Investing in Rare Coins and Banknotes A Beginner’s Guide to Numismatic Investment

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Numismatics The artful practice of collecting coins and banknotes

Numismatic Investment Making money from the strategic collection of coins and banknotes

1930 Penny (uncirculated)

1995 - $60,000 2000 - $140,000 2005 - $240,000 2010 - $300,000

Numismatics – the artful practice of collecting of coins and banknotes – is one of history’s oldest known hobbies. It has often been referred to as the hobby of Kings and the king of all hobbies – because only Kings could afford to purchase these fascinating links to history and because it is one of the most rewarding and exciting hobbies around. Even if you have never collected anything before, you might just develop an interest as you read on. Numismatics for investment is proving to be a promising sector for all levels of investor with steady growth and very healthy returns, and not infrequently, truly remarkable stories which offer real inspiration.

In 1977 an uncirculated Coombes and Wilson note sold for $80. In 1987 it sold for $420. Today, that same note is worth in excess of $25,000.

In 1970, Dr Alan Nicholson purchased a superscribed Queensland Government Treasury 1 pound note for $55. At auction in 1995 it sold for $84,700.

…if you study the past performance of certain key collectable pieces, you will see steadily increasing returns – some, quite staggering.

No investment is risk free – serious investors are keenly aware that risk walks hand-in-hand with potential – but numismatic investment counters that risk with a record of strong and dependable capital growth. In fact, according to the independent study conducted by Access Economics, Australian numismatics ranked as the highest performing asset class available to Australian investors over most periods in the past 25 years and showed frequent annual capital growth in excess of 20% compound p.a. Impressive figures by any standards.

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KEY STRENGTHS OF NUMISMATIC INVESTMENT

NOT TAXABLE How can this be? We established earlier that the only certainties in life are death and taxes! Unfortunately that remains the case but the questions to ask are: What taxes need to be paid? There is NO GST; include your investment portfolio as part of your superannuation plan and a lower tax rate applies.

When do any taxes need to be paid? Profits on coins and banknotes are not taxable until sale. This enables you to maximise capital growth. Read our disclaimer section at the end of this mini-manual – it is important that you do – but we stress at this point that we recommend that you take independent financial advice from a suitably qualified licensed financial advisor before setting out on any investment venture and certainly, that includes seeking the necessary advice in relation to tax implications.

STRONG AND DEPENDABLE CAPITAL GROWTH The prices just keep rising. The returns are significant. There is such a multitude of coin and banknote varieties that we can only skim the surface here. Besides, you should not take our word for it; try it out for yourself! Just pick up a copy of the McDonalds or Rennicks catalogues from 2000, 2005 and 2010 (or any years you like). Choose a coin or banknote that takes your fancy. Take note of the value in 2000, then 2005, then 2010. Chances are you will notice a significant increase in value which far exceeds the interest rate. If you follow the right coin or banknote you will be astonished at the exponential rate of growth. Then there are the auctions – get your hands on a copy of a rare coin and banknote auction catalogue (Nobles is a good one) and track a coin or banknote. See what it is worth in your catalogue and then find out what it sells for at auction. Again, chances are you will be nicely surprised.

INTRINSIC VALUE & DIVERSIFIED PORTFOLIO You know that it is never good to put all of your eggs in one basket. The future is unpredictable and investment carries risk – so it is sensible to take measures to manage that risk. As we have seen all too clearly in recent times, many asset classes such as stocks and shares and property rise and fall together. Inflation, financial crises and political uncertainties can cause a systemic breakdown which insidiously pulls all classes into the quicksand. But numismatic investment is not part of the herd so can frequently avoid or minimise the negative impact of situations which would overwhelm many other classes of asset. And by not keeping all of your eggs in one basket, you can deal with your numismatic portfolio separate from your home; your business; your motor vehicle; your way of life.

