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 is something special in being able to hold something which could have traded hands in a Roman marketplace in the time of the Emperors, or have been transported in the pocket of a settler who arrived in Sydney in the early days of the colony.

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 Collecting

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.

As your knowledge grows, so too will your ability to discriminate between a bargain and a bomb.

The degree of assistance and research required will vary enormously, depending on whether you are strictly a collector, or an invester searching for profit. The collector has a much easier task than the investor, being able to make decisions on criteria other than just profit potential. The collector can, and is often, swayed by the physical and artistic merit of a piece rather than its rarity, precious metal content or future prospects.

In either case, however, the golden rule of coin collecting is 'the book before the coin'. Quality books on the subject will repay their initial outlay many times over. Interestingly, many book editions become valuable items in their own right.

For investors, the mintage figure, a tiny mintmark or distinguishing feature, and past performance in auctions and sales rooms is of critical importance. It is impossible to memorise the details of every item which has investment or collector potential. There are a few basic rules, however, which serve well when buying or selling:

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. An instant collection containing fifty or one hundred well-circulated coins can be purchased for as little as $10 or $20. That will still be the value of the collection ten and twenty years later. An astute investor with only $10 or $20 would buy a single item. Better still, that investor would build up that stake to $100 or more, and then purchase a single, higher quality piece.

Do not be tempted to buy bulk lots. You can be sure that they have been carefully picked through. If you do happen to discover a rarity in this way, buy a lottery ticket - you're on a roll. By using a strategy of buying quality coins, you will ensure that your investment does not collapse in value.

2. Buy coins 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 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.

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.

What Makes a Coin Valuable ?

Rarity: On the supply side, if a sufficient quantity of a particular coin is available to ensure that every person who wishes to own one can do so, it is highly unlikely that the item will ever be worth much more than its intrinsic value or issue price. A good example of this can be seen in the proof sets released by the Royal Australian Mint in the early 1980's.

The huge mintages (often well in excess of 100,000 sets) were quickly snapped up and salted away as investments, based on the assumption that they would provide the same solid price gains that were seen in sets of the early seventies. What was not realised at the time was that every collector who wanted a set, obtained one. When the investment sets began to resurface, there was no-one to buy them. The price falls were inevitable.

On the other hand, there are certainly far more collectors than there are pieces available for items such as a 1930 penny or an uncirculated half sovereign. It is simply a matter of supply and demand.

Condition: There are many factors which influence demand, and hence price, for a particular numismatic item. One of the most important, and usually the most contentious, is the condition of the coin. Establishing the correct grading (see the separate article on grading coins) is a prerequisite to an accurate valuation of the piece.

Despite often huge mintage figures, pristine examples of circulating coin types are usually scarce. Obviously, collectors prefer to own better quality, better presented pieces and so demand for them will push their price upwards.

But there is a catch. Don't rely on condition alone as a guide to price. If you do, you will almost certainly get your fingers burnt. Few commemoratives, and no collector coin issues, stay in circulation for long. The result is that almost the entire mintage remains in a high state of preservation and so condition, one of the factors driving prices, plays a much less influential role for these items.

Desirability: A much harder factor to measure, let alone predict, is a coin's desirability. It can be influenced by the popularity, in the wider community, of the designs or themes depicted on the coin, by the artistic composition of those designs, and even by the amount of publicity received.

A coin many have a low mintage but if there is little demand for it, it is unlikely to have a significant value. The valuation rule is fairly simple, there must be more people with a desire to own a piece than there are numbers available.

Cleaning Coins

Most collectors regard a cleaned coin in much the same way as an antique car collector would regard a vintage car with a brand new motor or an iridescent paint job. Most would prefer to buy the car, dull as it may be, with its original components in place.

Cleaning coins takes away the natural finish the coin received when it was struck. Daily wear also destroys this, but collectors expect it. An even, natural toning has even been known to increase the value of a coin.

If you are holding a coin as an investment there is a simple rule on cleaning it - DON'T ! You will, without exception, devalue the coin.

Obviously, if the coin is yours, you are free to do with it much as you please (subject to currency laws dealing with the status of legal tender mediums of exchange). For a coin kept as a keepsake, or as a cheap filler until you can afford one in collectable condition, cleaning is less of a sin. In this context, the following details may be of assistance.

The first and least harmful treatment should be the use of warm soapy water applied with a gentle rub. Stubborn dirt may need the added persuasion of a cotton bud dipped in olive oil. Dirt wedged in a tight corner may need to be gently coaxed out with the tip of a wooden toothpick.

Never use abrasive cleaners, such as steel wool or gritty liquids, which create a shiny surface by stripping away the top surface of metal on the coin. The first thing to go will, of course, be the designs and legends.

Coins found after years buried in the earth or submerged in the sea are difficult to clean. Professional restorers have had some success by applying hydrochloric acid to these coins, carried out under magnification. The technique is definitely not recommended for the rest of us.

The copper-nickel and bronze metals most commonly used today are very difficult to clean. There are no satisfactory methods of removing the tarnish film which can build up. Experiments of soaking in olive oil, bathing with coca-cola or boiling in a bicarbonate of soda solution have produced some interesting results, none of which have resulted in an increase in the value of the piece.

Storing and Handling Coins

Coins should not be stored together in a bag or container, a proper album or tray system is essential to preserve them in the condition in which they were received. Never store coins affected with verdigris (an oxidation coating that affects copper and bronze) with other coins as it will spread.

Prior to the mid 1970's, many of the materials used to make coin albums contained sulphur and chlorine which reacts with the surface of the coin it is supposed to be protecting. Today, albums are made from paper, cardboard and plastics which are free of such harmful chemicals. It is a good idea to periodically check all coins for signs of tarnish, particularly around the rims. At the first sign, discard the storage medium in favour of a safer alternative.

The most important consideration in storing coins is to keep them separated in compartments soft enough not to damage the coin. Wooden cabinets with wooden, felt-lined trays are a popular storage choice. The type of wood used is extremely important. For example cedar should not be used as it produces gases which, over a period of time, will stain coin surfaces. The same is true for the glues used in the manufacture of plywood. The best results seem to be obtained with solid walnut or mahogany.

Other popular storage choices, from least expensive to most expensive are:

Envelopes:	Cheap and effective for cataloguing but it is difficult to view the coins without handling them. The coins are not protected from the atmosphere with its humidity, salty air, tobacco smoke and even breath. Better alternatives are available.
Press-in Albums:	Usually made of cardboard, it is easy to view one side of the coin but taking the coin out to view the other side presents a problem. Further, coins can, and often do, get dislodged from constant opening and closing. Again, the coins are not protected from the atmosphere.
Plastic albums:	These albums contain pages with varying numbers of pockets depending on the size of the coins to be stored. The albums and pages are relatively cheap and allow see-both-sides viewing without the need to directly handle the coins. However, some air does seep in through the slit made in the pocket to allow the coin to be inserted. Be careful if you attempt to remedy this by placing adhesive tape over the opening. The glues used are likely to be more damaging than the small amount of air that gets in.
Sealed Card holders:	These are self adhesive folding cardboard squares with inert plastic windows which create an airtight seal when they are pressed together to enclose the coin. Special plastic albums have been designed to take the cards providing a safe and secure haven from the atmosphere. The soft plastic and cardboard used means that the coins are not protected from accidental bumps.
Hard plastic capsules:	In recent years, most mints have introduced the practice of encapsulating their collector issues either individually, or as a set, in hard plastic containers. Individually encapsulated coins are then often housed in a hinged-lid presentation case. The two halves of each capsule either screw or push together forming an airtight, solid casing protecting the coin from both the atmosphere and accidental bumps.
Encapsulated Numismatic Product - Slabs:	The latest innovation in the storage of numismatic items is the so-called slab. In an attempt to remove the subjectivity surrounding grading, particularly for investors, many high value coins and other numismatic pieces are forwarded to a recognised, independent grading agency for evaluation. Along with a grading certification, the item is sealed within a 'slab' of inert plastic.

Sources:
'Rigby's Coin and Banknote Guide' by Greg McDonald - 1983;
'Coin Collecting' brochures issued by the Royal Australian Mint, 1994.