Are Indian rare coins undervalued?

[Harry]

I have a hunch that Indian rarities are quite undervalued when compared to US rarities.  For example take a look at this site which lists the top 10 world coins http://goldcoinblogger.com/top-10-most-expensive-coins/ .  There are 7 US coins on that list. The top 8 are from $1.2 million to $7.5 million. In fact the #5 coin listed as "1787 Brasher doubloons – $2,900,000", sold for close to $7.4 million last month http://news.yahoo.com/ap-exclusive-rare-1787-gold-coin-fetches-7-082110448.html .

Now even if we don't take these extreme examples and look at extremely rare (RRR) US coins I would think that they would range from $100,000 to $250,000 (Rs 50 lakhs to 1.3 crore). I don't think Indian coins come close to this.  I suspect that extremely rare Indian coins will be in the range of $8,000 to $16,000 (Rs 4 to 8 lakhs) or might be even less.  Is this correct, if so why is the gap so big? Is it the supply side (i.e. there are no coins which are extremely rare or unique in the market) or the demand side (people are just not willing to pay very high amounts even for extremely rare coins).

I suspect that its the demand side, when it comes to RRR Indian coins, there are very few people who are in the market for them and hence very little competition to drive up the price, they don't bid each other out and the "pie" is big enough for everyone in that space.

Does any one know what the prices of the top 10 (or top tier) Indian coins sold at auctions in the past 5 years? If so what are some of them. How can I find this information?

I would love to hear from others about this topic and especially about my estimates  on Indian RRR coins.

[akona20]

The short answer is yes.

The long answer is still yes but there are a multitude of reasons all of which point to price increases.

[brokencompass]

Here are a few thoughts I have about it, mostly random.

It is always about demand and supply. Particularly with RRR coins, it is always to do with the demand of the coin. Look at French Indo China coins from 1900's for example, only 10's of thousands of coins were stuck but they are still selling for under 200$ for Gem BU specimens. There is no demand for these coins and therefore however rarer it is no one wants to buy them.

It also depends on who collect these coins. Do investors look at such coins as an investment or is it just collected by collectors? The more the millionaires in a country, the more they want to collect their history. Look at how much Chinese coins have appreciated in the last few decades. By the same theory, US has been rich for over a century now and there has been a steady demand for such coins and US coins are considered investment grade since there is a steady predictable, consistent demand for it. There is even a red book and grey sheet and 90% coins are traded like actual money in most coin shops. It is very similar to the stock market, US coins have a AAA rating because of its consistently increasing demand unlike Indian coins have spikes of unpredictable demand. For investors to start payin crazy prices, the market just has to be more consistent and more mature.

Take all the BRIC nations coins, they have all been appreciating over the years because of the rising middle class and the expanding list of millionaires. It would take a while for coins from such counties to mature if they consistently maintain their growth and buying power to sell like US coins.

[Abhay]

In my opinion, another important factor is that the exact mintage of most of the Indian Coins is not recorded, as compared to US coins, where the exact mintage is meticulously recorded. So, in case of Indian Coins, you are really never sure if the coin is RRR, suddenly you find so many coins buried in a hoard, and the coin becomes common.

Take the example of 1939 British India George VI Silver Rupee. We all know that it is a rare coin. The reason being that most of the 1939 coin were melted. But the exact number of coins minted and melted is still not known. What if someone finds a large number of 1939 Coins stored away in a bank locker, which has not been opened for a long time? And how can you say for sure,  that this will never happen?

Or take another example of this Gohad Gold Mohur. Now, this mohur was mentioned as UNIQUE in the auction catalogue, of which, only this single piece is known till date. What happens if someone finds 100 more mohurs buried in ground somewhere near Gohad.

Abhay

[Md. Shariful Islam]

It is for sure that 'demand' and 'supply' should' be able to decide the price of coins like everything. But we also consider 'who' demands and 'who' supplies. I don't think that demand for 1939 rupee is any less than top US coin, but still its price is far less when compared. I feel that explains the economic strengths.

Another explanation may be 'PPP'. When an US coin is sold at 7m US$, an Indian coin is sold at 7m INR. 1939 rupees don't sale at 7.5m INR as the statistics of it is not available. If it was for sure that only 8 of it survives then that would reach 7.5m INR or even higher.

Islam   

[brokencompass]

Islam, To answer your question. Even though the two coins have the same rarity, it takes a few decades of such rare coins passing back and forth between people, for the coin to actual get as expensive. If you look at any of the hard to find US coins, they have consistently changed hands for higher and higher prices over decades or even a century. If the growth outlook for India/ China or other emerging countries continues the same way, more and more coins would change hands and the prices will increase. If you look at heritage auction archives you will notice how less a lot of the coins that are selling for 1000's costed back then.

