Archive

Archive for the ‘Bank Note Collecting’ Category

What makes a bank note or coin rare?

November 4th, 2009 1 comment

Even though I own and operate the Australian Bullion Company, buying and selling gold, silver and precious metals, I’m also an expert at determining the quality and rarity of coins and bank notes, as well as appraising them for sale or investment.

I use this expert skill every day, sometimes I have to sort a rare coin out of a pile of regular coins.

Many people have jars or drawers full of old coins that they’ve had for many years, or have been passed down from generation to generation. I get several customers who come into my office with jars full of old coins that they hope are valuable. Out of hundreds of coins their might be one that is rare and/or in good conditon.

Every once in a while I find one that can be worth thousands of dollars!

There are many examples of rare Australian coins and notes. We’ve all heard of the holy dollar, that was Australia’s first coin, it was a Spanish dollar that they punched a hole in the middle, hence the name.

The part of the coin that was punched out is also a collector’s piece, called a ‘dump’. Dumps have ‘New South Wales’ printed on them. They were punched out so that coin would be ‘Australian’.

In the 1960’s you could have bought a dump for $165; even in the 1990’s you could have bought that same dump for $20,000 if it was in extremely fine condition.

If you wanted to buy one now it would cost you $210,000!

Yeah I know – you wish you knew then what I am telling you now.

That’s the whole point of this blog – to educate and inform you so you can start to make better investment decision regarding rare coins and bank notes.

Let’s continue with another example…

There are other classic examples such as a 1930 penny, a square penny or a 1937 penny. There are numerous examples of extreme rarities in the George the 5th period; that’s 1911 to 1936. That period has the most Australian coin rarities. There are some sovereigns that go back to the 1850’s, which certainly commands a high premium as well.

If we’re looking at where there’s a lot of investment upside potential right now, that particular period is a very, very good period.

It’s important to understand that coin and note rarity fluctuates with time and demand.

Many Australian’s visit the Australian mint in Canberra as school children, and return with newly minted five, ten, and twenty cent pieces. These coins are not rare, but someday might be.

If only around 2,000 of that type was minted, then in fifty or a hundred years there may only be about a handful that survive. Those surviving coins would be valuable if, and that’s the basis of appreciation IF there was only a few of them. PLUS if for some reason there was a high demand, the price would rise even more. That high demand might be because one investor starts to buy them up, essentially taking them out of the market, or several collectors knowing that scarcity will mean greater returns.

In terms of how they appreciate, it’s quite amazing. I’ve been in the game now over 20 years, since I was a boy, and you may look at something that at one particular time you saw several of them around then they’re gone.

Let’s go back to the dump as an example.

When I first started collecting coins, you could pick an average quality 1830 New South Wales dump for 2 or 3 thousand dollars. You could go to many different coin shops and you’d easily find 1 or 2 in each shop.

Fast forward 20 odd years later, that same coin in average condition is about $30,000; and you’d be hard pressed finding one in any coin shop. They get put away, you have that shrinking pool, and market forces then apply.

Bank notes appreciate in a similar way, but they are worth even more if they are in uncirculated condition because it is easier to disfigure notes. An uncirculated ten shilling note was worth $7.50 in 1957, $120 in 1976, and today it’s worth $9,500.

In 1967 there was a dealer that had three 100 pound notes, (we had notes actually up to 1000 pound denominations here in Australia) and he had three 100 pound notes.  He tried to get 10% over face value for each of those notes.  He couldn’t get 10% over, so he cashed them in at the bank at face value.  Now, if he had them today, each of those three notes would be worth a ¼ of a million dollars, in the condition that they were in!

Australian notes have the signatures of the Governor of the Reserve Bank and/or the Secretary to the Treasury printed on them.

Now, if there is one combination of governor and secretary that are together for only a small period of time that means the notes that were issued during their tenure are only circulated for a short period of time.

That actually happened in 1967 when Coombs was the governor and the secretary was Randolph. That particular combination only lasted for about six months because Combs then retired. Any top condition notes from that period command quite a premium.

Another form of rare notes is the ‘star’ note. The star notes were replacements for notes that had been spoiled, they had the original serial number, but with a little asterisk after it. Any star note is valuable, especially if it is in uncirculated condition. The combination of rare Reserve and Treasury signatures, along with a star, is a rare and very valuable find.

I admit that coins like the dump, the star, and the 1967 notes are unusual situations. For the most part, I recommend buying rare coins, waiting five to ten years for them to appreciate, and then selling them. I do not however recommend holding on to your average coin for forty years in the hopes that it will become valuable.

Stay tuned for more insights to help you make more money from rare coins and bank notes.

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!