Wednesday, February 27, 2013

Water the Flower of Gold and Silver Coins with Love

By Huang Ruiyong, written in 2007
http://bbs.jibi.net/dispbbs.asp?BoardID=91&replyID=372822&ID=100819&skin=1

I like gold and silver coins from New China, almost to the degree of addiction.

I have been collecting gold and silver coins for a few years. As my collection grows and my coin knowledge is enriched, I have turned from appreciating their looks to the study of their inner beauty such as the technical process, culture and connotation. In my entire collection, the series that filled me with all emotions and gave me the most anxiety was the 1979 International Year of the Child commemorative coins.

The Year of the Child commemorative coins were the masterpiece by Mr. Chen Jian, which were warmly applauded by collectors as soon as they were released.

As the coins show two children watering a flower with affection and love, they are commonly known as “flower-watering” gold and silver coins. This series of coins is highly diversified: gold and silver; normal and double thickness; proof and BU. It is very difficult to collect the whole series, an absolute challenge to those who aim at becoming serious collectors of Chinese gold and silver coins.

Fortunately, after a few years of relentless searching, and with strong support from friends, I finally succeeded in bringing together the whole series of flower-watering coins. Whenever I admire them under the light in the midst of night, when all the human noise has subsided, I am still overcome with a mixture of feelings: fulfillment, satisfaction and excitement. Reflecting on the journey of collecting this series of coins, each episode flashes back in vivid detail in my mind, like movie montages. It looked like an easy step, but in fact was filled with painful efforts, and, because of that, I will treasure this series of gems more dearly.

Two years ago, I bought my first flower-watering gold coin (the thin version) from the Lugong Market – the biggest gold and silver coin market in China. After I brought this gold coin back, I took my time to admire it, my heart filled with delight. From that moment on, I embarked on my journey of searching for flower-watering coins. I obtained the flower-watering silver coin at Shenzhen Book Plaza. On South Yan’an Road in Hangzhou, I came across the matte silver coin. Like college entrance exams, the journey of collection is easy at first, followed by more arduous steps. After collecting all the thin versions, I naturally turned my eyes to a higher level – the piedfort coins.

However, it is easy to set a high goal, and it is a totally different story trying to press forward. To me, the piedfort coins in perfect condition were like “He learned that on the sea were fairy mountains which now appeared, and then disappeared amid the cloud”. (Translator: this is a line quoted from the ancient Chinese poet Bai Juyi’s poem “The Everlasting Regret”.)  I asked numerous coin dealers. They all heard about them, but never saw one. I asked numerous collector friends, who simply did not have a clue. But “Man proposes God disposes”. One day I got a call from Zhang Xiaolong, a master collector of sports coins, telling me that a piedfort gold coin turned up surprisingly in Germany. After making a hurried price inquiry, I asked him to grab it right away. The problem was that it was daytime in China, and because of the time difference, the Germans should be in their sleep, not a good time to make contacts. As soon as darkness fell, I urged Xiaolong to make a call to Germany, only to be devastated by tragic news, after all this anguish: during the few hours in between, this coin was already on its way across the oceans to the Samba kingdom. Overwhelmed with grief, I could only comfort myself with this thought: I had not been destined yet to cross the path with the piedfort coin. If I persisted with a strong yearning and will, I would finally succeed.

As luck would have it, I happened to stroll to the booth of Hosane’s German Office at the Beijing Coin Expo last year. The first few coins that came in sight were the thin version of flower-watering silver coin in OMP boxes. But there was another flower-watering silver coin at the bottom, with its box unsealed. Its packaging looked totally different from other flower-watering coins. “Is it a piedfort coin?” I suppressed the ecstasy surging to my head, and asked the sales people to take all the coins out. I was right! It was the piedfort coin that I had been dreaming of all the time, and the condition was perfect. I was suddenly struck with a revelation, and realized the beauty of Bai Juyi’s line: Only after our repeated calls did she appear; her face still half concealed behind a pipa. (Translator: this line was quoted from the ancient Chinese poet Bai Juyi’s poem “The Pipa Tune”.)…

