The article is broken up into separate posts - The coin investments list is at the end of the articleIn the CCF posting "
NEWS:Gold investment demand in China up", at first glance it appears to be bullish for us coin investors. But, davidt3251 conscientiously pointed out that cash flows into precious metals (and coins) are a double-edged sword that both hurt and help our investments. Money flowing into unproductive assets like gold and coins essentially drains an economy of its circulating cash. With no cash, people stop earning money for their labor. With no money, the labor stops. When the labor stops, people get hungry. When people get hungry... I think you can figure out the rest yourself.
I frequently say in my articles that in hard times, everybody hurts. The goal is not to avoid financial pain, and it isn't even to minimize the pain either. It's all about positioning. There are
200 laps in the Indy 500, and being in the lead for 199 laps is not only insufficient, it is totally counterproductive if you run out of fuel before the end of the 200th lap. The lead car always burns more fuel, so being in any position except the lead will help you to reduce your fuel consumption so you can burn the last few drops in a sprint for the finish line at the end of the race.
This principle has been learned by birds, which is why they fly long distances in the formations that they do. And, the principle has also been learned in the game of Go. Trying to dominate, and trying to avoid pain, are both destructive.
I think China's government is aware of this, and the Chinese people are tough and experienced in dealing with hardships. China's plan for dealing with the looming worldwide American-led financial hardship has a few creative features:
1. Sell modern Chinese coins in local banks to remove circulating currency, to keep the printing presses running to ensure the cash flows to keep people working, while also limiting inflation. Creating cash to keep the economy working, while also limiting inflation is the most difficult financial balancing act that can be done, and China is doing it!
2. If there is a global domino-efffect currency collapse, China will get hit the same as every other country. But, China has successfully persuaded its population to buy up the world's hard assets like gold, silver, and coins (among many others). That provides stability and less harsh consequences compared to the rest of the world, all without much direct expense or loss of wealth for the government and people of China. Chinese government and society will be hurting, but only because it's still alive to feel the pain. Western, African, and Middle Eastern societies are struggling to quell revolts, maintain order, and keep productivity from grinding to a halt.
3. When things improve, the improvement will be disproportionately concentrated for those who wisely distanced themselves from American-led self-destruction. It will be a dark age in the West, and an enlightened age in the East. The phrase "fine China" will have meaning once again, as all the manufacturing capacity and quality goods are Chinese.
Where do you think is the best place to invest your money? In the end, everything you need to know is in this graphic:
Source:
WikiMedia Commons.
CC grades and "details" gradesCoins with an NGC "details" grade are damaged in their own unique way, that makes them technically ungradable. So, they get recorded in the Coin Compendium with a 0 grade. Details grades aren't really grades since 2 coins with the same details grade can be completely different. That's why NGC doesn't assign numerical grades - it discourages direct comparison. Since the CC is a mindless machine, it can't tell which coins are "pretty" and which coins are "ugly", so even though the details grades might be useful for a human, I haven't been able to make them usable in the CC. Maybe in the future it might be possible to convert details grades into the lowest end of the numerical grading scale, but I don't think so because even undamaged coin grades have a fundamental problem.
The 70 point numerical grading scale is flawed because it has holy reverence for Sheldon's idea of what "uncirculated" meant. No matter how pristine and gorgeous a coin is, if it has discernible wear, it can never have a grade higher than 59. But, if a scraped up tire weight has no discernable wear, it can never have a grade lower than 60.
Therefore, I feel that grades between 55 and 65 cannot be trusted to indicate the true state of preservation of a coin. The 70 point scale would have been fine if it didn't arbitrarily dictate that wear versus no-wear should have a specific place on the grading scale, regardless of actual state of preservation.
I'm actually hoping that a third competitor to NGC and PCGS decides to dump the 70 point scale in favor of a more sophisticated scale that evaluates both sides and the edge of coin independently instead of trying to stuff the entire coin into a single grade. With a more capable scale, we could assign meaningful grades to coins that are currently impossible to grade using the primitive 70 point scale. For example, there are lots of "details" graded coins that look much better than other coins in worse condition that are considered worthy of a numerical grade. A proper grading scale should recognize superior preservation, as equally as possible in all cases.
In fact, enabling multiple opinions on the grade of a coin was one of my goals with the Coin Compendium. Since it has an image annotation feature, anybody can grade a coin how they see fit. Maybe this mythical 3rd competitor to PCGS and NGC will be ordinary people like you and me, who are now able to grade the coin while it's still in a PCGS or NGC holder, just by referring to the CC specimen number. That could get interesting.
Imagine a future for coin collecting where you can see a coin you want to buy, then look it up in the CC to review every forum discussion, every sale, and people's detailed notes about every speck of the surface of the coin. No more squinting through a loupe! If the coin has hairline scratches or white spots of death, you wouldn't even need to bother trying to find them. Just look at the CC's image annotations like they're a kind of coin map that charts all the landmarks on the coin.
Since coin collecting is a generational endeavor, where all future collectors necessarily must inherit coins owned by previous collectors, it isn't so far-fetched as it might at first seem. The CC already has over 10,000 specimens and and it's only been operational for about 3 months. Imagine how many coins it will have in 60 years...Assuming the CC growth rate remains exactly where it is now, it would have 2.4 million coins in that amount of time.
Of course, it's quite likely that growth will accelerate as time goes by. Maybe within 10 years, when a collector tries to enter a coin, he'll find that most of the time the coin has already been entered. From there, he'll have to entertain himself by adding more information like photos and historical data connected to the coin. The Coin Compendium is still in its infancy. I cannot foresee all the diverse ways it will be used in the future, but its profound utility is obvious.