Here are just a few of the reasons more and more people are choosing to invest in rare coins and banknotes

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HIGHLY LIQUID We have established that tangible assets are nice things to own. But let’s face facts - some tangible investments can be hard to sell. However, rare coins and banknotes are remarkably liquid. In fact, they are some of the most liquid investments in Australia with turnover estimates over $100 million per annum for quality pre-decimal investment items and over $250 million per annum for collector-oriented coins. [Figures taken from independent report published by Access Economics]

PORTABLE You can store them in a matchbox, in a thimble, or an egg-cup. (although we don’t recommend it as there are special plastic sleeves and cases which will keep your investments in optimum condition). The point is, they are small, highly concentrated forms of wealth. You could potentially carry $1 million worth of rare coins in a small bag or, depending on the coins, even a pocket.

PRIVATE Numismatics are one of the few remaining investments that you are legally entitled to accumulate privately. You don’t want people knowing your business when the future is so uncertain. Litigation can be a very necessary tool but also has the potential to be a weapon used disproportionately against those with visible wealth.

ELIGIBLITY TO BE INCLUDED IN SUPER-FUND The Australian Government recognizes numismatic collections as a valid investment for the purposes of compiling a superannuation portfolio. One obvious advantage with this is that a more beneficial tax rate applies on sale.

TANGIBLE In the Modern World it is usual to associate real sustainable wealth creation with intangible activities: stocks and shares, ISAs, debentures, bonds. Whilst smart investment in intangible assets can lead to great things, most of us prefer to know exactly what it is we own – even when it is for investment purposes only. It is therefore no wonder that for most of us, on the whole, tangible assets offer the most attractive investment prospect. This simple truth has indisputably played an important role in the mammoth growth of the property investment sector and this is part of the psychology behind the big companies spending so much producing high quality glossy prospectus brochures for their shareholders – at least that way the shareholder is holding something nice in his or her hands.

DIVISIBLE / CREATIVE PORTFOLIO DESIGN IS POSSIBLE The numbers of people choosing to get involved in property development have, in recent decades, soared. This has no doubt been attributable to the fact that people enjoy value adding to their investment with their own creative input. After all, even the most sensible, number-crunching, realists among us enjoy an opportunity to express their creative intuition. We know that, when in harmony with astute conscious decision-making, creative expression is the secret ingredient to results which transcend the ordinary. Still popular, but not such an attractive option these days, property investment is on the decline. But there are still some very inspiring options out there for savvy and creative investors and those who would like some creative input into building a truly unique and valuable investment portfolio.

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HISTORICALLY AND ARTISTICALLY SIGNIFICANT BEAUTIFUL ITEMS Just look at the reverse of the pre-decimal notes, take in the gorgeous finely rendered vistas, the ingenious use of colour, catch that uplifting rich and crisp scent of the note, hold a piece of history in your hand. And what about the gold sovereign…the vigour depicted in the visage of Saint George slaying the dragon is enticingly complemented by the lustre of the precious metal. Each sovereign has its own special and unique beauty. Is the strike bold or faint? Is the gold rich yellow or are there warm rose tones? You simply choose your favourite.

WHY CHOOSE AUSTRALIAN NUMISMATICS? European coins from the Age of Enlightenment, Ancient Roman coins, American coins…nobody could deny that they can be truly lovely and can be highly collectable. In fact, we stock some prime examples of world and ancient coins ourselves at Monetarium Adelaide. But as far as real investment pieces go, many believe that Australian pre-decimal coins are amongst the most exciting around. That is why Monetarium Adelaide has its main focus on this area. The 1930 penny has always had everyone talking. The Adelaide Pound is the classic investment piece. And there are many more examples of coins which today are worth more than a penthouse apartment. This is mostly due to the fact that the value of a coin or banknote is reliant on its scarcity and quality (or ‘grade’). Australia’s history is rich but coins have only been struck here since the early to mid-1800’s. In addition, many of our most collectable pieces are from the early to mid 1900’s. Our modest population has meant modest production of currency and this, coupled with our short numismatic history means that it is possible to find some very rare pieces in prime condition. In short, select examples of Australian pre-decimal currency have the potential to be a superb investment.