I felt a little better after acquiring 4 out of the 5 coins. What I often did when I got home was taking these 4 coins out, either admiring them from a distance, or observing them in hand, with all my affection. But a slight sense of sadness lingered in my mind all the time, a sadness akin to “Once gone, the yellow crane will never revisit the earth; only white clouds still float in vain from year to year”. (Translator: this line was quoted from the ancient Chinese poet Cui Hao’s poem “The Yellow Crane Tower”.)

Life is not unlike drama. When I was losing hope for the gold piedfort coin, exciting news struck my ears like music from Heaven. This time the help came from the top collector King Chan in Hong Kong. He connected me to a professional coin dealer in Germany, who had put in many years dealing in gold and silver coins from the PRC. After numerous phone calls and email exchanges, this dealer was touched by my persistence and sincerity, and granted my wish like a true gentleman. The moment I took hold of the gold piedfort coin, a sense of final achievement after years of pursuit surged through my mind. These gold and silver coins nourished by friendship will definitely be priceless.

Although all the flower-watering coins were now in my collection, I would never stop searching for knowledge about them. I got in touch with the designer Master Chen Jian, who surprised me with a great gift: the photo of the first Chinese Ambassador to the US Cai Zemin and the former Secretary of State Kissinger attending the ceremony of the first release of the Year of the Child commemorative coins. At the ceremony, Ambassador Cai presented this set of coins as gift to Dr. Kissinger. The host and guest were beaming with joy all over, an excellent footnote to the “gold and silver coin diplomacy”.

In addition, I collected flower-watering coins with different packaging and COAs. As this series was part of the United Nations project of Year of the Child commemorative coins, and with the US company Paramount as the distributor of the matte silver coins, packing boxes and COAs sold to different parts of the world came in various forms; they were gorgeous and colorful. Just one example: a violet colored velvet box covered under smooth velvet and housed in a violet paper box, graceful and majestic. When the box is opened, a thin version of the silver coin first comes in sight, its silvery gleam contrasting and complementing nicely with the box. When the silver coin is removed, another cell appears underneath to the surprise of the viewer, which just has enough room for a gold coin, its golden sparkle tantalizing our visual sense. With such an intricate design of double cells, the designers have succeeded in overwhelming us with their ingenuity. We are left with admiration for the superior starting point of the gold and silver coins of our country.

27 years is a flick of fingers. In the meantime, the gold and silver coins of the PRC are just entering a booming time. “I was here with a throng of companions; vivid yet those crowded months and years. Young we were, schoolmates,  at life's full flowering!” (Translator: these lines were quoted from Mao Zedong’ s poem “Changsha”.)  There is no doubt that the Chinese gold and silver coins in their prime time will leave everlasting impressions on many people. As one of the many collectors of Chinese gold and silver coins, I will pick such a little memory, and nourish it carefully with love. It will bloom with ever-growing brilliance, like the little flower under meticulous care on the flower-watering coins.


Saturday, February 16, 2013

An Impossible Task for Collectors

http://collection.sina.com.cn/qbtd/20120917/094284949.shtml
by Ding Chang
Sept 17, 2012

Collecting the whole series of the Ancient Chinese Inventions and Discoveries (I&D) precious metal coins is considered an impossible task for collectors. So far, no collector either in China or overseas has succeeded in assembling this massive series which was released for five years running from 1992 to 1996. The chronological order of this series of precious metal coins is as follows: three terrific gems were released in 1992 – the Compass kilo gold coin and the Seismograph kilo gold coin, with a mintage of 10, which is the lowest mintage among the gold coins released by the PRC; the Ancient Chinese I&D kilo silver coin set, with a mintage of 50 sets, again the lowest mintage among the silver coins released by the PRC. The wonder does not stop there: in the same year, 1992, the first set of Ancient Chinese I&D platinum coin set was released, with a mintage of 100 sets, which was the lowest mintage among all the platinum coins released by the PRC. Other releases, such as the first set of Ancient Chinese I&D gold coins (with a mintage of 1000), the Ancient Chinese I&D piedfort silver coin set (with a mintage of 2500 sets), the first set of Ancient Chinese I&D silver coins (with a mintage of 15000) and the 5oz Compass silver coin (with a mintage of 3000), are all hotly pursued by collectors. Last but not least, the two small silver coins, Paper Making and Bronze Coin Minting, are also highly valued!

