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A Guide to Investing in Premium Rare Australian Coins and Banknotes

Diversify Your Wealth Strategy 3


Contents Introduction

5

Historical Significance

6

Why Invest in Rare Australian Coins and Banknotes?

7

Advantages of Investing in Rare Coins and Banknotes 

8

A Safeguard Against Market Volatility

10

Hedge Against Inflation and Devaluation of Local Currency | Self-Managed Super Funds

11

Disadvantages of Investing in Rare Coins and Banknotes

12

Understanding the Australian Rare Coin and Banknote Market

13

Performance of Australian Numismatic Rarities

14

Past Performance of Classic Rarities

16

Appreciating the Beauty, Rarity and Heritage | Intrinsic Value

18

Australian Numismatic Market Segments

20

Structure of the Numismatic Market | Supply and Demand

26

Principles of Numismatic Investing

27

Numismatic Investment Guidelines

28

Forgeries

29

Risk Assessment | Holding Period

30

Planning Your Numismatic Strategy

31

The Rare Coin Company’s Quality Assurance and Professional Expertise

33

We Take Pride in Building Wealth for Our Clients

34

Displaying Your Wealth

35

Testimonials - Client Comments

36

How Demographics Impacts on the Numismatic Investment Market 

38

Cashed Up Baby Boomers

39

The Future of the Australian Rare Coin and Banknote Market

40

Helpful Rarity and Grading Ratings

41

A Basic Guide to Australian Coin Grades

42

A Basic Guide to Australian Banknote Grades

44

Essential Reading

46

An Overview 

47

Your Next Step

48


Introduction It has been our life’s work and an immense privilege to be specialists in Australia’s numismatic industry for the past three decades. Through our own collecting passion, a desire was borne to promote the pleasure, prestige and financial benefits associated with investing in rare and beautiful coins and banknotes. Established in 1982, The Rare Coin Company has evolved into a highly professional numismatic firm, growing and expanding through years of dedication, knowledge, experience and industry expertise, which we continue to proudly share with our clients. The Rare Coin Company has provided services in commercial and rarity segments of the Australian numismatic market for investors and collectors around the globe. We have come to recognise and appreciate the significant historical and investment appeal in acquiring rare and superbly preserved coins and banknotes from key areas of the market. Our greatest desire is to further expand on our Company’s achievements and those of our astute clients who, together with us, continue to enjoy the pride, kudos and generous investment returns through the acquisition of the rarest and finest Australian coins and banknotes we can source in the market. We are pleased to present the compelling benefits of collecting and investing in Australian rarities within this brochure. Together with our dedicated team of numismatic specialists, The Rare Coin Company is ready to assist established and new numismatic investors to the market, supported by sound business ethics and professional numismatic services.

Robert and Barbara Jackman Managing Directors, The Rare Coin Company

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During the Great Depression of the 1930s, rare coins held their value. In fact between 192 9 and 1936, high quality coins did not drop in value and it’s estimated overall they appreciated by approximately 48%. Numismatist 1988

Historical Significance For thousands of years, coins have been a means of trade and symbol of wealth and prosperity. Coin dealers traded throughout Europe over 500 years ago and banknotes share an equally fascinating history, appearing on the scene some 600 years ago, coming to the fore in the collecting arena in the last 50 to 100 years. From childhood dreams of buried treasure to collectors’ prized possessions, the magic and allure of coins has never diminished. Commemorative coins have been struck to pay tribute to monarchs and heads of state, as well as ordinary people who have made their mark on history. The origins of paper currency have followed suit with designs commemorating important people, key events and cultural significance. The desirability of coins and banknotes has been recorded throughout history and rare pieces in particular have always been associated with strong pedigree and prestige. Many of the world’s most significant collections have been formed as part of the wealth creation strategies of famous and influential people such as the British monarchy, King Farouk, the Rothschilds, USA Elizabergs, former British Prime Minister Tony Blair, Hollywood actress Nicole Kidman and many others. Today, rare coins and banknotes are fast becoming recognised as a solid wealth creation vehicle, in the same light as great works of art, antiques and more traditional investments such as shares and property. However, as with other investments, investors need to be highly selective to ensure they protect their wealth and maximise their returns. The Rare Coin Company offers investors and collectors the opportunity to build steady and reliable wealth through the astute acquisition of prized rare Australian coins and banknotes. As an alternative asset for diversification in these times, we invite you to examine the following compelling benefits this form of investing offers.

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Why Invest in Rare Australian Coins and Banknotes? A portfolio of rare Australian coins and banknotes is a particularly effective investment vehicle. It offers investors above average capital growth and accordingly, the opportunity to protect their wealth. The investment performance of Australian numismatics (comprising rare coins, banknotes and tokens) has historically shown a steady increase over the past 22 years, surpassing many traditional investment classes. Figures indicate the value of certain Australian coins and banknotes has increased by approximately 10 to 15 per cent per annum over this period. If we assume a conservative rate of growth of just 10 per cent per annum, a rare coin and banknote portfolio purchased for $500,000 today could be worth over $1,296,871 in 10 years time (subject to variables resulting from the downturn in the numismatic market from time to time). Price growth on certain rare and scarce quality Australian coins can be charted back as far as 40 to 50 years with results similar to the growth rate indicated over a 22-year period. This means the rate of investment return on rare Australian coins and banknotes frequently has the potential to exceed many other forms of investment, including residential property, fixed interest and the share market. While there are certainly other investment opportunities capable of producing results similar to those of the numismatic market, Australian coins and banknotes are considered to be one of the safest, easiest and most convenient and rewarding investment mediums available today. As testimony to the investment potential of the Australian numismatic market, rare coins and banknotes are Commonwealth Government approved for use in Company and Self-Managed Super Funds.

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Advantages of Investing in Rare Coins and Banknotes Numismatic rarities provide a tangible and portable investment that is rare in these times. They have advantages over other forms of investments, which are critical to creating a well-balanced portfolio. Here are some of the reasons why people invest: 1) Low risk

Due to the rarity factor, the risk in buying well selected rarities is extremely limited and total loss of capital is virtually impossible. As with any form of investment, the market can be subject to short-term extremes, however, rarities are generally considered a safe and very secure investment alternative.

2) Historical performance

The appreciation value of select rarities has historically proven to be one of the highest of any form of investment. Many independent sources quote average returns of approximately 10 to 15 per cent compounded per annum over a 22-year period. These figures vary, depending on the type and condition of the numismatic material. There is no doubt historically the appreciation rate has far outstripped the rate of inflation, this being the prime concern in an investment.

3) Limited availability

Select rarities are generally not as readily available as most other mainstream investments. Obviously if they were, their rarity would be questionable. Depending on the sum of the investment, a well structured rare coin and banknote portfolio may take weeks, months or even years to establish.

4) Liquidity

There are few investments, particularly in alternative like markets, that are as relatively liquid as numismatic rarities. Generally, investors have at least four avenues in which they can sell. The best option is to liquidate through the company providing the numismatic investment, and if genuine, such a company should welcome the chance to find new buyers. Alternative methods include consigning at auction, private treaty, or sale to another numismatic specialist / collector.

5) Worldwide market

Of all the alternatives, rare coins are one of the largest global collector-based markets. The Australian market has established a cyclical pattern and has a record of achievement on the international scene. In many instances, select rare Australian coins and banknotes are considered to be stronger price performers than our overseas counterparts.

6) No ongoing supervision and monitoring

Unlike many other investments, the rare coin and banknote market does not require constant price monitoring. As a medium to long-term investment proposition, it is not subject to daily price fluctuations reflecting prevailing volatile economic conditions. Decisions to buy and sell rarities should be made in the context of long-term economic predictions with supervision by a reputable and experienced dealer or advisor at sensible intervals.

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7) Low maintenance

No upkeep, maintenance or extensive storage space is required for rare coins and banknotes. Rarities can be professionally stored, eliminating deterioration by natural elements. As with all valuables, protection from theft is also important, therefore insurance charges and the cost of secure facilities need to be considered. These are generally the only costs necessary in maintaining a portfolio.

8) Discreet

A portfolio of numismatic rarities is a discreet form of wealth. There is no necessity for an investor to display their coins and banknotes, nor is there a registered deed of title, share certificate or any registered document of ownership. A numismatic portfolio is invisible to everyone but the owner and those to whom the investor / collector wishes to confide.

