If you are an American with a self directed IRA, you may be interested in making a coin collection part of your portfolio.  However beware, the IRS will not necessarily approve.  The agency will allow your IRA to invest in gold, silver, platinum and palladium, but not collectibles.  In other words investing in the metal is acceptable, but not if it’s in the form of an attractive coin worth more than the value of the metal.

Coin categories that the IRS generally allows include:

- Coins specifically listed in the Internal Revenue Code and minted by the US.

• American Gold Eagles
• American Gold Buffalo coins, although the specially processed proof version of this coin is not acceptable because the value of the coin is grater than value of the metal.
• American Silver Eagles.
• American Platinum Eagles.

Note that if the coins have been graded by certification organizations and placed in  “slabs”, they will probably count as collectables and not be premitted in IRAs.

- Some coins issued by mints of other nations that also meet the fineness requirements to be an IRA investment:

• Australian Nugget (Kangaroo) Gold coins..9999 fine.
• Australian Kangaroo and Kookaburra Silver coins .999
• Australian Koala Platinum coin .9995 fine
• Austrian Philharmonic Gold coins .9999 fine
• Austrian Philharmonic Silver coins .999 fine
• Canadian Maple Leaf Gold coins .9999 fine
• Canadian Maple Leaf Silver coins .9999 fine
• Canadian Maple Leaf Platinum coins .9995 fine
• Canadian Maple Leaf Palladium coins .9995 fine
• Mexican Libertad Silver Coins .999 fine
• Isle of Man Noble Platinum coins .9995 fine

Sadly though you can’t hold the coins personally if they are part of an IRA.  Your IRA custodians will require that the coins are held in a depository and you probably won’t get to see them unless you take them as a distribution upon retirement.

Reuters reports that mints around the world are reporting an increase in demand for gold coins, reflecting the soaring price of the metal itself.  The Royal Canadian Mint for instance quadrupled its production capacity last year because of demand for gold coins.  The article gives other examples of mints reporting similar rises.

US coin output fell by 30% last year to the lowest level in 10 years as the economy struggled.  In 2008 the US Mint produced a mere 10.1 billion coins.  Reduced demand from coin collectors is partly to blame:  the Mint cites diminishing consumer interest in collecting the quarters issued for each of the 50 states.  However the struggling economy is also playing a part since fewer cash register transactions mean less need to provide change.  Increasing use of debit and credit cards may also be contributing to a long term decline in the number of coins produced.

The Denver Mint accounts for just over half of US coin production with the rest from Philadelphia.

Lincoln Silver Dollar

Later this month the US Mint will issue a new silver dollar with a portrait of a youthful Lincoln on the head side and a short extract from the Gettysburg Address on the reverse side.  Production of presidential $1 coins is expected to increase as the US Government undertakes a marketing push to get them accepted.

Get the Lincoln silver dollar from the US Mint