Rare coins and gold serve important roles in most any diversified portfolio. One however should not be mistaken for the other. There are large differences between the two. These are differences that the consumer should understand before making purchase decisions. What follows is a brief review of rare coins and gold bullion.

1. Profitability

While gold bullion has had an impressive record of profitability since the mid-70's, there really is no comparison with rare coins. A professionally-managed $10,000 transaction in high-end rare coins -- from 1970 to today -- is now worth about $1,014,500.

Both have reacted well to rising inflation. However, rare coins tend to move faster and further than gold does in inflationary setting.

2. Privacy

With some forms of gold bullion, a 1099 form is needed. Not so in the case of rare coins where there are no reporting requirements whatsoever whether you buy or sell. You'll enjoy a degree of privacy different than any other transaction.

3. Volatility

Generally speaking, owning both gold and rare coins enjoy a relatively low degree of volatility. However history shows us that, rare coins raise that important benefit due to the fact that these rare coins have a strong collector base consisting of people who are passionate about keeping, and expanding, their coin collection.

4. Liquidity

Rare coins are close behind gold in available liquidity. A worldwide network of coin dealers and collectors gives you a great avenue of coin liquidity.

5. Psychology

Gold remains a lasting resort for financial security and protection. Historically speaking should all other forms of currency fail, governments, societies, and institutions would turn to gold to again establish stability. No investment has been more comforting through the millennia, with the possible exception of rare United States minted gold. Combine the overall intrinsic value held by the world for gold, with historical and key rare dated U.S. minted gold, and the result is irresistible to both collectors and savvy investors alike. Rare and alluring, extremely beautiful US coins have strong collectible attraction and often generate passionate owner devotion. Rare coin collectors underwrite a sound psychological lure to seasoned investors and new investor/collectors.

6. Portability

Rare coins provide owners with portability . The difference here is in just how portable. $1 million worth of gold or silver rare coins could easily be carried in an attaché case. Meanwhile,$1 million in gold bullion would be awfully heavy.

7. Confiscation

Just as the 'creditor of last resort' for U.S. currency is established by law to be the citizen tax payer, confiscation of gold from U.S. citizens one of the last resorts reserved by our government to protect the value of the dollar such as it occurred in 1933 through 1972 when gold bullion was in fact illegal to own personally. With the stroke of a pen the government has the ability to confiscate your gold bullion. But, if that were to happen, you'd still have all of your rare coins. That's because these hard-to-find coins are collector items and, as such, are exempt from confiscation by the US government. This is an additional huge benefit if our elected officials become convinced that it is in the public interest to back our currency again by precious metals not to mention what the prices may do leading up to such a decision.

There is a place for both gold bullion and rare US coins in every portfolio. In the past the role of gold has stood as a defense against the loss of value and as a diversifier with cash assets, while rare coins can both diversify and provide substantial profit potential.