The Coin Analyst: China Strives to Make Silver Pandas as Popular as American Silver Eagles
by Louis Golino for CoinWeek
Each year modern world coin collectors eagerly await the release of the latest Panda coins from China, which are made in silver and gold.
Even more than is the case with other world releases, one ounce silver Pandas attract the interest of both bullion buyers and numismatists, including those who are world coin generalists as well as China specialists.
One of the main reasons for the high interest in silver Panda coins is the impressive price track record of past issues. Even coins from the past couple years sell for a substantial premium over silver content.
In fact, premiums over melt value for silver Pandas exceed that for any other world bullion coin except those for Australian Lunar coins.
China and Australia Especially Strong
Jim Orcholski, a Wisconsin coin dealer who runs J&T Coins , said that the track record for Chinese and Australian coins is especially strong compared to other modern world coins.
There is a lot of interest right now among his customers in the 2012 silver Pandas, which were made available to the retail market by distributors several weeks ago.
Mr. Orcholski explained that this year’s issue was minted by the end of last year or the beginning of this year, according to what his distributors told him.
But dealers were told to wait for higher silver prices before releasing the coins.
After the coins were released, silver briefly rose to $37 before retreating to the $33 level.
Mr. Orcholski and other dealers found it interesting that China held off so long on releasing the coins, and a possible indication that China does not hedge its silver, as large producers often do to mitigate the effects of swings in bullion values.
Until last year the one ounce silver Pandas had mintages well below one million. Depending on the year past mintages were between 31,000 and 600,000 until 2011, when an initial three million were released but later the total mintage was said to be six million.
The coins were first issued in 1983 as proofs, when only 10,000 were made.
For 2012 eight million coins are being released. And the market appears to be eagerly snapping up those coins, with several large bullion dealers out of their initial allocation.
Despite the major increase in mintage the coins are not getting any easier to locate in the U.S. Mr. Orcholski said supplies are tight and that he was only able to secure one-third of the quantity he requested. He added that his distributor was unable to say when more coins might be available.
The main reason the mintage of these coins was increased so much starting last year is that it became legal in 2011 for Chinese citizens to own silver coins. This means that a lot of 2011 and 2012-dated coins remain in China.
The Chinese government is also eager to make silver Pandas as popular as American silver eagles, according to Mr. Orcholski.
Pandas are obviously very popular within China, and it is not known how many of the silver Pandas are exported and how many are sold within China. But it is believed that the increase in mintage was related to the legalization of silver ownership in China.
It seems like the higher overall mintages have not lowered prices. In fact, retail prices are actually up substantially on this year’s coins.
Mr. Orcholski added that at the wholesale level he had to pay $3.50 more this year per coin than he did last year.
Gold Pandas are also popular with collectors, but unlike silver Pandas, which are collected widely as numismatic items, the gold Pandas are primarily bullion coins and trade at levels comparable to American gold eagles.
2012 American silver eagles sell for about $5 each over spot, whereas 2012 silver Pandas run anywhere from about $12 to $25 over spot.
Silver Pandas are also made in limited numbers in a five-ounce format. Those coins are also very popular, and they sell for much higher premiums over melt value than the America the Beautiful five-ounce silver coins do.
The five-ounce 2012 silver Panda has not yet been released.
Proof one kilogram silver Panda coins were issued for some years between 1998 and 2010. The mintage for these coins is between two and four thousand. Mr. Orcholski said that many of these coins have performed well as collectibles, with some issues selling for several times current melt value.
Mr. Orcholski said that in the past modern world bullion coins were seen mostly as a bullion play, an investment in metal rather than coins. But today, there is growing interest in some of these coins as collectibles with significant numismatic potential.
The market for Chinese coins today is very strong in the U.S. and worldwide, and that is also likely to help sustain strong interest in silver Pandas.
In addition to attending coin shows and selling through his retail shop and web site, Mr. Orcholski also maintains a coin blog . He started the blog four years because he believes it is important for collectors to be educated and to be exposed to a variety of views on coins.
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.