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Archive for October, 2009

What do you think of our new USP?

October 29th, 2009 No comments

We have just written our first Unique Selling Proposition – in other words, what makes us different, special, unique – how and what we sell and the value proposition we offer our valued clients. Of course this is always a work in progress, but we’d love to hear what you think of it.

The Australian Bullion Company’s Unique Selling Proposition

Since 1972, the Australian Bullion Company has shown Australians,HOW to beat the ravages of inflation, INCREASE their personal wealth by OUTPERFORMING the ASX with LESS RISK leveraging OVER 37 YEARS of precious metals bullion investment EXPERTISE in the ‘SAFE HAVEN’ and most stable hard assets – GOLD and SILVER – With one phone call we can take care of all the transactional details and bank vault SAFE storage requirements you need to secure and protect your wealth portfolio with total privacy and confidentiality.

Gold is so popular, Harrods is selling it over the counter!

October 25th, 2009 1 comment

In a recent BRW article, they reported that people could actually go and buy gold from their retail counter. That’s how popular gold has become!

An excerpt from the article is below:

When in Knightsbridge

Thursday, 22 October 2009 | BRW | Kevin Chinnery

Opinion may be divided over what the weakness of the United States dollar means, but you know something is going on when alternative investments such as gold are being sold over shop counters. Not any old shop counters, of course. Wealthy investors can now buy gold bars at their London store of choice, Harrods in Knightsbridge. Harrods has teamed up with Swiss gold refiner Produits Artistiques Metaux Precieux to offer the full range of physical bullion. These are being sold at the Harrods Bank branch, which is discretely located on the lower ground floor. Interested shoppers will need something more substantial than one of those green and gold Harrods plastic carrier bags to take away a 12.5 kilogram gold bar, however. The head of Harrods Gold Bullion, Chris Hall, told the United Kingdom newspaper The Daily Telegraph that “the financial environment has kindled a new demand for physical gold among private investors in Britain – for many people this is a new and unfamiliar asset class that demands absolute trust”.

How rare coins and bank notes appreciate in value

October 22nd, 2009 2 comments

A lot of people ask me how coins and bank notes appreciate in value over time. There is an economic science involved in the appreciation of coins and notes. Investment in rare coins and notes may seem speculative from an outsider’s point of view, but seasoned investors and others within in the industry know that coin appreciation is a sure bet.

They know this because rare coins and notes exist in a collector’s market, which behaves differently from other markets.

There’s a big difference between coins, and let’s say, tulips in tulip mania. In tulip mania, the supply of tulip bulbs to the market while the fashion for buying those tulip bulbs existed for a short period creating a price bubble.

But and this is an important but… With tulips there was the ability to grow more tulips.

Once that happened, tulip bulbs flooded the market, the tulip price crashed, and that was it.  However, the difference with coins is that there is a profound lack of supply of quality material, and there always has been, always will be.

In most markets, a rise in demand causes an initial rise in price, followed by a rise in supply as manufactures rush to fill the demand. Then there is an inevitable drop in price as the rising supply outstrips demand. These accepted market laws do not apply to rare coins and notes because there is limited supply. Price rises as demand rises, but there will never be a rise in supply, so prices never go down. This is the benefit of investing in rare coins and notes.

The value of rare coins and notes are usually set in auctions. There are several major auctions each year, and the market prices are essentially set in a true market environment.

Each time a coin is bought for investment, generally speaking they’re taken off the market anywhere from 5 to 10 years. You have an ever-shrinking pool of coins left to choose from. If you want some of those better (rare) coins, the only way you’re going to pry them from any kind of investor or collector is to pay a premium.

In an auction environment, something may have been worth $5,000 2 or 3 years ago, if a number of individuals that want a particular piece and it hasn’t been around for a while, they’ll easily have to pay $7,000 to $8,000.

The appreciation of coins is consistent throughout time. A rare coin that was minted today would appreciate in the same way that rare coins from a hundred years ago appreciate now.

Let’s say you’ve got something that’s 100 years old, they only minted 2,000 and it’s appreciated dramatically. The thought is that if they minted 2,000 of that coin today, it would appreciate the same way.

I have to stress that time alone does not make coins and notes appreciate in value. The coin has to be rare or high quality first then time will raise the premium.

To prove the point, I have Roman coins that I can sell you for five dollars. It’s not age, it’s the rarity and the quality that creates the value that people are willing to pay for.

Don’t ever forget that – Rarity and quality – then time does its magic.

How to invest in Coins

October 15th, 2009 No comments

Today’s blog post will cover the basics of coin collection for investment purposes. It can be summed up in two words; quality and rarity.

