The Basics of Coin and Banknotes Collecting

Numismatics is the science, study or collection of coins, medals, tokens, banknotes and other similar objects. Believed to be the oldest hobby in the world, people have been collecting coins for as long as coins have been known to exist. The Roman Emperors are known to have collected coins from the Greek Empire, more than two thousand years ago.

Money, in the form of coins, has been used since the seventh century B.C. The words money and mint are derived from the name of the Roman Goddess Juno Moneta, in whose temple the Romans built a workshop for making coins. From that time, it became common usage to call places where coins were made 'Moneta'.
For some, coin collecting is a hobby, for others a driving passion and for yet more, a rewarding investment avenue. For all of them, coin collecting is a challenging and satisfying pastime, and one in which anyone can be involved, no matter how big or small the budget.

There are many different reasons why people choose to collect coins. Some collect coins and banknotes because their father have the same hobby. Some acquire pieces to appreciate their beauty, building a valuable heirloom which can be passed on to future generations. Others appreciate the history behind the coins, documenting the lives and times in which the coins were used, and reflecting changes in societies, cultures and technology. Through them, we are able to trace many facets of history.

1971 10 cent Malaysian Coin, only 32K mintage

There was once a time when a coin's value was determined by the quantity and type of precious metal it was made from. More recently, production techniques and the use of base metals have broadened these factors to include:

• Rarity - the current supply of the coin;


• Condition - the grading of the coin;


• Desirability - the demand, popularity and interest among collectors; and


• Economic Outlook - the condition of the economy and particularly, the effects of inflation.

The Basics of Coin and Banknotes Collecting

A novice collector can be easily confused by the variety of items available, and will often rely on the integrity of the seller. Is this a wise move ? Why would buyers or sellers in the numismatic marketplace possess any more scruples than players in any other market ? The answers are simple. Don't rely on the integrity or advice of a single source and don't make impulsive decisions. The greater the investment, the more you should research an item before making the commitment to purchase or sell it. A huge repository of information and reference material has accumulated over the decades providing intricate details on all aspects of numismatics and numismatic material. There are many dealers, coin clubs and quality publications available, all offering valuable information.

1. Buy the best quality that you can afford.

It is a well established fact that poor quality coins rarely, if ever, make money in the world of numismatics. If you want to make real money, it has to be with quality coins, a fact often hard for the novice collector to accept.

2. Buy coins and banknotes in the best condition obtainable.

Where more than one example of a coin type is on offer, look to purchase the best one rather that the cheaper, lower quality ones. A coin with just the slightest amount of wear can often be worth many times less than its pristine counterpart. Investment history has shown that higher quality coins appreciate at a faster rate than lesser quality ones.

3. Be prepared to hold coins and banknotes for a long period.

Apart from short-run newly released items, it is unusual for coins to significantly increase in value in just a few days or weeks. Established collectible coins may take three years or more to show worthwhile gains. Some coins display steady gains of 10% to 30% per year, while other 'sleepers' may be relatively dormant until a shift in market awareness causes a sudden price rise. It is important to monitor the market while you hold coins for investment. The best way to do this is by attending auctions and sales rooms, by acquiring and examining current, quality numismatic publications and by comparing asking prices wherever they are offered with the coins in your portfolio. Reputable coin dealers will help here, with purchase advice and to keep you informed of price movement. However, it is best to perform the bulk of the work yourself. You will retain your dealer's friendship and sanity, and gain a great deal of satisfaction from your investment.

RM1 Ali Abul signed

4. Don't spend until you can afford to.

Put another way, treat investments in coins as a luxury. Don't strain your budget to pay for any type of investment. More often than not, strained budgets lead investors to sell at the wrong time, and as sure as the sun will rise tomorrow, soon afterwards the item will forge ahead in value. Budget planning should be part of a strategy to ensure that you can keep the coins until you wish to sell, not until you are forced to sell.

Hopefully you have a better understanding of what Numismatic really is.

Cheers