My choices* Although I like gold modern Chinese coins, and I have been buying them, I buy them for wealth preservation knowing that their percentage gains are probably not going to be as good as for silver coins. Silver coin prices have been depressed more than gold recently, and likewise, they will probably rise more than gold when the time comes.
* Pay attention to the new things people are adding to the CCT405:
Modern Chinese coins 1979 to today area of the Coin Compendium. You might want to regularly check for new variety types being entered in the CC's
type category*
Coins in a 70 grade, any of them from the golden age 1979 to 2003.
*
1988 5 oz silver Hong Kong expo panda dragon*
Popular large size coins, especially lunars, expos, and gods, all in silver. Also possibly short series coins in gold, preferably no bigger than 5 oz unless exceptional (dragon & phoenix, peacock, etc) and you can tolerate increased risk/reward. Avoid common large size gold pandas.
*
World and Chinese historical figures 1984 to 1994.
* Copper Taoist folk gods?
*
1991 15 g silver lunar goat and
1993 2/3 oz silver scallop plum flower rooster.
*
Lunars. My personal favorites are the silver and gold plum flower lunars, the 15 g silver lunars, and the 1 oz piedfort lunars. The newly recognized non-fiat brass and silver lunar sets are cheap, and may have greater investment potential, with more risk.
*
Dragon and phoenix (marriage theme symbolism).
*
Peacocks (marriage theme symbolism).
*
Pandas, especially silver, the rarer the better.
* Popular low-mintage key dates:
1990, 1995, 1997, 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!), especially 2003 and older.
* Dates, COA's, etc. with the Chinese lucky number 8.
*
Other interesting numbers: 126, 129, 28, 6, 16
Newly discovered varietiesThis is where treasure hunters lurk...
This list is terribly incomplete. I can't keep up with all the new discoveries! Please see
Category:Types at the Coin Compendium. Newly entered types show up there, and checking that once a day will help you find new varieties that someone has entered.
* CCT311:
1986 22 g silver Chinese historical figures Cai Lun (7 varieties, rarest mintage 703)
* CCT303:
1987 22 g silver Chinese historical figures Li Chun (4 varieties, rarest mintage 455)
* CCT781:
1990 2 g silver dragon and phoenix proof (4 varieties, unknown mintage)
* CCT676:
1993 22 g silver invention & discovery yin yang (3 varieties, rarest mintage 25)
* CCT356:
1994 1 oz silver unicorn proof (3 varieties, rarest mintage 652)
* CCT1485:
1994 1/2 oz gold invention & discovery comets (2 varieties, rarest mintage 126)
* CCT203:
1995 1 oz silver panda proof (4 varieties, rarest mintage 1066)
* CCT1395:
1997 22 g silver traditional Chinese culture Genghis Khan (2 varieties, unknown mintage)
* CCT214:
1997 22 g silver Chinese traditional culture Zhuangzi (2 or 3 varieties, unknown mintage,
authenticity questioned)
* CCT214:
1997 22 g silver Chinese traditional culture Zhuangzi (unknown varieties, unknown mintage)
* CCT848:
1998 1 oz gold panda large date (2 varieties, unknown mintage)
* CCT666:
1999 1 oz silver panda Beijing expo (5 varieties, rarest mintage 395)
* CCT1456:
2012 1 oz silver panda Singapore expo (3 varieties, unknown mintage)
* CCT1457:
2012 5 oz silver panda Singapore expo (3 varieties, rarest mintage 225)
Tips* Buy coins you like.
* Underpriced coins are hot buys for contrarian investors right now.
* Incredible rarities are AVAILABLE, and that's always the best time to buy them.
* Pay what you have to pay for good coins.
* Focus your purchases on rarity together with popularity.
* Grade rarity is becoming important, especially 70 grades.
Remember, there are several kinds of rarity, in the normal order of importance:
* Mintage rarity
* Relative rarity within a series ("key" coins)
* Grade rarity
* Variety rarity + popularity (you also have to have at least the potential for popularity)
Right now grade rarity is more important from an investment perspective. Coins with high grade rarity are temporarily underpriced. Buy them up so you can profit when prices rise to where they should be, and things go back to normal.
8 criteria for investing in varietiesThe importance of a variety for investing depends on a few things:
1. Maturity of the market. More is better.
2. The number of dies, and thus varieties, used in production. Less is better.
3. Varieties of the same die (die states) are less important unless the difference is dramatic, funny, beautiful (early die states), or interesting.
4. The type of the varieties. Deliberate design changes are better than random die production oddities.
5. A substantial difference in the rarity of the varieties versus the rarity of the "common" type, especially if the varieties are minor.
6. A substantial difference in the appearance of the varieties.
7. Being part of a small set means collector's rapidly complete the basic set, and are ready to advance toward a new challenge of collecting varieties.
8. Collector challenge is met with collector cash. Cash = price increases = easy profits = importance.
A variety does not need to meet all of those criteria to the maximum extent possible in order to become a good investment. For example, the 1998 1/2 oz large date panda does not meet criteria #7 because it is part of a large set of other pandas. In the end, criteria #8 is the only one that matters. If collectors are competitively chasing a coin, that's all that is required to make them good investments.
Types of varietiesHere's a list of variety types that are known or believed to exist:
* Restrikes, patterns, or other special strikes.
* Design variations.
* Date variations.
* Edge variations.
* Rim variations.
* Major frosting variations.
* Errors (anything is possible).
* Minor frosting variations.
* Early die states.
* Late die states.
* Damaged dies.
* Repaired dies.
* Obverse and reverse die-pair variations.