How to invest in coins: Step 1 Find Quality and Rarity

First and foremost, the coin has to be of the highest quality, or it has to be extremely rare.  Now, an extreme rarity is something they didn’t make many of to begin with. If you don’t have access to rarity, try for the highest quality possible.

High quality coins are coins that have remained in brand new (uncirculated) condition for a number of years. High-quality rare coins are the most valuable. Although, circulated rare coins command a higher price than non-rare uncirculated coins.

How to invest in coins: Step 2 Buy and Hold

I recommend that investment collectors wait at least five to ten years to sell a coin after acquiring it. I wouldn’t recommend actively trading coins because you’ll probably only get some appreciation in the first 2 years of an investment in a coin and it’s a lot more unpredictable in the first few years.

It’s more predictable over 5 years and very, very predictable over 10. I advise my client that the 5 to 10 year period is the optimum period to hold a coin.

Of course, there are exceptions to the rule. There are times where instead of holding something for five years, the optimum capital appreciation might have occurred in two or three years. I that happens, I’ll ring my clients to tell them that this is a good time to actually sell this particular group of coins or banknotes because we’ve had a much quicker appreciation.

Usually, the longer a coin or note is held, the more valuable it becomes. If you look at coins over 40 years, the average rare coin has increased at a compound growth rate of 16.1%.  That’s a tremendous capital appreciation.

In fact, when Excess Economics used to do investment reports, ( they stopped doing it several years ago) they would ask what the best investment over 1 year, 5 years, and 10 years was.

Coins and bank notes always rated in the top 10 investments in all 3 categories.

Rare coins and bank notes are a great investment because there will always be a greater demand than there is supply in the market. The nature of rarity makes it so.

There are also many collectors who have collections for their own sake, and not for investment purposes. These collectors will never sell the rare coins in their collections, which puts further pressure on supply, and drives up the price of coins.

My business, Universal Coin Company, helps investors get started with a collection with as little as $1,000, but the recommended starting investment is around $50,000.

My company has collectors from all different backgrounds, there is no typical coin collector.

Although, there are several methods that are typical for buying and selling coins in a collection as well as creating an investment portfolio of coins and or bank notes.

I buy and sell coins at auction, for my business, and on behalf of my clients. There are also many businesses, that like my own, trade privately.

It’s important for collectors to align themselves with coin experts like me, because there is a high level of skill and experience involved in selecting rare coins as well as knowing when to buy and sell.

I feel that all investors should have a portion of their investment in rare coins and notes. The evidence is overwhelming showing the appreciation over time that makes it a great, safe and fun investment.

A peak inside the rare coin industry

October 8th, 2009 No comments

Hi, I’m Peter August, founder and CEO of The Australian Bullion Company.  You might not know it, but rare coin and bank note collecting has been a lifelong passion for me. It started as a hobby as a child, I used to actually go to all the shopkeepers and they used to put aside all their old pre-decimal coins for me. So, I was a decimal baby so to speak, but there were still some old coins floating around.

For me, I suppose the passion partly comes from the fact that it’s a bit of a treasure hunt. The other part is seeing wonderful rare pieces every now and again. It’s just a sight to behold

I get to fuel my passion everyday.

A normal day could consist of preparing some really nice items for sale, or discussing them with clients and showing them.

The beauty about a rare coin is it has to be of high quality.

For me, the most exciting part of my job is seeking out the quality rare coins and notes that I will later present for sale. When we’re talking about rare coins, we’re talking high quality and rarity. It’s ll about how many were made, or how many still exist.

If we’re looking at a coin that was made in 1915 for example, that coin, for it so survive in brand new condition, or uncirculated as we call it in coin terms, somebody would have had to put it aside 1915, and left it aside.

The chances of a coin of that vintage existing today in that top condition is extremely rare. Hence, they’re highly sort after and command a high premium.

Persuading people to invest in coins is also part of my job. Many investors have various self-managed funds in which they regularly deposit money. A rare coin and note collection is no different for a self-managed fund. Quality rare coins appreciate the same way that bank funds gain interest.

People will come and say, “I’d like a $50,000 portfolio of rare coins and bank notes”.  Now, if they go to a reputable dealer such as ourselves or one of my colleagues, we can show them a selection of quality and rare items that are likely to appreciate in value.

I am adept at choosing the coins and notes that are the most likely to appreciate. I encourage both seasoned and novice collectors to use reputable dealers, such as my own Universal Coin Company, to build their collections this removes a lot of the risk and helps people make better, informed decisions.

Investing in rare coins is not just a passion that is fun, but with the right strategy, can be exceptionally lucrative. Stay tuned for more on this blog and don’t forget to give us a call when you want to buy or sell rare coins!