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Lunar Gold Series I to Close this Summer
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(March 30, 2007) Now in its 12th and final year, the Lunar Series gold bullion coins issued by the Perth Mint will cease production as of this summer. This innovative and beautiful set of coins has been a favorite of many, and Series II will launch this autumn in a new format.
The Perth Mint Lunar Series of gold coins now constitutes a complete set of the twelve different Lunar Calendar animals, starting with the 1996 issue of the Year of the Rat and finishing with 2007’s Year of the Pig coins. Almost without exception, these coins have been rendered with spectacular designs, and each has a painstakingly detailed finish to the highest standards of the engraver’s art. Because of these qualities, the series has been an enormous hit with investors and collectors.

One unique quality of the series from an investor’s standpoint has been that each of the 1-ounce issues in gold has been limited to a mintage of 30,000 pieces. Early on, this meant a sell-out of the Dragon issue, and later, the completion of 30,000 coins sold in both the 2002 Horse and 2001 Snake. But the policy of the Perth Mint has been to provide coins to order, each issue going back to 1996, as long as the demand was there and the 30,000 piece ceiling has not been reached.>br>

From our conversation a few weeks ago with a Perth Mint representative, we expect that all production on the Series I coins will cease this summer, with an ordering deadline sometime in June. This fall, after the last orders are filled, the final mintage figures for the various issues from 1996 through 2007 will be announced. Which makes for an interesting speculation as to which of these highly collectible coins will, in the end, become the scarcest and most desirable.

This has the effect of turning previous investment strategies, particularly in the 1-ounce coins in the Lunar Series, totally upside down.

My own opinion is that the 2000 Dragon will always be the key to the Series. Many Dragons were sold in Asia, and many others have been dispersed to collectors all over the world. But the fate of the 2001 Snake and 2002 Horse, which have also reached their 30,000 coin ceiling but are heavily owned by speculators in the US, is less certain.

(Disclosure: Our firm placed a number of the gold Horses in May of 2004 when we saw that supplies were about to run out at the Perth Mint. Gold spot was $385 at the time, so those who bought Horses less then have seen their holdings increase over 65%.)

For instance, after the end of the ordering period, the Perth Mint may announce that not all of the Lunar 1-ounce gold coins reached the 30,000 limit. For example, what if the total number of Rabbits sold ends at 14,000? Should it happen that the mintage of any single Lunar 1-ounce coin ends up that low, and all are well-dispersed in sets owned by collectors, then that issue may join the Dragon as one of hardest to find.

Or another strategy may come into play. Let’s say that an individual or group, perhaps a hedge fund, could at this time order from the Perth Mint the remaining 1-ounce issues of the Rat, Ox, Tiger, Rabbit, Goat, Rooster, Monkey, Dog, or Pig – thus controlling most of the tradable supply of a particular issue. Something to think about if you are personally collecting this series. Or if you have stewardship of several million dollars and are contemplating a gold purchase, there’s a chance to really make an impact.

The other sizes in the gold issues, which had been freely available from the Perth Mint, will also be discontinued as of this June. Therefore, future supply of these lovely coins in the Kilogram, 10-ounce, and 2-ounce sizes, plus the popular quarter-, tenth-, and twentieth-ounce sizes will be dependant upon individuals and dealers who order and put them aside in the next couple of months. Mintages on some, if not most, of these issues will no doubt be nowhere near 30,000, with final numbers on the kilogram and ten-ounce issues probably ranging from less than a hundred to only a few hundred. And then, there will be no more.

The Lunar Series from Perth occupies a unique niche as a limited-mintage gold bullion product. And with the twelve years issues, in essence everyone’s birth year is now available in a commemorative gold coin appropriate for gift giving. Series I coins will always provide those choices.

The Perth Mint this fall will launch Series II with the 2008 Year of the Mouse issue. Series II coins are planned with a larger diameter format (approximately 38 millimeters as opposed to Series I in 32 millimeter) and all new designs for each of the issues through the year 2019.

When I visited with the Perth Mint rep, I was able to view a preliminary design for the 2008 issue (distinctly a Mouse this time, not the Rat that we saw in 1996) and it’s quite an artistic achievement. Series II will be all-new designs, and the larger diameter format provides a grander canvas for the Perth engravers, who I’m sure will make Series II creations as beautiful and accomplished we came to expect from Series I.

As these new coins are released each year, many buyers who purchase these issues as gift items (birthdays, new babies, holiday gifts for the grandchildren) will find a gap – for instance, there will be no new Year of the Rooster until 2017 – and that prospective customer’s needs can only be filled by coins from Series I.

I believe that demand will continue to pull on Series I issues as well-stocked bullion dealers will need to keep them in stock, in some variety of sizes, to meet the demand engendered by the Series II issues.

The Perth Mint has indicated that they expect to put out an announcement on the closure of Lunar Series I sometime in April. We will post that official notice here as soon as it is received.

In the meantime, whether you already own Lunar Series I coins or not, it might be time to give some thought to Lunar Series I while many issues are still available at bullion prices.

-Richard Smith

 

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