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Touting the Nags, or, Last Call on the Cheap Horses
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(May 21, 2004) Now that the gold price is meandering around at the sub-$400 level, it’s becoming even more attractive to take a position in the world’s favorite precious metal. The question often is, what form of gold should I buy? We have one good answer for you, but time is running out….
What follows is our final and most blatant sales pitch on our favorite bullion choice, the 2002 Australian Year of the Horse 1-ounce gold bullion coin.

The Year of the Horse is the 7th in the series of gold Lunar Cycle Animal Coins issued by the Perth Mint of Australia. This .9999 legal-tender bullion coin series began in 1996 (the Year of the Rat), and will end with the 2007 issue (the Year of the Boar).

It’s a very popular series, and we have sold thousands of these beautiful 1-ounce gold coins. So far, the first issue to sell out all of its 30,000 mintage is the Year of the Dragon, issued in 2000. The Dragon today trades for over $500 per coin.

Today, gold is some 10% cheaper than it was seven weeks ago, so there’s an argument for buying gold here ‘on the dip.’ But why the Horse? What are the value dynamics of a bullion choice which also has a limited-edition collectible aspect to it?

Probably the most apt comparison is with the China Panda series, which pioneered the idea of collectible gold bullion coins with a design which varies each year.

In 1982, the Panda debuted, and China sold around 30,000 of the 1-ounce gold Pandas. Five years later, in a strong gold market, the 1982 Panda coin was selling for over $3,500, nearly six times its actual gold value. Later Panda issues had much higher mintages, and no other year ever performed as well as the 1982.

But it is worth noting that in the booming gold market of the late 1980’s, a supply of merely 30,000 of the 1982 Pandas was simply not enough to meet demand, and its price skyrocketed.

Yet, arguably the Australian Lunar Series is potentially a much more collectible set than the Chinese Pandas. Each coin in the Lunar Series showcases a beautifully rendered animal image. Also, the 12-year Lunar Calendar repeats itself every dozen years, so everyone on earth can identify their birth year with one of these animals. And artistically, the Lunar Series detailed designs are more impressive than the Pandas’ cartoon-like images of an animal which, let’s be honest, is rendered as a mere teddy bear.

The Perth Mint has wisely chosen to limit mintages on this entire Lunar Series to 30,000 1-ounce coins each year. Therefore, there is the potential for these to trade at higher premiums in the future.

The Horse is going to be the next to sell out, probably in the next few weeks. Over 90% of the 1-ounce Horses authorized already have been sold - chiefly in America, where everybody and his sister love horses. Plus, this 12-year set still has three years to run, and in a bullish gold market, collector interest in the series will surely blossom.

As long as the Perth Mint has them available, we are pricing the Horse as a standard bullion product. But as of early this week, it would only take about US$1.2 million to buy out the entire remainder of 1-ounce 2002 Horses available from the Perth Mint. Time is running out.

Call me at 800 800 4485 if you would like to book some Horses now!

Disclaimer: Onlygold.com, its parent company CSG Inc, and officers and employees of CSG Inc. are gold marketers, and not investment advisors. We maintain an inventory of the products featured on this site, whether for speculative or mercantile purposes. For instance, we currently maintain a substantial position in the Lunar Series 2002 Horse coins.

Our trade is that of buying and selling. As gold dealers, we are interested in continuing to increase sales volume, and much that we publish is geared towards that goal, i.e., selling stuff. Furthermore, our corporate bias is a bullish attitude towards gold. Therefore, nothing we publish or say could possibly be construed as objective investment advice.

And as always, past performance is no guarantee that the sun will come up tomorrow.

-Richard Smith

 

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