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New Delhi: Last month a Bangalore-based businessman bid 11.5 lakh for a very rare coin in the city’s first spot auction of rare coins and currency notes. The auctioneer, Rajender Maru, claimed it was the highest price ever paid for a coin at an Indian auction and the winning bidder told The Hindu newspaper he was elated and had been willing to pay more.

Worth a million: An 1835 King William IV two-mohur coin was recently auctioned for 11.5 lakh. Source: Marudhar Arts

“Somebody bid higher online—Rs 13 lakh, but I thought it was safer to go with the bidder on the floor," the auctioneer said. “These prices are going up so quickly, in five years or so I would expect that coin to go for 15 lakh or more."

It’s true that the prices of Indian coins are steadily rising. Forbes reported last year that a similar 1835 two-mohur William IV coin, which sold for 85,250 in 2003, had been bought for 6.05 lakh in 2010.

Maru agreed that a strong economy and increasing interest from collectors have driven prices higher.

“Collectors are everywhere now," he said. “Supply is less and demand is more—everyone wants to buy them, but only a few want to sell. They know the market is growing and they want to hold on to get a higher price in five years’ time." The seller of the William IV coin, from Lucknow, wanted to remain anonymous.

Farokh Todywalla of Todywalla Auctions in Mumbai said he sold a similar coin for 7.5 lakh last August and added that the double mohur bought in the Bangalore auction may have been overvalued.

“But it’s really passion driven," he said. “This man must have really wanted it."

Todywalla agrees that the market for coins is pretty buoyant.

“It has been growing since the last 10 years now and we haven’t seen a slump really. Even during the sub-prime crash, the coin market wasn’t affected," he said. “India and China are doing very well and people have become more and more interested in their own heritage, and in the process realized it’s a good investment. Coins are a safe haven to protect your money rather than the stock market or other financial instruments."

In such an environment, it’s important to reach the maximum number of potential bidders, one reason that Maru has decided to start what he claims will be Asia’s first 100% online coin auction. “How many mobile users are there in India, and how many Internet users are there? Every time we get more bidders," he said.

The growing popularity of online auctions in the US, the UK and, to some extent, in the rest of Europe hasn’t thus far been mirrored in Asia. India regulates its antiquities quite strictly—no item more than 100 years old may be taken out of the country without the express permission of the director general of the Archaeological Survey of India (ASI).

Most antiquities have to be registered with ASI as must auction houses who want to hold a licence. As of now, coins are not included in the list of objects that must be registered, but Maru thinks it is possible that a law could be passed after the budget.

Todywalla, however, doubts that will happen.

Getting permission to auction coins isn’t easy. Every auction house that wants to hold an auction of antiquities (including coins and currency notes) must be registered and must obtain a licence from ASI, said Maru.

“Marudhar Arts is one of maybe four licence holders for coins in India, there are two more in Bombay and one in Ahmedabad," he said. “I am the first person to get a licence in south India and I’m getting it after three years and 10 months. They have to make a lot of enquiries, criminal checks, things like that. Because foreign buyers can’t export out of India, Indian customers are very critical."

Indian coins exported before independence are sold in foreign markets, according to Todywalla, and they tend to raise more money than those sold at home because of their rarity value. But increasingly, Indian coins are finding their way home to collectors from the country, he said.

The biggest hurdle facing collectors is fakes and forgeries. Maru offers a free vetting service to collectors (he asks them to send him scanned images of coins for verification before they buy). The extra work is worthwhile, he said, to rid the market of troublesome fakes.

Although bullion prices have risen, that has not been the primary reason for the popularity of old coins. “They are not buying the metal, they are paying for the historical value," Maru said.

While the market in India and for Indian coins is growing, even the highest prices pale in comparison with international sales of foreign coins. The highest value sale for any single coin at an auction was when a 1933 Double Eagle (a gold coin worth $20) coin sold for $7.59 million at Sotheby’s in 2002. In May 2005, a 1794 Flowing Hair dollar (the first dollar coin issued by the US government) was sold at a private sale for $7.85 million, more than any other coin in history.

cordelia.j@livemint.com

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