Retailers may be preparing for the introduction of a 12-sided £1 coin, but you could be quids in with rarer UK currency. Coin collectors — numismatists — are always on the lookout for rare and valuable currency, and apart from the decent returns on offer, there are tax advantages because profits on UK coins are free of capital gains.
There are plenty of collectors out there: stamps, cars, art, even war medals, but coins have been one of the more lucrative collections in recent years. The rarest UK coins have returned 6.2 per cent in the past year and 11.4 per cent annually over the past decade, according to Stanley Gibbons, the collectibles dealer. The company’s GB200 Rare Coin Index, based on values published in the Spink Coins of England annual catalogue, show that the UK coin that increased its value the most over the past year was the 1738 George II gold five guinea, which went from £30,000 to £45,000. The best performer over the past decade has been the 1663 Charles II gold guinea, increasing from £6,250 to £55,000.
Values can go even higher. In January 2013 a 1794 Flowing Hair dollar, the first coin issued by the US government, sold at auction for $10 million.
What makes a coin collectible?
Scarcity, character and design are the key factors. Many collectors go for a particular theme or monarch. For example, in 2014 a coin bearing the head of Edward VIII, made to mark his intended coronation in 1937 before he abdicated a year earlier, sold for a UK record of £516,000 at auction.
Collectors will also look for coins that mark a particular occasion. Last week the Royal Mint announced the launch of the Sovereign 2017 collection, marking 200 years since the coin was reintroduced in the aftermath of the Napoleonic wars. It features the original design of St George and the dragon created by the Royal Mint’s Italian engraver, Benedetto Pistrucci. The 2016 edition sold out and the 2017 version, above, priced at £430, is 80 per cent reserved.
Coins in circulation with a low mintage are often popular. The Royal Mint issued a limited range of 210,000 Kew Garden 50p pieces in 2009 that have been sold for £50 each.
There are also modern-day Royal Mint errors that become collectors’ favourites. In November 2008 a number of 20p coins were found to have no date, affecting fewer than 250,000 coins of the 136 million 20p pieces minted that year. These can fetch up to £100. However, dealers warn that there is more value and better returns in older coins.
Daniel Fisher, of the dealer Physical Gold, says: “If you are a collector or an investor, you are better off focusing on a mintage that is limited, but it needs to be a coin that people are interested in because if it is too obscure there is less chance of a market to sell in.”
Gold versus silver
As well as the coin’s design, you are also paying for the price of the metal. The type of metal can be a key driver of the price you pay and what your collection is worth. In the past year gold has soared 15 per cent to $1,300 an ounce, and while silver has increased 20 per cent, it is only $18 an ounce.
Mr Fisher says he has seen more clients opt for silver coins: “The modest novice wouldn’t have to commit too much for silver and it is attractive because the metal is used in electronics, so the price can do well when the economy picks up.”
How to start your collection
Coins can be found at public auctions, fairs and on eBay, and the Royal Numismatic Society runs events. You need to do your research to understand what you are buying and that is where a dealer can be helpful.
Mr Fisher says: “A good dealer will always recommend a certain coin trading below its usual premium that can add returns over the years. Edwardian coins have always traded at a higher premium, but have recently become more desirable. I always recommend a medium to long-term perspective of three to five years.”
You also need to watch out for fakes. Check your dealer is part of the British Numismatic Trade Association and make sure you get a certificate of authenticity and a buyback guarantee. Chris Barker, of the Royal Mint, says: “There is a fad going round for silver-coloured pennies and 2ps, but in most cases these are just other people plating coins. Only the Royal Mint can do official UK coins. Others may make commemorative coins, but they won’t be recognised UK coins.”
Apart from the purchase costs, you may need to pay extra on your home insurance if you are storing the coins in your house. Some dealers offer storage facilities. There is no capital gains tax to pay on UK coins, but if you are buying foreign coins there will be a liability.
Another factor is VAT. Investment-grade gold is VAT exempt, but silver isn’t, although Mr Fisher says his business will soon be launching a service to provide silver VAT free.
Can you spend it?
All coins issued by the Royal Mint have a nominal value, but this doesn’t necessarily mean you can use it to pay for items. Mr Barker says any coin that has come into circulation can technically be spent. He adds: “Coins are a token of exchange, but there is no obligation for a retailer to accept them. There are also questions as to why you would want to spend them.”
For those not interested in coins, awards and medals belonging to the Nobel laureate, Sir Robert Robinson, are to be sold on December 6 by Sworders Fine Art auctioneers. The 30 honours — which include a Légion d’honneur, Order of Merit insignia and copy of the organic chemist’s Nobel prize medal — will be sold as one lot with an estimate of £6,000-£8,000 in the auction house’s Winter Country House sale in Stansted, Essex.