In 1993, the People's Bank of China made adjustments to the Ancient Chinese I&D precious metal coins. Among the new releases were the second set of Ancient Chinese I&D platinum coins (with a mintage of 100 sets), the second set of Ancient Chinese I&D gold coins (with a mintage of 1200 sets), and the second set of Ancient Chinese I&D silver coins (with a mintage of 15000 sets). While the kilo gold and silver coins released in 1992 were discontinued, a new set of Yin and Yang Philosophy was launched, including 5oz gold and silver coins (with a mintage of 99 and 1000 respectively), a 1oz gold coin (with a mintage of 888), a 1/4oz gold coin (with a mintage of 3000), a 1/10 gold coin (unlimited mintage) and a 1oz silver coin (unlimited mintage). Shockingly, the People’s Bank of China also had a 5oz Definition of Zero silver coin minted, a pattern as valuable as national treasure, which is now housed in the showroom of the China Gold Coins Co.!

In 1994, the People’s Bank of China released the third set of Ancient Chinese I&D platinum coins (with a mintage of 100 sets), the third set of Ancient Chinese I&D gold coins (with a mintage of 1200 sets) and the third set of Ancient I&D silver coins (with a mintage of 15000 sets) and stopped at that. When it came to 1995, only the fourth set of Ancient Chinese I&D gold and silver coins were released (with a mintage of 1200 and 15000 respectively), plus the 15g Yin and Yang Philosophy small silver coin (with a mintage of 20000). In 1996, the People’s Bank of China only issued the fifth set of Ancient Chinese I&D gold and silver coins (with a mintage of 1200 and 15000 respectively), thus putting an end to the whole series of Ancient Chinese I&D precious metal coins, but the end was a snake’s tail compared with the start which resembled a tiger's head.

The most difficult coin to collect for the whole Ancient Chinese I&D series is the 5oz silver pattern Definition of Zero. Next in line are the kilo gold Compass and Seismograph, as well as the kilo silver coin set with a mintage of 50. Nobody either in China or overseas owns all these three types, even if we leave out the 5oz silver pattern Definition of Zero. A kilo gold Compass was auctioned of for the huge price of RMB8.3 million at the Champion Auction last year, and a kilo gold Seismograph was sold for RMB7.25 million at the beginning of this year.

(Description of the compass and the seismograph omitted.)

The Ancient I&D kilo silver set, with a mintage of 50, is priced at RMB2.5 million on the market right now; the Ancient Chinese I&D platinum coins (sets 1, 2 and 3) also have a market price tag of RMB2.5 million at the moment, while the Ancient Chinese I&D gold coins (sets 1, 2, 3, 4, and 5) have an asking price of RMB1.1 million. The 5oz Ying and Yang Philosophy gold coin has a price tag of RMB0.9 million. It is obvious that many sets in the Ancient Chinese I&D series are highly priced, not to mention the whole series!

Friday, February 1, 2013

Stories Behind Panda Gold Coins

By Hu Fuqing
http://www.jibi.net/News/qbqbcx/8_19_9_200.html

This year marks the 30th anniversary of the release of panda gold coins. With the celebrations under way, the attention to panda gold coins will intensify. I would like to recount the early stories of the 20th century Chinese panda gold coins which I am aware of, hopefully to bring a historical perspective for the designers and manufacturers of Chinese panda gold coins, as well as for collectors.

