As I've encountered a bit of downcast sentiment in the market over the past few weeks, what with: apparently lacklustre retail trade figures, concern about the possible impact of the Cooper Review into Australia's superannuation system in it's present form, and sighting of some rather good counterfeit predecimal coins at the last ANDA trade show in Melbourne, I thought it prudent to bring some perspective to our situation by reminding us all about how tangible assets such as rare coins are regarded by high nett worth individuals around the world.
A Solid Trend Towards Tangible Assets
Details of a recent survey conducted by Capgemini SA and Merrill Lynch into the assets held by high nett worth individuals shows that not only is there a strong "trend toward putting money into tangible assets like art and gold...", but tangible assets such as art, rare coins and other collectables "typically account for about a third of a millionaire’s total holdings." Surely our good friend Mr Cooper would have trouble digesting that little gem of information!
Before he takes issue with the veracity of the information, I should point out that "The annual wealth survey covered 71 countries and drew on interviews with 1,200 wealth managers who serve 150,000 clients. There were many regional differences in spending trends."
What many of us seem to have forgotten in recent years is that although after-tax spending by the lower and middle classes eases in times of economic strain, those same economic circumstances actually cause many wealthier individuals to redirect their disposable or "investment" income into solid assets they believe will always retain their value. Although a good number of high nett worth individuals undoubtedly have the expertise, risk tolerance and knowledge to take keen advantage of volatility in the equity and property markets, not everyone falls into the same boat, no matter how many zeroes may be included in their bank balance.
We only need to look at the numismatic headlines coming out of the UK, Europe and the United States to see clear evidence of the present strength of demand for rare coins right across the board - prices have never been stronger, despite the dire economic outlook in those regions. Indeed, it turns out demand is so strong at present because of the dire economic outlook in those regions!
Ileana van der Linde, the Capgemini principal who managed the research, apaprently stated in a phone interview with a Bloomnberg journalist that “They don’t fully trust the financial markets and regulatory bodies. That’s why we are seeing a trend toward putting money into tangible assets like art and gold.”
It's clear that Australia has sailed through the economic winds of the past few years far better than Europe and North America, which leads me to believe that we are yet to see similar patterns of demand here. If or when our economy and financial markets turn the same way as those internationally have, that's when the situation may well change. At present the outlook for our own stockmarket and various state property markets is nowhere near as dire as they are internationally, our financial institutions remain stable and interest rates are higher than they are elsewhere. If any of this changes in the coming years, demand patterns for rare coins and notes that offer prudent buyers excellent value for money may well be different than they are at present.