£20 coin is a UK first - but is it really a collectible?
There's cash to be made in coins, but it pays to be picky. Our personal finance expert assesses the first £20 coin
IS IT worth stumping up for the first ever £20 coin when it is launched at the end of next month? The Royal Mint is certainly expecting it to be a sell-out, says the Daily Telegraph. Just 250,000 of the Benedetto Pistrucci-designed coins – displaying his version of the classic St George and dragon design – have been made, and the Mint is convinced they're highly collectible.
"It is a beautiful work of art at a price more people can afford," says director of commemorative coins, Shane Bissett. And it will build on the popularity of commemorative £5 coins, such as the one struck to mark Prince George's birth. As the first in series of £20 coins issued periodically to celebrate "significant events and figures from British culture", the Mint hopes to spark a "love of coin collecting" among the general public.
There's certainly cash to be made in coins, as the latest update to Knight Frank's Luxury Investment Index makes clear. As a general investment class, coins are up nine per cent over the past year and by a whopping 225 per cent over the decade.
Still, collectors are picky – and the reaction to the new twenty nicker coin among dealers hasn't exactly been ecstatic, says Philip Inman in The Guardian.
Richard Lobel of Coincraft reckons it contains little more than £8 in silver, and probably won't trade for much more than that after it launches on 31 October. "Not since the 1980s has a Royal Mint coin gained in value," he notes. High-priced coins struck last year to celebrate the Olympics, for instance, now trade at less than face value.
If you're interested in silver, "and can afford to take some risk with your savings", there are opportunities beyond coins. In fact, this could be a great time to check out gold's "less blingy rival", said Mark Bridge in The Times.
The price of silver (at around $23/per ounce) is currently some 22 per cent lower than its average price last year. Advisor Martin Bamford of Informed Choice reckons that "represents a buying opportunity for the long-term investor". Silver tends to be more volatile than gold, "so the price can rise or fall more rapidly, creating opportunities".
Unlike gold, this precious metal also has the advantage of industrial applications, which account for around 40 per cent of demand every year. So if you think the recent big sell-off of metal commodities has been overdone, buying silver is one way to get back into the market.
Bamford likes Ishares Physical Silver exchange-traded commodity, which tracks daily price movements by physically holding bullion. With a total expense ratio of just 0.4 per cent, he argues it is also a cheap way to invest.
This article appears in the 14 September 2013 issue of The Week.