Antique silver dollar poised to smash the US$1m barrier

Michael Chou is fairly sure this is the one. The Champion Auction president is pretty confident that by the time the hammer falls today at the 11th Champion Auction at the Hyatt Regency Hong Kong Hotel in Tsim Sha Tsui, the Yunnan Spring 1910 Silver Dragon Dollar will have become what he says is the first Chinese coin to sell at auction for more than US$1 million. 'In private transactions there are coins sold for over a million dollars US. In public auction so far the record is about US$900,000. We expect this coin to be the first coin to go over a million dollars,' Chou said. Even if he is proven wrong, if the past is any predictor of the future, Chou has cause for confidence. In April 2002 the spring dollar was the first coin to sell for more than 1 million yuan (HK$1.14 million) on the mainland, and five years later it was snapped up for about three times that price. If the coin does set a new benchmark, the sale will be at least double what Singaporean collector George Lim paid for it just a few short years ago. When he bought the item, Lim saw that it had great potential but little else was known about it. 'We only knew that it is the only coin that survived. There wasn't much research about this coin,' he said. That potential doubling in price underscores what one veteran of the business describes as an explosion of interest in Chinese currency collectibles, from ingots to banknotes, in the past five or so years, a bull market that may have a long way to run. Chou is surprised the million-dollar mark has not yet been reached. He says there are two dozen Russian coins and more than 360 coins in the US that have commanded that price at auction and through private treaty. 'Now the most expensive Polish coin is US$1.38 million. We are still dumbfounded that Chinese coins are still way under value because of the lack of recognition ... If you look at the Chinese economy and the collectors, there's no reason why there is no coin in China worth a million dollars or more,' he said. Ma Tak Wo, president of the Hong Kong Numismatic Society and managing director of Ma Tak Wo Numismatic, agrees there's a lot of value yet to be realised in Chinese coins and now is a good time to get into this market. Ma says Chinese coins are comparable in rarity and grade to million-dollar US coins but are only changing hands for 'thousands instead of millions'. He says Chinese antique items in general are still underpriced compared to those of similar heritage value originating, say, in Europe. 'I think as far as Chinese coins are concerned, we are just at the start of a long-term growth trend ... I think there is still a lot of upside in Chinese coins,' he said. 'Actually, most people involved in Chinese coins, whether collectors or dealers, have made money, especially the last three years. Some prices are five times more than in the past three or four years. There's huge demand but not enough material to go around.' A three-decade veteran of the field, Ma began collecting Hong Kong and mainland coins and banknotes in the late 1970s when the mainland started opening up and many Chinese examples were smuggled out of the mainland and into what was then the British colony. He says the items from that time varied in grade and quality and it was a great time to get into the market. 'Some of them had been buried in the ground, some were unearthed and I guess some were stolen from bank vaults or something. So it came in all grades and qualities,' he said. Ma later turned his passion into business and in the intervening years has witnessed several ups and downs in the market. The market took a turn for the worse in the early 1980s with the uncertainty over Hong Kong's return to China, before bouncing back in the early 1990s up until the Asian financial crisis in 1997. 'Then of course there's a big correction and everything dropped in value, including coins.' Ma has also seen the collector base in Hong Kong expand from the 1980s as the city industrialised and people acquired the wealth, time and interest to invest in nostalgia. It's a pattern that occurred in post-war Japan and is happening today on the mainland, underpinning demand in the sector. 'In China, we see this [interest in collectables] starting from the '90s. As Chinese personal income grows, a lot of collectors in China can afford to collect ... Now I've seen a lot of coins going back to China. All the big prices are paid by Chinese collectors as far as I know. So basically we see the return of all the rarities back to China. That's the reverse of what has been going on for decades,' he said. Ma says the demand from the mainland is across the board, with buyers seeking out low-end and high-end materials, but it is difficult to quantify just how big the collector base is. 'It's hard to guess [how many collectors there are] but there are coin markets in all the major cities. In Shanghai or Beijing there are shopping malls almost entirely lined up with coin shops and stamp shops,' he said. At the top end, Chou has seen more mainland industrialists take an interest in collecting, despite the limited time they have to learn about the items. Museums, institutions and companies have also started putting in major bids at auctions in the past few years. One of the defining features of this market is regionalism, a preference for coins and notes from the same area as the buyer. 'For example, Yunnan industrialists or local governments are very interested in bringing back their own items. At Chinese auctions, we see this clear pattern of people with different regional backgrounds going for different items.' One of the big problems confronting collectors is fakes. According to Champion Auction, forgeries of the 1910 spring dollar appeared at auction nine times in England, America and Hong Kong between 1961 and 1991. Ma says counterfeiting is a huge problem and the quality of the fakes is improving all the time with the aid of computers and more money to buy better minting machines. So much so that some mainland collectors prefer to buy their items at auctions elsewhere because most major offshore auction houses guarantee the coins they sell. 'When they sell a coin, it's guaranteed it's genuine,' he said. Third-party assessments are critical to ensure trust in an item, Chou says. Independent grading also allows more collectors who are not so knowledgeable to enter the market. It's an interest that requires passion. 'You need to love the coins before you can enjoy what you are doing ... If it's purely for financial reasons, there are a lot of venues like the property market or the stock market,' Ma said.