Dandan's Comments on Chinese Coins (2)

The Grotto Series

 

Someone asked about the Grotto series. I did not mean to write about it, but then changed my mind.

First, why didn’t I want to write about it? The main reason is that it is much too expensive. Not many people know me on this KDS forum, but I have been positive on the Grotto Series, even enthusiastic about it, because the theme is highly cultural, and the 2oz Dunhuang Grotto silver coin won an international prize. Their mintage is also relatively low. There is no reason to be negative about it except for one thing: they are expensive, very expensive.

Four sets have been issued in the Grotto Series, which are Dunhuang, Longmen, Majishan and Yungang. Dunhuang is the king of the Grotto Series, not only because it is the first in the series, but also because the silver coin won an international prize. The Dunhuang gold coin is very popular, to the extent that you need to pay one thousand Yuan to get an original box for the gold coin, a price higher than some silver coins. I quite like the half ounce gold Dunhuang coin. I feel that both the design and the workmanship are first class. Although the mintage of the 2oz silver coin is 30,000, it is beautifully made, well worthy of the international prize it received. The Dunhuang set was not born into a welcoming world. For a long time, it did not experience any dramatic price increase. But this was not a bad thing. Its high mintage drove it off the radar screen of reckless speculators, thus missing their overzealous hype. After a long time of sleeping, this set rose like a star in the last couple of years, rewarding enormously those who dared to collect it when the market was down. For those who like collecting, a coin would be OK even if it remains a sleeper for 10 years after the purchase, as long as they like it and feel that it is valuable. The sudden price upswing after ten years is only a small reward for their patience. Not getting lost in immediate profits has brought about abundant rewards to these collectors. The 2oz silver coin could barely make 500 Yuan back then, and now it has broken the 10,000 Yuan threshold. Play with coins in the mindset of a collector, and you will be rewarded enormously.

Next we will talk about Longmen. Longmen was issued one year after Dunhuang. When Longmen is mentioned, our first thought is the kilo Longmen silver coin, because it was the first kilo silver coin in the Grotto Series, although the mintage was as high as 8,000. This mintage is high among kilo silver coins, but as the first kilo coin in the Grotto Series, it has been more expensive than some silver coins with a 4,000 or 5,000 mintage. The Buddha’s head on the Longmen coins are so classical that all the gold, silver and circulating coins picked the design, because people are used to seeing it, equating the huge Buddha with the Longmen Grotto.

Next we will take up Maijishan. The three coins in the Maijishan set are relatively overlooked in the Grotto Series. Majishan’s overall release mintage is not high, with a standard gold and silver set plus a 5oz gold coin. Its overall mintage is the lowest among the Grotto Series. But the Maijishan Grotto is little known in real life. We all talk about the enormous Dunhuang and Longmen Grottoes, about how Monk Wang at Dunhuang Grotto sold national treasures cheap to foreigners, and all the plundering that took place in those years. In comparison, Maijishan has few stories. Although the 2oz silver coin witnessed significant price increase in the last few years, sales volume was not that impressive, at most lukewarm.

Finally, let’s talk about the Yungang set. As the last set in the Grotto Series, coincided with the hot coin market in the last couple of years, Yungang has been the darling of the times, an absolute tide rider. The Yungang set included not only the gold/silver set, but also a kilo silver coin, and, last but not least, a kilo gold coin. The mintage fluctuated. The mintage of the half ounce gold coin was boosted to 10,000, but at the same time, the mintage of the 2oz silver coin was reduced from the 30,000 pieces of the Dunhuang set to 20,000 pieces. The second (and also last) kilo silver coin in the Grotto Series was released at the same time, but the mintage was brought down to 3,800. My favorite among the Yungang coins is the kilo silver coin. Although many like the gold/silver set, if I have to choose among the two, I would go with the silver coin. After all, the 2oz silver coins in the Grotto Series are highly favored by everyone. Starting from the 2oz silver coin of the Dunhuang set, Grotto silver coins have been no brainers for collection. I am against the gold/silver set not because of the design or the workmanship, let alone the mintage. The reason was rampant short-term speculation. Only a few months ago, the gold/silver Yungang set moved as high as 27,000 Yuan, and what about it now? Yungang was born into a rising tide, and its theme is wonderful both for investment and for collection. Just because of these, however, too many speculators stepped in, which sowed elements of uncertainty for the set. The biggest problem with Yungang is that it was released not too long ago, and its collectors are still few. Short-term hoarding by speculators is a highly risky factor. After all speculators step in just to make a profit, through flipping. Flipping means continuous selling. They have no loyalty whatsoever to the collection item. The continuous growth is credited to the highly favorable market condition. Otherwise such speculation would end up badly. As for the Yungang kilo silver coin, it has benefited enormously from its low mintage of only 3,800, the lowest among the kilo coins in recent years, and also the lowest in the Grotto Series. The other kilo silver coin from the Longmen set has a mintage of 8,000. So it is not surprising that the Yungang kilo silver coin rose from more than 20,000 Yuan to close to 50,000 Yuan in only two years. It is too bad that this coin is beyond common investors and collectors as it is much too expensive.

