By Louis Golino for CoinWeek….
One of the most anticipated events of the modern world coin scene every year is the release in October of the design for the following year’s silver and gold Panda coins by the People’s Bank of China.
Last year’s release of these coins shocked many people when the inscriptions for the metal, weight, and purity of the coins was removed. This quickly led to rampant speculation about why these changes were made, and whether they were a good idea.
A consensus quickly emerged that the removal of those inscriptions was probably intended to pave the way for a move to metric weights in 2016. This argument was based on the facts that China has used the metric system for a long time, and that the domestic Chinese bullion and coin market has grown substantially since it became legal for the Chinese to purchase precious metals in 2011. In fact, the Chinese government even encourages its citizens to invest in these products, and that is the main reason the mintage levels for these coins has been increased so much in recent years.
On October 15 the People’s Bank of China announced the release of the design of the 12 silver and gold Pandas for 2016, which includes all sizes and proof as well as bullion coins. And, as expected, the new coins now indicate their weights in grams rather than troy ounces as was the practice for much of the past three decades. The metal type and fineness (which remains at .999) are also once again stated on the coins. This should reassure buyers who were put off by the lack of that information on the 2015 coins, especially given the prevalence of counterfeit Panda coins.
The silver bullion coin, the 10 Yuan piece, now weighs 30 grams rather than 31.1 grams, which is a troy ounce. The diameter remains at 40 millimeters, and the mintage at eight million coins. Panda expert Peter Anthony recently covered the new weights on CoinWeek.
Reaction to the switch to metric weight has been mixed. Some people argue that even-gram weights are a simpler system that makes it easier to calculate total precious metal holdings. Lawrence Chard, a British coin expert and longtime dealer, wrote in September on his web site that perhaps the troy ounce system is outdated, especially since when it comes to bullion bars and larger bullion coins, metric weights of grams and kilos are already the world standard.
Others, especially some individual U.S. coin collectors, have said that they are not sure if they like the new system and are worried that they will pay the same price for the new coins even though they weight slightly less. However, I doubt that will really make much of a difference unless you are making a large purchase.
Besides, part of the allure of Panda coins is that as they sell out and become harder to source, premiums tend to rise well beyond their metal value, so I doubt that many buyers will worry about a difference of a gram, even with the gold versions.
Michael Alexander, Director of the London Banknote and Monetary Research Centre and a prominent writer on modern coins, has suggested that a system based on 10, 25, 50, etc. grams would be easier to understand and tabulate. He may be right, but as I saw last year when watching a video taken in a Chinese neighborhood full of coin and jewelry stores, the Chinese are by now used to buying precious metal bars and coins in the weights that are now used for the Panda coins, i.e., 8, 15, 30 grams, 150 grams, 1 kilo, etc.
And that raises the most important issue: why was the switch to metric weights really made? Peter Anthony suggested in his article that it was related to making the Panda coins less of a bullion product and more of a numismatic item.
But these coins have straddled the bullion-numismatic divide almost from the beginning, and by now these coins have a loyal cadre of collectors all over the world, who are not primarily looking to stack precious metals since there are cheaper ways to do that. It seems probable that these coins will continue to be seen as both bullion and collectibles.
A far more likely explanation, which is also in many ways the simplest (as in the simplest answer is often the right one), is that the move is intended as part of the ongoing effort by the Chinese government to continue expanding the domestic Chinese bullion market. In fact, when it comes to gold, the Chinese market has already supplanted India’s as the world’s largest. It thus makes sense not to underestimate the importance of the domestic market in China.
Moreover, as Lawrence Chard pointed out, by switching to grams from ounces, Panda coins are perhaps no longer direct competitors of other major world mint bullion coins that are based on the troy ounce system like American Silver and Gold Eagles, Canadian Maple Leafs, etc.
It is also worth considering the broader, longer term context for Chinese policy, which is mainly driven by the goal of having the yuan, possibly linked in some way to precious metals, replace the dollar as the world’s leading reserve currency.
Unfortunately, the Chinese government does not provide data on what portion of their coin sales are domestic and how much goes to the foreign market. That will make it hard to know how the metric move is affecting sales within China.
At any rate it remains to be seen how this change is accepted over time by foreign buyers and sellers. Given the widespread popularity of these coins, I doubt we will see a decrease in sales within the non-Chinese market. We may not have the data on Chinese sales, but it will certainly be possible to observe how things proceed in the Western bullion market.
A final consideration is the 2015 coins, which may acquire higher premiums than other recent issues going forward, since they will be one-year type coins. That too remains to be seen.
Louis Golino is an award-winning numismatic journalist and writer specializing on modern coins. He has been writing a weekly column for CoinWeek since May 2011 called “The Coin Analyst,” which focuses primarily on modern U.S. and world coins and developments at major world mints. In August 2015 he received the Numismatic Literary Guild’s award for Best Website Column for “The Coin Analyst.”
He is also a contributor to several magazines, including Coin World, American Hard Assets and The Numismatist, the American Numismatic Association’s monthly publication, where he writes a monthly column on modern world coins. He is a founding member of the Modern Coin Forum.
He has collected classic and modern U.S. and world coins since he was about 10 and first joined the ANA in the 1970’s. He has also worked as a congressional relations specialist and analyst at the Congressional Research Service of the Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of publications. He has been writing professionally since the early 1980s.