TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 132

39

not only do the royalty payments exceed the face value of the coins

(Falkland Islands 250%, Tuvalu 103%), but also, where applicable, the

intrinsic value of the coins is high. As a result, even where

royalties are less than face value, the combination of royalties with

the calculation of the bullion value is more than enough to match the

face value of the coins.

9.2(4) The survey results have shown that this is not the case with

programmes promoted by the US companies. In the case of Turks and

Caicos, and BVI, no attempt seems to have been made to set aside any

royalties as a backing fund; they have simply gone into the current

revenues (in both these cases, without infringement of any legis-

lation). But the amounts of royalty received from US promotional

companies have in any case been on average only about 15% of the face

value issued. There may well be a case for arguing that the royalties

from the US companies are too low in relation to their likely profits;

but the dependencies are at a disadvantage when dealing with companies

which have contracted with several territories and which are able to

play one territory off against another.

The Market

9.3(1) We have not looked at this closely from the point of view of

the collectors and dealers who constitute it. Not only would a

thorough analysis have required an investigation beyond our resources

in a short period, but signs of enquiry by an outside body into the

market as a whole and/or into the promotional companies might have

provoked undesirable reactions. As a general point, of course, it

will be appreciated that the coins of the dependencies covered by the survey can form only a small part of the total number of numismatic

coins issued and in the market, but we are not in a position to

estimate the proportion.

9.3(2)

We cannot therefore estimate how firmly numismatic coins are

at present held by collectors and investors, nor can we evaluate fully

the factors that are likely to influence their decisions. There can

be little doubt, however, that, as the promotional companies argue, a large part are at present held firmly by collectors. If an original

purchaser decides to dispose of a coin, he can now do so quite easily through the secondary market, where it would probably command a higher price than when issued.

9.3(3) Not surprisingly, therefore, the survey has revealed nothing to suggest that coin redemptions have hitherto posed major problems,