And these are just a few of the reasons why numismatic investment has recently been attracting such a lot of interest.

…Select examples of Australian pre-decimal currency have the potential to be a superb investment.

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Many of you will already be familiar with

McDonalds and Rennick’s catalogues – the

‘Bibles’ of Australian numismatics. But

for those who are looking at numismatics

for the first time, these annually

produced catalogues set the values for all

Australian coins and banknotes. When

you attend a numismatic auction or look

at a dealer’s catalogue or website, you

will often see reference which shows the

page on which the particular coin or

banknote is valued in one or both of these

publications. The values are based on

grades of coin or banknote, from VERY

GOOD, FINE, VERY FINE and EXTRA FINE to

about UNCIRCULATED, UNCIRCULATED,

CHOICE UNCIRCULATED, GEM and PROOF.

This enables buyers to see what each

piece is worth.

GRADING COINS Grading coins and banknotes is a highly specialist area which can only be reliably performed by a reputable and experienced dealer. Here at Monetarium we have been grading coins and banknotes for 25 years and our director has been in the business of grading rare coins and banknotes consistently throughout his working career. Our grading has always been and continues today to be accurate and fair and reliable. We stand behind all of our grading on all of our coins and banknotes with our 100% 14-day money back guarantee.

Proof Not your average coin. Strictly speaking, not a grade of coin. These are the very special pieces never intended for circulation.

Fleur de Coin Flower of the Die – a coin in the highest state of preservation – nice! AKA SUPERCOINS

Uncirculated (Gem, Choice, Typical, Almost) Gem Uncirculated: this is essentially the Golden Chalice of most great collections. Choice Uncirculated: Great! But may have a little weakness. Typical: Not circulated as such but not a supercoin and there may be moderate detracting marks.

Fine (Extremely, Very, Typical) Extremely Fine: Wear which is usually not clearly visible to the naked eye. Very Fine: Can be some damage to the rim and some signs of wear. Typical: Coin’s design is easy to recognize but much of the significant detail has worn away.

Very Good No significant detail, or very little at least. The basic design and date will be readable. Be sure to not confuse a soft strike with signs of wear.

Visit our website and download our latest free catalogue of products: www.monetariumadelaide.com.au

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THE SIX MAIN MARKET SEGMENTS

Whilst it is fulfilling to be a Jack-of-all-trades, everyone knows that the real money is made by the specialists – those who are the top of their respective fields. The more specialised the area, generally, the higher the remuneration. The same principle applies to collecting numismatics for investment purposes. Specialise. Know what area you want to focus on and that way you can build a really strong collection. Here is a quick overview of the 6 market segments in Australian Numismatics to get you started:

PATTERNS AND PROOFS These are the extremely rare and collectable coins made when a coin is first struck. They are used as a historical reference point and you can think of them like museum pieces – as items with a broader historical significance for which collectors are prepared to pay whatever it takes. They are not made in the way a normal coin is made – the dies and blanks have been polished for the occasion – and these coins were never destined to end up in a piggy bank – they are intended to be kept in perfect condition.

Needless to say, they are extremely collectable.

AUSTRALIAN PRE-DECIMAL RARE COINS These are the most collectable numismatic pieces in the Australian market and include the penny, the halfpenny, the florin, the sixpence, the threepence, the Crown, Proclamation Coins (which are captivating from a historical perspective and include Indian, Spanish and Portuguese coins) and the Holey Dollar and Dump.

Specialise. Know what area you want to focus on and that way you can build a really strong collection.

