February, March, and April were very exciting months for the Chinese coin market, especially for gold Pandas. As the price of gold paper contracts on the COMEX and London markets declined from $1700 to $1350 per ounce, Chinese panda collectors went into full buying mode, driving prices of most pre-2011 pandas up substantially.
A major driver of the buying surge was marketing program run by one or more Chinese banks which sold complete 1982-2012 "master sets" of BU gold pandas to high net worth collectors. A master set is a complete set of all 1/20 oz to 1 oz gold panda coins for each year. That would be 5 coins (1.9oz) for each year except 1982 which has only 4 coins (no 1/20 oz) - a total of 154 coins, 58.85 ounces, 31 years. Major China coin dealers were contracted to build many of these sets, setting off a competitive buying spree worldwide, driving up prices of most pandas and sending a few key coins into the stratosphere.
The fierce buying quickly drained dealer inventories as well as ebay. Soon, certain fractional coins were in short supply, preventing completion of sets. As we noted in past entries of this blog, dealer inventories were already low. Chinese dealers had to outbid each other to get set completions.
As a result, some new panda scarcities were uncovered. Surprisingly scarce coins and peak prices in late April:
1995 25Y 1/4 oz: $5000
1995 50Y 1/2 oz: $4500
2002 50Y 1/10 oz: $3000 (that equals $30,000 per ounce!)
2006 50Y 1/10 oz: $1000
The previously known scarce coins, 1998 all fractionals and 1994 1/2 oz also moved up. 1997 1/2s were tough to find as well. 1995 1 oz were over $5000. Even "common" dates like 1985, 86, and 88 saw increases.
The master sets were mostly built with pandas that are not certified, with some dealers even buying and cracking-out MS69 coins to fill gaps. The relative premiums on MS69 shrank as the prices for sealed and unsealed pandas increased. Also, varieties and mints were completely ignored for master sets, so Large Date and Small Date differentials reduced as well.
The marketing programs ended in early May, so the demand for these coins has subsided and extreme prices have retreated. However, we have learned of more Panda rarities. The master sets were sold to long-term buy-and-hold collectors for wealth preservation, so it is unlikely many of these coins will re-appear on the market any time soon. It seems very likely that the coins above will be increasingly expensive and difficult to find.
Dealer stocks of almost all pre-2011 Pandas are still very thin. The summer doldrums will be a time to slowly re-stock, but North American supplies are now very depleted. The next buying binge, whenever that occurs, should send some Pandas to new and extreme heights. This most recent bull-run happened when gold was declining and there was almost no participation from US and European collectors. What will happen when gold starts to go up again and the west gets on the gold bandwagon?
Summer is traditionally the quite time in the coin business... and an excellent time to be a buyer.