World record price for rare Australian 'Holey Dollar'

Only 300 of the coins survive and Belinda Downie, managing director of Melbourne dealer Coinworks, said the one that sold this week was the finest example.

"This Holey Dollar was created in 1813 from a Spanish Silver Dollar that had been minted at the Lima Mint in Peru in 1808," she said.

"Only 20 of the 200 specimens held by private collectors have ties to the Lima Mint. And this is the absolute finest of them all."

The previous record price was Aus$485,000, achieved in 2011.

The coin is one of 40,000 Spanish Silver Dollars that Governor Lachlan Macquarie bought in 1812 to solve a currency shortage in the fledgling penal colony of New South Wales.

Macquarie enlisted the help of a convicted forger, William Henshall, to cut a hole in the centre of each to prevent the coins leaving the colony in payment of imports.

The resulting "donut" was then stamped over with the words New South Wales, the value Five Shillings and the date 1813 to create Australia's first coin.

The piece taken out of the centre became the 1813 Colonial Dump, with a value of 15 pence.

Withdrawn from circulation in 1829, most Holey Dollars and Dumps were shipped to London and melted down and sold off as bullion silver.

Of those that survived the smelter, there are now only some 300 left, of which 200 are in private hands.