Monday, January 30, 2012

Welcome to SilverLunar.com!

Why “Silver” Lunar? Well for starters the "Gold" Lunar .com domain was already registered. Secondly I do believe there is a greater opportunity in Silver Lunar coins than Gold, the price of Silver coins simply opens their collect-ability to a greater number of buyers, ensuring a more liquid market and potential for higher premiums. That said there are Gold Lunar coins that have performed well in the past and will continue to do so in the future, so don't rule them out, I will be covering both on the blog.

Those of you who visit my primary blog at BullionBaron.com would be aware that I have an interest in Gold and Silver bullion as well as bullion coins with numismatic potential. I blogged several times last year about Lunar coins, predominantly focusing on the Perth Mint Lunar Dragon. As early as June 2011 (3 months before release of the series and well before seeing the final design) I identified that the series was likely to be very popular and a good bullion coin to get a hold of for those able to pre-order at low prices ($40-45):

Perth Mint 2012 Year of the Dragon Silver Coin

Little did I know the level of interest that these coins would attract... so intense was the demand for these coins after first release that a micro bubble was quick to form with 1oz bullion coins selling for up to $150 and higher (after selling out at the Perth Mint for $48) within days of release prior to collapsing to their current market rate of around $55-65. The proof and other individual coins and sets released at the same time or shortly after also experienced similar booms then contractions.

What was the cause of the huge rush for this release (for example the Lunar Rabbit took 5 months to sell out of the 1oz Silver bullion coin vs the Lunar Dragons few days)? Several factors would have compounded the interest, but I would suggest the main contributors were:

- A super spike in Silver early in 2011 which bought in a large number of new retail Silver investors to the market.

- Carry over from the interest in the 2000 Lunar Dragon coin which is arguably the most popular in the series with the Series 1 coins carrying the highest premium today even though they don't always have the lower mintage.

- Demand was built over time via the introduction of pre-orders for the coin through some dealers, which was not a common practice for earlier releases.

- Hype around the coins built up by those writing about them (including blogs, discussion on forums and articles in magazines, e.g. I wrote about the Dragon release in an issue of AHA Investor).

While this micro bubble has perhaps damaged the reputation of the Silver Lunar dragon (short term), I do believe that those who purchased at release price or pre-ordered will be well rewarded over the longer term as interest returns to the Lunar series for the next major release later this year, the 2013 Year of the Snake Silver and Gold Coins.

While I think it’s important to have a core position in low premium bullion to take advantage of the current bull market (to protect ones wealth from the destructive forces of central banking), I think that the increased interest in metals will also reignite a lost passion for other hard assets including numismatic coins (especially those of the Silver and Gold variety).

The recent boom in low mintage Chinese Panda coins is one example of how well some modern numismatic coins can perform; the Panda Collector’s Panda Pricepedia 2000 Index shows that 20 low mintage Pandas (est. population under 2000) have managed to outperform both Gold and Silver over the past 5 years. 


I suspect there will be other coins that can perform similarly over the next 5 years, so my goal will be to identify those in the Lunar range that will and are outperforming spot metal prices…

Welcome aboard, enjoy your stay. Feel free to challenge my opinions/suggestions (constructively!), share your experiences in the Lunar Coin market and if you feel the information on this site will benefit others then please do pass on the link.

Cheers

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