Estimated price: 20,000 CHFPoseidonia. Circa 530-500 BC. AR Stater.LEU Numismatic Auction 1510
Estimated price: 25,000 CHFDerrones. Circa 480-465 BC. AR Tetrastater or Dodekadrachm.LEU Numismatic Auction 1540
Estimated price: 25,000 CHFUncertain Ionia. Circa 650-600 BC. EL Stater.LEU Numismatic Auction 1593
Estimated price: 10,000 CHFTigranes the Younger. 77-66 BC. AR Tetradrachm.LEU Numismatic Auction 15128
Estimated price: 50,000 CHFBar Kokhba Revolt. 132-135 CE. AR Sela or Tetradrachm.LEU Numismatic Auction 15154
Estimated price: 20,000 CHFKyrene. Circa 450-435 BC. AR Tetradrachm.LEU Numismatic Auction 15166
Estimated price: 20,000 CHFApameia. Septimius Severus. 193-211 AD. Pentassarion.LEU Numismatic Auction 15189
Estimated price: 10,000 CHFHadrian. 117-138 AD. AV Aureus.LEU Numismatic Auction 15263
Estimated price: 15,000 CHFCommodus. 177-192 AD. AE Medallion.LEU Numismatic Auction 15273
Estimated price: 20,000 CHFLicinius I. 308-324 AD. AV Solidus.LEU Numismatic Auction 15304
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The Difference Between Stamps and Coins: Not as Trivial as You’d Think!

by Ursula Kampmann, translated by Maike Meßmann

There was a time when numerous people bought freshly printed stamps to put in their collector’s album. I’m talking about the 1970s. Back then, the collector’s market for stamps was an excellent field of business that offered wonderful profits.

Content

Today’s commemorative coins can be fun to buy. However, generally they are not a solid form of investment.

Today’s commemorative coins can be fun to buy. However, generally they are not a solid form of investment.

We all know that collecting for investment purposes became a popular pastime in the 1970s. It was not only stamps that were selling like hot cakes, but also commemorative coins – especially circulating commemorative coins. But since state mints couldn’t keep up with issuing enough commemorative coins, more and more private companies jumped on the bandwagon. They produced what’s known as non-circulating legal tender today. Their preferred target group was the same as that of stamps from Angola or the Fiji Islands: people who didn’t really know what they were doing. After all, every expert could have anticipated that the sale of many overpriced collectibles would result in great financial loss.

The Slump of Contemporary Collectibles in the 1980s

And that’s exactly what happened. A drop in inflation combined with falling precious metal prices and an economic boom made it attractive again to store your money at the bank or to invest in shares. Coin and stamp collections were sold – and, very much to the surprise of some owners, at a high loss. But not to the surprise of real collectors. They knew what collectibles issued at horrendous mintage figures were worth: their material or face value. Coin collectors were a bit better off than stamp collectors: at least, even non-circulating legal tender had a material value (although it was rather low). Those who had been clever enough to put their money in circulation commemorative coins could even sell their objects at face value.

Stamps Lost in Credibility

Stamps, however, were made of paper and therefore practically unsaleable. That’s why, contemporary commemorative coins enjoy a better image than contemporary stamps. This is proven by the fact that modern stamps don’t benefit in the slightest from the current collecting hype.

Will Commemorative Coins Produced Today Retain Their Credibility after the Boom?

And now things get uncomfortable – because those who have not yet experienced a boom to end cannot imagine that even the most beautiful boom will eventually come to an end. In other words: the coin industry must prepare itself for the fact that the run on its products will end at some point. As soon as share prices start to rise again, the fear of inflation is overcome, and life returns to normal, commemorative coins will lose a great deal of their appeal as an investment object. I currently assume that out of 10 buyers of contemporary commemorative coins, one – at most – is a collector in the traditional sense of the word. Put differently, it may well be that sales will collapse to a tenth of today’s figures when the boom ends.

Nobody knows when that will be. It could just as easily be in a month as in five years. But one thing’s for sure: in all of history, no boom has lasted forever.

Collector Versus Investor

What will happen after the end of the boom? Actually, that’s quite easy to predict by relying on the model of the coin crash of the 1980s. Only those commemorative coins were still worth more than face value for which there was a collector’s market – readily called “secondary market” by mints – which must clearly be distinguished from the investor’s market.

Unlike investors and many other “customers” of mints who need to be attacked by means of bold marketing measures, collectors are people who buy coins solely for intrinsic reasons. To inspire a collector, you don’t need advertising, you need to provide them with information. Collectors are people who buy coins without immediately thinking of their resale value. In short, a collector will also remain loyal to coins when investors have long since pulled out.

The Example of Russian Olympic Coins

An excellent example to illustrate the difference between the investor’s and the collector’s market are the extensive coin sets issued for the Moscow Olympics in 1980, which were primarily sold abroad. Those who wanted to sell their coin sets after the Olympics suffered a loss of more than 90%. Bad publicity for the image of commemorative coins as investment objects!

But then the Iron Curtain fell in 1989. It took a few years, but in the mid-1990s, Russian coin collectors entered the market. The market for Russian coins experienced an unprecedented boom. In the slipstream of this development, Olympic coins were also offered at some auctions – and sold like hot cakes. Russian collectors bought commemorative coins that had escaped the melting pot for many times their issue price. Those who hadn’t sold their Russian Olympic coins in the 1980s, enjoyed a nice increase in value in the 1990s.

By the way, although the market for Russian coins has shrunk considerably due to the embargoes, Moscow Olympic coins still enjoy the attention of collectors. After all, Russian-born people now live across the globe, and coin dealers currently buy Russian coins at attractive prices to be ready when Russian customers are back.

In this way, Russian commemorative coins made it into the cycle of the coin trade. Their number is small enough today to harmonise the ratio of coins and collectors.

The Secondary Market as a Key Issue of Mints

Only a fraction of all contemporary issues will succeed in doing what Russian Olympic coins achieved. Like in the 1980s, there will be many newspaper articles and TV features in which journalists luridly report on what a collecting investor paid for his commemorative coins and what value he is left with today. Especially when state mints get caught up in the whirlwind of such coverage, this can have devastating effects on their reputation. What politicians and central banks will do then remains an open question.

That’s why, in my view, it’s especially important to think of what will happen “after” in times of boom. Now it would be possible to invest money to attract real collectors. And to do so, other methods are needed than those marketing departments are currently adopting, measuring their success by means of the annual balance sheet and not by the effect that will only become apparent in a few years, maybe decades.

Those who want to know how to build up a collector’s market should take the methods of the classic coin trade as an example. By the way, the classic coin trade has been around since half a millennium. Mints have only been selling commemorative coins for half a century.

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