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AUSTRALIAN GOLD COINS This category includes coins with seriously high international demand – there are some real beauties within this segment of the market including sovereigns and the highly desirable Adelaide Pound. These are absolutely lovely coins to own; each one a perfect treasure. And you can really get creative when collecting this type of coin – collect by mint mark, date, portrait or reverse type. Of course investment in any gold coins is a sensible measure against inflation or devaluation of our currency because of gold’s intrinsic value, which maintains some stability even in times of financial crisis (see “Gold and Silver Bullion Coins” below). But collecting these coins can be so much more significant than just collecting a precious metal. Depending on the date, Australian sovereigns can be worth sums far in excess of their gold value (for example, $26,000 for the 1922 Melbourne Mint sovereign when the gold value in that coin as at the time of publication is in the region of $320 - $380). Note that British sovereigns generally have a gold value only so if you want to collect sovereigns, collect Australian sovereigns.

GOLD AND SILVER BULLION COINS Gold – it has been the most coveted substance that exists – so many legends and tales of humankind taking whatever ruthless measures were necessary to obtain this sacred element – Midas, the Goose who laid golden eggs, Rumplestiltskin, pirates… well, you get the idea. But the attraction to gold is sensible as well as instinctual – after all, a fiat based currency has been argued by many economists to be the reason behind the financial collapse of a number of modern economies. Gold-backed currency has been believed to be more inherently stable because of gold’s intrinsic value. And the same principle applies to silver.

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DECIMAL BANKNOTES Fans of popular culture will be inspired by the familiar colours and designs on what some collectors cheekily like to refer to as “Monopoly Money”. These colourful and exciting notes designed by acclaimed cult artist, Gordon Andrews, are a striking representation of our strong and vibrant nation.

Introduced in 1966 and ceased in 1986 (at the time of the introduction of the polymer note) these notes reflect one of Australia’s most exciting periods of growth and vitality.

The condition, serial numbers and signature combinations on these notes determine their value – for example, a $1 note with the famous ‘star note’ suffix serial number can be worth as much as an Aston Martin.

PRE-DECIMAL BANKNOTES Take the time to study these notes and it is apparent that the artwork is truly exquisite. The designs are extremely fine and detailed and the colour combinations are supremely elegant. Many consider collect these notes the way art collectors collect fine art. The other advantage with pre-decimal banknotes is that they extremely rare – Reserve Bank records show that very few of these notes exist. And, as we know. the main determinants of value for numismatic pieces are (1) rarity and (2) condition.

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When you are looking to invest in numismatics you want to look for two key things when choosing a dealer.

• Firstly, they need to know more than

just a thing or two about the highly specialised area of numismatic investment. Many numismatist dealers are wonderfully enthusiastic about their passion and this makes them ideal coin dealers. But when it comes to numismatic investment, you really want a dealer with investment know-how. Someone with many years’ practical experience who knows what options suit different people, and can guide you accordingly - not just your average high street dealer.

• Secondly, that dealer should match

this business nous with a genuine passion for collecting coins and banknotes. They should be counting coins instead of sheep to get to sleep, dreaming about banknotes and still be thinking about them when they wake up. Anything less and you risk dealing with a cynical operation with the undesirable side-effect that you can be made to feel like a faceless commodity. Don’ let such a dealer detract from the fun and beauty from this wonderful pursuit.

But there is no need to compromise – at Monetarium Adelaide we comprehensively cover both aspects.

You have complete peace of mind when dealing with Monetarium. We were the founding member of ANDA back in 1985 and have been going strong ever since. Our Director, Steven Nugent, has been involved in the numismatics business for 30 years. Steven has served as President of ANDA (which is the quality mark to signify the association established to regulate numismatic dealers in the Australasian region and sets the industry standard) for four consecutive terms. He has a life-long passion for numismatics but his focus has always been predominantly on high quality investment pieces – of course he admires the modern-issue hobbyists but is the first to admit that their numismatic needs are better serviced by other dealers. We liken it to the difference between going to a specialist antique dealer or Ikea for an armchair or table. Ikea can be ideal for fun and modern ways to spruce up your home but if you want an investment; an heirloom; an exquisite piece of art that resonates with innate beauty, it is generally good sense to go for the classic, high quality antique every time. Monetarium Adelaide clients tend to be looking for that perfect piece to add to their collection. They enjoy discussing their collections and purchases with Steven because of his friendly and approachable demeanour and, most importantly, they know that they can trust Steven’s expertise.

