Sale of a Legend

March 2012, Volume 49 No. 3
True worth

COINS and coin collecting hit the mainstream media recently when an article in the Antiques Trade Gazette (a front page article no less) was picked up by the Independent and others. In essence the article quoted a leading London coin dealer’s ire at the Royal Mint and their pricing policy. His argument was that the Mint were over-pricing their Collector coins to a vast degree and that he, as a buyer on the secondary market, had to frequently disappoint purchasers of Royal Mint products as he was only able to offer them a small percentage of what had originally been paid when they came to sell to him. In essence he believes that buyers of new issues shouldn’t pay the “inflated” prices that he says the Royal Mint is charging if they are doing so for investment as they simply will not get their money back. He was backed up in the Independent by a variety of other dealers and auctioneers who all echoed his sentiments—there were also examples to show what a dealer was likely to pay for some of the new issues that are being produced this year and, as was to be expected the prices offered were substantially lower than the prices asked by the Royal Mint. On that basis alone the dealers seem to be spot on—Royal Mint prices are indeed far higher than the price you can expect to sell that same item to a dealer for. But is it that simple? If we are simply looking at economics, buying and selling, then on the basis of buying something from the Mint and then immediately selling it to a dealer, the argument is irrefutable—Royal Mint prices are high. But is that how it works? After all, if I buy from dealer A then immediately sell to dealer B I’m unlikely to get back what I paid for the item—dealer A would have sold it for market value and dealer B, who will want to also sell it for market value, will need to offer me less to make his money. Does that mean dealer A was overcharging me? And what if I were to go out and buy a new TV, new car, new vacuum cleaner, new anything, then immediately try to sell it on to the secondary market. Would I be likely to get the same money back as I paid for it? Probably not, in fact definitely not; only in very rare cases, with especially limited editions or errors, etc., are you ever likely to get back the money you spent on a new item if you try to sell it on quickly in the secondhand market.

Of course, coins are always seen as something a bit different, there always seems to be an automatic assumption that they will increase in value and people get very upset when they don’t—but why is this? In virtually no other field of collecting would you automatically assume your acquisitions will rise in value. If I was collecting model cars, for example, I would know that if I came to sell my collection they would, unless I had some incredible rarities, be worth less than I paid for them; the same with postcards, even stamps—in just about every collecting field bar coins there is no automatic belief that prices will rise, or even maintain—just a hope that they will. The problem stems from the idea of coins as “investments” . . . people buying items with the sole intention of seeing them increase in value. When this happens people often get burned, they buy badly and then object vociferously when the items they have purchased don’t sell for the same money they paid for them. Without wishing to give investment advice per se I feel obliged to point out that if someone is going to spend thousands of pounds on coins then they really should do their homework first and find out what the secondary market, i.e. the people they will one day sell on to, actually wants. Additionally they really should not expect any purchase to increase in value over a short space of time—the idea of buying a coin from the Royal Mint one day and being able to sell it on the next for anything close to what the buyer paid is clearly ludicrous. That didn’t stop the ’papers of course, who loved the disparity between the Mint’s prices and the dealers, no matter how unrealistic the scenario. If all investments were simply a matter of buying from one person on Monday and then selling to another on Wednesday for a vastly inflated sum then we’d all be rich. Some coins will increase in value, even some of the Royal Mint’s “expensive” 2012 coins may one day be worth more than they are today. But which coins they are and when they’ll be worth that money I have no idea. I do know that Royal Mint year sets bought to commemorate a birth, marriage or anniversary, the base metal issues purchased as a keepsake or memento, are highly unlikely to fetch a premium if sold this year, or the next, indeed they are unlikely to make the buyer much money at all if bought as an investment. Maybe some of the gold and silver coins will be a good buy, but which ones, or how much of a good buy they are, I simply do not know—if gold climbs to $4,000 an ounce next year anyone buying gold coins now will be sitting pretty, but if it drops. . . . The simple fact is, we don’t know if the coins we buy today, any coins, new issues or ancients, are a good investment or not. We like to think that they are. We don’t like to believe that our well-loved (and expensive) collections are worthless to others, but maybe we have to accept that they might be. We at COIN NEWS have never advocated buying coins for investment—we have always sought to encourage collectors to acquire coins simply for the love of the hobby and nothing more and that advice is the same today as it has always been. Do not buy coins with a view to them rising in value inexorably; buy them for the fun of it, for the joy of it, for the pleasure of the hobby. If they rise in value then great, good luck to you. If they don’t, then maybe look at the enjoyment you have had out of them over the years—maybe that is where their true worth lies.

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In This Issue

Spotlight36
The Prospero Collection
Focus on an historic sale in New York
Interview38
Two heavyweights
Meet the designers of the Royal Mint’s biggest coins
Insight41
Sceats on a budget
Introducing the enigmatic coinage of the Dark Ages
In focus45
English and Scottish shillings
England’s first “Scottish” coins explained
Background48
Errors by design
A look at some intriguing numismatic hiccups
Collector’s notebook52
Roses and plumes
Background to the well-known provenance mark
Dealer’s notebook54
Ring ring...
A morning in the life of a frustrated coin dealer
Banknote feature67
Scotland’s Forgotten Banks: Aberdeen
Some attractive notes from local banks

Regulars

Editor’s Comment2
Coin news & views14
View of the Bay22
Around the World24
New issues coin update26
Royal Mint Bulletin28
Market Scene31
Coin of the month56
Price Guide to GUINEA FRACTIONALS58
Back to basics63
Banknote News65
Price Guide to RBS NOTES70
New issues banknote update72
Bookshelf74
FAIR PREVIEW—HARROGATE76
Letters to the Editor79
Dealers’ lists80
Fair diary82
Auction diary82
Societies diary84
Semi-display adverts86
The Web directory88
Classified advertising90
Advertisers index91