Buyers Have a Yen for World Coins?|
April 09, 2013
It has been true for a number of years that the coins of China and Russia have been hot. Chinese armed with money earned in the rapidly growing economy of the People’s Republic have been eager buyers of the issues of their nation.
Russian buyers have been following the same path and there probably isn’t an auction house in Europe that has not benefited from these active bidders.
New players might have arrived on the scene, or perhaps it would be more correct to say old players have returned. They come from Japan and there is some recent evidence that they are bidding with enthusiasm.
Morton & Eden Ltd. held a London auction March 6 that offered a rare 1859 U.S. proof set that had been sent to the British Royal Mint Museum around the time of issue.
Rare American coins offered in London make headlines, but the firm also identified the eager buyer. Ten of the 11 lots were sold to the same Japanese bidder.
Why would a Japanese buyer take such an interest in a rare American set of coins?
It could be that the firm has interested clients. There is no way I can know for sure.
But there is another possibility and that is an eagerness by the holders of yen denominated assets to diversify out of them as quickly as they can.
The new government and the Bank of Japan have both announced that it is their intention to push the country out of its 23-year long deflationary recession and to do this by setting a minimum inflation rate of 2 percent and to buy bonds as the U.S. Federal Reserve is buying bonds, but on a scale that is twice as large as the U.S. bond purchases.
Since Japan’s economy is half as large as the U.S. economy and the Bank of Japan is spending twice as much on bonds, you can imagine what an impact this will have.
The first manifestation has been a rapid fall in the exchange rate of the yen versus the dollar. A year ago, the dollar bought 79 yen. As this is written, the dollar buys 99 yen. Most of the depreciation of the yen has occurred in just the past six months.
What better way to hedge the decline of the yen than to spend them on quality world numismatic assets? Could this be what the London buyer was doing?
Fearful Americans have bid up the price of gold and silver because of the Federal Reserve’s bond buying. Will fearful Japanese buyers use their yen to create a new boom in the world coin field?
Such a possibility is not out of the question. The question is the coins of which nations will be the focus of all this buying?
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