Ahhhh! For once, an article entirely about something positive; i.e.,
the fun bullion coin collecting can be, when one gains a working
knowledge of how the industry works.
In my case, I started acquiring physical metal in 2008 – at which point, I
knew next to nothing of the pros and cons of specific investment
products. Eight years later – including 4½ as the Marketing Director of
one of America’s largest bullion dealers – I know a LOT more about gold,
silver, and platinum coins; and consequently, what to look for when
considering new purchases. Or sometimes, swaps – as per thismust
hear interview with Miles Franklin’s President and Co-Founder, Andy
Schectman, there are a variety of “trades” that can be executed to optimize
one’s Precious Metal portfolio – to capitalize on tax considerations,
out-of-whack gold/silver or gold/platinum ratios, or perceived over- or
under-valuation of numismatic products. Frankly, in today’s decidedly
“abnormal” price environment, there’s never been a better time to consider
such actions.
Regarding today’s article title, those familiar with Miles Franklin are
well aware that we do NOT recommend numismatic products to anyone but
hobbyists and otherwise precious metal experts. In our view, the
principal reason to own PMs is protection of your life’s savings, and insurance
against the ominous political, economic, and social developments plaguing the
world today. That said, when “numismatics” – i.e., products with
subjectively determined value, above and beyond melt value – trade at or near
melt value, we aggressively market them to clients.
Like any subjectively valued market, “bargains” arise from time to time,
for a variety of reasons. And when they do, you are afforded the rare
opportunity to acquire rare coins at or near melt value, with a zero or low
cost “option” on future numismatic value. In our business, the most
common reasons for such price anomalies are general PM market apathy;
“emergency” product sales; and in the case of the Royal Canadian Mints,’ or
RCMs,’ limited edition Wildlife, Birds of Prey, Call of the Wild, and
Predator series’ – or for that matter, the Perth Mints’ “exotic and dangerous
creatures” series (like the Saltwater Crocodile and Funnel Web Spider) – the
simple fact that upon issuance, they are not yet perceived to be supply
constrained.
To that end, Miles Franklin has marketed the aforementioned RCM series’
immediately following their issuance’s – as in each case, issuance prices
were essentially the same as generic Maples. And in each case, gold or
silver, their value relative to generics increased over time.
Typically, the RCM has issued one-a-year series’ in February; and for
two-a-year series,’ February and September. And each time, Miles
Franklin aggressively marketed the newly issued coins – such as the silver
Peregrine Falcon in February
2014; and both the silver Red-Tailed Hawk and gold Growling Cougar in February 2015.
Miles Franklin does NOT guarantee the new issuance’s will garner
significant premiums over generic Maples; or that older issuance’s will
maintain the premiums they have attained thus far. However, after ten
such silver issuance’s; and two gold issuance’s; it’s difficult to make the
case a trend isn’t forming. Moreover, the oldest series’
continue to hold the highest values – such as the silver “Wildlife” Wolf,
issued in 2011; the silver “Birds of Prey” Peregrine Falcon, issued in 2014;
and the gold “Call of the Wild” Howling Wolf, also issued in 2014.
Below, I have compiled a table of where each of the six “Wildlife” and
four “Birds of Prey” series’ are trading relative to generic silver Maples,
in chronological order of issuance. Each of the ten series was limited
at exactly one million ounces, to never be minted again. As you can see
at the bottom of the chart, the new silver Cougar “Predator” is already trading
at a 3%-4% premium, despite having just been issued two weeks ago
(disclosure, I bought some this morning). In my view, the reason its
premium has risen so quickly is because investors are assuming that it, like
the “Wildlife” Wolf and “Birds of Prey” Peregrine Falcon, it will in time
have the highest premium of the four-coin silver “Predator” series.
After the silver “Predator” Cougar (not to be confused with the silver
“Wildlife” Cougar or the gold “Call of the Wild” Growling Cougar), the second
of the silver “Predator” series will be issued in September 2016 – followed
by the third and fourth coins in February 2017 and September 2017,
respectively. In our view, the Cougar’s 3%-4% premium
($0.60-$0.70/coin) relative to generic silver Maples is low enough that the
risk of it losing its “numismatic” value – relative to the potential for it
to garner a significant premium over time – is immaterial.
As for gold, the third and final of the three-coin “Call of the Wild”
series was issued two weeks ago as well; i.e., the “Roaring Grizzly.”
Like 2014’s “Howling Wolf” and 2015’s “Growling Cougar,” the “Roaring
Grizzly” is .9999 fine gold, making the series the world’s only “five
nines” gold issuance. As you can see, they come individually packaged
with an assay card on the back; and like generic gold Maples, are Precious
Metal IRA eligible.
Unlike the silver “Wildlife”; “Birds of Prey”; and “Predator” series’, the
mintage of the gold “Call of the Wild” series was not officially capped.
That said, we are quite confident that the February-2014-issued Howling Wolf
was discontinued when the Growling Cougar was issued in February 2015; and in
turn, the Growling Cougar when the Roaring Grizzly was issued earlier this
month. The reason being, that Howling Wolf supply essentially dried up
a year ago; as did Growling Cougar supply this month. As you can see
below, the Howling Wolf now trades at a roughly $150/oz premium to generic
gold Maples; while in the Growling Cougar’s case, the vast majority of its
premium expansion occurred in the last two weeks; i.e., when we believe its
issuance was discontinued. More so than the silver Cougar “Predator,”
the gold “Roaring Grizzly” – released just two weeks ago – trades barely
above the price of a generic Maple, by just over 1%. Thus, for those
considering new gold bullion purchases, we believe the “Roaring Grizzly” may
be the “cheapest numismatic around!”
If you have any questions about the silver Cougar “Predator” or gold
“Roaring Grizzly” – or any other Precious Metal product – please call us at
800-822-8080, or email me at ahoffman@milesfranklin.com.