9) Portability

Coins and banknotes can be easily and discreetly stored anywhere the owner chooses and readily moved anywhere in Australia or overseas without restriction. There are generally no limits to where or when you can move or trade your investment.

10) Diminishing supply

The exclusivity of the Australian rarity market places it according to experts to be amongst the most desirable and attractive numismatic markets in the world. With most known Australian rarities now residing in numerous collections and wealth portfolios worldwide, any pieces accidentally lost, misplaced, damaged or destroyed, effectively takes another precious example out of the marketplace, further reducing an already finite market.

11) Growing demand

There are now more numismatic specialist firms and auction houses dealing in the top end of the Australian numismatic market. Due to increased awareness in this niche area over about the past 20 years, and greater attention to professional promotions and marketing, rare Australian coins and banknotes have been elevated onto the world stage. The growing worldwide trend in alternative investment markets is significantly raising the profile of Australian rarities. Therefore their potential as a competing force alongside other major investment markets is considered by some to be almost unlimited.

12) Ease of administration

An investment in numismatic rarities requires minimal administration. Other than certification of authenticity and grading by the numismatic firm selling the rarity, there are no legal documents to be signed by the purchaser and lodged with authorities. Ongoing daily supervision of investment price movements is unnecessary and there are relatively few decisions that have to be made immediately relative to economic conditions. On sale / purchase of an numismatic investment in order to protect against such investments being charged or in mortgage to any third party, legal advice should be taken on relevant enquiries that it may be prudent to make to ensure clear title is secured (for example, search of the register on the Personal Property Securities Act 2009).

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A Safeguard Against Market Volatility Rare coins and banknotes offer a safeguard against market volatility and the benefit of allowing investors to carefully consider whether they need to liquidate rarities in their portfolio. Investors in any market can be fickle and panic selling can have a major impact on markets such as stocks and shares, sending them into turmoil. Savvy investors usually plan ahead and may set their sights on other investment areas or rollover funds from one portfolio to another. The rare coin and banknote market operates within the framework of the general economy and liquidations can be affected to some degree when other markets are slow. In strong economic times, rarities tend to enjoy relative ease of liquidity, however investors are generally not as eager to part with them in such times. In economic downturns, investors may need to liquidate, however as rare coins and banknotes are normally not an instantly traded commodity, it is generally recommended they carefully consider whether they have the patience to wait for their investments to be sold to a suitable buyer. This is where the time buffer can be a positive benefit. If every rare coin or banknote returned to the market had the potential to be liquidated instantly, many of these investors would soon realise the folly of their hasty decision to sell as such ‘pre-planned’, having cut short the best potential of their investment while it was in the process of realising steady and reliable compounding growth. Thankfully, the numismatic market is generally protected against erratic investor behaviour precisely because rarities attract buyers normally through judicious selection, enabling items to change hands at a steady rate. In the opinion of many, rare coins are an excellent hedge in times of global and economic unrest. When real estate and stocks plummeted during the mid-1970s recession, rare coin prices continued to rise. ‘During the 1979 oil crisis, rare coin prices rose dramatically and in the two years following the 1987 stock market crash, coin rarities more than doubled in price’. (Source: Heritage Auctions, USA). There is growing evidence worldwide, larger volumes of investors are turning to collectables. In a recent Capgemini and Merril Lynch – World Wealth Report it was stated buyers were targeting classic rarities with historically proven, long-term value. The most notable tangible assets in demand were rare coins, fine art, wine and antiques. It is estimated high net worth individuals hold at least 10 per cent of their wealth in alternative tangible investments. It is well documented in international financial circles that diversifying a portfolio of tangible and non-tangible assets offered the best safeguard against endemic loss of wealth.

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Hedge Against Inflation and Devaluation of Local Currency Volatile economic conditions, with a lack-lustre share market, fluctuating interest rates and the spectre of increasing inflation, are attracting forward planning investors diversifying into tangible-based assets for Self-Managed Super Funds and personal investment portfolios. As rare coins and banknotes have an international demand, the investment can be protected from local currency devaluation. • Safe, predicable appreciation (subject to market trends) • Flexibility of investment size and funding pattern • Portability and liquidity if and when required • Ease of administration with no fees • Deferred tax liabilities (see footnote on page 48 concerning obtaining independent legal, tax and / or financial investment advice) • A confidential investment • A tangible asset With these benefits in mind, what better vehicle to achieve this than through a professionally developed rare coin and banknote portfolio?

Self-Managed Super Funds Numismatic rarities are Australian Government approved for inclusion in Self-Managed Superannuation Funds. Investments in rare coins and banknotes are considered to be particularly effective in creating an overall, well balanced wealth portfolio. The long-term compounding growth in numismatic rarities is considered to add diversity, tangibility and stability alongside traditional investments.

* Of course, past performance is no guarantee of future returns

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Disadvantages of Investing in Rare Coins and Banknotes Investing in numismatic rarities is not for everyone; therefore potential investors need to be informed of the disadvantages associated with this market before planning their strategy. 1) Capital growth asset

Rare coins and banknotes do not generate any income whilst held, therefore profits are realised in terms of capital appreciation only when sold. It is important for investors to understand that growth compounds and cannot be drawn on as dividends.

2) Highly specialised field

Due to the specialised nature of the numismatic market, potential new buyers are strongly advised not to attempt to invest without first seeking the professional advice and guidance of an accredited numismatic expert.

3) Long-term investment

Rare coins and banknotes are recommended for long-term investing and have historically performed strongest when held for at least 5 to 10 years.

4) Liquidation discretion

As rare coins and banknotes are not an every-day commodity listed on any exchange to attract instant buyers, investors need to plan ahead when considering liquidating their rarities. Depending on prevailing market conditions at the time and the size of the investment, rare items may take many months to on-sell to private buyers, which means investors may be subject to extended holding periods until sold.

In the opinion of many experts the advantages of investing in coin and note rarities far outweigh the disadvantages. As with any alternative asset market, a well structured plan will help minimise any risks and drawbacks in taking up a numismatic investment.

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Understanding the Australian Rare Coin and Banknote Market When buying, we select Australian numismatic rarities that are unspoilt, or in the best condition obtainable in their category. The reason for this is quite simple! While Australia boasts some of the finest and most desirable rare coins and banknotes in the world, our numismatic market is still developing and is considerably smaller in comparison to many others overseas. With Australia’s market beginning to mature and more investors realising the potential in this exciting investment area, the value of rare Australian coins and banknotes is predicted to rise dramatically in the future. As Australian rarities become scarcer, investors are likely to enjoy the same spectacular, if not better, returns than those achieved in overseas markets. Certain anomalies exist in the pricing of Australian rarities due to public awareness and perception. For example, a 1930 penny, regarded as Australia’s most famous, scarce date circulating coin with a mintage of approximately 1,500, can be more valuable in top quality than a rarity where only two or three are known to exist. The now celebrated Australian 1930 penny came to light in the 1960s as the missing link in the Australian copper penny series. As collectors scoured their loose change and rummaged through coin shops for the elusive coin to complete their collection, it soon became public knowledge this was a scarce date and prices quickly rose. Hence the coin to have in any collection was and still remains the 1930 penny. Conversely, a Proof gold sovereign, struck as an archival showpiece and one of only two known, had virtually no exposure to the public of the day. It only become known decades later having been passed on by the original guardians to other worthy collectors. Such treasures have become more accessible to discerning investors and collectors, therefore greater public awareness is developing in response to growing demand for prestigious coins and banknotes. Many of today’s most coveted coins and banknotes will become household names, much like the 1930 penny. As more people associate these rarities with status and wealth creation, demand may well see a new and exciting era emerging in Australia’s rich and exclusive currency heritage.

