The case for investing in the artistry of rare gold coins
THE rare coin market encompasses over 2,500 years of history. It’s dominated by a backbone of collectors who offer stability as long-term holders with a passion for collecting.
Growth is currently coming from both collectors and investors. It is a result of a combination of very low interest rates, extreme volatility within traditional investment markets and the desire to physically hold a tangible asset. Some investors prefer to have a 1,000 year-old rare coin to owning euros.
In the rare coin market, demand from wealthy collectors and investors appears to have exceeded supply. While there are millions of collectors globally, it is still a relatively small market when compared with the more traditional forms of investment, such as equities, property or even the art market. A small shift by investors away from traditional investments to collectibles can give rise to strong price movements.
One significant advantage that coins have is that the market is relatively financially unsophisticated. There is virtually no gearing or buying on margin. Coins are not a short-term investment; English coins, for example, are considered a serious investment, as statistics over the past 15 years show top quality English rarities rose on average by 11 per cent per year. Rare coins are a valid part of a portfolio for an investor looking for some form of diversification, they are not for an investor looking for a position in gold, silver, copper or bronze. Although a rise in the underlying commodity price can do no harm towards sentiment.
Prospective investors should consider where the economy is strong and has potential for further growth. As wealth increases citizens tend to look to collectibles, which leads to a repatriation of their heritage – a phenomenon seen in Russia, China and India recently.
Collectible coins are under-promoted, under-researched and under the radar. Consequently, they appear to be decades behind the art market, where one evening of contemporary art sales at a large auction house is more than the UK coin market turns over in a year. But things are certainly beginning to change. Coins are starting to be considered as another form of art. And those that have held in their hand a gold Stater struck during the reign of Alexander the Great, or a gold Aureus with the portrait of Hadrian, know that these coins are not only a rare piece of history but also a work of art.
Ian Goldbart is managing director of Noble Investments.