Collectors and investors at the top end of the rare coin and banknote market have been dealt another blow with the second major Australian numismatics dealer in the last year heading to the liquidators.
The Rare Coin Co. based in Western Australia have gone into receivership under the wing of Perth based Sheridans Chartered Accountants. The accounting firm will wind up the business and attempt to recoup money invested by many people who were investing for future returns for income or for their superannuation. Mum and Dad investors, business tycoons and Aussie farmers are among those seeking to sell rare coins and banknotes that were purchased in what appeared to be an artificially inflated marketplace. Now that certain sectors of the Australian coin and banknote market have seen drawbacks these investors are now seeing losses of many thousands or even tens of thousands of dollars. Changes to the rules governing self managed superannuation funds means that coins and banknotes (and other collectables) are now controlled more tightly and many investors have sought to sell off these types of assets. This is likely to be a contributing factor to the latest downfall in prices of banknotes in general and some collectable Australian coins.
Only 9 months ago in October 2012 administrators were appointed to John Pettit Rare Banknotes operating in Sydney. Strangely enough the John Pettit website still seems to be active. The rare banknote dealer reported losses of $2.4 million over 5 years but the exact magnitude of the loss and the point at which the business became insolvent were difficult to determine due to poor record keeping. It's interesting to note both companies now in crisis offered a buy-back guarantee on coin and banknotes sold to investors which it appears they could ultimately not fulfil.
Perhaps this is a warning to anyone looking to invest in coins and banknotes that they do their due diligence before investing under such guarantees. We do not offer investment advice on this blog and suggest if you are going to collect coins or banknotes then do so for the love of it. We have heard too many sad stories about investors who have lost money investing in coin and banknotes who knew little or nothing about the coins or banknotes they were purchasing. As always buyer (and investor) beware.
Posted by harrisk at July 10, 2013 8:55 AM
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