serious money, but the buyers themselves are pretty serious. Albarian described them this way:
“Most people who invest are probably 40 plus,” he said.
“People have investible dollars sometime after the kids are grown.”
And while so far that matches the profile of a fairly average coin collector, Goldline’s client base diverges fairly strongly in the ratio of men to women.
Albarian estimated Goldline clients as being “a little bit more men than women, but we have a lot of women clients.”
He put the ratio at 55-45 percent, or perhaps 60-40. But that is a far cry from the 90 percent plus number of men that describes the active population of coin collectors.
He attributed this to Goldline advertising, much of which occurs during the day.
“Women respond,” he said, and they feel comfortable doing business “when prices are established and they are in writing.”
He also said that women tend to make investment decisions together with their spouses.
Albarian said of his clients, “Most would say they are collector/investors with more stress on investor,” but “we bring in a lot of new collectors.
“If you don’t have the collecting bug in you, you are probably not going to buy semi-numismatic items.”
Not only does Goldline sell coins, but the firm also sells bars.
“We do a fair amount of business in the 1-ounce and 10-ounce gold bars and 100-ounce silver bars,” Albarian said.
How do customers know whether to buy coins or bars?
“We don’t give investment advice,” Albarian stressed. His firm’s policy is to “give them the information and let them choose what’s right for them.”
“The reason I like coins is they are made by government mints.
“The benefit from the bars generally is they are less expensive. The larger the bar, the less expensive it is per ounce.”
Once buyers have decided what to purchase, most take delivery.
“Well over 90 percent take delivery,” Albarian said.
“If you have a safe place to put your gold, like a safe deposit box, I recommend you take delivery. It is something I personally believe in.”
“If you don’t know where to put it, and you buy half a million in silver, independent storage is better than your garage,” he continued. His firm can arrange that if asked.
What firms collector/investors should be buying their gold and silver from depends on a number of factors.
Albarian said there are three things he would suggest in evaluating a dealer or firm.
Would-be precious metals buyers should ask how long a person has been in business.
They should find out the Better Business Bureau rating, because it is important. They keep records of complaints.
And finally, does the firm have independently audited financial statements, which is especially important if precious metals are to be stored rather than shipped to the buyer.
Albarian also suggests that potential gold investors “Seek advice from financial professionals.”
In the Goldline information packet and risk disclosure document potential clients can learn that gold investment should not be all of one’s investible funds.
“Five percent to 20 percent of a person’s investible asssets is a good range,” Albarian said.
Clients aren’t prevented from exceeding that range, though.
“At that point, if they understand it and they understand the risk, then ultimately the choice is theirs,” he said.
With rising gold prices, Albarian noted that gold as an investment has become more mainstream, and as it has, it has caused what Albarian characterizes as the biggest change he has seen in his 18 years at Goldline.
“They don’t call us gold bugs anymore. When we first got interviewed by people 15 years ago, we were selling an alternative investment.”
He said gold investing was treated like something only people who were building bunkers in their backyards would do.
Also, Albarian was clearly pleased to note that nowadays financial firms like Goldman Sachs, Barclays and Merrill Lynch are assessing the gold market.
They are in a league well beyond backyard bunkers.
“I think if you look at what independent analysts are saying, they’re calling for higher gold prices ... Higher prices are going to keep the public interested.
“We will see $1,500 gold. I don’t know when,” Albarian said.
It is this uncertainty that is a major risk.
Anybody who wants to jump into the market should “be able to hold your gold three to five years, minimally, preferably longer,” Albarian said. “It’s not a trading vehicle.”