Friday, August 9, 2013

Lunar Horse Coins Are Bolting Out Of The Stable


The below article was written for American Hard Assets magazine & will be featured in an upcoming issue (keep an eye out). You can also catch them on twitter: @HardAssetsMag

In the premier issue of American Hard Assets I wrote about the lunar snake coins that were released to celebrate the Chinese Lunar Calendar (2013 being Year of the Snake). While we are still around 6 months away from the start of the Chinese New Year (marking the change to Year of the Horse), which begins on January 31st 2014, that hasn’t stopped dealers and mints from getting their coins designed, minted and released to the public well in advance.

At the time of writing this article (early August) there are already around half a dozen designs which have been released in the public domain, one of which (the Tokelau 2014 Lunar Horse 1oz Silver Coin) is already in the hands of collectors with several ‘unboxing’ videos making their way to YouTube in July. This coin is the second in the Tokelau Lunar Coin Series. The maximum mintage is 50,000. The coin is currently listed on Modern Coin Mart’s website (they have exclusive distribution rights in the US) at a rate of $27.25 per coin (in bulk 200 coin purchase), which is 37% above spot. They are also being sold in graded packaging (from NGC and PCGS) for a higher premium.

Several other designs have been publicly revealed, most so far appear to have been commissioned specifically by dealers to capitalise on expected popularity for lunar horse coins. They include a 5 ounce silver proof coin released by Downies in Australia (legal tender of Niue, struck by PAMP) which has selective gold plating and a mintage of only 500 coins; a unique feature includes the mintage number being stamped onto the reeded edge of the coin. Another several coins available for preorder with legal tender status in Niue or Palau appear to have been commissioned by a German dealer and vary in size 1/2oz to 1oz with various finishes (including partially gold gilded and selective use of colour). The continuation of these ‘first issue’ coins into an ongoing series will likely depend on the popularity of these releases.

I have not yet seen any gold lunar coins available for preorder or sale, the lower price point of silver coins makes them a much more popular option for investors and collectors (so the number of gold coin offerings is usually much lower). Even the most popular of gold lunar coins do not appreciate in value anywhere near that of their silver counterparts, so for investment purposes you are best sticking with purchasing silver lunar coins unless you expect gold to significantly outperform silver in the foreseeable future.

We can also expect to see the regular offerings of lunar series coins which will be released over the coming months and include those of Singapore Mint (Macau Series, their 5oz silver coin with mintage of 500 is usually quick to sell out), PAMP (lunar themed bars, due for release in late August), Royal Canadian Mint, China Mint and New Zealand Mint (who takes particular care in providing unique and high quality presentation packaging). The Perth Mint will also have their regular line-up with a mix of bullion coins and numismatic releases, including a special coloured set of square coins destined for the Chinese market.

Half a decade ago there was only a handful of mints producing lunar coins designs, but the increasing interest in physical precious metals as a ‘safe haven’ asset (not always price safety, but their lack of counterparty risk) has bought a larger pool of buyers to the coin market . The perfect example to illustrate these changing dynamics is to look at the demand for Perth Mint’s Lunar Series II Coins (specifically the 1oz bullion coins with a mintage limit of 300,000), which started in 2008 and runs to 2019. The first couple of coins in Series II weren’t particularly strong sellers (and didn’t sell out in the year of issue, they were later minted up to their limits), but after interest increased we saw the 2011 1oz bullion rabbit sell out in around 5 months, the 2012 dragon took only days and the 2013 snake has also seen strong sales, selling out in 2 months. I expect the time it takes for the horse to sell out will be somewhere between that of the dragon and snake.

The Perth Mint’s Lunar Series Coins are probably the most well recognised globally and their success has in a large part been the driver behind many other mints jumping onto the lunar coin bandwagon. To give an example of just how sought after the coins are, the Perth Mint received expressions of interest from dealers and wholesalers for 1.2 million of the 1oz lunar snake bullion coin (4x maximum mintage). Perth Mint coins have been especially popular in European countries and examples of premiums they can fetch are observable on sites like Silber-Corner or eBay Germany.

The Perth Mint Australia

The designs for the Perth Mint lunar coins don’t come out of embargo until August 22nd (they will be published on on that date), but I have seen the designs and think collectors and investors will be well satisfied. Of course judging the aesthetics of any coin design is subjective, but in my opinion the aggressive stance of the horse (presumably representing a wild brumby), mountains and Chinese styled clouds make for the best design in Series II so far. The design for the silver coin is also graceful with two horses standing near a river (which flows down the right hand side of the coin), one of them drinking from it. I think they will be well received by lunar coin fans.

Something that should be clear in a buyers mind before making a purchase of any lunar coins is whether you are buying the coin/s primarily for the purpose of investment (to make a profit over time) or just to add to your collection (for personal enjoyment of the coin itself).

There is a fine line when it comes some of the lunar products as some of them start as a bullion product (when sold directly from the mint), but once sold out can quickly achieve a numismatic premium. In my opinion these are the coins best targeted by the lunar coin investor as they provide a mix of lower premium to purchase (when bought on release), but with the potential to increase in value over and above that of other bullion coin products (such as an American Silver Eagles or Canadian Maples, which are produced in far higher quantities, without limit). Even where mints produce bullion coins with a limit they are often far higher than that of the 1oz bullion lunar coins from Perth Mint (e.g. Chinese Panda at 8 million for 2013 or Royal Canadian Mint’s Wildlife Series which were capped at 1 million per coin).

Many of the ‘modern numismatic’ lunar coin releases will set you back a very high premium over the content of the metal in the coin, for example most 1oz releases will set you back circa $100 which is currently a 400% premium to spot price, so the value of the coin will move in line with demand for that specific coin (rather than track the price of silver). Bullion lunar coins are sold on release with much lower premiums (usually around $5-10 over spot, 25-50% based on current spot price) and will more closely track the price of Silver, but can also achieve high premiums over time depending on the demand for the coin (for example the 2010 1oz silver bullion tiger from Perth Mint was widely available for $10 over spot per coin when released, but now commands a premium of $40 over spot). Some modern numismatic coins will hold their value or even increase over time, but the majority are unlikely to and in this writers opinion investors are best sticking with popular bullion lunar coins.

Of the lunar coins we can expect released over the next 12 months, it’s my opinion that the 1oz silver bullion lunar coin from Perth Mint is the best coin to purchase for those seeking a financial return (for investment). They have a low maximum mintage, an aesthetically pleasing design, a quality finish, are individually capsuled for protection, come with legal tender status from world renowned Perth Mint, are priced as bullion coins on release and are sought after by coin investors and collectors all over the world. If you expect the price of silver to continue appreciating over the long term, then they are a great option for exposure to the spot price, but come with the potential for a numismatic premium once sold out at the Perth Mint.

Whether you are buying lunar coins for investment or to add to your coin collection, they are well worth focusing on given the Chinese origins of their subject matter, a region which is likely to become more influential over time and with it their cultural history which is reflected in the theme of these coins.


You can catch some of my previous 2014 Lunar Horse Coin coverage below:


very good piece Baron a pleasure to read thx

the macau horse will be beautifull like his predecesor,s
iam curious about the perth and the macau
what i,ve seen so far doesnt got me going (exept the stockhorse)
maybe the downies 5 oz horse if its available in europe
Regards Coins07

The embargo comes off the Perth Mint designs August 22nd and I will be publishing them here at 12.01am AEST so keep an eye out. I'm also looking forward to seeing the Macau design!

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