INVESTMENT ADVICE FOR
STAMP AND COIN COLLECTORS.

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Above: Always desirable, always collectable, its just a matter of price. These historical George III (1760-1820) Guineas  are sometimes available for $600 to $900 Australian dollars, ie usually mid grade, fine to near VF, with the normal faults and marks, expected for a coin in this price range and age.

George III Gold Guinea, circa 1798. Such a historic period with the American Revolution, the French Revolution, the Napoleonic Wars,  not to mention the colonization of Australia, all happened during George III's reign. A little over 8 grams of 22 carat gold, also with a collector interest.

Collecting Coins and Stamps is a wonderful hobby, practiced as long ago as ancient times where affluent Romans would collect coins of the ancient Greeks who ruled before them. People such as myself, who love history and the past, find a real connection with coins and stamps, one of the truly affordable souvenirs of history. Being the first mass production item, coins from historic periods are surprisingly affordable, although some are extremely rare.

Too many people confuse the hobby with investment however.

If stamp and coin collecting is a hobby, then cost is secondary, just as is playing golf, or building model planes, etc.

If you make the connection with history and the world in general then you can't fail to enjoy coins or stamps. They are also a wonderful education for children, and can be a cheap geography and social sciences lesson.

Coins and stamps will always have some value at the end, unlike many other hobbies. They are certainly a better bet than the pokies, and are really another form of entertainment. If you treat them this way, you will never be disappointed.

Having said  that, no-one likes to waste money or throw it away. If you are investing, then different criteria are involved than when you are  collecting.   Collecting means following your passion and interest.  For example, I collect Ancient Greek & Roman silver and bronze coins. Most coins I buy are usually sold later at a modest gain, which, with all expenses taken into account, is more often like a small loss, in real terms. Why do I collect them then? Because of the history and artistry involved, the sense of romance about long ago, I suppose. Certainly not for the monetary gain, which I know, will usually be minimal.

Investing means taking a different view. Most items need to be both RARE and WANTED to appreciate in value. Although many of my ancient coins are rare, they have to be wanted, and whilst they are overseas, it is not so much the case in Australia. 

If you buy common material, that is available anywhere, as an "investment", it will always be common and be readily available on the secondary market, often at discounted prices. An "investment" is not a good buy just because you can afford it..

 This strategy might mean possession of only a few items, but, if properly chosen, they will always hold their relative value and give you the pleasure of ownership. Condition is important but not absolute. Overall appearance and centering is as important as any technical grading. If you are considering Investing some money in coins/stamps, test the water first. Buy some lower grade, cheaper coins or stamps to get a feel for grading and what you need to look for that determines different grades.  Buy a book or two and/or some catalogues first, to get some background knowledge of the series that interests you.  Subscribe to the monthly Coin or Stamp magazines, which have useful articles and advice for collectors. If you don't KNOW about the background to coins and stamps, how do you know what is scarce and wanted... PLEASE - Don't invest in coins and stamps if you don't care about history or the artistry and romance of these objects. Stick the money in the bank instead.

Often investment is a matter of timing or luck. No one can say for certain whether something will increase in price, in REAL terms.  Anyone who bought Australian Mint Products in the 1966-74 period is still well ahead in the investment stakes. If you invested in the 1977- 1989 period at the issue price, then, in most cases, you are  behind and will always be. This is because everyone did the same thing in those years and the Mint and the post office responded by issuing larger amounts.   Proof Sets from the 1990's have often retained their values better than sets from the 1980's. This is because less numbers of each year Proof & Mint Sets were made in the 1990's than the 1980's and also because INFLATION has been much lower in the last ten years. 

Buyers of quality Australian pre-decimal banknotes in the 1940's to 1960's are sitting on a fortune now. That can't be said, in real terms, for people who bought lots of 1980's $1/$2 notes. Some later 1990's & current Australian proof and mint issues and stamps look a reasonable bet, as mintage was much lower in many cases, than in the years 1977- 89. Examples of later Australian coins to do well are the RAM 1996 30th anniversary of Decimal Currency silver proof, also the RAM $5 Bradman Proof, whilst the 1999 RAM Millennium coin and the year 2000 proof and mint sets have had a lot of money put into them. 

