With the end of financial year now drawing to a close, it’s perhaps timely to reflect back with a brief glimpse at what has transpired with the top end of the numismatic market in Australia over the 2011/12 financial period.
Few could argue that economic uncertainty has made an impact on many markets throughout 2011 and more noticeably on financial markets in general. It may also be fair to say that slower retail activity overall will have affected many Australian’s to varying degrees over the past months and we all continue to hear and read enough in the media to know that many are doing it tough out there at present.
The slow economic cycle in Australia will no doubt bring its lessons and its merits once we’re able to look at the past objectively; awareness, wealth protection, better market knowledge and education, good old fashioned values and service, quality, appreciation, respect, planning, patience and understanding - basic principles that often become lost or overlooked in the maze over time.
Quality and rarity speaks all languages
A standard which has always stood the test of time is quality. True quality is rare; wherever there’s quality, there’s sure to be a market. While the rarity sector of Australia’s numismatic market may be currently feeling the pressure of economic conditions, buyers still recognise and appreciate the appeal and value in genuine quality and rarity as their prime motivator for doing business. This remains evident in the numismatic rarity market where desirable pieces still continue to capture interest with sales quietly taking place despite the overall cautious attitudes of connoisseurs and investors in these uncertain times.
The rarity market has certainly been put to the test and while there may be some mixed feelings, especially with numismatic investors disillusioned by lengthy periods its taking to sell their assets because of the lack lustre economy, what we’re seeing overall remains positive with some encouraging signs. The stayers in the numismatic market are the ones who understand the dynamics of the market and how the fundamental principles of supply and demand come into play in cycles such as these, calling for patience, confidence and above all – trust – not easy but essential.
While numismatic dealers Australia wide, acknowledge there are more sellers than buyers in the market at present, we all agree, opportunities across most areas and price levels don’t come along all that often and this current cycle has literally created a numismatic buyers paradise. This is quite possibly a unique situation in the industry on this scale and if investors but only realised it, these opportunities just aren’t around when the market is buoyant. This is one of the positives to come out of this cycle and it’s a great time for buyers to be awakening to the potential.
One factor possibly influencing supply and demand is the superior rarities being introduced on the Australian scene, particularly over the past ten to fifteen years or so which are also now competing alongside many of the more well known classics and traditional areas of demand over the years. Elite rarities, not so widely known in times past, have come onto the market, largely due to a shift in buying attitudes in conjunction with greater numbers of investors with more disposable wealth.
This shift in trends has seen a greater emphasis on owning the rarest and most prized pieces possibly obtainable. Many of the coveted rarities privately offered today have haled from some of the most distinguished collections and provenances internationally. These have only been shared among privileged individuals over the decades generally changing hands discretely between astute buyers. While many such pieces continue to be sold privately, they are becoming talked about in ever increasing circles as numismatic specialists promote them to interested buyers vying for the best.
In general, there are multiple levels investors can buy into the market at present, from unique and super rare pieces, to rare and scarcer items, and the more traditional and popular coins and notes for new buyers to select from. Then there’s some of the more readily accessible areas mostly associated with numismatic collectors.
Much of the rare and top quality material now available for sale on the market around Australia is largely due to the number of Australian collectors and investors needing to cash up, so the range of scarce quality pieces available spans all levels from top end investment to mid and lower end items. Its no secret that investors still appear to be cautious in buying, weighing up whether the time is right to invest or maybe hold onto their funds a little longer while many markets are currently in flux and particularly the continuing volatility of the stock market.
However, like many other dealers, we believe that this cycle will pass. In the meantime, it presents an ideal opportunity for those in the industry to get there out and promote the numismatic market with everything they’ve got. There are many investors who still don’t know about the potential in numismatics and that’s why we believe the future holds the greatest potential for this market.
Certainly there are people who have unfortunately invested in this market that are not suited to it. But it’s a little late to suddenly realise this when in a desperate need to sell. Responsible buyers need to be aware of the structure of the markets they’re investing their money in and be mindful of not putting all their eggs in one basket, as the saying goes.