The release of Chinese panda gold coins was a monumental moment, but before their release, what strenuous efforts were made by the government agencies without publicity? This is exactly what this article is about. Without the groundbreaking efforts, there would not have been any Chinese panda gold coins.

Prelude

When the Great Cultural Revolution was brought to an end in Mainland China, the plan to mint commemorative coins ranked among the key technological programs of the Print Administration of the People's Bank of China (the predecessor of the current China Banknote Printing and Minting Corporation). The details included:

1.   The designs would focus on significant and memorable events in China, such as portraits of the previous generation revolutionists and the historical sites where they engaged in revolutionary activities as well as their monuments; famous ancient and modern writers and scientists; and well-known historic buildings.

2.   Efforts would be made to research and improve artistic and technical expertise in the design, engraving and die making of commemorative coins, with the state of the art in the world as the goal – unique, exquisite, and graceful. The coins would have denominations on them, and the shape could be round or multi-sided.

3.   In terms of the material, research should be mostly done on coins of 99.9% gold and silver, in singles or sets.

4.   The design of the first pattern to be reviewed should have the completion of the Chairman Mao Memorial Hall as the theme; otherwise there would be no restrictions. The pattern must have the text "People's Republic of China" on it.

The leadership and the engineering and technical staff of the then Shanghai Mint (state owned Factory 614) responded with enthusiasm to the call from the leaders of the Printing Administration. The Party Committee decided to trial mint commemorative coins for the anniversary of Chairman Mao's death, called Product "990", which was to be completed by September 9, the first anniversary of Chairman Mao's death. Two teams were organized for this purpose: the first team was led by engineer Yan Yangsheng, with three assistants (Chen Fuquan, Yan Zhaolin Jin Huaqing). (Some text missing here- translator) based on the engraving from Birmingham Mint in England. The team lead was designer/engraver Luo Xingsha.

The Director of the Printing Administration at that time, Yang Bingchao, visited the Soviet Union, and brought back from Saint Petersburg Mint samples of the high relief Lenin commemorative medal. He called for honing of technical skills, to mint gift coins with portraits of the great leaders, and to engrave great Chinese leaders on the coins of RMB.

In order to hone the skills of engraving on coins, Mr. Zhu Dechun got in touch with Professor Zheng Ke of the Central Institute of Arts and Crafts, for him to give a training class on engraving, with the support of the leadership of the Printing Administration. Professor Zheng gave lectures in person, and coached trainees in making engravings.

I was lucky to be one of the formal trainees, thus witnessing the period  from the very start to official trial minting of commemorative coins by the coin minting industry. Shanghai Mint (state owned Factory 614) sent 6 designers/engravers to this important engraving training class, but the Shenyang Mint was absent due to some unknown reason. It was a regrettable decision, because they missed an excellent opportunity to improve engraving skills. During the training class, the Chairman Mao Memorial Hall was under intensive construction. The leadership of the Administration of the Chairman Mao Memorial Hall and those of the construction companies all wished to mint a number of commemorative coins for the Chairman Mao Memorial Hall. This idea struck home with Shanghai Mint's (state owned Factory 614) "990" project. A trial run was performed with success using Shanghai Mint's production line for Chairman Mao badges. The commemorative medals included the engravings of the Chairman Mao Memorial Hall and Chairman Mao seated. On September 9, 1977, which was Chairman Mao's death anniversary, Shanghai Mint's 990 project produced designs on time. After careful engraving and technical adjustment, patterns were formally submitted to the Printing Administration on December 20, 1977.

People joked that the 1977 engraving training class was the "Huangpu Military Academy." There is some truth to it. Many key designers/engravers in the minting industry "graduated" from this training class.