[Md. Shariful Islam]

If you look at any of the hard to find US coins, they have consistently changed hands for higher and higher prices over decades or even a century. If the growth outlook for India/ China or other emerging countries continues the same way, more and more coins would change hands and the prices will increase.

I appreciate your comment. Indian coins did not change hands earlier that much as economy of India got momentum very recently. But the case of US is far different. That explains the question 'who' demands.

One more point is, we should not expect that an equally rare Indian coin will be sold at 7.5m multiplied 50 (as 50 INR equals 1 $) equals 375m INR. It is impossible ceteres paribus.

Islam   

[Harry]

I think @brokencompass makes a point that I did not consider, and that is the decades of prosperity that US has enjoyed and the years of investor's presence in the numismatic area. 

With regards to Abhay's issue about hoards, I think all numismatic markets are susceptible to this. US has not been speared one such hoards comes to mind, in the Carson City mint dollars, when the Treasury department  located 3 million silver dollars and released them to the public in the 70s. There have been many other hoards found in US coins.

Another reason could be on the supply side. India's coinage is one of the largest in the world from breath (ancients, medieval to modern) and depth (varieties and sub types ) . This has given collectors of Indian coins ample supply and thus not crowding one area to drive up prices for individual rarities such as the 1939 Rupee as not every Indian collector would collect British India coins.

[asm]

A similar incident as what Abhay mentions for the Gohad Mohur happened a few years back regarding the Hukeri Silver Rupee in the name of Mughal Emperor Aurangzeb.

It was a scarce coin with not many specimens known. Prices a few (may be 10 -12) years back had reached Rs 12000 in the local market when the normal Aurangzeb Rupes were available at around Rs 100. One fine morning a villager brought a bunch of coins to a Jeweller who took the coins to the dealers in Mumbai. Of the lot, they found 53 coins of Hukeri. The dealer at first sold them one by one. The prices reached 6000 and then in one lot he sold the rest. It was then that I picked up my coin @ 3500. But since no further hoards have been found, the price is again inching up............. The known pieces are now mostly with collectors and while the floating stock is low, demand is still high........

Amit

[akona20]

Interesting post given the laws in india.

[asm]

Interesting post given the laws in India.

Well this is the fate....... due to the stupid laws, the hoard was never reported but got sold in the market. Most coins of this find would have survived as the farmer, jeweler and the dealer were lucky to get the lot without being found.......... It happens most of the time......

Amit

[akona20]

Yes it does and that is why we have started to push for a change in the law in India. Cahnces of it happening are remote but given what happens at least we are prepared to try. We already know who is against us.

[Md. Shariful Islam]

Yes it does and that is why we have started to push for a change in the law in India. Cahnces of it happening are remote but given what happens at least we are prepared to try. We already know who is against us.

Wish you success. Change in India hopefully push other countries of the region to bring change. But that will not happen automatically but a huge initiative is needed. An agent have to fight for that.

Islam

[Shastri JC Philip]

Rare Indian coins are grossly undervalued, and the reasons are many. Some of them have been mentioned above.

The legal angle was hinted upon above, and that definitely has played a role. Laws related to collection and ownership coins are still so obscure that most people do not know when they are doing it right and when they become trespassers.

Treasure-trove laws, and laws related to numismatics need to be explicit about what rights collectors have, what exactly can they do and what they are forbidden from doing.  Once such matters are clear, more buyers will come forward to buy coins and the principle of demand and supply will push rare Indian coins to their rightful value.

-- Shastri

[Coinsforever]

Rarity as every one aware consists of several key factors as follows :
1. Less  Mintage .
2. Coins minted for short period of span .
3. VVVIP Sets or so on .

However valuation of coins in Indian context is quite vague until this industry reach maturity stage of its  life cycle like every commodity or product.

Indian Coins may be undervalued for US investors and same coin may  be overvalued for Indian collector.

This was same situation of China in last decade regarding both philately & numismatics. Over a period of time  and progressively market trend change and now situation is sky rocketing crazy prices for any stuff .

India with  different socio economic status in comparison with other developing nations , investors pay more attention to  risk factor  instead of crazy investments . Moreover demand is progressing and fakes are being flooded to meet the demand.

Therefore I would conclude that it depend upon opportunity which strikes for purchasing particular rare coin within affordability ( it again depend if buyer is collector or investor)

Cheers