Wise investing in this type of market is to be prepared to hold in slower cycles if you really don’t need to check out. Growth in superior quality is still positive and if investors don’t panic, the market will continue to remain stable and steady. This is a point we really want to get across at present to better educate buyers into this market. In effect, this cycle is a kind of sorting out period, not just for the numismatic market but all markets, and as we mentioned, there will be lessons learned and more knowledge gained to strengthen and secure markets for buyers as well as sellers in future years to come.
Working tirelessly on your behalf
Together with TRCC team we have been tirelessly promoting numismatic investing at numerous shows and private functions while showcasing some of the finest rare and scarce quality coins and banknotes in our Essentially Money publications, online mailings and website, and for those visiting our Albany and Perth showrooms, we have a constant dazzling display of coins and notes on show.
2012 APAC Summit Macau
TRCC was invited to be a sponsor of the APAC Summit in Macau, China in April this year which we accepted as an excellent opportunity to promote Australia’s rare coin and banknote investment market to major wealth fund managers and private investors. Asians spare no expense when it comes to catering to visitors and every possible whim and taste is attended to in the most elaborate and elegant of styles. Five star hotels exude the utmost in luxury and the impeccable hospitality and service has to be experienced to be believed.
The APAC Summit was held at the Venetian Hotel in central Macau last March. Rob attended the summit as an invited sponsor which entitled him and other participants to exclusive, one on one private meetings with international fund managers, Private Wealth Office CEO’s and Advisory firms over 3 days. Inter-disposed, were a core group of representatives from IMF (International Monetary Fund), economists and other prominent speakers.
The APAC Summit was very professionally organised and Rob was extremely pleased with the reception he received as he discussed the merits of rare Australian coins and banknotes as a serious investment alternative. There was considerable interest shown by several major advisors and fund managers from Australia, Hong Kong and Singapore. As numismatic investing was something a little out of the ordinary to many of these people, some interested, in-depth and very worthwhile conversations resulted.
In fact, as many of the presentations at the summit were focussing on investing in tangible assets and alternative forms of wealth preservation, this presented the perfect opportunity to talk about Australian coin and note rarities and the historical performance. Wealthy Asian investors seem very compatible with tangible type investments, particularly those with strong collectability.
Rob has been invited back to Hong Kong in July to present to other groups of investors, many who need no introducing to the world of investing in collectables as they are already heavily involved in rare art and fine wines. At the same time, he will be travelling to Singapore to meet with other investors looking at the Australian market.
The shift in attitudes, now predominantly towards tangible assets, has seen many investors seeking some of the more niche markets such as Australia’s rare coin and banknote segment. This niche area may take time to establish with Asian buyers however we believe Australia’s rarity market is now developing into a major force and will be of genuine interest to many wealthy and confident overseas prospects.
Many of Australia’s premium level numismatic rarities, originated from overseas and as previously said, haled from major collections and institutions held, in some cases for many decades. We may well see many top rarities return back overseas again to be held in private wealth funds and major collections, only to repeat the whole to and from process all over again in future decades to come. Each time the stakes will be higher and as for demand, when the genie’s out of the bottle….who’s to say what dizzy heights values may rise to!
USA - COINWEEK
This is something that collectors and investors may find of interest, particularly those selling at present and it also applies to the way some of our super rare pieces currently sell in Australia and other countries also.
As Mark Ferguson for COINWEEK – MFRareCoins.com puts it – quote: “Values are quietly rising for ultra rare coins”
“Clearly, much of the action in ultra rare coins in the US is quietly taking place ‘under the radar’ in private transactions. There’s great demand for such ultra rare coins by wealthy collectors and investors, and sellers in these rarities often prefer to transact business out of the limelight, away from the auction scene.
