Nupur Anand, ET Bureau Jan 10, 2011, 07.05pm IST
Source
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.
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.
Source
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.
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.
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.
Coins as investments: The first thing an investor has to remember is that the value of a coin does not necessarily depend on its age. There are other parameters such as condition, rarity, metallic value, supply and demand that also come into play and may add to the value.
Uncirculated coins known as proof coins have a greater value. Proof coins are ones that were minted for a collection or presentation. "A common silver British Indian rupee would be worth Rs 500. But in proof condition, it would be Rs 5,000," says auctioneer Todywalla.
Uncirculated coins known as proof coins have a greater value. Proof coins are ones that were minted for a collection or presentation. "A common silver British Indian rupee would be worth Rs 500. But in proof condition, it would be Rs 5,000," says auctioneer Todywalla.
Expert help: There are agencies that grade coins. This helps you to get a fair idea about the true worth of your collection. Apart from these, there are books and journals that give details on how to distinguish between an original and fake.
And with social networking becoming such an integral part of our lives, you can always turn to sites such as Facebook for more information. There are various societies and groups that you can join. Apart from showcasing your collection, these clubs can also guide you in making investments.
Selling: You can sell your collection to dealers or auction it. Auctioneers charge around 10% of the total sales. Keep in mind: "Like in other instruments, there are no guaranteed returns. Suppose you have a coin that is rare, its value would be sky-high. However, if similar coins come into the market, the value of your coin would fall," says Todywalla.
The other factor that can bring down the value of a coin or note is its condition. If it hasn't been preserved well, its value is sure to go down.
Lastly, remember there is a difference between an antique and a recently minted medallion. Many such medallions are touted as coins and sold in the market; it is advisable to stay away from them.
And with social networking becoming such an integral part of our lives, you can always turn to sites such as Facebook for more information. There are various societies and groups that you can join. Apart from showcasing your collection, these clubs can also guide you in making investments.
Selling: You can sell your collection to dealers or auction it. Auctioneers charge around 10% of the total sales. Keep in mind: "Like in other instruments, there are no guaranteed returns. Suppose you have a coin that is rare, its value would be sky-high. However, if similar coins come into the market, the value of your coin would fall," says Todywalla.
The other factor that can bring down the value of a coin or note is its condition. If it hasn't been preserved well, its value is sure to go down.
Lastly, remember there is a difference between an antique and a recently minted medallion. Many such medallions are touted as coins and sold in the market; it is advisable to stay away from them.
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