The article is broken up into separate posts - The coin investments list is at the end of the article
As much as we talk about coins here at LBC, it might be easy to forget that this is a site about business, or more generally, about making money. We're pretty good at staying ahead of the market too, so for a while we'll be writing about real estate, then precious metals, then oil, then stocks, and back to precious metals again, then into coins, and then into real estate again. We're not "coin people", we're "making money people".
tamo42 has written an article recently in his blog
called "Contrarian Investing: The Real Estate Edition
". In my comments beneath his posting, I had a hard time coming up with a conclusive reason to disagree with him, even though I traditionally have been against real estate investing (long before it finally collapsed). The particular areas of real estate that he discussed do look to me like pretty good value investments right now, so I had to reluctantly agree with him, despite my personal unwillingness to enter that market (see my comments below tamo42's article
I bring it up because the strategy he is using to find medium to low risk profits in the weak real estate market are the same strategies I'm using right now in the modern Chinese coin market. Fortunately for me in writing this article, tamo42 has chosen to carefully highlight the notable highs and lows from the previous list (he did that before he had seen me write this). Overall, it appears that right now the winning investments are in the value investments, whether they're in the real estate market, the coin market, or wherever.
I'm often fond of saying that you make money when you buy, not when you sell. If you carefully BUY the right coins, selling them profitably is easy. At this point, you may want to skip down and read tamo42's commentary before you come back and finish mine, so you'll have a better understanding of what I'm going to talk about next.What I'm going to talk about next
There was one very interesting question posted over at the Chinese Coin Forum
about a $22,000 1990 2 oz gold dragon & phoenix that Nick Brown at Majestic Rarities has been leaving unsold for a while. This is a coin that was the hottest of the hot. During that time, I frequently called it the single most popular modern Chinese coin of them all. The planned mintage was 2500, and the actual mintage is unknown, but I will guess at around half the planned mintage, or 1250 coins. Coins routinely valued over $15,000 typically have mintages of around 500 or less. But this coin rose to such meteoric popularity that it easily topped $20,000 with a comparatively high mintage.
The 1990 2 oz dragon & phoenix coin is prone to being popular, and everyone knows it, so the people who own them rarely reduce prices when sector rotation drops them out of favor. But, if prices did drop, you can bet there would be interested buyers for the coin, even if the drop was small compared to its price - say, a drop of only $1000 to $2000 (5% to 10% reduction). I was offered one of them for $11,000 about a year ago, and I'm still kicking myself for not taking it - but that's another subject. My point is that there are good coins that are selling for cheap prices - or if not cheap and also very rare/popular, then at least they're available at SOME price, and you should do some buying.
In the spirit of tamo42's urgings to be contrarian, I agree. For the last 6 months or so I have been putting most of my investment money into silver, particularly non-lunar dragons. The time to buy is when they're cheap and/or available. The fractional gold pandas have been an ongoing winner during the same time frame, but soon they will relax as the sectors rotate once again. I have bought a few of the nicest fractional gold pandas just to take advantage of the quick run up, but I think the most money will be made for those who accumulate the rare silver coins that are being overlooked, while at the same time are "prone to being popular".
That's why the little 2 gram dragon & phoenix is still one of my top picks! One just sold for a hair over $200, which is an excellent price. I think they could go as low as $140 to $160, but I do not foresee them dropping much lower than that under any circumstances, because then people could afford to buy them only because they like them, without even giving it any special status as a good investment.LBC pump-and-dump scam?
There have been questions about whether I'm a pump-and-dump
writer. If I were, why would I be ever-more strongly recommending a coin that has been steadily falling in price, the lower it goes? Do I own those coins? Of course I do! I would be a fool not to :) But, whether I write about a particular coin or not, the price is still going to go up, that's why I bought the coins in the first place.
On top of that, there's tamo42, KonaJim, PandaCollector, Batman, and many others who also write up their own thoughts about coins, which often disagree with each other, and me (usually they all get it right, and the disagreement is only about who has the best strategy, or who's making the most money, haha). All of those people have posted at both LBC and CCF at one time or another. These are public forums, and nobody has any particularly strong sway over the market unless they're actually 100% correct. Remember, market manipulation does not work in the long run
, even though I posted an article about how market cornering can be done successfully
if the market is already headed in that direction on its own anyway. In other words, unnatural market pricing will not be sustainable. That's why long term investing is so superior to short term investing - manipulation DOES happen, but if you're a long term investor, the volatility that the manipulation causes ends up just disappearing into the noise as the trend takes the market exactly where it was going to from the beginning.