High Level Decisions

Back in April 14, 1978, a team from Shanghai Mint went to the Printing Administration to report on the trial minting of Chinese commemorative coins. On the morning of April 17, Director Yang Bingchao advised that a meeting was to be held in the office of Geng Daoming, Vice Governor of the People's Bank of China. In addition to Vice Governor Geng and Director Yang, there were Zhu Dechun from the Technology Department of the Printing Administration, Wu Hanlu, a researcher from a related department, Director Qian Zhenlin of the Non-Commercial Department of the Foreign Bureau of the BOC, and Zhao Chengan, Vice Governor of Po Sang Bank in Hong Kong. Vice Governor Geng made it clear that Chinese commemorative coins were to be made, to assist in tourism for foreign visitors in an effort to promote China and to earn foreign exchange.

The purpose of the meeting was investigation and research, to fully assess domestic and international demands, and to study the report to be submitted to the State Council, based mainly on the briefings of Vice Governor of Po Sang Bank. Li Xiannian, Vice President of the PRC, also instructed the Governor of BOC, Li Baohua, to push for commemorative coins.

On the domestic front, the office of Liao Chengzhi in the Ministry of Foreign Affairs called to ask whether the BOC could provide Chinese commemorative coins. At that time, a retired Defense Minister from Luxemburg was visiting China. He happened to be a seasoned coin collector, and was eager to obtain some Chinese commemorative coins. But there were no commemorative coins available either as gift or for purchase. The Ministry of Foreign Affairs called Po Sang Bank in Hong Kong for commemorative coins, but Po Sang Bank had none either.

The Cultural Revolution had drawn to an end by then, and foreign interactions were picking up. Some patriotic overseas Chinese suggested, after they learned about this story upon visiting China, that they pay the cost and supply the gold for China to mint commemorative coins. They would bear all the costs, and split profits half-half with government agencies involved. Some foreign friends also made similar proposals, with design elements such as China's emblem and country name to be approved by China. They also wanted to bear all the costs and split sales profits half-half. Wuhan City had exported a batch of old gold coins. Their melt value would have been RMB80,000, but the sales revenue reached more than RMB400,000. Shanghai sold some banknotes from the Qing Dynasty as waste paper, but brought in RMB6,000 instead. All in all, the collection market was prospering with increasing stability in the country after the Cultural Revolution.

In view of all the facts above, Vice Governor of the BOC Geng Daoming made it clear that China would market its own commemorative coins. First, the design had to be highly artistic; secondly, the workmanship had to be superb; thirdly, the decorative accessories had to be beautiful. Vice Governor Geng also mentioned that three tons of gold would be allocated the next year (1979), and weight of the commemorative coins would be around 1/2 ounce. They had to be an instant hit.

However, the Chinese government banned Renminbi from export in the 70s of the last century. Even if the commemorative coins were made, whether they could be sold overseas was a big challenge. Despite all these uncertainties, the step had to be made. So a fool-proof plan was made: commemorative gold and silver medals would be made first, while commemorative gold and silver coins were also in preparation. Both series would be submitted to the State Council. If the medals were allowed to carry denominations, they would become commemorative coins. The commemorative medals would be minted to proof standards anyway, using the minting technology of commemorative coins. Denominations on the coins was another big policy issue. The BOC instructed departments involved to check the international market for all the details.

After the meeting chaired by Vice Governor Geng Daoming, Director Yang Bingchao of the Printing Administration called another meeting on April 19, 1978, to study the implementation of the plan. The participants were Qiu Weimin of the Production Department of the Printing Administration, Zhu Chunde of the Technology Department, Mr. Tang, engineer of the Construction Department, and Ye Bolin from Shanghai Mint (state owned Factory 614). The meeting designated the Department of Production as responsible for the project, assisted by the Department of Technology. On April 24, Ye Bolin returned to Shanghai, and reported the decisions of the two meetings to the factory's Party Committee and the Revolutionary Committee. The leadership immediately decided to take actions. After his briefing, several decisions were made at the meeting: re-allocate workspace, add equipment, reinforce staffing, assign duties, and specify responsibilities. The purpose was to straighten out the internal process within Factory 614 for smooth execution. The meeting took seriously the message from the April 17 meeting called by Vice Governer Geng, and tentatively decided on Beijing scenery as the theme for the commemorative medals. In the afternoon of May 30, Factory 614 called a meeting for design and engraving, followed by 8 more special meetings, to seek consensus, specify tasks and check the progress and quality of each task. 