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Performance of Australian Numismatic Rarities Naturally, there have been occasional periods of sharp, short-term increases followed by market corrections; however as a medium to long-term investment, coins, banknotes and other numismatic items are considered to have performed so well, they are reported to have topped many investment performance charts for approximately 10 of the past 20 years. A selection of 38 numismatic pieces chosen at random from actual prices quoted in the McDonald’s Australian Coins and Banknotes Price Guide is in chart form on the following page. It gives an independent guide to actual performances over the past 22 years. Please note one of the determinative criteria for the investment return on the coins and banknotes involved in this survey, is that they are of investment quality and available in today’s marketplace. The average increase in value over the 22-year period represents * 13.8 per cent compounded per annum – a far better return than would have been realised by most other investments over the same period. The changes in market emphasis have played an integral role in increasing the value of numismatic rarities and should continue to do so. While there has been a strong market in Commonwealth coinage since 1968, the markets in gold coinage and banknotes have gained prominence since the 1980s.

* Past performance is no guarantee of future returns

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An independent performance guide over the past 22 years Year

Description

Grade

1990

2000

2010

2012

1919

Halfpenny

Proof

$2,500

$8,000

$60,000

$80,000

1923

Halfpenny

Unc

$8,000

$30,000

$65,000

$67,500

1919

Penny (double dot variety)

Gem

$1,500

$6,000

$12,250

$13,000

1930

Penny

VF

$7,500

$17,500

$65,000

$70,000

1946

Penny

Gem

$1,200

$3,250

$12,500

$15,000

1910

Threepence

Proof

$1,000

$8,450

$35,000

$57,500

1915

Threepence

Gem

$2,250

$5,250

$15,000

$18,000

1920

Sixpence

Proof

$2,500

$6,750

$75,000

$100,000

1916

Shilling

Proof

$2,000

$8,500

$50,000

$68,500

1928

Shilling

Gem

$1,500

$4,250

$8,750

$9,500

1916

Florin

Proof

$3,500

$9,600

$65,000

$100,000

1910

Florin

Gem

$1,950

$4,000

$12,500

$14,000

1934

Florin

Proof

$2,000

$6,500

$45,000

$75,000

1852

Adelaide Pound Type 2

Unc

$20,000

$25,000

$140,000

$175,000

1813

Holey Dollar

EF

$30,000

$60,000

$400,000

$500,000

1871

Half-Sovereign

Proof

$15,000

$30,000

$165,000

$235,000

1881S

Half-Sovereign Shield

Unc

$4,000

$6,500

$65,000

$80,000

1918P

Half-Sovereign

Unc

$1,250

$2,250

$8,500

$9,250

1856

Sovereign

Proof

$50,000

$100,000

$450,000

$625,000

1871S

Sydney St George Sovereign

Proof

$10,000

$30,000

$175,000

$260,000

1920S

KGV Sovereign

Unc

$60,000

$200,000

$700,000

$900,000

1929

Melbourne Sovereign

Proof

$13,500

$27,500

$145,000

$195,000

1921

Kookaburra Halfpenny

Unc

$10,000

$27,500

$295,000

$365,000

1921

Kookaburra Penny Pattern

Unc

$5,000

$12,500

$87,500

$110,000

1937

Pattern Florin

Proof

$13,000

$27,500

$225,000

$350,000

1923

10/- Banknote Miller Collins

Unc

$2,500

$8,250

$58,500

$64,500

1934

10/- Banknote Riddle Sheehan

Unc

$1,100

$4,250

$30,000

$32,500

1949

10/- Banknote Coombs Watt Star

Unc

$2,750

$13,750

$85,000

$90,000

1918

1pd Cerutty Collins

EF

$1,100

$3,250

$22,000

$19,250

1927

1pd Riddle Heathershaw

Unc

$325

$1,300

$11,000

$12,500

1933

1pd Riddle Sheehan

Unc

$225

$950

$8,000

$9,250

1927

5pd Riddle Heathershaw

Unc

$1,650

$5,500

$42,500

$46,000

1939

5pd Sheehan McFarlane

Unc

$650

$2,750

$19,000

$21,500

1925

10pd Kell Collins

EF

$7,500

$17,000

$67,500

$60,000

1934

10pd Riddle Sheehan

Unc

$1,750

$6,250

$44,000

$52,500

1960

10pd Coombs Wilson

Unc

$200

$450

$2,500

$2,750

1918

20pd Cerutty Collins

EF

$15,000

$50,000

$265,000

$265,000

1924

100pd Cerutty Collins

VF

$14,000

$56,000

$245,000

$245,000

$317,000

$836,500

$4,277,000 $5,413,000

13.8 per cent growth compounded per annum. Figures quoted from McDonald’s Coins and Banknotes publication. Values current as of July 1, 2012.

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Past Performance of Classic Rarities 1852 Adelaide £1 Type 1 Gold Piece Sold for $115,000 in 2002 and $480,000 in 2010, averaging a 19.6 per cent per annum return. The Adelaide Pound was Australia’s first legal tender gold coin. Only 30 to 40 pieces were produced. They are now extremely rare to acquire in choice grade.

1921 George V Kookaburra Type 2 Pattern Halfpenny Sold for $90,000 in 2004 and $275,000 in 2010, averaging a 20.5 per cent per annum return. This is one of the most sought-after, best known and unusual of all Australian coins. Fewer than 10 such examples exist. They were never issued for circulation.

1930 George V Proof Halfpenny Sold for $30,000 in 2000 and $150,000 in 2008 averaging a 22.3 per cent per annum return. Struck at the Melbourne Mint, this coin issue is considered extremely rare with only three known in private hands.

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1924 George V Kell / Collins £1,000 Cancelled Specimen Note Sold for $86,000 in 1998 and $1,223,250 in 2007, averaging a 34.3 per cent per annum return. This finely preserved banknote is the only example of its type to have ever been offered at auction or for private sale anywhere in the world.

1952 Unissued Parkes £50 Specimen Note Sold for $350,000 in 2006 and $750,000 in 2010, averaging a 21 per cent per annum return. This superbly preserved banknote is unique in private hands. The only other example is displayed in the Reserve Bank of Australia’s museum in Sydney.

1896 Western Australian Bank £1 Issued Note Sold for $11,000 in 1998 and $125,000 in 2010, averaging a 22.4 per cent per annum return. As an issued note, this well preserved example is particularly rare, having survived extensive circulation and handling in it’s time.

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Appreciating the Beauty, Rarity and Heritage When buying rare coins and banknotes there are many factors to consider aside from the obvious wealth accrual benefits. Historical significance, beauty and rarity remain at the very core of their desirability and demand. They offer a direct link to our national heritage and mirror the economic and cultural development of our nation. For more than two centuries our currency has included rich symbols of our unique Australian identity. Many of the designs adopted are now considered important works of art, understandably highly valued by passionate collectors and connoisseurs. Only select buyers will ever enjoy the privilege of owning a prominent and highly prized piece of Australian numismatic history, making investing in rare coins and banknotes a truly unique and rewarding experience. It is important to respect the significance of this investment area. Premium rare coins and banknotes, as with other notable collectables, deserve the greatest attention to preservation, allowing future generations to experience the pride of ownership and the potential financial rewards.

Intrinsic Value Unlike electronic investments, rare coins have a solid value that you can physically see and hold. They have a built-in base metal value, which means the intrinsic aspect is a safeguard against total loss of value. Non-physical forms of hedging, such as futures or options contracts, do not offer the peace of mind available to investors who have a considerable level of their wealth secured in intrinsic assets such as rare coins. A safely stored, prized collection remains protected, giving the owner total control over their possessions.

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Australian Numismatic Market Segments There are six primary segments within the Australian numismatic rarity market with proven appeal to investors and collectors. • Pattern, Proof and Specimen coins

• Commonwealth coins

• Pre-Decimal banknotes

• Australian gold coins

• Pre-Federation banknotes

• Specimen banknotes

Each of these markets has its own characteristics in terms of rarity, collector appeal and demand. As a result, market values for individual sectors move in largely independent cycles, each strong at different times. This provides investors with the opportunity to select a suitable market at a time they see as favourable in meeting their objectives for their overall portfolio of investments. This market independence allows investors to diversify their funds amongst several different markets, minimising risk and optimising capital growth. The following is an outline of the six market segments and their benefits.

Australian Pattern, Proof and Specimen Coins 1852 to 1964 Patterns, Proofs and Specimens are the first coins struck whenever coinage is being introduced or altered in a major way. They are widely regarded as the most exclusive areas of the Australian coin rarity market. Such coins display superior striking quality, being specifically produced using polished dies and coin blanks. Only very small numbers were struck and by their very nature are extremely rare, historic and exclusive.