I'm reminded of an excellent post by groovemachine where he specifically says "Don't trust badon
". There was also a poster who called himself "useurbrain
" who posted in the earliest days of this list about how he thought I might be misleading people. This is list #104, and none of the skeptical posters were censored in any way - in fact, I was eager to have a naysayer around to keep me on my toes. But, we have not seen useurbrain since January 2011, about 80 lists ago and I think, after a while, useurbrain saw that the market was doing what I said it would do, and indeed, it has been profitable for everyone involved. Even the prominent and well-respected KonaJim was once very skeptical and cautious, but he has both changed his clothes, and his mind
. Still, it would be nice to have some fresh criticism to come out publicly so it can be addressed. That would reinforce confidence that, really, this market is still the place to be.
This market has been profitable for everyone, even the newcomers who wouldn't have enough knowledge to find an edge in another market that wasn't a bull market like this one. In other words, price gains are not caused by any one person posting his random thoughts on a few popular forums. Those prices would have gone up on their own without the articles, perhaps a little later but up nonetheless, because this is a bull market.
We at LBC just happen to be good at picking the bulls out of the herd.
Oh, and we like to share the info too. Why? We do this as a hobby - but it's actually more of a hobby for us, it's an investment strategy. The benefits for us are a little vague. One thing we have all noticed is that writing up our investment decisions in article form, where it's open to both the praise and the scorn, puts some healthy pressure on us to carefully consider not only what we're saying, but also what we're investing in.
Writing for LBC for fun as a hobby has literally made us better investors.
Enough people have noticed this effect that they too have begun writing up their thoughts. We see regular postings from KonaJim, Batman, Exchange, and many, many others. Each one has ideas they want to flesh out through dialog on the forums. But, it always seems to be that the ones that put the most effort into writing up good advice for others, are also the ones that take the best advice for themselves.
It really is better to give, than to receive - so much so that it's difficult to see a distinction! Are you looking forward to Christmas as much as I am? :)Coin and bullion diversified investing strategy
Silver is being neglected in favor of gold, especially in pandas. That trend will flip back into silver when precious metals start making big gains again, because silver will draw the most attention from it's normal tendency to have much larger percentage gains than gold.
2012 remains unwritten, so it is difficult for me to foresee what its character will be like. Despite being an important year for us in our modern Chinese coin investment strategies, we may not see the biggest effects produced by the events of 2012 until later years (2013 to 2015).
There is price weakness now, so you must accumulate golden age rare modern Chinese coins from 1979 to 2009 (approximately). If there is price weakness or even just slow gains in 2012, you must continue to accumulate aggressively.
Consider diversifying your investments into cheap, generic bullion silver to prepare for the possibility that bullion gains overshadow coin gains. You can easily trade your silver, or convert to cash to buy coins if that possibility does not occur, so preparation with some bullion purchases carries only the risk of lost opportunities in buying rare coins. If you can't afford rare coins yet, the risk is even smaller for you if you put some of your money in cheap silver bullion instead of coins. For wealthy people, you should give this some thought before you make your decision.
I have still so far chosen not to buy bullion for myself, even though I fall into the "wealthy people" category. I chose this because my lifestyle is extremely frugal, and will not gain much benefit in comparison to the risks if I diversify into bullion silver, since my income exceeds my expenses, and probably will continue to even if my income drops substantially (due to inflation, or whatever). My income is best applied toward obtaining rare coins, as many as possible, and holding them until I need to be trading or selling to upgrade into better coins.
Your own circumstances are unique, and probably very different from mine. I hope this info helps you decide what category you fit in, and what strategy will work best for you in maximizing your profits over your preferred timescale, while minimizing your risks.My choices
* 1990 2 g silver 5 jiao dragon & phoenix
* 1998 dragon culture
* Coins in a 70 grade.
* Lunars, starting with dragons, and expanding to the whole sets. 2012 year of the dragon will be lunar-mania.
* Dragon and phoenix (marriage theme symbolism).
* Peacocks (marriage theme symbolism).
* Pandas, especially silver, the rarer the better.
* Popular low-mintage key dates: 1990, 1995, 1998.
* 2012 anniversary dates: 1982 (panda), 1988 & 2000 (lunar).
* Other anniversary dates: 1991, 1992, 2007, 2009.
* "Golden age" coins 1979 to 2009 (30 amazing years!).
* Dates (etc) with the Chinese lucky number 8.
* Underpriced coins are hot buys for contrarian investors right now.
* Pay what you have to pay for good coins that stubbornly do not drop in price (those are the kinds of coins you want to own if you have to sell in a weak market - in a strong market, they will provide good gains).
* Focus your purchases on rarity together with popularity.
* Stick with the best coins available, in the most popular types (prefer 1 oz over 5 oz, for example).
* Be sure to continually upgrade your coins so you can keep up with the market as better coins accelerate ahead of lesser coins.
Remember, there are several kinds of rarity, in order of importance:
* Mintage rarity
* Grade rarity
* Relative rarity within a series ("key" coins)
* Variety rarity + popularity potential (you have to have popularity too)