Why are certain extremely rare coins cheap? ... (gold libertads and possibly others)

I'm seeing them cheaper.

The 1/2 oz. 2010 PF69 Libertad (mintage 600) I was watching went for $1,100 when spot gold was going for ~$1,750 and 1 oz. bullion for ~$1,825. Same with a few from a reputable online dealer.

There's a 2007 1/2 oz available right now for $954. That's about $200/oz over bullion coins.

I don't understand the Panda demand. I wouldn't touch them unless they were slabbed, and even then I haven't touched them. From my reading, they're the most counterfeited. And for some reason they seem to be more expensive. I stick to Eagles, Philharmonics, Krugerrands, Maple Leafs and Centenarios, either slabbed or from impeccable sources. You gotta be careful. Heck, they even counterfeited 2002 $100 Platinum Eagles.

 

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Hey Smitty,
With key dates and high values, there is a huge difference between modern and older coins. With moderns, like these Libertads, it's a matter of condition rarity rather than general rarity. This is why the slabbed PF68+ coins command a premium, as you and jjack mentioned.
As for Pandas, they are Chinese coins. All Chinese coins are going for big money now-a-days compared to their counterparts from elsewhere. The Chinese are collecting like never before. And, with 1.3+ billion population the demand is HUGE.
Personally I ask myself one thing when considering rarity: Can I find it?
A great example is the 1895 Puerto Rico peso. Original mintage 8.5 million pieces.
Most of the time I see them for sale they are described as "rare". But if you looked for a circulated example, you find several to chose from at any given time. For this coin people mistake value for rarity. If all it takes to own a coin is being able to afford it, then it's not rare by any means.
Now an all original AU or better example of this coin is a different story. =)

 

Well Apmex has 2005 MS70 1/2 oz for around $1500 and unslabbed 2005 for $980. So there is some premium, as for Panda demand the demand has skyrocketed for it from main land china and not to mention there is a lot of speculative buying by US buyers. Also always due your due diligence and do some basic tests on any coin your purchased even from trusted sources.

 

Excellent advice. Basic tests for all Chinese silver commems should include a specific gravity or electromagnetic test (I prefer the latter). The counterfeiters have become very good at mimicking the density of silver with alloys. The first time I saw a fake silver 10 yuan Panda that had exactly correct size, weight and appearance I was shocked! SG test on this coin was pretty close, within 2/10ths. It's a red flag, but as with weight some people figure it's "close enough". It completely failed the electromagnetic test though.

 

What device do you need to do an electromagnetic test? I know ... an electromagnet ... lol. But what kind and what type of results are you looking for? I Googled and searched here, but surprisingly there are no specifics. Only that coin mechanisms in vending machines use it.

 

Well there's the really cheap way and the slightly more expensive way. The cheap way can potentially kill you, as it involves cutting and stripping part of the wire from an old household appliance, plugging it into a socket, and touching the coin with the stripped copper wire while having a magnet 10 millimeters from the coin. DO NOT TRY THIS AT HOME!!

The best way is to purchase some strong neodymium magnets. Around $50 worth in the right shapes and sizes will suffice. My advice is to buy them directly from one of the many Chinese sellers of magnets on eBay. China is the leading producer of neodymium magnets, and if you buy them from any other place it will most likely be the same Chinese manufactured magnets plus the middleman's cut added on.

Here's my simple setup (dimensions 110mm x 50mm):


I keep it in a plastic baggie to avoid damaging the coins. It doesn't appear to affect the results one bit. Actually the plastic produces a better friction/static induced electric current than the surface of the magnets.

What you want to do is hold it with the flat side up and at a steep angle where an object would normally fall pretty quick. 30 degrees should be fine. Put the coin at the top and let it slide. The result will show if it is electromagnetic or not, as well as how strong. Precious metals are highly electromagnetic.

Now the strong magnetic fields exist where the magnets connect to one another and there are many connections in a small amount of space. My setup has such a zone at either end, with a break in the middle.

Silver and other precious metal coins will slide slowly through the heavy magnetic zones at either end, while common metal and alloy coins will simply drop with normal gravity.

This also allows you to weed out slightly magnetic coins that may otherwise fool this method. Both a slightly magnetic and a precious metal coins would start out sliding slowly at the first zone. However, the inertia from falling through the break will cause the slightly magnetic coin to continue falling through the second zone, while the precious metal coin will immediately get "caught" and slowly slide down the rest of it.

Someone had posted a youtube video about the "magnetic slide" technique on this forum a few months back (which is how I first learned of it). You should be able to find it pretty easily.

Please note that aligning the magnets into a flat plane is like a Jenga puzzle. You have to align the magnetic fields on each piece to fit with the others it touches. If you try to force it, the whole thing will collapse back into a neat stack in an instant. And with these strong magnets, it hurts A LOT when your finger gets pinched in between.

 

Yeah there is youtube videos where the user constructed a magnetic slide but i do something little simpler here. I have my coins in air tite so it works out well, i simply slide the magnet down the Air Tite while it is held at 25 degree angle, normally there should no friction so the magnet should slide smoothly down. But when you have a silver coin it will behave like it is sticking to air tite holder and will slowly slide down. Not the best picture but here is an example.

Added:Just because it passes the test doesn't make it legit keep in mind Lead is also dimagnetic not the extent of Silver or Gold but Silver plated Lead coin might behave quite similarly?

 

Its actually a very common misconception sir. "Rare" is always relative. No one pays for absolute rarity. A 1916d Mercury dime is not a rare coin in the grand scheme of things. However, versus all other dates, its very rare. Since the series is highly collectible, and this one date is by far rarer than all others, that is what makes the price high. Contrast that with your comparison. Yes, maybe just a few hundred were minted, but how many people are collecting by date? How common are other dates of the series? Its this relative rarity, along with demand, that will produce strong prices.

Believe me, I know about collecting rare. If one or two more serious collectors start collecting some coins I do, prices could quadruple easily. In terms of absolute rarity, these coins are right at the top. However, since most have not ever heard of them, and of those who have many consider them ugly, thankfully there are only a few competitors for the few coins available. Rarity only equals high price IF there is demand.

Having said all of that, by all means collect them. It really is cool to have coins that you can get relatively cheaply that are truly rare. You very well could be onto a gold mine in that some day maybe the premiums WILL go up due to their scarcity.

Chris

 

Rarity of a certain piece doesn't always correlate with prices. I have several pieces in my Scottish collection that are near unique, only 2-3 examples known. But they are very specialized areas of collecting and not a lot of demand. I also have some very low mintage 19th century coins that are in a low demand and modestly priced considering how few of them there are. There are some coins that defy logic, like the 1844 Seated Dime that were seemingly rare from it's release in 1844. It is sort of a created demand though, because of the legends swirling around them, people want them(including me, I added one to my collection this summer)

 

Yea that's a pretty cool and cheaper way of doing it. Some non-silver items may behave that way, but when you compare with a known genuine example of the same silver purity as the coin in question is supposed to be, the sliding times will vary. For coins of identical silver purity there should not be a noticeable difference in sliding times. You really need a larger magnetic slide to have enough distance to observe this difference.