Can Coin collection be a Gold mine?

Old coins
Suhas Kadam, a private-sector employee, dreamt of owning a house. But money was a problem and there came a point where he was about to give up on his dream. He had no godfather, no windfall or inheritance that he could turn to. He turned to the small investments he had made over 25 painstaking years-a collection of 252 "error" coins. These are coins in which minor errors had crept in during minting. 

In 2009, he auctioned his collection for Rs 6 lakh. This money he used as down payment for his house. 

Minting money: "The returns from investing in coins and bank notes can range anywhere between 20% and 30% on a year-on-year basis," says Farokh S Todywalla, owner of Todywalla House, a Mumbai-based auction house. The same sentiment is echoed by Shamji Vinchhi, a coin dealer. Illustrating his own example, Vinchhi says an East India Company coin of 1808 that he had bought three years ago for Rs 100 is now valued at Rs 3,000. 

             Experts say the astronomical returns are because of demand and supply mismatch. The number of people showing interest in numismatics (the study of coins) has been rising, but the supply of antique coins hasn’t increased in the same proportion. 

             The other reason is that with the increase in the value of gold and silver, the intrinsic value of old coins also rises. All collectors and dealers stress on one point: It is strictly an interest-led investment. Most caution that it would be foolhardy to jump into coin collecting only because of the potential returns. 

             "Unlike other investment classes, coin collecting is illiquid and is not institutionalised. Governments keep changing the size and shape of coins. So investors have more opportunity to increase their collections," says Harsh Dalal, regional head (multi family office), Altamount Capital, a wealth advisory. 
Collectors' fortune


How to begin: Experienced collectors such as Vinchhi suggest start by investing small amounts-even Rs 500-1,000 a month. The market in India still remains largely unorganised. So the problem for investors is where to source the coins from. 

             "There are two ways of acquiring coins; first by purchasing them from a dealer and second by sourcing them from coin and paper money exhibitions that are conducted by private collectors and traders across the country," says Dalal. Even while buying from a dealer you should check if he has a licence and permit as it adds authenticity. If the dealer is not licensed, you should always check the repute of the person before buying. Experts point out that buying from an auction is always a better option than an over-the-counter deal as the surety of the product being authentic increases. However, the prices generally scale up in auctions due to aggressive bidding. 

             The other thing that you should keep an eye for is if the dealer offers a money-back guarantee if the coin is not genuine. If a coin has been bought at an auction, then only the minimum bid price will be returned to you. Family and friends along with jewellers are also good sources. When prices of gold and silver rise, people who are ignorant about the value of antique coins generally sell them to the local jeweller. 

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