COMMENT
A Mint Investment

The world's most valuable coin is the American 1933 Double Eagle. It is the only coin of its kind known to be in circulation, and fetched a record sum of £5m at auction in 2002.

Only three 1933 Double Eagles, which have face value of $20, are known to exist. Two are currently held at the Smithsonian. The third, which is steeped in history and oodles of mystery, is the only Double Eagle that is permitted to be in private hands.

While you're not going to pick up a Double Eagle, some UK coins have produced decent returns in recent years. A Charles II shilling, worth £450 in 1997, was valued at £1,500 in 2003. That equates to a compound annual return of 22%. While the value of a William IV proof shilling has ballooned from £250 in 1997 to £1,250, a compound return of 31% a year over 6 years.

Clearly, there's a mint that can be made from numismatics! But before you empty out your piggy bank or dust off your metal detector, here are a few things to consider first.

Generally, coin collectors like to focus on the coins of the country in which they live. The advantage here is that you will be more aware of the history of the coins, which is half the fun of collecting coins. Additionally, it will make buying and selling parts of your collection that much easier later on.

Apart from concentrating on domestic coins, collectors may also hone in on various themes. For example, coins of Henry VIII could form the focus of your collection. So your goal here would be to collect the entire set during his reign.

Alternatively, you could concentrate on monarchs with a much shorter reign. Coins made during Richard III's reign, which lasted just two years, may be harder to find. However, they could also prove to be more valuable later on because of this rarity.

In fact, if you plan to treat numismatics as an alternative investment, then scarcity is a key consideration. Other important determinants to the value of your collection include condition and the tone of your coins. Amusingly, experts claim that a brown or green sheen on copper coins can enhance their value considerably. Consequently, they advise never to clean your coins despite the huge temptation to do so!

Another important consideration if you plan to invest in coins is time. It is reckoned that you should be prepared to keep your collection for as long as 50 years to reap the best returns. You will need to factor in storage and insurance costs, which will inevitably chip away at your returns. Moreover, if you eventually sell your collection through an auction house, then your return will also be net of saleroom commission.

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