Dandan's Comments on Chinese Coins (3)

Commemorative Coin for the 40th Anniversary of the Founding of the People’s Bank of China

Over the weekend, someone asked me in his post about the value of the “Founding of the Bank” commemorative coin. Today I will discuss it.

The king of all the circulating commemorative coins, for the 40th Anniversary of the Founding of the People’s Bank of China, is often known as “Founding of the Bank” or “40th Anniversary of the Founding of the Bank.” Here I would like to make it clear that we are talking about the 40th Anniversary of the People’s Bank, not the Construction Bank. (Translator’s note: “founding of the bank” and “Construction Bank” are the same in Chinese.) Only it is commonly known as “Founding of the Bank”. The Construction Bank is not good enough to have a commemorative coin issued for itself, or at least at the moment, it is not qualified for issuing a circulating commemorative coin. I was asked about the potential and value of this coin. How come a coin worth 1 Yuan could rise as high 4,000 Yuan? Let me begin with some basic information of this coin.

The coin "40th Anniversary of the Founding of the People’s Bank” was released in 1988, with a mintage of 2.04 million, which is relatively low among commemorative coins, but not the lowest. It is the most expensive, though. When this commemorative coin was released, few people were collecting coins. It was released like common circulating coins. Now commemorative coins can be exchanged at the bank, but at that time, this coin was “sold” within the bank. Why were quotation marks used on “sold”? There was a simple reason. At that time, this coin was given out as part of the salary. For example your salary was 32 Yuan, with 2 Yuan as change. And you were given a one Yuan coin, which was a commemorative coin. It even happened that when this commemorative coin was used in shopping, it was rejected, as it was mistaken for a counterfeit. If someone bought such a coin with 2 Yuan, he would surely be picked on by his family members. Many people gave it away as gifts, or have kept it around because it couldn’t even buy a steamed bun, as it was not accepted in shops.

Now when the high price of the “Founding of the Bank” is mentioned, the first reaction would be attributing it to the coin’s low mintage. Some pretenders would claim that “Founding of the Bank” had the lowest mintage among commemorative coins. But Teacher Dandan hereby tells you that they are wrong. Ningxia had the lowest mintage, but the current price of Ningxia is less than one third of the price of “Founding of the Bank”. Ningxia’s mintage was 1.56 million, but the price is much lower. Many cannot figure out why. The answer is actually very simple. The distribution channels led to the current situation. The Ningxia commemorative coin was released in the local banks in the Ningxia Autonomous Region. Banks in other areas were given some, but the quantity was small. Most Ningxia commemorative coins were distributed to banks in the Ningxia Autonomous Region. As supervision on these local banks is weaker, coins have been circulating back to the market from the local banks over the years. The surviving mintage is high. On the other hand, the “Founding of the Bank” coin was released exclusively by the People’s Bank. Most of the stock of this commemorative coin is kept by the Central Bank, like the Olympics Commemorative Banknotes. In simple and easy-to-understand terms, these two coins are not in the same rank. The one with a lower mintage is owned by a maketmaker like a rich guy in a small town. The other with a larger mintage is owned by a maketmaker like the richest guy in the country, who is also the issuer of the coin. The power of the two maketmakers is beyond comparison. The result is that Ningxia had a lower issuing mintage, and yet the surviving mintage is higher than “Founding of the Bank”. This is the fundamental reason why the latter finally became the king of circulating commemorative coins.

“Founding of the Bank” has been sailing smoothly all these years, and has gone entirely beyond speculation, into the realm of collection. With the great price upswing of commemorative coins last year, the price of lunars shot up several folds. Yet the price of “Founding of the Bank” only doubled. It has faded out of the radar screen of major speculators, and the quantity is well-known, too low for speculation. I personally believe that the price of “Founding of the Bank” will keep rising steadily in the future, driven by collection needs accompanied by investment. At the end of every year, when the complete set of commemorative coins would be consumed as gifts, “Founding of the Bank” is a must-have coin. Unlike paper banknotes which distinguish between major and minor sets of the fourth and fifth issuance, there is only one complete commemorative coin set. Such a set won’t be complete without “Founding of the Bank”. And a commemorative coin collector should have at least one “Founding of the Bank” coin. So “Founding of the Bank” still has the potential upside for its price. But I don’t believe that it is possible to drive the price up 6 or 7 times in one year, like some types subject to speculation.

Now the condition of “Founding of the Bank”. This coin has more or less minor bag marks when purchased new. The major reason is that the coins were packed in rolls when they left the mint. Rubbing between coins often leads to some light wear. This soft damage is not a big deal for the coin, but attention should be paid to dents from hard knocks. Cleaned coins also should be watched out for. It is easy to tell them apart. The surface of cleaned coins appears white and cleaner. In other words, it is much too clean. The complete set of commemorative coins at Lugong may have half of the coins cleaned. Those subject to cleaning include “Founding of the Bank”, Ningxia, the 6^th Sports Meet, and the Animal series. Sometimes the 35^th Anniversary of the PRC and Tibet are cleaned, too. Watch out for them.

Finally I will talk about the “Founding of the Bank” with holes. Some dealers on the market specifically buy “Founding of the Bank” with holes in it. You may ask why. Well, they doctor the coin. Some skilled guys can pick one from the holed “Founding of the Bank” coins and melt it, and then fill up the holes with the melted metal. After some light polishing, a holed “Founding of the Bank” is reborn. You may ask why melt “Founding of the Bank”. Why not some other coin? Of course not! Commemorative coins are made from alloys. The makeup of the alloys is never made public. Filling the hole with other materials will result in differences in weight and color, sometimes pretty noticeable differences. So don’t throw away “Founding of the Bank” with a hole in it. It is valuable, too.

Collection index: 10 (King of the commemorative coins, with no challenger, a must-have for commemorative coin collection)

Investment Index: 8

"Orange Peel" on Chinese Brass Coins and Medals in the Late 70's and Early 80's

It has been observed that on early modern Chinese brass coins and medals, the field is not totally smooth. Instead, it has an "orange peel" look:

Even gilt brass medals have this orange peel texture, too:

When this observation was brought up with the moderator of the Chinese brass medal QQ group, Li Haoyu, he stated that the bumpy surface (orange peel) resulted from the annealing process, as brass blanks were subject to extremely high temperatures. He had learned it from insiders of Shanghai Mint. This revelation is similar to the discussions in this thread: http://forums.collectors.com/messageview.cfm?catid=26&threadid=899301.

Interestingly, the "orange peel" texture can be used as a characteristic to tell brass coins and medals from this period of time from later fakes.

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