Coin Collectors Gone Wild

Good grief, have coin collectors gone wild?! I participated in this auction last week, but the lot I bid on certainly didn’t get this much attention!

Australian sovereign smashes several records
Rare 1920-S gold coin realizes $1.26 million in sale

The Australian 1920-S gold sovereign, the jewel of the Bentley Collection, established four records, the auction house states, realizing £780,000 (about $1,261,520 U.S.), including the 20 percent buyer’s fee.

The A.H. Baldwin & Son auction was conducted in London Sept. 27 …[and]… totaled £2,226,104 (about $3.6 million in U.S. funds).

The final part of the Bentley Collection will be sold May 7, 2013. The first auction, conducted May 8, realized £899,346 (about $1,452,600 in U.S. funds).

— John Andrew, Coin World, 10/8/2012 |

There’s a method to the madness, though. Governments are printing new money like crazy, backed by absolutely nothing. Left in the bank, your money earns less interest than the rate of inflation. If you buy something, it often loses half its value just leaving the store. In the stock market, you risk losing it altogether. So what’s left?

The issuers of the Standard Catalogue of British coins ‘Spinks’ have identified a general 16.5 per cent a year growth of the value of coins, and for certain rare and good condition pieces the yearly increase in value is more than 21 per cent over the past five or six years. This rise is not simply a ‘mark up of catalogue values’, but is borne out by auction results, that is, what someone has actually been prepared to pay. Very large increases of value are now being achieved in the sale rooms – for example, auction house DNW [Dix Noonan Webb] sold a Mary gold Ryal for £190,000 last September – it fetched £400 when it was sold in 1950.

— Chris Dillow &Richard Gladdle, Investors Chronicle, 10/2/2012 |

So coin collectors haven’t actually gone wild — it’s an increased interest in coins as an alternative to more conventional investments. From a collector’s standpoint, this increased interest in coins isn’t making assembling a collection any easier, and no one likes paying high prices. But on the other hand, I can’t imagine any collector not being happy to find that a coin purchased several years ago is now selling for much, much more.

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