Pride of ownership Investors and collectors gain a great deal of satisfaction from owning the very first coin struck of a particular denomination or design, and some have been willing to pay a premium to obtain pieces closely related to pivotal events in our economic history. Patterns, Proofs and Specimens are coveted as the creme de la creme of Australian numismatics.

Strong competition between collectors and investors These special coins are often obtained from astute collectors who have been active in the numismatic market for many years. They generally have an intimate understanding of this sector and long-term goals for their collections. Due to the close correlation between Patterns, Proofs and Specimens to major monetary events, these coins have an appeal that increases with time. Their extreme rarity ensures there is strong competition between bidders at auction and selling by private treaty, even when economic conditions may see subdued activity in other collector markets. Financially stable investors with a long-term view are likely to be best positioned to take advantage of the strong capital growth this market is considered to offer.

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Australian Gold Coins 1852 to 1931 Historians agree the discovery of gold in Australia in 1851 had a resounding impact on our economy, society, national history and identity. The importance of this historic period from a collector’s viewpoint may be best understood through the study of a gold sovereign collection.

The core of the Australian numismatic market Australia has long been amongst the largest gold-producing nations in the world, reflected in the level of international demand for our gold coins. Many numismatists regard gold sovereigns as the core of the Australian numismatic market. The production of sovereigns is closely connected to the history of 19th and early 20th century Australia. They represent the first Australian coins to form an extensive and cohesive series.

Security through sound levels of underlying demand Investors and collectors are attracted to the range of opportunities possible within the gold sovereign market, collecting by date, mint mark, portrait or reverse type. This diversity has been considered to be reassuring to investors seeking security through often perceived sound levels of underlying demand. The fundamental relationship between the gold coin market and market price for physical gold is considered to be an additional advantage for investors. While superior quality rare and historic sovereigns are considered to have recorded marked increases in value during periods of strong growth in the price of gold, numismatic investments in this area have also on occasion increased in value when the base market price of gold has been stable or on the decline. A collection of gold sovereigns is therefore often considered to be a sound hedge against inflation or devaluation of the Australian dollar generally.

Australian Commonwealth Coinage 1910 to 1964 Coins produced during Australia’s Commonwealth period (otherwise known as the pre-decimal era) are perhaps the most collected series in the Australian numismatic market. As Commonwealth coins were minted over an extended period and during diverse economic conditions, they vary widely in rarity and historical importance, resulting in several tiers of demand.

Future values not constrained by past market activity There is a large ‘grass roots’ base of collectors for Commonwealth coins, but as they increase their financial capacity and numismatic sophistication, they inevitably desire rarer and higher quality coins.

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This continually evolving demand for numismatic investments bodes well for the long-term future of the market, so investors will feel confident that values are not likely to be constrained by parameters set by past market activity. The fact that the background of these coins ties in so closely with formative events in Australia’s history such as Federation, two world wars and the Great Depression, also ensures their appeal and demand is likely to continue unabated well into the future. The strong capital growth of the renowned 1930 penny is a persuasive example of newly affluent baby boomers investing in Australiana familiar to them since their childhood. The extent of demand the Commonwealth coin market enjoys, together with the high rarity of key coins available, is likely to suit investors seeking strong capital growth largely detached from the prevailing price of physical gold.

Australian Pre-Federation Banknotes 1817 to 1901 The majestic era of the Australian pre-Federation private trading banknote is perhaps the most historic and potentially desirable area of the numismatic market. Banknotes printed during 19th century colonial Australia offer collectors and investors some of the rarest and most spectacular works of art known throughout the world of note engraving. Printed for the numerous banks issuing their own notes, they offer a glimpse into our early banking institutions and the people, places and practices that lead to their eventual demise in the 1893 banking crisis, or survival as forerunners of today’s major Australian banks. Colonial banknotes were once overlooked as part of Australia’s currency heritage by collectors who were drawn to the Commonwealth issues from 1913. However, greater studies, research and the printing of detailed publications led to their recognition as a major area of historical significance during the 1980s and 1990s.

Previously a relatively untapped numismatic area Some 64 private and state banks operating throughout the 19th century issued banknotes. The banknotes were large, intricately designed and printed on delicate paper. They were not designed with durability in mind and many did not survive the harsh circulation of the time. Issued notes were signed by the banks and paid to customers against gold deposits. Those that survive today in choice quality are now excessively rare and therefore seldom seen in the market and in consequence these are considered to be highly sought-after by collectors and investors.

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Most pre-Federation banknotes privately offered in recent years have been Specimen issues released from archives by the engraving firms in England where they were printed or sold by the banks, or handed down from prominent collections over time. These numismatic time capsules were sleepers in the market until their extreme rarity and immense historical significance were revealed. Greater awareness has finally awarded pre-Federation banknotes well deserved recognition, coming to the fore as the most historical chapter in Australia’s currency history.

Future potential Australian pre-Federation banknotes were only introduced to the wider collector and investor market in the 1980s with increased demand propelling their price growth significantly during that time. There are now many more collectors and investors seeking Australian pre-Federation banknotes to add to their collections and numismatic investment portfolios. Their extreme rarity underpins their future performance in a rapidly developing market considered yet to realise its full potential.

Australian Pre-Decimal Banknotes 1913 to 1961 The elaborate and dignified images employed on Australia’s Commonwealth paper currency carry with them an air of exclusivity not captured by coinage of the same period. Because of their purchasing power, very few banknotes from such trying economic times as the Great Depression and World War I actually remain, particularly in superior quality. Many were produced in very limited numbers, and the Australian Commonwealth Government actively recalled banknotes issued under the gold standard during the early 1930s. It is known from Reserve Bank of Australia records that very few of these notes exist.

Broad appeal – an advantage to investors Commonwealth banknotes appeal to a wider range of collectors and investors than other segments of the Australian numismatic market, primarily because of the ornate designs and vibrant colours employed in their production. However, it has only been in relatively recent times that interest has brought the market values of most banknotes in line with those of coins of corresponding eras. The advantage to the potential investor in this sector of the market is considered to be its appeal to collectors interested in our country’s heritage and art.

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Australian Pre-Decimal and Decimal Specimen Banknotes 1913 to 1974 Specimen banknotes were produced as examples of an intended new design of a banknote issue destined for general circulation. As test examples identical to the notes for use, they were either perforated with the word SPECIMEN as in early pre-decimal issues, or overprinted with the word SPECIMEN on decimal note issues so they could not be used. Variations in Specimen notes included the word CANCELLED perforated across the centre of the note, punch holes within the notes, or diagonal black lines printed across the notes from corner to corner. Specimen notes were very important in banknote production and held in high esteem by the Commonwealth and Reserve Banks of Australia. They were printed in notoriously small numbers and only occasionally presented to important people in society or to public libraries and institutions for display. They were never made available to the collecting public. Specimens were produced throughout Australia’s Commonwealth note series from 1913 to 1961 and from decimalisation in 1966 to 1996.

From banking archives to major collections and investment portfolios Regarded as elite issues within the banknote market, Specimen notes have established their place in the industry as some of the most prized numismatic items in the world, revered for their immense historical value and extreme rarity. As such, they represent a potential major investment area with a proven history of demand and performance with well preserved examples historically having attracted significant premium values.

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The Rare Coin Company has the capability and resources to source specific numismatic investments, including select coin and banknote rarities from overseas, for clients as required (depending on availability).

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Structure of the Numismatic Market Reflecting on the history of coins and banknotes and collecting trends, investing in numismatic rarities is broadly considered to be an investment based on firmer foundations than most traditional investments. It has evolved into a sophisticated endeavour enjoyed by millions of collectors and investors. From the mere collecting of numismatic material as a hobby, an established and highly profitable potential form of investment has emerged, appealing to individuals and major institutions. A significant number of investors, dealers and auctioneers operate independently and no single player dominates nor has a disproportionate majority share in the Australian market. Australia’s numismatic investment and collectable markets are estimated to be trading in excess of $450 million per annum, not including bullion.