Here is an example of timing and luck. Husband dies at end of 1965. Wife gets $4000 from estate in early 1966 (you could have bought a house in 1966 for that money) It is put into 200 of the new 1966 $20 notes. Notes sold for $50 each in 2006 = $10,000. That represents a massive loss BECAUSE 1966 $20s were made in large quantities and are common. Here is the rub. If the death had occurred one year later and the notes were bought in 1967, they would have been Coombs/Randall signatures and 200 UNC $20 Coombs/Randall notes would be worth $700,000-$800,000 today. Investment in collectables is largely a matter of timing and luck.

CONDITION: It is quite possible to take a mania for condition too far. Good examples of this are to be found in Australian mint & proof sets and Australian decimal stamps. If you relax and start to enjoy the hobby, rather than worrying about the investment side of it, big savings can be had in this area. Example. 1985,86,87,88,89 proof sets. New and perfect, cost $50 to $60 each, depending on where and when you bought them. Same sets, missing outer box, (collectors often throw the boxes out, for all sorts of silly reasons) or with scratches/cracks in case (coins still perfect mind you) price $25 to $30 .  You can often save $10-$20 or more on mint product that has soiled or damaged or missing outer boxes. As long is as the coins are securely housed and not stolen property, that should be your two main concerns in this area. The idea is to get some joy of ownership, that doesn't mean sticking them away in a box and never looking at them.  Sure, with things that are rare and desirable, we take particular note of condition, many items from the 1970's-1980's do not quite fit that category.... Australian decimal yearbooks 1981 to the present are another example. They are meant to be read and enjoyed, not stuck away never to be looked at. So, what if a few pages have finger marks or minor faults. It is called life, wear and tear..  Believe me, when they are sold as a bulk lot, they go most times for the same price as  brand new ones that have never been touched or opened...

Investment in stamps/coins is a medium to long term goal. Few people succeed in the short term, or if they buy common material as an investment, because of the cost involved with buying and selling. Remember that there is always a cost of selling your items, a fact too many people fail to take into account. Investing in coins/stamps is NOT for the impatient, who want to turn their money around quickly, unless you are lucky or an expert.

If you would like to put some money safely aside into older coins and learn their grades, then I suggest gold and Silver coins. They are always wanted, and can be traded with a minimum of knowledge. This is important if you are putting coins aside for children. Whilst gains may be uncertain, losses will be minimal, and they are easily converted back into currency. I sometimes have available silver round Australian 50c coins from 1966. Three make exactly an ounce of fine silver and silver is an attractive metal that is always in demand.

Regarding gold, I usually have available some nice late 19th and early 20th century sovereigns, mostly minted in Australia, some in England. These are so historic and easily traded and are all in higher grades, for a touch over the bullion value. These are a perfect way to collect and learn about old Australian gold coins and coins in general without risking too much, as the bullion value of even the worst of them is close to the sale price. Many sovereigns from the early 20th century are a much safer investment than many silver and copper coins from this period, and, in the same grade, much more affordable. Compare a 1915 Melbourne sovereign in EF for about $400 and the price of any similar grade Australian silver or copper coin from 1915.

Most collections, if formed coherently and over a long period will average out the gains and losses, leaving one wiser and with a tangible asset. Also, collecting stamps and coins will return an investment in knowledge and history that can't be measured totally in monetary terms. 

Finding a dealer who you can trust and who will look after you is important also. I remember some good relationships over the years with other dealers when I was purely a collector. The enemy of every dealer is time, we gladly give it to customers that are prepared to return us something to help us stay in business. Those dealers were happy to look after me and share their knowledge, because they could see I was enthusiastic and was not just a one-off buyer, or worse, someone out to waste their time and pick their brains. Knowledge does not come cheaply, my library of reference books cost $1000's and is still grossly inadequate. 

Examples of what to avoid and the responsibilities of the dealer and the buyer.

 I have seen enough examples of dealers AND auction houses who are not too fussed about their clients.

As a dealer it is surely my responsibility to buy and sell things at a fair profit and describe them properly.

As a buyer, don't blindly trust dealers or auctions, who, after all are salesmen, trying to part you from your money. As a buyer, if you don't take the time to investigate and research what you are buying, you are putting your neck on the block and some smooth talker will chop it off.. Shop around for what you want, don't drop your money with the first person who looks or sounds "reputable" Just because they have a big fancy shop or auction and wear a big fancy suit, doesn't mean they are going to look after you, in fact, their higher expenses and jet-set lifestyle usually means you pay more.

