Ten tips for the collector
Before starting a collection of coins or medals, you will need to decide whether you seek an alternative to depositing money, or want to create a collection focused on a certain period or subject. The approach of a collector and an investor differ absolutely – the former collects most often with the aim of creating an integrated collection with certain historic value, the latter follows primarily the aim of increasing the value of deposited means. The following basic tips concerning start of a collection of coins or medals were compiled by Czech Mint’s employee Karel Havránek:
- Get ready
- Do not confuse coins with medals
- Coins are VAT exempt
- Go for coins if you are conservative
- Choose renowned authors
- Select the topic of your collection depending on how much you can spend
- Focus on modern coinage if you dont have much time
- Let reason guide you if you invest, and heart if you collect
- Buy in time and for the issue price
- Buy from the manufacturer or trustworthy dealers
- Before starting your own collection, get the most information available about what you would like to collect. Learn everything you can about prices, availability and rarity of the items to be collected
- Consider the extent of the collection. In this case it often applies that less is sometimes more. If you decide to go for coins you can for example begin with a certain period or ruler; you can however also focus on one kind of coins (e.g. gold, commemorative, groschen and similar). In no case do we recommend to collect “everything“ from the start.
- It is wise to adapt the choice of your collection’s theme to the time you can spend on it. You will need plenty of aids, too. They include special containers or boxes for the collected items, gloves, scales, tweezers, professional coin cleaners and so on. Please do not forget that a collection must be properly organized, you will therefore need a computer or at least a notepad where you will enter notes, keep records of the pieces bought and write information about prices of individual items.
Specialist’s tip: If you decide to collect coins and medals, keep in mind that it will most likely be your hobby for a lifetime. It will therefore cost you plenty of time, searching and contemplating. Unless you put your heart and soul into it, your collection will be a mere accumulation of objects.
- Coins are usually issued by the central bank and they serve as generally accepted legal tender. In the Czech Republic, the Czech National Bank has the exclusive right to issue coins. Coins are struck in Czech Mint in Jablonec nad Nisou, the only mint in the country.
- As opposed to medals, coins have a nominal value (in the CR they are denominated 1, 2, 5, 10, 20 and 50 Kč = Czech crowns), state symbol (in the CR the Czech lion), name of the issuer’s country (the Czech Republic) and the year of issue.
- The same as banknotes, circulation coins are in principal means of exchange. However, over the time they may also become sought-after collector items. On the contrary, commemorative coins are primarily earmarked for collectors. As the law stipulates, they have all the marks described above including nominal value, and therefore serve as legal tender in their country. The central bank has a duty to buy out the commemorative coin for its nominal value. Other entities (individuals, banks, dealers) may also accept the commemorative coin as legal tender but they may also refuse it.
- Medals can also be issued by other entities than the central bank, most often by business entities. Medals do not have a nominal value, and they do not serve as legal tender. Their value is determined by the content of precious metal, artistic design and availability as they are struck in limited editions.
- While coins are issued in thousands and millions of pieces (Czech commemorative coins in about 10 to 20 thousand pieces per issue), the edition of certain medals is limited to hundreds.
- Medals feature a wider range of topics, larger diversity of materials and weights and they can be made in almost any shape.
- The maximum weight of a Czech commemorative coin is one ounce (1 oz = one Troy ounce = 31.1 g). To the contrary, medals can weigh up to one kilo of pure gold and they are also struck from platinum, for example. Czech Mint holds a world record with its half a kilo platinum medal worth currently 790,000 Czech crowns.
Specialist’s tip: Theoretically, you could pay with a commemorative coin for lunch in a restaurant. It would not, however, be very clever as its nominal value is usually lower than the value of metal it contains.
- Commemorative coins also differ from commemorative medals by varying tax requirements applied to them. Gold coins are VAT exempt, while the customer has to pay VAT when buying gold medals. And in case of heavier medals, VAT represents a substantial amount.
Specialist’s tip: Some mints offer a licence to third parties which then strike gold coins exempt from VAT under the heading of small countries. Czech Mint has also embarked on this project when it launched its own trademark “Smart coins“, which are minted under the licence of the New Zealand mint.
