[QA] Why should I pay a large premium for a Panda?

Discussion in 'Modern Chinese Coins & Medallions' started by yennus, Oct 9, 2011.

  1. yennus

    yennus Well-Known Member Silver Stacker

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    Well, it's been an exciting day answering questions and such, and I really appreciated the pm from someone from my home state of QLD. It is a good question which I am more than happy to answer (some words have been edited):

    Q> Why should I pay a large premium for a Panda that may have 10times the mintage of a similarly produced coin from another mint?
    A> Thanks so much for the question. It is a pleasure to share my thoughts on this.

    A large Premium on a Panda can often scare people away. But it also an indicator that a certain coin is popular.

    Here is an example of one coin which has a very high premium. It's the 2000 Frosted Panda. Currently worth around $500 (give or take $100, depending on the condition, and the desperation of the guy selling it). They estimate that the surviving mintage of these is <88,000



    A meager $10,000 investment 11 years ago if placed in ASEs ($6.50) would only be worth approx. $60,000 today ($38.93).
    A meager $10,000 investment 11 years ago if placed in Frosted Pandas ($10) would now be worth around $500,000 ($500)

    So one can see the huge gain in owning such a coin.

    Some people may then believe that buying such a coin at a high price now is unlikely to continue to give back such a high return. We don't know what the future may bring, but if we look back three years with this coin, we know this not to be true.

    In 2007, the standard 2000 Frosted Panda BU was valued at 880RMB (approx. $146). Today it is valued at over $500 (even more for NGC coins). Growth of 3.42 times.
    In 2007, the standard ASE was about $18. Today it is valued about $39. Growth of 2.16 times.
    So yes, the expensive coins have also appreciated faster than spot and standard bullion.

    (Please note, this is not being critical of ASEs, just using them as the benchmark since they sell close to spot)

    This is an example of one coin, there are obviously some coins that have done better (bi-metallics, Munich Pandas, etc), and some that have not.

    But I hope this quick example has demonstrated why some investors and collectors don't mind paying a large premium for Pandas.

    Hope this helps.

    For those that want to go deeper into the world of Pandas, here is an example of the 2000 Mirrored Panda (population estimated to be less than 15,000).

    [imgz=http://forums.silverstackers.com/uploads/675_2000ob.jpeg][​IMG][/imgz][imgz=http://forums.silverstackers.com/uploads/675_2000re.jpeg][​IMG][/imgz]

    A meager $10,000 investment 11 years ago if placed in ASEs ($6.50) would only be worth approx. $60,000 today ($38.93).
    A meager $10,000 investment 11 years ago if placed in Mirrored Pandas ($10) would now be worth over $1,500,000 (>$1500)
     
  2. LovingtheSilver

    LovingtheSilver Active Member Silver Stacker

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    I know there are no ms70 mirrors, whats the story with ms70 frosted?
     
  3. alor

    alor Well-Known Member Silver Stacker

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    was it possible to buy $10k worth of panda in the past? considering mintage, you have cornered it.
    I don't see the market could have worked this way, for a handful of coins might be possible.
     
  4. yennus

    yennus Well-Known Member Silver Stacker

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    Hi alor,

    that's a wonderful question to ask.

    Yes, indeed, just like it is possible to buy thousands and thousands of 2011 Pandas today, back then it was possible to order thousands and thousands of them.

    Unfortuately we are fairly certain many of them have not survived. Often the way the Mint has worked in China, is that they would mint a certain volume of coins, that which was not sold was melted down and turned into the next years Panda.

    In fact, I've met a man with heaps (maybe more than 50) of the 1995 Small Twig, Micro Date Pandas. These are incredibly rare (<4000 believed to be still around), each worth about $1500 (+/- $200), and he has been buying stacks of them each year as they are released... now he is slowly selling them off. He is no rush, he knows what they are worth.
     
  5. 940palmtx

    940palmtx New Member

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    But how much bread could I buy with one when SHTF? LOL
    Sorry man, couldn't resist.

    In all seriousness, what IYO are good Pandas to buy for less than 125-150? And maybe why, though you don't need to give every single reason for every single coin. Thanks I appreciate any recommendation you have mate
     
  6. Anthony

    Anthony New Member

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    The trick with pandas is to forget that they are bullion.

    Their only real link to bullion price is to set a floor price on the current year.
     
  7. Reeve

    Reeve Member

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    Appreciate the effort you are putting in Yennus. I am curious, when u say frosted coins, does that mean there was regular BU and then these? or was the frosted coin the BU for that year? and are the 2011 panda's equivalent?
    Thank you :)
     
  8. yennus

    yennus Well-Known Member Silver Stacker

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    I try to remember these two ideas:

    Eagles rise to the height of the ceiling.
    Pandas walk on or above the ceiling.


    ASEs generally only move in alignment with spot (not a criticism of ASEs, just an observation).
    Like Anthony has pointed out. Pandas generally only behave as bullion in the year of release. But very quickly take on a numismatic edge, where spot price doesn't dictate their price as much.
     
  9. yennus

    yennus Well-Known Member Silver Stacker

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    Thanks Reeve, compliment much appreciated :)

    Both the Frosted and Mirrored Pandas were BU. If you were in Shanghai, you probably got the Mirrored version. If you were elsewhere, you probably got the Frosted version.

    It's kinda like now with the 2011 Pandas, some have large eyes, and some have smaller eyes. No one is really sure which one will be worth more in the future (or if there will be any price difference between the two).

    I personally think the big achievers in the 2011 series will be the Commemorative coins. The aviation, high speed railway, etc have been popular, and generally have low mintages (some only about 20,000).

    Thanks for your questions :)
     
  10. trew

    trew Active Member Silver Stacker

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    I'm willing to pay up to double gold spot and even triple silver spot for coins that I REALLY LIKE.
    These are usually limited mintage proofs that I CONSIDER TO BE BEAUTIFUL AND I WANT TO OWN.

    I never forget, however, that when I am buying such coins, I am being a COLLECTOR - NOT A STACKER OR INVESTOR.
    The 'spot' component of the coin is my investment, and the premium over spot is my 'hobby' component, as a collector.
    I expect that most times my 'hobby' component will actually be a cost to me, as I expect the collector premium on most coins will go down over time, rather than up.

    If you are willing to pay a large premium for any coin, panda or penny or whatever, do not forget what you are doing.
    You are either COLLECTING, which means it is your hobby and this is a coin you truly desire and it is beautiful (to you) and you must have it.
    Or you a SPECULATING that you will be able to find a 'collector' (as described in the previous line), in the future, willing to pay you more for it than you paid today.

    I'm not saying don't do it, just have your eyes wide open.
    If something is a 'sure thing' and it 'can only go ever go up', you should be asking a lot of questions!
     
  11. yennus

    yennus Well-Known Member Silver Stacker

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    Indeed, as Jim Rogers says: "Do your homework".

    I have confidence that the Panda market is on the way up to even greater heights, but I am very specific in the coins I am hunting.

    For those that have attended the Panda talks at the SydneyStacker Meets, they hopefully remember my 3 different strategies for those with different tolerance for risk and rewards:

    1. Low Risk - Low returns (2011 1oz Pandas)
    2. Medium Risk - Medium returns (A selection of older silver 1oz Pandas, a range of fractional gold Pandas)
    3. High Risk - High returns (Bi-metallics, Munich Pandas, NGC Graded Pandas)

    Each has their own intricacies, and rewards for those who are diligent in doing their homework.

    Whether you are a collector or investor rewards await those who are fortunate and diligent.
     

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