 I know some very honorable mail-order dealers, ie Michael Kupermann, Dick Pot, Geoff Yates, John Watson, who don't have shops and some rogues,  who will go unmentioned, who do have shops or auctions.

1. Australian 1850s Taylor patterns.

 Some of the coins being offered by people who should (and do) know better are in fact forgeries made by David Gee. Be very careful in this area. A read of the book "Heads I Win" is a must for any rare Australian coin collector.

2. IMPROVED BANKNOTES. 

 I sold an Australian 10 pound King George V  banknote for $1250 in 2005. It had been originally sold in 1996 by a dealer who knows better, as aUNC for $3000+ The note had been cleaned and pressed and had a pinhole. It was still a nice looking note, and rare, but gVF was the correct grade and $1250 in 2005 a realistic price. Cleaning and "improving" old Australian banknotes is a virtual industry in Australia. There is nothing wrong with this, in many cases it is restoration. What IS wrong is the failure to discount the price accordingly.  It is logical really. Most  notes that are 50 or more years old, if truly UNC will not look "white" around the borders. Paper tones with age, due to pollutants and trace elements in the air. Most truly UNC notes, will in fact, have a grey sheen to them and not be white. There are VERY FEW truly UNC notes around from the King George V period. Many that look UNC have, in fact, been "improved" This is logical to a point and seems to be what the market demands. How many 5 & 10 pound notes from the 1930s/40s never got circulated? Very few, 5 quid was a LOT of money in this period and those notes got spent. Look also for repairs, which can often escape the eye on first glance. If a note has been repaired, it should be in the description and the price discounted accordingly. Notes are a lot harder than coins to grade.

 3. Coins in fancy packaging.

This presents the coins better, but does not necessarily add to the value and is often a large portion of the original price. You often pay a lot for this packaging, which is pretty, but is not going to necessarily make the coins more valuable. Decimal Australian Gold coins priced at far above the intrinsic or gold value are often a good example of something to be wary of.. Australian 2000 Olympics gold set and silver set of 16 for example - compare issue price to what they sell for on eBay now..  Fancy packaging, glossy brochures.. Who pays for these? The collector, who else?

4. CLEANED Higher priced (over say, $200) AUSTRALIAN PRE-DECIMAL Silver coins. 

My friend, Gerry McGinley, who is one of the straight shooters in this industry, has a 1934 florin, sold by a notorious dealer from the 1980's. Originally sold and described as UNC, it is in fact VF and has a bad scratch in the kings crown. Original sale price $1400, actual value about $20. How did it get sold as UNC you ask? Simple. It has been cleaned and made to look a higher grade than it is. With most old florins you look at on a dealers tray, they should be different colours. Silver tones naturally with age, like paper, and will go a myriad of different colours, blues, greys, etc. If all the coins 1910-1940 look the same colour on a dealer's tray, alarm bells should start ringing. It is usually because they have been CLEANED, this is especially true of coins pre 1940. 

To be Uncirculated, Australian silver coins 1910-64 must have MINT LUSTRE or MINT BLOOM. This is difficult to put in words, but is a frosty looking "sheen" that was on them when they left the mint. All silver coins eventually lose this sheen as the toning (ageing) process takes over. This can take up to 200 years, depending on how they are stored. it is very rare indeed to see a silver coin more than 200 years old with mint lustre and toning usually begins after about 50-60 years, sometimes less, depending on how they were stored. Cleaned coins still have a value, but less than if the coin was truly UNC. If they are individual coins with a value over $200 each and not described as such, then your or your children are in for grief in years to come..

5. "Investment" Portfolios. 

 I have seen some lovely examples in the area of Investment Portfolios, usually sold in the 1970's - 1980's by slick salesman with fancy lifestyles and/or bad gambling habits. Coin portfolios sold for $10,000 TWENTY+ YEARS AGO that are worth $1500 today, etc. BEWARE of anything being offered as an "INVESTMENT" No-one can say for certain whether coins sold now will be a good investment or not. People peddling the term "INVESTMENT" are usually doing it to make more sales. If it is such a great investment, why are they selling it?? True, you can take an educated guess at what MIGHT be a good investment, but no-one knows for certain. Percentage wise, a lot of LOWER priced items have been the best investment. Future prices are VERY MUCH dependent on economic and maybe climatic conditions.  Remember - THERE IS NO SUCH THING AS A 100% SAFE RISK FREE INVESTMENT! Such an animal doesn't exist, if it did, we would all have money in it! 