- In case of coins as well as medals you can choose from modern or historical coinage.
- Coins and medals mirror their period of time. Circulation coins feature rulers, symbols and creative design, commemorative coins mark significant events.Medals further amplify this – they usually cover a wider range of topics and creative designs, they can bring new views, new authors – this makes them interesting for many collectors. In this respect, coins are usually more conservative.
Specialist’s tip: Choose a topic that addresses you. Collectors usually choose one period, one mint (very often “their“ national one in case of modern coinage, in case of historical coins they often collect Austria-Hungary, antique etc.), one topic, one author and similar.
- The most highly valued authors are easy to recognize -- their design was chosen for one or several coins or commemorative medals issued by the Czech National Bank (CNB). Czech Mint regularly addresses such authors with a request to design its commemorative medals, too. One of the artists Czech Mint closely cooperates with is the academic sculptor Vladimír Oppl. His best known materialized designs include the Czech circulation coins denominated 20 crowns (1993 design), fifty hellers (1993 design) and half-a-kilo platinum medal St. Vitus Cathedral.
- Other experienced academic sculptors engaging in the design of coins and medals include for example Zbyněk Fojtů, Jiří Dostál, Jaroslav Bejvl and others.
Specialist’s tip: Coins and medals are tiny works of art and the name of the author matters – similarly to all other spheres of art.
- If you are a collector, you aimed at creating the fullest possible collection of coins or medals with a certain topic. When selecting the topic you may guide yourself by the estimated amount required for the collection. A nice collection can be created for thousands of crowns, as well as for hundreds of thousands
Specialist’s tip: The orientation in modern coinage is relatively easy: you can either collect gold or silver items in proof quality (top quality – high polish) or standard quality (mat). Silver standard is the cheapest while gold proof is the most expensive.
- Consider your time capacity. Collecting historical coinage requires plenty of time – first you will need to study literature, seek information, analyse it and just afterwards start collecting. In case of historical coins you also have to be more alert to fakes. It especially applies to foreign coinage that is for example offered as authentic finds from excavations.
- Collecting modern coins and medals is much easier as various publications and catalogues bring rather precise information about them. As a result it is not difficult to find information about the author, date of issue or the number of pieces struck. The risk of buying a fake is also much lower.
- Investors almost exclusively focus on modern commemorative coins and, eventually, on bullion coins, which are mentioned below.• Investors almost exclusively focus on modern commemorative coins and, eventually, on bullion coins, which are mentioned below.
Specialist’s tip: Modern coins and medals can be collected by the CNB’s or Czech Mint’s issue plans.
- Numismatics is a matter of heart and soul while investing is rational. In case of coins and medals these two attitudes often blend.
- If you have sufficient resources, focus on modern gold coinage where there is a higher possibility its value will increase. It stems from the current situation on precious metals market where great potential future growth is still ascribed to gold, and it is considered as excellent store of value and hedge against inflation. The biggest increase in value is implied in case of commemorative coins in proof quality issued by CNB.
- In case of historical coinage it is necessary to monitor the situation on the market even more thoroughly. Before you start collecting a certain period or type of coins, get the most information you can to estimate their potential growth, liquidity etc. For someone who just wants to invest, this area is not suitable.
- If all you are thinking about is investing in precious metals in shape of coins and are not planning to start a collection, then the right choice for you are bullion (investment) coins such as Wiener Philharmoniker struck in editions of millions of pieces. While their collector value is zero, they can be purchased for a price close to that of a bullion bar and they are highly liquid – the majority of dealers in bullion gold offer their buy-out.Smart coins made in Czech Mint are waiting for those who wish to have at home a unique investment item. They have all the benefits of a bullion coin – their price is very similar to the price of a bullion bar and they are highly liquid. What’s more, they are struck in limited editions – from 150 to 1,000 pcs at the most depending on the type, and their designs were created by outstanding Czech creative artists.
