Investing in coins
04 Dec 2013
Investing in coins is a past time that has existed since citizens of the renaissance coveted the currency of the ancients. However, while a coin’s rarity is dictated by time, its overall value is heavily dependent on its condition.
If a coin is damaged it will bring the owner only a fraction of its potential value.
The secret to being a successful collector comes down to being selective about where you buy and sell. Managing Director of Noble Numismatics – Valuations and Auctions, Jim Noble says, “the most important step in collecting coins is to work with a reputable trader.”
Starting out
A coin collection can be started with only a couple of coins and as little as $100. Although there are players in the market purchasing $20,000 to $30,000 of coins at a single time.
Before buying coins it’s important to realise that you are committing to a long-term investment, with most coins reaching their value after 10 or 12 years. Don’t let this deter you, there is potential for a considerable return on investment if you purchase wisely. Noble is selling a coin at an upcoming auction that was purchased by his client in April 1980 for $1800, which is expected to be worth $15,000 today.
Up and down
Certain coins are subject to fads and therefore have the potential to go up dramatically in price over a short period of time, which is a result of a release that was too small for the market. “It’s like picking a share,” says Noble. “It could go up or down on the day.”
Noble experienced first hand the rapid turnaround in a coin’s value in his early days as a collector. In 1960 he purchased a couple of 1930’s pennies for three to five pounds each. By 1961 the value of the coins had risen to ten pounds. Noble traded his coins in at this point, but a mere 12 months later they had risen to a value of 100 pounds. “The 1930’s penny is a good yard stick,” he says. “Today these same coins would be worth $20,000.”
Finders keepers
What is so interesting about collecting coins is the unexpected places you will find them, be it because they were left there consciously or subconsciously.
Noble says there are a number of cases of people who have discovered coins left in a drawer by a family member 200 years earlier, that have awarded them a fortune.
While these surprise finds are fantastic, for the more tactical investor Noble recommends buying stable value coins.
These are early gold value coins from Australia, early florins or old English coins. “People tend to forget that old English coins were used here before we had our own coins in 1910,” he says.
This doesn’t rule out modern issue coins. Today the mint makes coins for collectors because there aren’t enough out there to satisfy the market. They make commemoratives and proof versions, which are specially prepared in limited numbers, giving them automatic rarity value. In these circumstances collectors need to be careful as often the mint will produce so many of the same coin that they inevitably stifle future demand.
One series that has been proving its value of late is the Lunar series, which was struck by the Perth Mint. “This line attracts the Chinese buyers, so there’s considerably more demand than supply,” says Noble.
Preservation
To get the most out of your investment it’s important to take proper precautions to preserve your collection. Specially made coin envelopes or coin albums with plastic windows can be purchased widely and are essential for keeping your coins in good condition.
Another must have for the budding coin collector is McDonald’s Pocket Guide to Australian Coins & Banknotes, of which the latest edition was released this year.
While it’s important to do your research and be thoughtful and measured in your purchases, Noble says that ultimately coins are there to be enjoyed. “There is a history and geography to be learnt from these coins,” he says. “They are beautiful and artistic and offer an opportunity to learn about a broad mix of people and places.” Noble says coin collecting is a particularly enjoyable pursuit for retirees who have the time to do their collection justice by thoroughly researching each coin’s subject matter.
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