Sunday, February 19, 2012

Are Perth Mint damaging their reputation?

Those of you who follow my posts on bullion forums that I frequent might have picked up that I'm not a huge fan of purchasing bullion Chinese Panda coins. This has nothing to do with their designs. Having seen several in the flesh I would agree with many of the enthusiasts that they are a stunning coin. 

The main reasons I avoid Pandas are:

- They have a reputation of many fake coins circulating and I think this will make them difficult to resell.

- The mintage has been announced and then increased part way through their production year (they did this in 2010 and 2011).

- Slight variations in many of the designs due to being minted across multiple locations each with their own set of dies (although to be fair this has actually increased the value of some anomalies).

- There are lower mintage coins available (such as those from Perth Mint).

So two of the key things I am looking for when choosing bullion Silver coins to buy is a consistent product and a mintage number that can be trusted.

Are Perth Mint keeping to their previously high standard in these areas or are they releasing opportunistic products which harm existing collectors and investors who hold their products?

The Russian Red Back Spider

Most collectors who are familiar with high value modern numismatic coins would know of the Perth Mint Red Back Spider from the Deadly & Dangerous coin series. It was a 1oz Proof coin released as the first in the series. The price soared with some paying in excess of $1500 for the coin and prices now are still well elevated at around $1000 for a coin which contains $31 worth of Silver. The coin was released in 2006 with a 5000 coin mintage:

Original Red Back Spider Coin, 1oz Silver Proof, 5000 Coin Mintage

What you may not be aware of is that the Perth Mint produced a "copy" coin especially for the Russian market 5 years later in 2011 (2000 coin mintage):

Russian Red Back Spider Coin, 1oz Silver Proof, 2000 Coin Mintage

So they've slapped an extra ring around the existing design, imprinted some Russian text and then they are flogging this off as a new coin? In my opinion this sort of activity reeks of a Mint who do not have respect for their collector coin customer base.

But are such tactics only a problem for their numismatic coin releases?

The Privy Mark Dragon

The Perth Mint has had strict mintage limits on their bullion coins over both 1st and 2nd Lunar Series coins. The limits having been set at 30,000 coins for 1oz Gold and 300,000 coin for 1oz Silver. These (previously strict) limits have made them a popular choice for both collectors and investors given that most other bullion series coins have much higher limits (which in most cases range from 1 million to tens of millions).

A couple of weeks ago I wrote about the forthcoming Privy Dragon design (on, little did I know at the time that this was to be a bullion release rather than a low mintage premium coin. As pointed out by a user on Silver Stackers and later blogged on at Silver Lunar this coin is being produced with a 200,000 mintage limit and is being sold for bullion prices. Assuming that these coins sell out (or have already been minted in full), it will result in a 1oz Silver bullion coin mintage of 500,000 rather than the 300,000 of previous years, with only a small lion privy separating the two.

Spot the difference: 2012 Perth Mint Bullion Silver Lunar Dragon vs Privy Mark Lunar Dragon

In March 2011 Stephen Ward of the Perth Mint blog had this to say in relation to the 1oz bullion coins:
"For investors, we offer bullion quality versions in capsules. These coins are made in much larger quantities, enabling us to keep the sales premium to a minimum. Even though Lunar bullion coins are made for investors, we do acknowledge that they attract significant collector interest in many quarters.

1oz Lunar silver bullion coins have a maximum mintage of 300,000 each." Perth Mint Blog
This statement is now void as there will be 500,000 Silver bullion coins.

Then in September last year Ron Currie said this:
"Throughout the course of the first 12-year Australian Lunar bullion coin series and also during the second 12-year series, 1oz releases have been limited by mintage: 30,000 gold and 300,000 silver. As well as investors, these mintage quotas have also attracted collectors to the series.

To increase mintages of 1oz coins during a particularly popular year could be interpreted as opportunistic and possibly damage our credibility as a Mint." Perth Mint Blog
While the bullion Privy Dragon is technically a different design to the standard bullion coin, it is obvious to investors and collectors that the Perth Mint has used a backdoor technicality to workaround their own mintage limits and this is (as Ron Currie hints above) an opportunistic action which has the potential to damage the Mint's credibility.

As I pointed out in a recent blog post on Silver Lunar it appears that this Privy Mark coin will continue in the Year of the Snake (2013), so assuming the sale of these coins goes well we can expect the mintage of bullion 1oz coins to be permanently increased for the rest of the second series (and maybe the Perth Mint will even work on getting the previous Series 2 releases, Mouse, Ox, Tiger and Rabbit also minted with the Privy)...

There are other examples of opportunistic behavior from the Perth Mint, but to list/describe them all now would take more time than I have available to write this post.

It seems to me that of late the Perth Mint strategy is to squeeze every dollar they can out of their customer base, releasing as many designs as the market will soak up with little regard for those who have already purchased based on expectations previously set by the Perth Mint and it's representatives. 

While pumping out these releases might improve their bottom line in the short term, it's more than likely going to make buyers a lot more wary about purchasing their releases in the future and in my opinion has the potential to devastate a well established reputation which the Perth Mint has spent a long time building. Here's hoping they can get things back on track.


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