Tuesday, December 2, 2014

Dandan's Comments on Chinese Coins (7) - 5 oz Rectangular Silver Tiger

Today I am going to write about 5 oz coins. Someone said that I liked large silver coins. It is true, mainly because the recently released small silver coins have a huge mintage, expanding with no limits. On the other hand, large gold coins are much too expensive, not good for common collectors. The coin I am going to discuss today was released 2 years ago, the rectangular silver Tiger.

As usual, let me talk briefly about the background of the coin. The 5 oz rectangular silver Tiger was released in 2009, with 2010 on the reverse of the coin. Like all the precious metal lunar coins, it was released at the end of the previous year, with a crouching tiger on the design. Honestly, my first reaction was this tiger was so lifeless, not awe-inspiring at all. It is much too bland in design and craftsmanship, mostly because this tiger is not spirited. The mintage of this coin was 1,888, very small. Yet starting from 2000, when the 5 oz rectangular silver coin was first released, this series has not seen much growth in value. Many distributors have few in their inventory. There are three main reasons. First, before the 5 oz rectangular silver coins, 5 oz round-shaped silver coins had been marketed, with a mintage of around 1,000. (The mintage of the round silver coins varied depending on the year.) The price of those round coins also remained tepid. Secondly, the 5 oz rectangular silver coins  back flew from overseas, as they are mostly released to the Hong Kong market. The inventory is really low among distributors inside China. As such, speculation is not easy. Lastly, we all know that many coins released in 2000 had a low price, because the market was in a deep freeze then. Only a handful of true collectors carried on with collection of these coins. Where were those speculators at that time? Considering all these three factors, the 5 oz rectangular series has remained tepid since its initial release in 2000, as a largely overlooked category. Things started to change after 2009. The three reasons for change can also be summarized as follows. First, the mintage. This point is beyond any dispute. The 1,888 mintage may appear unsurprising among the early precious metal coins, but today, especially after the steady increase of the mintage in recent years, the mintage of 1,888 is tiny. Secondly, after 10 years, the whole 5 oz rectangular silver coin series is drawing to a close. With this in mind, many collectors, investors and even speculators have started to pick them up, because for a collector, once he or she started on a series, this series has to be completed. Otherwise it will feel as if there is something missing. Last but not least, the market turned. Unlike the slow market in 2000, which was going down, the coin market at the beginning of 2009 was going to witness the best two years in history. Many types kept breaking records and went through one peak after another in the last two years. In addition, through the powerful and wide-spread reporting and promotion by traditional media like TV and newspapers, and new media like the Internet, more people became aware of this market, with new collectors steadily joining in. This "new blood" has been the major driving force of the expanding market. With these three points, the later growth of the 5 oz rectangular silver Tiger is logical and reasonable. Its release price at the end of 2009 was a few thousand Yuan, but now it is already tens of thousands Yuan, a multiple time increase in just two years. But this coin is still largely ignored, mainly because the 5 oz colored Tiger is more popular, overshadowing it. Also, the mintage of the 5 oz rectangular silver coins is too small. Although the rank of players and collectors of this series grew in recent years, their total number is still unimpressive. This leads to the considerable difference between the buying price and the selling price. The collector has to offer a significant discount when cashing out the coin. This year the China Gold Coins Incorporation went out of their head again, by increasing the mintage of the new round of 5 oz rectangular silver coins to 20,000. I have negative opinion on this move, as the mintage is now too large. 

I have the feeling that the price growth of 5 oz rectangular silver coins in the past couple of years is the result of value return and value realization. Now that value is realized, reaching a high price range, the first series cannot be used as major investment. It can be a major collectible series, though. After all, the first series is miniscule in mintage compared with the second series.  

Collection Index: 10
Investment Index: 7

1 comment: