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Collecting rare coins is a popular hobby and can be a valuable method of investment.
The study and collection of coins and other forms of currency is known as numismatics
and the demand from collectors for rare coins can often lead to the inflation of their prices.
In theory, the worth of a bullion coin is objective as it is determined by the price of its
precious metal content. A gold bullion investor or dealer will therefore value a coin
according to its weight and the gold spot price. A numismatist, however, may value
a certain coin higher than one of the same weight and material due to factors such as
its grade, condition and rarity.
Rare Gold Coins
An example of this is the Gold Double Eagle. This is an American bullion coin with a face
value of $20, containing approximately 30g of fine gold. The coin was generally minted on
a large scale from 1849 until it was discontinued in 1933 and many of the coins are available
for small premiums over spot price. However, the fact that production of the coin ceased so
long ago means that availability of the double eagle is lower than it once was and certain
issues are now incredibly rare, making them valuable.
The 1933 double eagle, for example, was ordered to be melted down before it was ever
officially circulated. Only a few of these coins survived, making it one of the rarest coins in
history and would now cost millions of pound to buy, despite only weighing 30g of gold. The
most expensive coin of all time is a 1794 US Silver Dollar, one of the first ever minted, that
was bought in an auction for $10 million, despite having a face value of one dollar and
containing less than 24g of pure silver.
Most bullion coins will have certain years or designs that are rarer than others and numismatists around the world will often be prepared to pay high premiums in order to add them to their
collection. Popular coins such as the Krugerrand are minted regularly and are generally not
difficult to find, but many collectors would pay an inflated price for a specific year.
This phenomenon does not only apply to bullion coins. There are several examples of
rare circulating UK currency coins, with specific designs or errors that collectors will
pay high prices to be able to own. In 2012 a series of 50p coins were circulated in
honour of the Olympics, featuring images of different sports on the reverse. One of the
designs - the picture of a swimmer - was changed soon after production to make the
athlete’s face more visible and a collector once paid as much as £820 for this coin that
would only be worth 50p in a shop. Although this is unusual, with the coin usually selling
for a few pounds, this example highlights to what extent the value of a rare coin can be
inflated. As time moves on and coins become lost or deteriorate in condition, a rare coin
such as this could appreciate further in value, making it a potentially lucrative investment.
However, while the potential of rare coins is arguably enormous, there is also an increased
element of risk involved in viewing collectible coins as in investment. Certain coins do indeed
sell for huge sums but this value is ultimately only determined by the buyer and the amount
they are willing to pay. The value attached to rare coins is largely a sentimental one and while
there are perhaps some exceptions - it may not always be easy or possible to find a buyer who
is willing to match your valuation of your coin. For many people, coin collecting is a hobby and
therefore a luxury, meaning that in difficult times people may not be willing to trade as much
for a rare coin, damaging the potential return on your investment.
The value of a rare gold coin is at least protected by its precious metal content. A rare double eagle, for example, will always be worth at least the value of 30g of fine gold but, if an investor who paid an inflated price due to its rarity were forced to sell the coin for its bullion price, this would represent a potentially enormous loss on their investment.
Rare British Coins
Coins have been a part of British history since the Roman occupation, and the Royal Mint has produced coins that were circulated across the globe thanks to the size of the British Empire.
The interest in the British Monarchy has made antique English coins incredibly valuable, and this demand - coupled with the age of some coins - makes old British coins extremely rare. Collections featuring British monarchs are some of the most sought after in the world, and at BullionByPost we have a range of rare, valuable coins for customers to enjoy.