Supply and Demand The rare coin and banknote market operates on the principles of supply and demand. When a particular rare or scarce quality piece, or exclusive segment of the market which is limited in supply attracts more demand from buyers than can be met, the market value increases. At numismatic auctions frenzied bidding on a desirable and seldom seen piece can drive the final price well above the estimate set by the auction house (much like a real estate auction). If demand is particularly strong, the price can sometimes greatly exceed catalogue values. As with most markets, numismatics tends to be cyclical in nature. Coin and banknote prices can fluctuate due to various factors including market perception. There may be times when certain coins, banknotes or segments of the market have been extensively researched by specialists, highlighting their extreme rarity and / or historical significance. This action can set new trends with buyers turning their attentions to other areas of the market. Changes to the monetary system and major historical events also have the potential to focus collector demand on a specific item or numismatic segment. Broader factors can affect demand too including changes in world economic conditions and interest rates, currency exchange rates and the market price of precious metals.

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Principles of Numismatic Investing Astute numismatic investors always apply the following maxims when buying rarities: 1) Aim for top quality

High quality numismatic pieces increase in value at a greater rate than lower quality examples. They are in the highest demand and most limited supply. A coin or banknote may be quite common in average condition but rare, or even extremely rare in Uncirculated grade. Quality is therefore another degree of rarity and a key criterion when predetermining the material for investment.

2) There can never be any bargain prices for superior quality pieces:

To have genuine investment potential, a coin or banknote must be in limited supply. This means that so-called bargains rarely, if ever, are available. It is most likely any item which appears to be bargain priced is either over-graded or has a blemish or other fault not fully described.

3) The value of a rare coin or banknote relates to availability:

The value of rare coins and banknotes constantly changes and prices can only be determined when the item is available on the market. • Catalogue Prices: Prices marked are only a guide and can often be misleading to the uninformed. They should therefore be regarded as estimates only and at best an approximation, especially in rarely seen pieces. • Rarity: The number of individual coins or notes produced may not necessarily have any bearing on a coin or banknote’s rarity in the marketplace. The level of rarity is determined by the number of pieces currently available, not the number originally produced. • Auction Prices: Auction prices can be misleading as many factors come into play, such as the intensity of the purchaser of the item, commissions applicable in many cases and the overall strength of the auction at the time.

4) Diversification is the key to maximising investment potential

It is quite usual for investors to outlay a considerable sum of money on a single numismatic investment. Often it may be preferable to purchase one or two high priced rarities rather than a number of lower priced examples for inclusion in an investment portfolio. This will depend entirely on the buyer’s strategy.

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Numismatic Investment Guidelines Purchase only the finest quality available The most important rule to follow when investing in rare coins and banknotes is to purchase only the finest quality examples. Generally this means acquiring pieces that are of the highest grade possible – for coins; FDC Proof, Specimen Strike or Gem Uncirculated and for banknotes; Uncirculated. In some cases, certain rarities are simply not available in top grades and in such instances the investor should purchase the best available grade rather than pass up a valuable piece. It is important to note the grades mentioned above are a general recommendation. Factors such as the existing numbers, price, market demand and availability have as equal bearing as the condition in the decision to purchase.

Obtain the finest quality available in the price range you can afford There are high quality rare coins and banknotes to suit most investors’ budgets. One of the most important factors about rare coins or banknotes is their condition, and investors acquiring less than the finest examples are making a potentially costly mistake. Investing in something with relatively little or no market demand is near pointless. The resale market for lesser grade items is generally very soft and offers relatively insignificant returns. High quality rarities on the other hand, have shown rather consistent demand in the marketplace.

Invest in numismatic rarities only if you can afford to hold long-term Rarities should be purchased with discretionary income that can be committed for long periods. Rare coins and banknotes do fluctuate in value based on overall economic conditions, market supply and demand. In the past these cycles usually occurred every four to six years, so numismatic investments should only be made when funds can be comfortably committed beyond these periods.

Deal with an experienced numismatic firm Investing in numismatic rarities can be a complex and risky undertaking for the uninitiated, therefore it is essential to seek professional advice and guidance from an experienced and reputable numismatic firm before buying. An expert in the field should always be willing to take the time to consult with a potential investor, offer valuable advice in developing a rarities portfolio and be prepared to establish professional, long-term relationships with their clients. A reputable dealer should know the most historically sound areas of the market to recommend and ensure the buyer understands how and why particular rarities are selected.

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Forgeries While forgeries of rarities have existed in the past, they are seldom seen in Australia today. Most of Australia’s iconic coins and banknotes are world renowned and have been well documented and researched in leading numismatic journals, catalogues, auction publications, specialist libraries and many other historical publications. Australia’s numismatic fraternity is quick to record any suspicious appearances in the market with most of the best known rarities closely observed through a network of dealerships, connoisseurs, investors and major auction houses. Thanks to modern technology and the ever watchful eye of dedicated numismatists, forgeries are now far easier to detect. The few coins that have surfaced on the market over the years quickly came to light, exposing under powerful magnification and rigorous testing, the clever techniques used by the forger. These discoveries have lead to greater collector awareness and the characteristics have been documented in detail in leading numismatic publications and other specialised studies. Australian rarities such as the 1930 Penny and the 1813 Colonial Holey Dollar have been the main target of forgers, however there have been no new counterfeits seen in Australia for some years. Banknote forgeries are virtually unheard of in Australia due mostly to the elaborate and complex engravings. Special types of paper, printing and intricate watermark features, cleverly combine to foil and deter even the most skilled forger. The few attempts that have surfaced over the years have been inferior reproductions and quickly seized by authorities. These have been mainly confined to Australian decimal notes. Forgery is illegal in Australia and carries criminal penalties and civil liabilities. An accredited numismatic specialist should always be consulted when purchasing valuable pieces and qualified rarities should always be accompanied with authenticity certification. A history of the item should also be provided where possible. Most specialists in the rarity sector of the market handle the buying and selling of rarities on behalf of their clients, therefore the history often remains with the respective specialist long-term.

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Risk Assessment As with every investment there are associated risks. As a collectable asset, rare coins and banknotes are considered to rate as low to medium risk. Investment Risk Investment risk can be defined as the probability of losing capital or not achieving the returns expected from a particular investment. Historically, select Australian rarities have generally produced strong capital gains, however as with all investments, historical returns do not guarantee future performance.

Market Risk Market risk can be defined as events that may occur and have a negative effect on the price and liquidity of all types of investments within a particular market. These events may include economic, political, legal or social conditions.

Asset Risk Asset risk is the risk a particular item may fall in value. This may occur due to incorrect grading, or the discovery of other examples of a particular piece that may come onto the market which could affect its value. However, historically the latter has rarely occurred in Australia.

Physical Risk Physical risk is the possibility of damage or destruction caused by incorrect storage, theft etc. It is therefore essential to seek professional advice and guidance through an accredited numismatic specialist before embarking on investing in this highly specialised field.

Holding Period Historically, rare coins and banknotes perform best when considered as long-term investments. Like any investment, numismatics can be cyclical in nature, with one sector outperforming another each year, dependant on demand. As with any scarce commodity, the longer numismatic rarities remain out of the marketplace, the stronger the buyer competition when they surface. An investment in rare coins and banknotes should, as a rule, be considered for at least a 5 to 10-year holding period to maximise potential gains.

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Planning Your Numismatic Strategy While The Rare Coin Company takes pride in professionally consulting with potential buyers about rarities and the way the market operates, we are not financial advisors and cannot offer advice or guidance on the appropriate funding of a numismatic investment portfolio. Our primary aim is to promote numismatic rarities for investment and collecting purposes and to source the finest examples for private sale. There are various strategies that can be considered when looking to commence a numismatic investment and while potential investors may have a plan to achieve a certain level of growth; they should have an exit strategy to meet their own investment objectives. Strategic planning is strongly advisable, whether considering liquidating one item at a time or the entire portfolio at once. A numismatic expert should work closely with a client to identify their numismatic objectives and recommend appropriate rarities as and when available. These strategies may include:

Building a retirement nest-egg A buyer may decide to place a portion of their capital into building a personal rare coin and banknote investment portfolio. This may come from incomes or other surplus funds. This strategy allows investors to sell off one or more of their rarities as required, helping to sustain them through their retirement.