Collection index: 9

Investment index: 8

Dunhuang 2oz silver coin

Dunhuang 1/2oz gold coin

 

Longmen kilo silver coin 

Longmen 5oz gold coin

Maijishan 2oz silver coin

Maijishan 1/2oz gold coin

Yungang 2oz silver coin

Yungang kilo silver coin

 Yungang kilo gold coin

Dandan's Comments on Chinese Coins

I have started posting translations of posts from a veteran coin/bank note dealer at the Lugong Market in Shanghai. The topics cover both precious metal coins and circulating coins. The author calls himself Dandan (Eggy), without giving his real identity, stating that his purpose is to educate new collectors/investors of Chinese coins, who have average budgets. His perspectives are well worth noting for those interested in Chinese coin collection and investment. He assigns a “collection index” and a “investment index” to the coin he discusses, which provide useful clues to those acquiring Chinese coins. 

(About Chinese circulating coins: apart from precious metal coins, the Chinese circulating coins are  nice investments, too, or even better investments than the former. As the post below shows, the Ningxia circulating commemorative coin, for example, is selling at around 1,000 yuan. In terms of percentage of growth, it beats most precious metal coins hands down, as it was available from the bank for 1 yuan when it was first issued in 1988. Circulating coins are ideal investments especially for those with a smaller budget.

Another advantage of circulating coin collection/investment is that they move in their own path, following the market law of supply and demand, unlike Chinese precious metal coins held hostage to the bullion prices of gold and silver, which in turn are heavily manipulated. Speculation does happen with circulating coins, especially when they are first issued, but price swings for coins issued before the 21 century are much less violent, leaving the investor with peace of mind. )

http://club.pchome.net/thread_1_15_6648665__.html

Commemorative Coins for the Five Autonomous Regions (Circulating Coins)

Here we are talking about Commemorative Coins for Tibet, Guangxi, Xinjiang, Inner Mongolia and Ningxia. Among these, Ningxia is the most expensive, and Inner Mongolia is the least expensive. Their pricing is directly dependent on their mintage. Ningxia has the lowest mintage, and so it is the most expensive. Inner Mongolia has the highest mintage, and so it is the cheapest. My favorites are Tibet and Xinjiang. The design of the Potala Palace on the Tibet coin is extremely exquisite, truly beautiful. The Harvest Scene on the Xinjiang coin is amazing, too. Moreover, the mintage is low. As the third commemorative circulating coin, it is only RMB 120-130 a piece now, good for both investment and collection. Great stuff, with big future upside potential, as long-term investment. The mintage of Inner Mongolia is too high. It would be fine to buy one for collection, but not for investment. It is the target for speculation and hyping. Ningxia is good for both investment and collection, but as it is priced over RMB1000, only speculators and buyers with a deep pocket can afford it. The problem with Guangxi is that the coins were packaged in soft paper, which absorbs moisture easily, making storage difficult. So I do not recommend it.

Collection Index：Ningxia 10, Tibet 10, Xinjiang 10, Guangxi 8, Inner Mongolia 6
Investment Index：Ningxia 7, Tibet 8, Xinjiang 10, Guangxi 6, Inner Mongolia 5

Ningxia

 Tibet

Xinjiang

Inner Mongolia

Guangxi

Unveil the Mystery of the "Straight-Side Old Tibet" Cuni Coin

In 1985, China Mint Company issued a set of coins (one silver, the other copper-nickel) to commemorate the 20th anniversary of the founding of the Tibet Autonomous Region. These coins are known as "Old Tibet" among Chinese collectors, to distinguish them from coins for later celebrations. The mintage of the set is believed to be 3,000. In addition to this proof set, business strike cuni coins were also released, in much large quantities.

Five to six years ago, another "Old Tibet" cuni coin with the same design emerged on the market. It features a straight side, like early proof cuni coins from Chinese mints, but it does not have their mirror field. Nevertheless its strike quality is outstanding: no bag marks, easily graded to 68 or 69, which is rare among business strike cuni coins. The package is a plastic capsule within a soft pouch, much like precious metal coins from China Mint. Not knowing how to name it correctly, Chinese circulating coin collectors call it "Straight-Side Old Tibet".