SELECTING THE BEST DEALER

Ensure Peace of Mind… Always choose an ANDA dealer

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It is unlikely that you are reading these words by chance alone… you almost certainly have the seed of interest in coin and banknote investment within you. Is it possible that you are inspired to start on a journey along this fascinating path full of history and colour and opportunity? Whether or not you nurture this into something more really just depends on you. Like all those early property investors who purchased 1,000 sm plots for $5,000 along the sea-front will tell you, it is wise to get on board as soon as you see the opportunity - And whilst we hear the success stories and fantasise about making a life’s fortune from a $1 coin, it is sobering to remember that we have heard of inspiring stories of tremendous success in every area of life and whilst these inspirations drive us onward and upward, giving us hope that we too might hit the jackpot and strike it rich, our good sense knows that the chances of such a boon are slim. But numismatic investment is not a lottery – its appeal is that for all the phenomenal success stories, far more common are the accounts of the steady but sure returns. And with clever portfolio creation, this steady return can be transformed into something spectacular.

…numismatic investment is not a lottery – its appeal is that for all the phenomenal success stories, far more common are the accounts of the steady but sure returns. And with clever portfolio creation, this steady return can be transformed into something spectacular.

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We refuse to make realistic promises. Just like you, we don’t know what the future holds. Let’s face it… not a single one of us does. Yes, we have heard the one about taxes and death… But seriously, in terms of investment, we do tend to make the soundest decisions after taking account of rational analysis of past performance. Whilst we are legally obliged to state at the end of this brochure that past performance of investments and other financial matters is no reliable indication of future returns or performance, an analysis of trends combined with past performance is essentially all anyone has to go on. Of course it is sensible to see specialist advice on these trends and performance but it is similarly common sense that an investment with a strong track record of capital growth is going to be attractive. The inherent uncertainty in life means that it is no good us telling you that numismatics will make you rich. It might but, like all investment options, it might not. All we can tell you is that if you study the past performance of certain key collectable pieces, you will see steadily increasing returns – some quite staggering.

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IMPORTANT DISCLAIMER The information contained in this publication does not constitute financial advice and is for general information only. It does not purport to be comprehensive. There is no express or implied warranty given by Monetarium Adelaide Pty Ltd by any information provided in any of its publications. Whilst we are always delighted to provide suggestions when you are building a collection or investment portfolio, we have no authority to provide professional financial advice – just fantastic coins and banknotes! - so potential investors should seek appropriate professional advice from a suitable and licensed financial advisor / consultant before making any investment decisions. Whilst we have made reasonable efforts to provide only accurate information, it is a fact that in modern life, standard disclaimers need to be included in these kinds publications to avoid unwanted liability (which can arise for all manner of reasons in this heavily litigious world). So, to avoid any doubts we stress that you should not rely on the contents here – check out the situation yourself – we know this goes without saying as all savvy investors would never rely on a brochure to make an important investment decision so we know that you will do the sensible thing and get independent financial advice from a qualified expert. Any inaccuracy or error or omission in this publication or any publication of Monetarium Adelaide Pty Ltd cannot be relied on and this means that we cannot be held responsible for any loss or damage caused by any negligence or other tortious or contractual liability we could perceivably commit as a result of the information we provide here (not that it is our intention to do any of the above!). Disclaimers are unfortunately not fun to read but they offer important protection for you and for us. Thank you Best regards Monetarium Adelaide Pty Ltd

IF YOU DO WHAT YOU’VE ALWAYS DONE, YOU’LL GET WHAT YOU’VE ALWAYS HAD Try something a little different today and see where it takes you…

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