Family heirlooms People who are financially independent may choose this strategy to establish a portfolio of rarities in their childrens’ or grandchildrens’ names. As a longer term strategy, a portfolio of well selected items may be structured over a period of time, significantly enhancing the performance of the portfolio by the time the child reaches adulthood. (See footnote on page 48 in relation to obtaining independent legal, tax and / or financial investment advice about tax liabilities / benefits of investments, particularly in relation to family tax planning strategies.)

Self-Managed Super Funds The advent of Self-Managed Super Funds in recent years has seen investors taking control of their own financial future by diversifying their investments. Rare coins and other collectables are highly suited as part of a balanced strategy (the specialist selling the collectables should provide proof of compliance with the laws on storing collectables in SMSFs). Investors may select a variety of rarities to compliment other investments already in their portfolio and plan to liquidate when required. The long-term holding period of rare coins and banknotes makes them highly suited to SMSFs as the performance is greatest when held over a 5 to 10-year period. This allows for maximum compounding growth. Footnote: Independent legal, tax and / or financial investment advice should be taken by a potential investor on tax benefits and liabilities in relation to a proposed investment.

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Personal Investment Portfolio A portfolio of rarities or a single high value piece may be purchased by an investor who has plans to use the funds for a particular project or as capital to fund another future investment. This type of investment usually should be considered for a minimum holding period of five to ten years where possible, taking into consideration the need to plan an exit strategy well in advance to allow time for the consignment process to occur.

Establishing an Astute Collection Many numismatic investors are collectors at heart and have some knowledge of the rare coins and notes they select as a collectioncome investment portfolio. Discerning collectors usually have most of the say in what they purchase and need very little guidance about what to select. They are notoriously fussy and passionate on the subject and may choose quality pieces from a particular area of the market such as Australian pre-Federation banknotes. Some prefer to build a collection containing key rarities from a particular coin or banknote series or both, and generally find it difficult to part with their prized pieces when necessity compels them to. Whatever the strategy, investors need to be prepared to hold long-term and advise the intended nominated dealer to liquidate well in advance.

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The Rare Coin Company’s Quality Assurance and Professional Expertise The authenticity and grading of all rarities sold by The Rare Coin Company is certified. We have a wellestablished national and worldwide buying network with reputable numismatic dealers, auction houses, investors and collectors to assist clients with the future re-sale of their rarities when required. This is generally conducted by consignment whereby the rarities are offered for private sale by the Company on the client’s behalf. Other re-sale alternatives may include consignment through auction on a client’s behalf. Commission fees are negotiable. The Rare Coin Company operations are centred on providing professional and expert services for genuine investors and collectors seeking to diversify a portion of their wealth into numismatic rarities - secure in the knowledge their strategy is supported by sound administrative procedures, the objective of achieving the most potential in terms of return of capital in the investments and complete confidentiality.

Access to prominent rarities As an accredited specialist handling leading rarities, the Company maintains close alliances with key national and international industry figures. Our strong proactive approach is essential in keeping pace with the latest market intelligence. This extensive network allows us exclusive opportunities to access and secure the most significant rarities known. The Rare Coin Company’s field of expertise is established extensively within Australia’s numismatic market and many of our nation’s most prized and revered numismatic treasures have passed through our hands, residing in prime investment portfolios today.

The Rare Coin Company is an accredited member of these collector and trade organisations: • Australasian Numismatic Dealers Association Inc. ANDA (Founding Member) • International Banknote Society (IBNS) • Industry Council for Tangible Assets (ICTA) • American Numismatic Association (ANA) • Numismatic Association of Australia (NAA) • Professional Coin Grading Service (PCGS)

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We Take Pride in Building Wealth for Our Clients Professional service and advice Our team is extensively trained to provide clients with personalised portfolio management services in the numismatic market. The Rare Coin Company also has invested in an extensive research library, comprising numerous volumes and publications containing historical numismatic archives, factual information and relevant data from leading industry journals, Australian and international auction catalogues and major references known throughout the Australian market.

Resources to source and handle the rarest and finest numismatic pieces worldwide The Rare Coin Company has access to the finest and rarest pieces the market has to offer. Most of Australia’s renowned coin and banknote rarities have been sold through our Company, including the revered and unique Specimen and Issued Commonwealth of Australia £1,000 banknotes, which achieved record prices well above the AU$1 million mark.

Certificate of Authenticity The Rare Coin Company provides a certification of authenticity and quality on all investment level coin and banknote rarities we sell.

Secure, safe custody storage facility The Rare Coin Company has a dedicated secure storage facility for clients choosing to store their numismatic investments purchased through us. Whilst held in our storage facility, investments are covered by an extensive insurance policy and safeguarded by our advanced security systems. An annual fee applies for this security service.

Annual Investment Performance Review The Rare Coin Company provides a complimentary written annual valuation on investments purchased through our Company, for the term of the investment. End of financial year assessments are also provided for clients holding rarities in Self-Managed Super Funds. Clients storing their rarities with The Rare Coin Company can be assured they are fully compliant with Commonwealth Government legislation regarding investing in collectables for these funds. (See footnote on page 48 in relation to independent legal, tax and / or financial investment advice.)

Ability to create numismatic portfolios of any size No two numismatic investment portfolios are exactly the same, just as there are no two clients with identical strategies; therefore The Rare Coin Company can structure any sized portfolio to suit the buyer’s individual needs and objectives. While we accommodate buyers at most investment levels, creating million dollar portfolios is our field of expertise.

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Liquidation Assistance is assured in the future re-sale of all certified rarities sold by The Rare Company at the client’s request. Rarities are appraised then clients are required to provide written authority to proceed with consignment before rarities can be made available for private sale. Until sold, certified rarities remain the sole property of the client while in safe custody with The Rare Coin Company. Rarities can be withdrawn from consignment if the owner desires, provided the item/s have not subsequently been committed to sale with another buyer. We provide professional advice as to the timing of placing numismatic items on consignment.

Portfolio Management The Rare Coin Company manages portfolios for the following: • High Net Worth Individuals • Corporate Buyers • Private Wealth Funds • International Investors • Sovereign Funds • Pension Funds • Personalised Portfolios

Displaying Your Wealth Many lovers of great artworks, antiques and other objet d’art take delight in displaying their prized possessions. While we do not recommend openly displaying valuable rarities such as coins and banknotes, unless under strict supervision and secure lock and key, clients may still have the option to showcase their prestigious rarities with a superbly framed photo enlargement of their valuable pieces as an artistic wall hanging or desktop frame. The Rare Coin Company provides professionally framed photos on select, extremely rare and unique coins and banknotes. This is complimentary at our discretion or may alternatively be purchased through the Company by clients.

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Testimonials - Client Comments “I have purchased numismatic rarities in most years since I became a client of The Rare Coin Company in 2005. My aim was to create a hedge against hyperinflation. The lowest return I received on one of my investment rarities in 2011 was 10 per cent. Even working on 8 per cent I would have been happy. Eight per cent compounding over 40 years on a $100,000 purchase would reap $2.1 million, but a bank term deposit where, if you were in the 30 per cent tax bracket, would only realise around 5.6 per cent and an $884,000 return. Investing in numismatics through TRCC means no overheads or outgoings, except for an annual minimal storage fee, and no other people involved as in the case of assets such as real estate, where there are agents and tenants to deal with and the very real risk of falls in value. Rob and Barb are amongst the most honest people you could meet and I will continue to purchase as funds become available.” David Burton, Caloundra QLD School of Gann and Commodity Hedging Company

“A portfolio of rare coins and banknotes when used as an investment tool can produce dynamic growth and future prosperity for any discerning investor. Having invested in numismatics for many years we have personally witnessed the tremendous growth, of not just the individual items themselves, but also the understanding of and general trend to own and invest in these historical treasures. During those exciting and turbulent early years, The Rare Coin Company also grew from strength-to-strength and played a paramount part in its role as advisor and mentor to us. The highly professional company profile and extremely friendly well-trained consultants make it not only easy, but almost a necessity to recommend their services and products.” Rob Wright and Loraine Naylor, Youngs Siding WA Award-winning Alpaca Breeders

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“Some years ago, we were advised by a couple of friends to consider investing in rare coins and banknotes. The main criterion for us was that the investment had to equal, or better the yearly inflation rate, which some of our other investments were not doing. Having made the decision we made our first numismatic purchase and have never looked back. Being able to collect these rare treasures of Australian history has turned into a fascinating hobby. We both know these items will appreciate in value and be much sought after by other like-minded collectors, if and when we decide to sell. The friendly service and helpful advice from The Rare Coin Company has only reinforced our peace of mind to secure our future in this way. We can both honestly say, that this is one of the best investment strategies we have made.” Chris and Carol Brown, Springwood QLD Retirees

“I first met Rob Jackman more than 20 years ago when he purchased a new motor vehicle from my company. At the time, Rob and Barbara were dealing in stamps and coins from a small arcade shop. Several years later, Rob introduced my wife and I to the advantages of investing in rare Australian coins and banknotes. In April 1999, we made our first purchase, a consecutive pair of 1936 George V 10/- banknotes, for which we paid $5,650. This and other purchases since have rewarded us well with their capital growth exceeding anything else on offer. The professionalism and integrity of the company’s management and staff is second to none.” John Barnesby, Albany WA Prominent Business Professional

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The Rare Coin Company has 30 years experience in the specialised field of numismatics. As such, we are well positioned to assist discerning investors and connoisseurs in obtaining the most renowned rarities.

How Demographics Impacts on the Numismatic Investment Market There are more than 200 million genuine collectors worldwide and it is their passion and commitment that propels the market, assuring it remains stable and resilient. Investing in high-end collectables is a growth area and with an aging population and expanding economies, it is predicted to double over the next 30 years. Another key influence is actual population growth. According to a report by investment banking and securities firm Goldman Sachs, we are in the midst of an unprecedented explosion in the ‘world middle class’. The firm has predicted that by 2030 two billion new people may join the ranks. These will be people with money to spend and the time to pursue interests, which will no doubt have a positive spin off for the collectables investment market. Asia is already proving a growth region, especially in China where investors have taken a keen interest in fine wines, art and other notable collectables.

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Cashed Up Baby Boomers Many cashed up baby boomers (post-World War II) about to, or already retired, are living longer, have more disposable income and now have more time on their hands to return to old hobbies they once pursued, with renewed enthusiasm and money to spend. They also appreciate the importance of tangible assets that perform exceptionally well and often outclass traditional investments. The collecting market is expecting a flow on effect from this demographic and in turn, increasing demand and prices for quality collectables. A trend is also emerging where mainstream investors are now entering the market and investment funds are being established. Many investors have already diversified into quality collectables including rare coins and banknotes, to develop well balanced private wealth portfolios.

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The Future of the Australian Rare Coin and Banknote Market Many collectable markets throughout the world are coming of age as investment mediums and notable rarities in particular are now in greater demand than ever. Collectables are enjoying heightened exposure in the wake of disastrous Wall Street crashes and other failing speculative markets. Larger numbers of disillusioned investors around the globe are now seeking new alternatives such as rare coins to safeguard their wealth against further loss and increasing uncertainty. The advent of the internet during the 1990s has helped propel numismatics and a host of other popular collectables onto world markets and as a direct result, very high prices are now being seen in greater frequency in areas such as classic rare coins and banknotes, where prices continue to make headlines amidst global economic turmoil. Priceless rarities are receiving increasing media attention and professional numismatic specialists worldwide are making the most of the regular publicity and growing awareness in terms of the development of the numismatic market. While Australia’s numismatic rarity market may be currently lagging behind the strength of its European and United States counterparts, it has certainly gained long-overdue exposure in recent years as record prices dominated the market several years running from 2000 to 2007. Prominent rare coins and banknotes, once secluded and reserved for highly privileged and influential individuals, have been flushed out into the open as the market matures and becomes more widely recognised. Prestigious Australian Proof and Pattern coins, Specimen banknotes and many other key rarities formerly preserved in highly prestigious collections have come onto the market as demand increases for the most significant pieces. Smart Australian investors and collectors are now targeting the ultimate numismatic prizes and overseas buyers are becoming strong competitors as they set their sights on the exclusivity and enviable position of the Australian market. The Asia Pacific region is rapidly developing and larger numbers of wealthy collectors and investors are set to take advantage of the potential of the Australian numismatic market. As our market makes a wider impact on our Asian neighbours, Australian buyers may be left to compete for any superior pieces on a level never before seen in the history of the industry.

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Helpful Rarity and Grading Ratings Often numismatic investors, particularly newcomers to the market, are not familiar with the various levels of scarcity attached to rare coins and banknotes. To assist buyers when making future decisions to invest, we have included the simplified rarities rating guide below based on our extensive industry knowledge, research and experience. Ratings appear in order of importance. Rarity

Grading (state of preservation)

Unique

Unique in this grade

The only example of its kind

Highest quality obtainable

Extremely Rare

Extremely Rare in this grade

Between 2 and 10 examples known

In top ten examples known

Very Rare

Very Rare in this grade

Between 11 and 50 examples known

Difficult to come by in this grade

Rare Between 51 and 150 examples known Very Scarce Between 151 and 750 examples known Scarce Between 751 and 2,500 examples known

As a general rule, the higher the rarity, the longer the item should be held to allow the natural economic cycles to realise the full appreciation value. For example, a unique piece returned to the market within a short time would not only impact on its ability to perform in terms of return on investment, but could also be detrimental to its status as an historical artifact and possibly be perceived to be damaging to the integrity of the rare coin and banknote market. Responsible numismatic specialists in top end rarities usually diligently endeavour to educate potential investors to ensure historical significance, rarity and provenance are of primary interest, with investment potential considered secondary.

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A Basic Guide to Australian Coin Grades Proofs, Patterns and Specimens These terms are not grades as such but rather refer to the special types of strikes in coins not designed for general circulation. Struck with specially prepared dies, they showcase the mint’s ultimate craftsmanship and display distinct characteristics of striking quality quite unlike the coins struck for public use.

Fleur de Coin (FDC) This is a French term which literally means, ‘Flower of the Die’. It describes a coin in the highest state of preservation. It can be used with PROOF coins exclusively struck for collectors, or coins produced for normal circulation. The strike is faultless and well centred. Design details are razor sharp and the surface of the coin and rim show no sign of detracting marks. Full fresh Mint lustre and brilliance is present with superb eye appeal.

Gem This is a superior coin with an almost perfect strike. It may show a few detracting marks barely visible to the naked eye. Virtually full lustre or Mint bloom is present. A coin in this grade would be as close to perfect as is possible.

Choice This is a coin displaying a strong strike with maybe the most minor detail missing from the highest points of the design. A scattering of fairly insignificant detracting marks may be present, but should not attract undue attention. Mint lustre or bloom should be at least moderate. This is considered a pleasing coin with strong eye appeal.

Uncirculated Although still considered a top grade, an Uncirculated example would characteristically display some weakness of strike and a small number of detracting marks of a moderate nature. If any of the above are excessive in an otherwise Uncirculated coin, then such impediments should be mentioned separately as they will affect the value. Some mint bloom or lustre should still be present although subdued. Uncirculated coins are quite desirable due to absence of wear.

about Uncirculated ‘about’ is a term attached to a coin that doesn’t quite meet the grade above due to some slight traces of wear, however may still feature a strong strike. Faint traces of wear on the high points of the coin are telltale signs. Some mint lustre usually remains, particularly in the legends of the coin. Occasionally about Uncirculated coins have more eye appeal than Uncirculated but the small amount of wear reduces them from the higher grade. Occasionally coins are minted with a weak strike but they are still Uncirculated. They can sometimes be mistaken for an about Uncirculated coin. Only the trained eye can determine the difference.

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Extremely Fine This grade shows light wear, apparent on the high points of the design both sides. Small detracting marks such as tiny scratches from contact with other coins are likely to be evident also. Lustre may still be present in the legend around the rim, which is an important area to check when grading. On George V coins, the centre diamond in the band should be well raised and the pearls to the left of it should be well separated. This grade is still desirable in Australia’s pre-decimal coinage.

Very Fine Moderate wear has resulted in flat spots on the high points of the design, generally more evident on George V coins. Detracting marks and minor edge nicks mat be present, but if excessive should be mentioned. The centre diamond on the crown of George V on the obverse side of the coin should be clearly visible, showing all four points of the diamond. Overall, a pleasing collector’s coin.