Comparison of the sides:

People were mystified by the origin and mintage of the "Straight-Side Old Tibet", as nobody knew for sure. Various proposals were bought up: trial strikes for the proof version, first strikes of the business strike BU version, and so on. Here are some discussions:

http://blog.sina.com.cn/s/blog_5a66689f0100s23b.html

www.coin001.com/read.php?tid=1711&page=1

http://blog.sina.com.cn/s/blog_5a66689f0100ssly.html

In May, 2013, a listing on eBay caught my attention when I was doing my daily browsing. It had a lengthy description:

KM#110. In 1985, the People's Republic of China issued a quantity of 1 Yuan coins commemorating the 20th anniversary of the founding of the Tibet Autonomous Region. While this was a commemorative coin, it was actually issued for circulation. About that time, a numismatic firm with offices in Kowloon, Hong Kong, and Tarzana, CA, USA, contracted with the China Mint for a two piece proof set of this coinage. The set was to be comprised of a 10 Yuan in proof silver and a 1 Yuan in proof copper-nickel. The two pieces in a deluxe lacquer case. The entire issue of the two piece proof sets were for that firm. When the sets arrived in Tarzana it was discovered that while the 10 Yuan was in beautiful proof silver, the matching 1 Yuan was a special circulation strike, something like a matte proof, and was only made in the quantity of proof sets in special uncirculated quality strike. However, this is not what the contract called for and the China mint then struck full proof 1 Yuans to replace coins in the proof set. All the sets were sold and in recent years, this two piece set has traded for as much as $500 and more. This left the special 1 Yuan coins, which were more in the nature of the specimen strike, and this is what we offer here in the original capsule. This very minuscule issue of this special 1 Yuan coin must be considered somewhat rare and very special.

After some research on the "Old Tibet" cuni coins, I contacted the seller and sent pictures of the sides of the business strike and "Straight-Side Old Tibet" to him, as the listing did not show the side of the coin. He confirmed it was the straight side type. To make sure, I bought the coin. When I examined it closely, there was no doubt it was the "Straight-Side Old Tibet", whose origin was thus unveiled!

I contacted the seller, who turned out to be none other than Mr. Richard Nelson of the Money Company of the World Inc., the distributor of the highly popular Xinjiang, Tibet and Zhantianyou coins. He wrote several long emails to discuss these coins. Here is the first one:

Hi, I hope you enjoy the coin when you receive it. There should be no speculation in China as to the history of the coin. It is quite simple. I am the President and the CEO of the Money Company of the World Inc. We operate under several divisions which are primarily the Money Company, Econo Coin Company, American National Mint, Silver State Token and at one time the Money Company Traders of Hong Kong. The last entity is not in business as we sold our real estate in Hong Kong and closed the Company prior to the reversion to China. At the same time we sold the Hong Kong International Coin Expo which we had founded and owned. During the course of the years of the HKICE we developed a relationship with the Chine Mint. So for several years the China Mint had a table at our coin show and for each of these years they issued a special commemorative Panda made for the show. During this time I would visit the mint once or twice a year in Beijing. After negotiations at that time, we obtained a contract with the Mint to produce exclusively for us 3 different issues. The first of these issues was a proof set version of the Tibet coin that was issued for circulation. We had no connection with the circulating coin, only the proof set version that was made for us. Next we obtained a contract for the same kind of situation. This was for the Sinkiang region coin. We had no connection with the circulating coin, only the proof set which was made strictly for us. There was also a very large silver railroad coin which was also made strictly for us. I think this explains the situation as clearly as possible. Unfortunately, we sold virtually all of these coins at that time. A number of years later when the price of these coins went so high, we were very sad that we had sold almost all of the coins. We had in our archives only a few of all the coins. Normally, I would not make such along explanation of the origin of these coins but as your interest seemed so sincere, I thought I would tell you the whole story.

I posted my findings on Chinese coin collection sites, and my posts caught the attention of the circulating guru Mr. Sun Keqin, who re-posted my findings in his blog. To answer the challenges raised by some doubtful readers, I forwarded all my email exchanges with Mr. Nelson to him with Mr. Nelson's approval. Mr. Sun concluded that the origin and the mintage of the coin were now clear.

There still remained a question why these "Straight-Side Old Tibet" cuni coins did not appear on the market much sooner. Mr. Nelson's reply was that they had been put away in the vault, as China Mint did not ask them back. A few years ago, he unloaded them all to one of his former employees, Mr. Ma Tak Wo in Hong Kong, who has been running the Ma Tak Wo Numismatic Co Ltd. This also accounted for the fact that "Straight-Side Old Tibet" on the China market was all imported from Hong Kong. But when I contacted Mr. Ma for his inventory, which Mr. Sun intended to buy up, he said it was all gone.

Before my discovery was made, the "Straight-Side Old Tibet" was selling around RMB1,500 ($250) on the Chinese retail market. The price has since risen to RMB2,000. But its upside is still enormous. With a mintage of 3,000, it should be valued on par with the proof cuni Old Tibet, which is selling around RMB6,000 ($1,000) and rising.

Observation: in addition to the precious metal coins from China, which were intended for overseas markets from day one, many early cuni coins (such as proof cuni coins) and medals of various materials also ended up outside China, like the "Straight-Edge Old Tibet" and proof "Great Wall" sets. US and European collectors still have cherries to pick if they can spot these rarities.

Disclosure: I myself own four "Straight-Side Old Tibet" cuni specimens.