Coins have more tangibles than just money, they have HISTORY right there in your hands.

6. Too good to be true - it usually is!

If a coin is rare, it sells for much closer to the catalogue price than common coins. If something was genuine and worth $3000 - why are you being offered it for $500? Buy from a reputable dealer who backs what he sells by being a member of a recognized dealers association.  Expect to pay a realistic price.  Buying from non professionals is not worth it over such things as Holey Dollars, 1930 pennies and 1923 halfpennies, of which there are many fakes, ranging from crude to expert..

7. Auctions - good luck!!  

Auctions - some good buys and bargains to be had and some traps for the unwary.

Most auctions have high buyer & seller & postage charges, auctions even slug the buyer for credit card use, something I NEVER do!

 Sometimes at auctions, it seems as if you are bidding against the pot plant in the corner, the ceiling fan or the vendor of the material...

Sometimes material sells very cheaply at auctions, other times it can sell for ridiculously high prices. If buying at auctions, view the items, do your research, set your price and stick to it, it is very easy to get outbid on what you want, get bored and end up with a whole lot of crap you didn't really want, this I have done at auction too many times...

Getting a refund for poorly described or defective items or any sort of prompt service from some auction houses, is very, very hard...

8. Dishonest percentage returns.

 A favourite trick of "investment" peddlers, is to show you a graph of the rise in price of a coin or other item over some years.

Example 1930 penny. In 1975 approx cost $2000, value today $20000, gain $18000 divide by 33 years = 54.54% percent a year gain. Right? Wrong. This dishonest  scenario TOTALLY fails to take into account Inflation and the fact that money BUYS CONSIDERABLY LESS per dollar than it did in 1975.

Yes, they have gone up in real terms, but only over the last 5 years, where they have jumped considerably in price, from approx $12000 in average grade to $20,000, due mainly to other factors, ie some shocking Superanuation returns 1998-2003 and again 2008 and 2009, low interest rates, lack of alternative investments, etc. A fairer way to look at this is as follows. Average weekly wage in 1975 $120, average weekly wage in 2008 about  $1000. In 1975 it took approx 16 weeks pay to buy a 1930 penny. In 2008 it took about 20 weeks pay to buy a 1930 penny. So yes, they have increased in real terms and represent a reasonable investment, but certainly NOT to the tune of 54.54% per year or anywhere near it. 

The best INVESTMENT you can make in coins or stamps is KNOWLEDGE and that only comes from diligent study and work, by reading and comparing and handling the items of interest to you.  For example, I shudder to think of the amount of money people have dropped in higher grade Sydney Mint sovereigns over the years and I have been one of them. This area in higher grades is a hard area to RE-SELL when you have had enough of it. Reselling Sydney Mint sovereigns in higher grade usually means taking them back to the dealer who specializes in this area or putting them up for auction with a large auction house. With auction commissions often running at OVER 30% (at least 16.5% for buyer and often up to 15% for seller) this means that it takes a long time to see a return, if ever in real terms. 

9. Who are you buying from - will they look after you?

Here is an email sent by a so-called "dealer" in reply to one of their customers, who received a pile of rubbish, masquerading as something better and requested a refund..

ADVICE FOR PEOPLE WITH SERIOUS INTENT.  Whilst I have a good range of Ancient, Medieval, British & Proclamation period coins, I often sell Australian coins 1910-1964 in the lower to mid range price bracket, where I feel happy to be.  This is mainly due to the amount of restoration and the subjectivity of grading higher valued Australian pre-decimal coins and banknotes.

I can and sometimes do, sell higher priced coins & notes, eg 1930 pennies, 1923 halfpennies, rare banknotes and rare stamps for you at a fair commission or buy them outright, as I have many contacts amongst the dealer fraternity and know the Australian market pretty well...

Perhaps the most important investment advice I can offer, again,  is BOOKS.
Knowledge is everything in stamp/coin collecting, if you are not prepared to spend money on books, catalogues, magazines, etc to research your field then what hope have you got?? I have available, or can order, most major numismatic or philatelic publications. Also, I sometimes have cheap, relevant, 2nd hand books and journals so please ask on the field you require and I will try to help. 

If you don't care for the history and romance of stamps and coins, if you are not prepared to study prices and the history of your area then don't invest in them, because nine times out of 10 you will get burnt.

As a hobby, I can't find anything I'd rather be doing.

Richard Welling.

Adelaide, written 2008 and updated since then.