Fine Extensive wear is evident, usually on both sides of the coin, although the outline of the design may still be fairly raised. Marks may be many, but should not be of an excessive nature. Prominent gouges or scratches are not acceptable. Coin grading is very technical and takes many years to learn and perfect. In most cases the terms are broad and many dealers will use additional words to help describe the grading of coins, eg: ‘about’: this word placed before a grade means nearly at a firm

The opportunity to

grade but not quite

purchase a superior

‘good’: this word placed before a grade means better than a firm

numismatic rarity can

grade but not up to the next standard.

often be rarer than the

The above definitions are consistent with the grading guidelines

piece itself.

of the Australasian Numismatic Dealers Association Inc (ANDA)

The appearance of certain

and are officially accepted within Australia. In most cases for

rarities for private sale

investment quality coins, the highest possible grade available should only be considered. This will depend on the rarity of the

may be said to be ‘a once

coin as some only exist in lower grades, however, it is best to be

in a lifetime investment

safe and seek the guidance of a qualified numismatic specialist.

opportunity’. 43


A Basic Guide to Australian Banknote Grades The following tips for collectors are taken from the International Banknote Society Grading Standards.

Uncirculated This is a perfectly preserved note, never mishandled by the issuing authority, bank teller, collector or the public. The paper is clean and firm, without discolouration. Corners are sharp and square, without any evidence of rounding. An Uncirculated note will have its original, natural sheen.

about Uncirculated This is a virtually perfect note, with some minor handling. The note may show very slight evidence of bank counting folds at a corner or one light fold through the centre, but not both. An about Uncirculated note cannot be creased, a crease being a hard fold which has usually ‘broken’ the surface of the note. Paper is clean and bright with original sheen. Corners are not rounded.

Extremely Fine This is a very attractive note, with light handling. It may have a maximum of three folds or one strong crease. Paper is clean and bright with original sheen. Corners are not rounded.

Very Fine This is an attractive note, but with more evidence of handling and wear. There may be several folds both vertically and horizontally. Paper may have minimal dirt, or possible colour smudging. The paper is still relatively crisp and not floppy. There are no tears into the boarder area, although the edges do show slight wear. Corners may also show wear but should not be fully rounded.

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Quality, rarity, demand, designs and historical merit all influence the market value of a rare coin or banknote. This explains why for example, a banknote from the 1940s can be worth more than another from the 1800s, or vice versa.

Fine This note shows considerable circulation with many folds, creases and wrinkling. The paper is not excessively dirty but may have some softness. Edges may show much handling with minor tears in the border area. Tears may not extend into the design. There is no centre hole because of excessive folding. Colours are clear but not very bright. A staple hole or two would not be considered unusual wear in a fine graded note. Overall appearance is still on the desirable side.

Very Good This is a well used note, abused but still intact. Corners may have much wear and rounding. Tiny nicks and tears may extend into the design. Some discolouration may be present, staining may have occurred and a small hole may sometimes be seen at a centre from excessive folding. Staple and pinholes are usually present and the note is quite limp but no pieces can be missing. A note in very good condition may still have an overall attractive appearance. Grades lower than this are not recommended for consideration at an investment level and possibly only apply to a note that may be unique, but for no other reason. When selecting notes of the highest quality and investment potential, the first two grades are superior. Naturally notes in this state of preservation attract the highest premiums because of demand, however with extremely rare notes, lesser grades down the scale are still a good option to choose when all else fails. The grading of coins and banknotes requires great skill, technical know-how and years of experience to perfect. There are widely recognised grading standards in place, which all numismatic specialists adhere to when ascertaining the condition of individual coins and banknotes. As with coins, additional words such as ‘about’ and ‘good’ are words used throughout the numismatic industry to more accurately describe the grading of a note.

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Essential Reading These are some recommended historical references and value guides to assist investors and collectors with information on Australian coins and banknotes. All publications are available through The Rare Coin Company. 1982 Banks of Issue by Mick Vort Ronald

2012 Renniks Australian Coin and Banknote Values

Historical research and archival reference to:

by Alan Pitt

• Notes issued by banks 1817 to 1910

Market values on:

• Notes issued by State Governments 1893 to 1910

• All Australian coins and banknotes,

• Notes overprinted by the Australian Government

• 18th, 19th 20th and 21st Century

• Superscribed Notes 1910 to 1914

2007 Australian History 1901 to 2001 As Seen 2012 Australian Coins and Banknotes

Through Banknotes by Joanne C. Dauer. USA:

by Greg McDonald

Edward A Dauer. USA: John Pettit. Sydney. Aust

Pocket book guide to market values on:

This is a pictorial history of Australian banknotes

• All Australian coins and banknotes

illustrating important historical events in the evolution of

• 18th Century Proclamation Coinage

Australian paper currency.

• 19th Century Colonial - 20th Century

This beautiful hard-bound volume is a foremost reference

• Australian Commonwealth, Australian Decimal and

on Australia’s paper currency heritage and a superb

Modern Mint Commemoratives

46

collectable keepsake in its own right.

2011 Investing in Collectables by Charles Beelaerts

2009 The Quartermaster Collection by

An investor’s guide to turning collecting passions into

Monetarium (Australia) Pty Ltd

a portfolio. Includes other collectable areas besides

The most comprehensive collection of Australian Ingots,

numismatics:

Patterns, Proofs, and Sovereigns and Half-Sovereigns ever

• Buying and selling through dealers and auctions

assembled by a private collector or public institution.

• Tips for making a profit

Historical reference and photos of the most significant

• Tax and other legislation

gold coin collection ever auctioned in Australian

• How to detect fakes and forgeries

numismatic history in 2009, realising in excess of

• Conservation and restoration

AU$10.4 million.


An Overview Acquiring rare coins and banknotes has not only proved to be one of the most reliable and profitable forms of investing, it also provides great interest, pride of ownership, educational value and physical enjoyment. Historically, the appreciation rate of certain rarities has far outstripped inflation and of course, this is the main objective of any sound investment. As disclosed earlier, depending on the type and condition of the rarity acquired, average investment returns of approximately 10 to 15 per cent compounded per annum have been quoted by independent sources over a period of 22 years. It is worthwhile revisiting some of the elements that particularly make this type of investing so highly regarded: • Overall, a very low risk investment • Tangible assets which are easily portable anywhere in the world • Non-taxable while held (see footnote on page 48 re: independent legal, tax and / or financial investment advice) • Low, minimum investment entry levels • No upkeep, maintenance or constant supervision • No management fees • A discreet and invisible form of wealth • Secure hedge against inflation (subject to market fluctuations)

Rare Australian coins and banknotes are suitable for international investors seeking an alternative market and currency hedge. 47


Your Next Step We trust this introduction has provided you with the necessary information to help you consider whether this niche investment market is suitable for your particular wealth strategy. If you have any questions you feel have not been answered in this guide, and given the specialised nature of the market and the individual needs of investing, we strongly recommend you talk through your objectives, concerns and motivations with us before progressing any further. The first step is for us to assess if this alternative investment area is suitable for you as a long-term strategy. Once we establish a profile, we will work with you to customise a coin and banknote investment portfolio tailored to your brief. At the time of purchase we will discuss each investment piece and its recommended holding period to ensure the integrity of the rarity and the market is mutually respected. For more information or to liaise with one of our professional numismatic consultants, please contact The Rare Coin Company Albany, Western Australia, on +61 8 9892 8000 or email: mdrcc@rarecoin.com.au

Visit us online at rarecoin.com.au Arcabi Pty Ltd t/as The Rare Coin Company 12 Sanford Road Albany, Western Australia The information contained in this publication refers to numismatics only and bears no comparison to any other collectable or investment market. It is for general information only and should not be considered financial advice. Past performance is no indication of future returns. Potential buyers into numismatics should seek professional advice from a qualified rare coin and banknote specialist and a licensed Financial Advisor. No warranty is given and no liability accepted by The Rare Coin Company or its employees for any statement of opinion, errors or omissions. All information is provided without regard to any person’s individual circumstances, investment objectives, financial situations or requirements. The average returns shown on coins and banknotes in this publication were calculated using reference from leading Australian price guide, McDonald’s Australian Coins and Banknotes and independent figures. Footnote: Independent legal, tax and / or financial investment advice should be taken by a potential investor on tax benefits and liabilities in relation to a proposed investment. Copyright July 2012.

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