Rare coin investment - Are coins as good an investment as stamps?
Stamps often take the headlines, but are rare coins just as good an investment?
Paul Fraser Collectibles, Thursday 7 June 2012
Are coins as good an investment as stamps? Barry, via email
A tricky one, the stamps and coins sectors are built on specifics - specific specimens, specific gradings, specific auctions, but it is possible to draw some general conclusions.
I tend not to look at the two areas in competition, but as companions worthy of any portfolio. Both stamps and coins are flagships of the collectibles business, and offer collectors some similar attributes.
Both provide those calming qualities - low volatility and liquidity. It has traditionally been believed that stamps have the edge in both categories, but this is no longer the case. US rare coin sales total around $10bn a year, while the annual global stamp market achieves a similar number. Both sectors contain around 50m enthusiasts - a vast, and growing, number that ensures auction houses are buzzing.
Price index comparison is a worthwhile exercise. There is little between the two sectors in terms of historical price growth. The average coin on PCGS' US-centric Key Dates and Rarities Index has risen by 8% pa since December 2001. The recently launched GB200 Coin Index, which has tracked 200 leading investment-grade British coins at auction over the past 10 years, found that the average example is up by 13.3% pa. The average value for the leading 250 British stamps during the same period is up 13.4% pa - all three put the stock market to shame.
Where things do differ are in prices at the low to mid level of the market, where the majority of transactions take place. The average coin on the GB200 Coin Index is valued at £20,000, while for the leading 250 British stamps it is £31,000. This is why the rare coins sector is often more appealing for the entry-level investor - it's so much more accessible. There are other factors that make coins potentially more appealing to newcomers. The hobby has more than 2000 years behind it, making it a real delight for historians. Stamps are only 172 years old, at best! There's also the wow factor - open a drawer of gold or silver sovereigns and you have to cover your eyes - the beauty of stamps is no less great, but is perhaps less immediate.
One last thought. During the economic crisis we've seen many investors concerned about inflation plunging their money into gold and silver coins. Some commentators fear this has led to an artificial price for many rare coins. I'm of the alternative view. I believe that the sector's growing number of serious collectors will reclaim the sector over the coming years, and push prices far beyond their metal value.
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· Rare British coin investment shows 13.3% pa rise since 2002 | 6 June 2012
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