One public example of why private transactions are sometimes preferred for ultra rarities, rather than by auction is found with the 1913 Liberty Nickel which sold privately for $5 million in 2007. A few months before this private sale it was offered in a major public auction, with a reserve price, but it failed to attract any bids at all. This can be a risk when such coins are publically auctioned.
The timing has to be right! Qualified buyers don’t always have ready cash to execute such transactions immediately, and there are also possible tax consequences for sellers – so it goes both ways”. End quote.
USA - Heritage Auctions sells Silver Cent for $1 million at CNCS Convention
Major USA auction house, Heritage Auctions achieved a record $1 million sale for the 1792 One Cent piece, an experimental coin with a small silver plug in its middle. Considered the first coin ever struck inside the Philadelphia Mint, the final hammer price for the coin was one million dollars with a 15% buyers premium added, making a total of $1,150,000.
USA - PCGS Certifies 1903 Fengtien Tael, one of China’s most important coins during a successful Hong Kong show
One of the most important silver coins in Chinese numismatic history, the unique 1903 Fengtien Province Tael was certified by Professional Coin Grading Services during the recent April 2012 International Coin Convention & Antique Watch Fair held in Hong Kong.
The 1903 dragon dollar, graded PCGS Secure Plus™ AU55 was submitted by a Taiwan coin company and is insured for $5 million.
How well are your investments protected?
An increasing number of clients have been talking about estate planning in recent months which has prompted us to look at including some very worthwhile information on the subject from one of the legal experts. The following information is current law and will no doubt be of great value for those with investment portfolios and various other assets, wanting to take personal responsibility for their belongings in the event of death, illness or accident.
Estate planning is about you and the choices you make. You choose who benefits from your investments.
Do you know that if you die without a Will, your spouse or partner will only get household chattels, other assets to the value of $50,000 and then one third of the rest of your estate? Your children will receive the other two thirds. Valuable investments and collectibles (including coins and banknotes) however, may not form part of your “household chattels” and your beneficiaries may end up fighting over these assets if you don’t leave a Will.
If you have a Will, you decide who benefits from your assets, at what time and under what terms. If you want your valuables to be given to a particular person, you have the choice as to who these will go to.
Your Will needs to be structured and worded very carefully to take into account your particular circumstances. How long ago did you make your last Will and is it up to date? Have you acquired more investments since your last Will and are these investments being distributed to the right people? Rather than you owning the investments, does your self managed superannuation fund or family trust own them? If your children are to inherit your assets, do they need protection from creditors and predators and are Testamentary Trusts appropriate?
A Will is just one part of your estate plan.
What happens if you have a stroke or dementia and cannot make decisions for yourself? Who will make decisions regarding your valuable investments?
You can appoint a person or persons of your choice to look after your legal and financial affairs in your Enduring Power of Attorney. Your attorney should be someone you trust to make decisions regarding your investments.
You can also appoint one or more people to make medical, personal and lifestyle decisions for you in your Enduring Power of Guardianship. In your Advance Health Directive you can choose what forms of medical treatment you want or do not want down the track when you are unable to make these decisions yourself.
These documents set out your choices in the event of death or legal incapacity. You’ve worked hard to accumulate your wealth. Don’t let the courts decide how your wealth is to be distributed.
Bernadette Duell is a Senior Wills and Estates and Commercial lawyer in the Albany office of HHG Legal Group.
Bernadette is happy to discuss your estate planning issues with you, and for clients of The Rare Coin Company is offering a free half-hour consultation regarding your estate plan.
Disclaimer: This report reflects our professional opinions and observations of the numismatic rarity market. Whilst all care is taken to represent the market in the utmost integrity and discretion, the information and comments may differ from the viewpoints of other numismatic specialists. All information is supplied without regard to a particular person’s individual circumstance, investment objectives, financial situation or needs. We believe that the purchase of investment grade Numismatics should be both enjoyable and profitable, but like any traded commodity, there are risks and past performance is not a guarantee of future returns.
If in doubt, we recommend you consult your financial advisor.