It is no exaggeration to say that these concrete steps laid a solid foundation for the release of China's panda gold coins.

Background of International Market for Investment Coins

China's panda gold coins are the only investment gold coins from our country. Talking about this type of investment BU gold coins, according to the definition of the global "Industry Directory of BU Gold Coins", BU gold coins are fiat gold coins specifically for investment in gold. The standard weight of BU gold coins is calculated in ounces, which is the universal unit of troy weight. A coin may contain one ounce of pure gold , or a fraction of one ounce (such as 1/2, 1/4, 1/10 or 1/20). BU gold coins can be minted in large quantities or without any quantity limit. The issuer releases them by adding a low premium to the price of the gold in the coins. The purity and technical specs are guaranteed by the government.

The first BU coins were minted in South Africa. In 1970, the South African Chamber of Mines officially launched the Krugerrand gold coins, which took over the gold investment markets in Europe and the United Sates shortly afterwards. In 1974, more than 3.2 million ounces of the South African Krugerrand gold coins were sold. Inspired by the sales performance of the South African Krugerrand gold coins, some developed countries released their own BU gold coins after 1979. This became the most effective means for the issuer country to earn foreign exchange with gold.

The chronological order of the countries issuing investment gold coins is:

South Africa, which first issued Krugerrand gold coins in 1970;
Canada, which first issued Maple gold coins in 1979;
Mexico, which first issued Liberty gold coins in 1981;
China, which first issued Panda gold coins in 1982;
The United States, which first issued Eagle gold coins in 1986;
Australia, which first issued Kangaroo gold coins in 1987;
Great Britain, which first issued British gold coins in 1987;
Austria, which first issued the Philharmonic gold coins in 1989.

Some other countries followed suit by issuing their own gold coins, such as Lion gold coins from Singapore.

Among the investment gold coins, China's panda gold coins were among the forerunners. The Cultural Revolution impacted a whole generation of the Chinese people, but the Chinese panda gold coins managed to keep up with historical development.

Internationally, sales of the 1 ounce BU gold coin account for 80% of all the BU gold coins in most cases. This shows the real popularity of the investment coin. In comparison, based on statistics before Year 2000, the sales of Chinese 1 ounce panda gold coins only accounted for around 49% of all the types. The reason might be that the Chinese BU panda gold coins were produced with more than BU quality and excellent workmanship. Many people had them for collection, not investment.

The international sales volume of the Chinese panda gold coins was relatively low (based on statistics before 2000). In 1989, the Chinese panda gold coins reached their peak sales of 254,000 ounces. In contrast, in the same historical period (end of the 20th century), the gold production in South Africa (average annual production) reached 75% of all the gold produced in Western countries. The South African Krugerrand BU gold coins reached 5 million ounces in annual sales in 1985. This left the Chinese panda gold coins far behind.

Starting from January 1, 2000, the EU countries waived VAT on gold investment products through legislation. This served as an important stimulus to the sales (market sentiment) of BU gold coins in the EU.

Design and Minting Technologies of China's Panda Gold Coins

The design on the 1982 panda gold coins was classical. Many design drafts were submitted for the Chinese panda gold coins of that year. Proposals varied. The observe had the national emblem, the Great Wall and the Temple of Heaven for consideration, and the designs for the reverse were more numerous. The design for the obverse was finalized on the Temple of Heaven. Many years of market reaction proves that the design of the Temple of Heaven on the obverse of all the Chinese panda gold coins was a successful pick. There was no objection whatsoever from anyone.

There was a specific reason why the first set of panda gold coins had no denominations. Li Baohua, the son of Martyr Li Dazhao, was the Governor of the People's Bank of China. He was very cautious about denominations on panda gold coins. Before the release of the Chinese panda gold coins, the commemorative gold coins for the 30th anniversary of the People's Republic of China had been released in 1979 with great success. The denomination was 400. With this precedent, why no denomination was added to the first set of panda gold coins? It was a historical mystery. When patterns were submitted for the first set of panda gold coins, the 1 ounce gold coin had two denominations, 350 Yuan and 400 Yuan, for selection by the leadership. As panda gold coins were investment coins, they would be released continuously each year as per international conventions. In contrast, other gold coins were issued once and for all, with no residual problems. Just for this reason, Governor Li Baohua was extremely cautious. After serious studies by the People's Bank of China, Governor Li Baohua finally decided on the four sizes of 1 ounce, 1/2 ounce, 1/4 ounce and 1/10 ounce for the first set of panda coins in 1982, out of his sense of responsibility for history and for the success of this investment coin project. These sizes were in line with international standards, too. He also decided not to add denominations to the coins. International market reaction would be watched for decisions on the denominations of the second set of panda gold coins, so that the configuration of the denominations on panda gold coins would be set more reasonably and more stably, which would benefit panda gold coins in the long run. That was why no denominations were added to the first set of China's panda gold coins in 1982. However, the first set of panda gold coins from 1982 are internationally regarded as China's fiat currency, only more valuable, as only the 1982 set enjoyed this special glory in history.

The emergence of panda gold coins resulted from the hard work by Shanghai Mint (state owned Factory 614). Although panda gold coins were BU coins, their minting process was no less than that of proof coins, thanks to the serious and meticulous work of those involved. That gave rise to the catch phrase in the industry: BU coins are more than BU (and proof coins are not proof enough). Proof versions of panda gold coins were also minted, those with a P in the panda design on the reverse.

Ways to Promote Sales of China's Panda Gold Coins

Compared with the sales of many BU coins in the world, the annual sales of Chinese panda gold coins are not great. If we take other factors into consideration, the disadvantage of the panda gold coins are even more obvious. Take the Canadian maple gold coin for example: the Chinese panda gold coins are higher in purity than the maple gold coins. The design on the reverse of the panda gold coin changes every year (except for 2002), while the maple gold coin keeps the same design year in and year out, with the Queen of England on the obverse and the Canadian maple on the reverse. Only the Year is updated. The minting quality of panda gold coins is next to proof coins, while maple gold coins are BU coins in the real sense. But in the end the Canadian maple gold coins still outsell the Chinese panda gold coins. In 1999, more than 4 million ounces of the American gold eagle coins were sold, while the Chinese panda gold coins only reached an annual sales volume of 50,909.05 ounces (fifty thousand ounces). This "Panda Phenomenon" is thought provoking.

Let's just focus on the design of the panda gold coins. It is a challenge by itself. So far we have more than 100 designs on panda coins (including proof panda coins in the past). It is no exaggeration to say that panda's postures are almost "exhausted". How far the design of panda gold coins can go remains to be seen. The design of the 2001 panda gold coins was awesome, which was reused in 2002, in the hope to fixate the panda design, so that only the Year would be updated annually. But the attempt fell through, with disapproval from dealers. We can say that panda gold coins are selling at low margins with high quality. As panda gold coins have very low premium, not much higher than the gold price, they are only profitable with large sales volumes. If sales lag, the profit is terribly low.

The basis of panda gold coins' price is the cost of gold. As a 17% VAT is added within China, and as the VAT is either waived internationally or charged at a much lower rate than in China, the marketing challenge is self-evident.

