Monday, October 11, 2010

Silver - Intrinsic and Numismatic Value

In 2005, when silver spot price was below US$10, few took notice of this metal. And I was one of those who rather put my money in stocks than silver. In 2006, silver cleared the US$10 mark to reach US$15, I still was deeply immersed in stocks. It was only in 2007, when the US$ has been weakening and news of US housing bubble, that got me sitting up to look at alternative investment opportunities. In November 2007, I bought my first ounce of silver – the Canadian Maple Leaf when spot price was US$14.73 (S$27.65 at that time, inclusive of shipping, insurance and tax).

Naturally, the beautiful shiny silver round enticed me to look at other types of silver pieces available. I bought Pan-Am silver bars when spot was US$18.48 (S$28 at that time). My first high-premium silver piece was the 2007 Silver Britannia, which I paid S$56 for it. I also bought the Australian Lunar Series I Box Set at S$457 (S$38 per ounce) and a few other one and two ounce of the Lunar Series.

So what’s my point here about intrinsic and numismatic value?

When I got started writing this on 28 August 2010, silver spot price was still below US$20. At present moment, 11 October 2010, silver spot price is above US$23.23, monex is selling Canadian Silver Maple Leaf at US$25.37 (S$39.49 inclusive of shipping, insurance and tax). Let’s do some simple mathematics. Spot price has gone up 57.7% (US$14.73 – US$23.23) from the time I first made my purchase. Bullion price of the Canadian Silver Maple Leaf has gone up 42.8% (S$27.65 – S$39.49). Though I do not have the data to show that in Singapore Dollar terms, the gain is not a much, but let’s look at coins that I regard to have numismatic value – the Australian Lunar Series.

The Australian Lunar Series that I bought at S$457 is sells at S$846 without the box (85% gain). For key date coins, like the dragon, a 1 oz coin would cost S$90 (136% gain). A 2005 Britannia bought in June 2008 for S$47 was sold for £51 on 2 September 2010 - before silver price rally. The Chinese Silver Panda is another story of its own.

Hence, I would say, for silver investors, the preferred type of silver would be those that has low premium over spot price:

  • American Eagle
  • Austrian Philharmoniker
  • Canadian Maple Leaf
  • Mexican Libertad (except for 1998, 1999)
Silver investors would probably buy them by monster boxes of 500 oz. to be profitable. And it goes back to why take delivery in the first place or why buy physical silver?

Whereas silver collectors who look at what was being stamped on the silver rounds would have plenty of choices:
  • Australian Kangaroo, Koala and Kookaburra
  • Chinese Panda
  • New Zealand Kiwi
  • UK Britannia
  • Australian and Chinese Lunar Series
  • Somalian Elephants
The Russian St. George coin is an interesting prospect, while having mintage of less than 300,000, it has the same design for each year and yet commands quite a high premium. Recently, there were also reports that the gold version was found to be rusting.

Friday, October 8, 2010

2011 Year of Rabbit Second Series

Coin's reverse design depicts an adult and young rabbit surrounded by foliage and a tree with creepers entwined in its branches

2 oz and 1 oz 2011 Silver Rabbit

Perth Mint has decided to cease production for the 1/2 kg denomination for the Lunar Series, citing poor take-up. Hence, only 2008 - 2010 would have 1/2 kg version. However, there will be 500 pieces of 10 kg 2011 Lunar Rabbit coins to be produced - more than 10 times of the 2008 & 2009 versions.

Hence, the 2011 Year of Rabbit Second Series Silver has only 7 denominations. However, it continues to have the same number of limited mintage for 1 oz Gilded, Coloured, Proof, 3-Coin Proof Set, 4-Coin Typeset and 1 kg Proof.

Emerald Eye Inset is used in the 2011 Year of Rabbit 1 kg Gemstone Edition.

For 2011 Year of Rabbit, Perth Mint has minted for Cook Islands their first issue of 4-Coin Silver Proof Rectangle Set in the Lunar Series. Each coin has a different design depicting coloured rabbits on the reverse. However, each coin is issued as a legal tender under the authority of the Government of Cook Islands instead of Australia. The maximum mintage for the set is at 3,000 sets, each set is issued with COA and display case.

Coin Specifications:
  • 1 troy ounce or 31.135 grams
  • 99.9% fineness
  • Face value: Cook Islands 1 Dollar
  • Dimension: 47.6 X 27.6 X 4.0 mm
Mintage for 2011 Year of Rabbit Silver Lunar Second Series:
  • 10 kg: (Capped at 1,000)
  • 1 kg: TBD
  • 1/2 kg: TBD
  • 10 oz: 12,563
  • 5 oz: 8,030
  • 2 oz: 99,494
  • 1 oz: 300,000 (Maximum Mintage)
  • 1/2 oz: 124,488
Note: The above-mentioned mintage figures are sales figures released by Perth Mint. Except for the 10 kg and 1 oz, the rest of the denominations have unlimited mintages. Minting will close upon minting of the next issue is declared.

Transacted price (shipped) (Jan - Nov 2010)
Series 2
10 Kilo: NIL
1 Kilo: NIL
10 oz: S$398 - 426
5 oz: NIL
2 oz: S$84 - 88
1 oz: S$36 - 54
1/2 oz: NIL
1 oz Proof: S$94

High silver prices have turned buyers away as there were only 25 pieces of 1 oz and 7 pieces of 2 oz transacted from September to November compared to 61 pieces of 1 oz and 20 pieces of 2 oz transacted in November 2009 alone for the Year of Tiger coins. If silver prices remain high, the Year of Rabbit coins could well be at low mintage.

Apparently, transactions on ebay do not reflect the real situation on the 2011 Rabbit. It was declared by Perth Mint in January 2011 that they have reached the maximum mintage for the 1 oz Rabbit.

Transacted Prices in S$ inclusive of shipping to Singapore (Dec 2010 - Nov 2011)

10oz: S$486 - 547
5oz: S$391
2oz: S$109 - 162
1oz: S$59 - 96
1/2oz: NIL
1oz Proof: S$120 - 133
Typeset: S$473 - 633

Transacted Prices in US$ inclusive of shipping within US (Dec 2010 - Nov 2011)
1 Kilo: US$1,270 - 1,502
10oz: US$445 - 605
5oz: US$180 - 246
2oz: US$70 - 160
1oz: US$38 - 61
1/2oz: US$21 - 32
1oz Proof: US$126
3-Coin Proof Set: US$464