- Monitor the increase of value of coins already issued. When CNB issues a new series of gold coins, the first coin in the series usually has the highest potential of growth, for example the value of the “Gothic bridge in Písek” coin has increased over two years quite remarkably:
- Issue price of proof quality coin in May 2011: CZK 15,650
- Maximal price bid at the auction website in January 2012: CZK 56,900
- For comparison, the “Baroque bridge in Náměšť nad Oslavou”coin issued in May 2012 was sold for CZK 19,000. Contrary to the Gothic bridge in Písek it cost more by CZK 3,350, which was caused by the increase in gold prices. The steep growth in the price of coins on the secondary market above 50 thousand crowns was caused by the fact that the coins were sold out almost immediately when issued.
- In case of medals, the edition usually oscillates from hundreds to thousands of pieces. Whether the entire edition is sold out depends on the topic of the medal. The gold medal commemorating the deceased President Václav Havel serves as an example of a successful medal: the entire edition was sold out in Czech Mint within 24 hours after the striking began.
Liquidity (i.e. how easily an asset can be converted to cash) of coins is relatively high.It can be lower in case of medals as collectors focus on various topics and collection is more emotional matter for them. Therefore you have to find a collector for whom the medal you wish to sell has the same value as for you. It is easy to sell it via an auction website but it usually takes longer before you find a buyer who has a similar idea about the price as you.
Specialist’s tip: Monitor the number of pieces in an issue. The lower their number, the rarer the coin or medal and the possibility it will be sold out and become a sought-after collector item is higher.
- Czech gold and silver commemorative coins are struck in Czech Mint. However, their issuer is the Czech National Bank that distributes them to dealers who then offer them to collectors. Very few people have a chance to buy directly from CNB. It is therefore wise to buy coins from reliable dealers who buy them directly from CNB and, ideally, on the day of issue. To do that, it is necessary to reserve coins before they are issued. Because attractive titles are usually out of stock on the day of issue. Until recently it was the case of gold commemorative coins, this year the entire edition of some commemorative silver coins was sold out before the issue.
Specialist’s tip: Speed is really important. There are quite a few resellers on the market who profit on selling to those who did not manage to book on time. They buy coins in large numbers and then they resell them via auction websites with high surcharge. Latecomers have no other option than to buy for these prices.
- Historical coins should be bought from trustworthy dealers and you should be aware of fakes. Avoid unknown dealers and so-called “matchless“ offers – they are very seldom as matchless as they seem as nobody sells knowingly with a loss.
- Buy modern coins and medals directly from the manufacturer (the mint) or trustworthy dealers who have a valid contract with CNB (their list can be found at www.cnb.cz).
- Reliable sellers have a seat in the Czech Republic (with the exception of foreign partners included in CNB’s list of foreign contractual partners). Do not buy from anyone who states a P. O. Box as its only contact address in the CR.
- If you wish to spend a large sum of money but are not sure whether a specific dealer is reliable, ask whether he has a stone shop or a customer line where you could get advice.
- Ignore offers of dishonest mail-order firms. In 2010, collectors as well as the Czech National Bank alerted the public to practices of one such firm. It offered a product containing the name of the Czech state (Czech Republic) – and nominal value (1,000 CZK) – the usual features of a coin, while it was a gold-plated medal.
- Search for information about the precious metal, weight and fineness. Some dealers hide under clever marketing catchwords the fact that they sell a medal made of common metal coated with a thin layer of gold or silver.
- Beware of fakes – especially of rare coins that may either be imported or come from local sources. Certain firms officially manufacture replicas of older coins (antiques or medieval), that are however neither marked with a hallmark if made of precious metal, nor as a replica.
- In case of local coins andmedals it is not difficult to verify if the price offered is too high. Prices of foreign coins can be checked at foreign auction websites; for example at the German ebay where it is possible to buy without custom duty.
Specialist’s tip: The trustworthiness of the dealer is the first thing you need to check.
Karel completed the Pedagogical Faculty of the Charles University, Prague, specialization History – Social Sciences. His big hobbies are history, politics and international relations. He primarily focuses on the period of modern history of the 20th century. Currently he devotes himself entirely to numismatics – in particular to modern Czech coins that are issued by the Czech National Bank. He is also engaged in developing relations of Czech Mint with the Czech Numismatic Society, he participates in the organization of specialized lectures and seminars devoted to numismatics. Last but not least, he administers the exposition of historical coins, which Czech Mint opened in Prague in 2012.