The time to market of panda gold coins is relatively long, in contrast to other international gold coins. The supply is slow, due to the processes of domestic banks and Customs. This inevitably tie down the capital of the dealers while exposing them to more financial risks at the same time. Internationally, dealers of BU gold coins would try their best to move their stock fast once it is replenished, or to secure buyers before the supply is delivered, in order to minimize the risk of cash tie-up. Vaults are set up in New York, Los Angeles and other locations for gold coin distribution. If the customer agrees to the price and pays for a purchase, he can directly take the delivery the next day with the invoice. It is a quick process which can greatly speed up the capital turnover of the dealer. On the other hand, it takes dealers of panda gold coins a week or even longer to receive the gold coins after price negotiation and payment. Sometimes customers cannot wait and turn to other BU gold coins in stock. Long delivery time is one of the constraints on the sales of panda gold coins.

Domestically, there is no control over the price of gold coins that dealers charge. This is especially true in big shopping centers, where panda gold coins are sold at exorbitant prices. This disqualifies panda gold coins as investment coins, and alienates most of the salary-earning investors.

Our international sales network for panda gold coins is far from strong. Take the example of the US Mint. The US Mint has tough requirements for dealers in their distribution network. Dealers applying for sales of the US BU gold eagle coins must submit some qualification documents, such as certifications from internationally certified financial firms and membership in major international commodity exchanges. The dealer's customers must be qualified to deal in gold in large quantities. The dealer's net asset should be no less than 5 million dollars, and each order should be 1,000 ounces at the minimum. These measures help in guaranteeing the annual sales volume of the US BU gold eagles. Major dealers of the US Mint include well-known financial institutions such as A-Mark Precious Metals, ScotiaMocatta Precious Metals, Republic Bank, MTB Bank, Deutsche Bank, the Sumitomo Corporation in Japan, Hang Seng Bank in Hong Kong, and Swiss UBS. Viewed against developed countries, our panda gold coin distribution network is still weak.

Another bottleneck to the sales of panda gold coins is the buyback channel. Globally, especially on the US and European markets, BU gold coins are well received as a gold investment vehicle because the society is wealthy. Dealers buy back gold coins while selling them, and are happy to make profits both ways. The buyback channel makes cashing out easy and convenient, which in turn attracts more investors to BU gold coins. But in China such buyback channels do not exist. People cannot timely cash out the BU coins they bought. The "investment coin" does not make sense as an investment.

These issues are constraints on the sales and progress of panda gold coins. Of course, as mentioned before, my article mainly touches on the state of panda gold coins at the end of the 20th century. Currently the market, the gold price and purchasing power of the Chinese population have significantly improved. Hopefully the conditions may have been more favorable.

Historical Contribution of Panda Gold Coins

The history of modern Chinese gold and silver coins is embodied in the growth of panda gold coins. In the past 30 years, panda gold coins scored many great successes.

Many of the technologies in minting modern Chinese commemorative gold and silver coins were used on panda gold coins first, and applied gradually to other coins afterwards. For example, the unique intaglio engraving technique won remarkable esteem in history. This technique was in use for 13 years, till the anti-sandblasting technology was adopted on the 1995 panda gold coins. Other technologies, such as local gold plating, gold inlay, color printing, and slanted reeding, were all first tried on panda coins.

Historically, panda coins were awarded the Best Gold Coin and Best Silver Coin multiple times in the American "Coin of the Year" competition. This award is regarded as the Oscar of numismatics.

Although panda gold coins failed to reach the top sales volume in the world, they brought in huge profits in the past 30 years, contributing significantly to the finance of the PRC.

Panda is the national treasure of the Chinese nation, and panda gold coins are the backbone of the China Gold Coin Co.

At the end of this article, I would like to give my heartfelt thanks to the individuals and organizations who helped the Chinese panda gold coins grow along the way. Among them are Luo Xingsha, Chen Jian, Sun Qiling, Fang Maosen, Ye Bolin, Zhu Dechun, Bian Yaohui, Yan Yangsheng, Yang Binchao, Geng Daoming, Martin Weiss (USA), Ms. Zhang Jiechang (USA), Shanghai Mint (state owned Factory 614) and Panda America.

(The author of the article is member of China Arts and Crafts Association, and member of the review committee of Coin of the Year)