Silver Trade Dollars of East Asia – Visions of Imperialism Past

Silver Trade Dollars of East Asia - Visions of Imperialism Past
Here is a spread of early 20th century silver piastre trade coins from the colony of French Indo-China.  Prices for these silver trade dollars, and others like them, have steadily risen over the past 10 years – particularly for problem free specimens in good condition.

In 1865 U.S. journalist Horace Greeley popularized the rallying cry “Go west, young man”.  The phrase was originally meant to encourage the enterprising and ambitious to strike out for fortune in the rugged expanses of the Western United States.  And yet, if you travel far enough west, you inevitably find yourself in the exotic and mysterious Far East.

In the 19th century, China, Japan, Korea and Southeast Asia were not only sources of curious philosophies and bizarre plants and animals, but also luxury goods of all descriptions.  So it shouldn’t come as a surprise that the unfamiliar, yet beguiling, cultures of the Far East fascinated the West.  Antique silver trade dollars – large coins minted to promote commerce in the region – perfectly exemplified this Western obsession with all things East Asian.

During the mid 19th century European trade with the Far East grew dramatically.  Europe imported massive quantities of Chinese silk, porcelain and tea, along with many other East Asian luxury goods.  However, the merchants of the Far East – and China in particular – would only accept silver bullion in exchange for their wares.

As the 19th century progressed and the European powers established colonial territories in East Asia, the need for standardized silver trade coins to facilitate commerce became acute.  As a result, the greatest empires and nations of the age – France, Great Britain, Japan and the U.S. – all minted impressively heavy silver trade dollars for exclusive use in the distant Far East trade.

Although I use the phrase “silver trade dollars” as a catchall term in this guide, calling these coins silver trade crowns would be more technically accurate.  A “crown” in coin collecting traditionally referred to an old British 5 shilling silver coin.  However, the term has also been adopted by the collecting community to refer to any silver coin that is similarly large in size.

Foreign silver crowns are avidly sought by coin collectors due to their imposing dimensions and captivating designs.  Silver trade dollars of the Far East are no exception to this rule.  With diameters generally varying between 38 and 39 millimeters (1.5 to 1.54 inches), they are similar in size to the venerable U.S. silver dollar.

In addition, these East Asian trade coins were struck from high purity, 900 fine (90%) silver.  They were among the largest, most splendid coins ever intended for general circulation.  Nothing impresses a potential trade partner like a massive hunk of almost pure silver.

Tragically, these historic silver trade dollars were usually treated as common bullion.  Although originally minted by the tens of millions, over the decades vast quantities have been damaged, excessively worn or melted down.  Consequently, these artistically crafted treasures of a bygone era are not nearly as plentiful as official mintage figures would indicate, particularly for examples in better condition.

One of the most beautiful and iconic of these silver trade dollars is the French Indo-China piastre.  Over a period of about 30 years in the late 19th century, France accumulated several territories that it eventually consolidated into French Indo-China.  The present-day countries of Vietnam, Laos and Cambodia were all part of this colony.  At the time, the French Empire was second only to the British Empire in terms of prestige.

In order to facilitate trade in French Indo-China, France introduced a new currency unit called the piastre de commerce.  The piastre was minted to a standard of 24.49 grams (0.7875 troy ounces) of pure silver.  The series ran from 1885 to 1928 and featured the personification of Liberty seated on the front.

The figure of seated Liberty on the coin looks uncannily like the Statue of Liberty in New York City’s harbor.  This isn’t just a coincidence.  France gave the famous landmark to the United States in 1886 as a gift for its (belated) 100th anniversary.  The reverse has a simple, yet elegant, wreath surrounded by a legend with the coin’s weight and fineness.

In 1895 the weight of the French Indo-China piastre was slightly reduced to 24.30 grams (0.7812 troy ounces) of fine silver.  However, the purity and design of the coin were left unaltered.  The French Indo-China piastre was minted primarily in Paris, but coins dated 1921 and 1922 were struck in Birmingham, Osaka or Hanoi.

 

French Indo-China Silver Piastre Coins for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

Another silver trade dollar that is extremely popular with collectors today is the British trade dollar.  In the early 1890s, the British began looking for a new currency to promote commerce with China, as well as Britain’s expansive East Asian possessions.  As a result, the British trade dollar was minted from 1895 to 1935.  This coveted coin saw heavy circulation in Burma, British Malaya, British Borneo, Singapore and Hong Kong.

This attractive silver trade dollar shows Britannia – the personification of the mighty British Empire – standing proudly with her trident and shield on the obverse while the reverse displays the denomination in both the Chinese and Malay languages.  The British trade dollar contained 24.26 grams (0.7800 troy ounces) of fine silver and was minted in both Bombay (present day Mumbai) and Calcutta (present day Kolkata).

 

British Silver Trade Dollars for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

The Japanese also felt the need to maintain their commercial interests by striking a silver trade dollar.  In 1897 Japan pulled over 20 million of its silver one yen coins from circulation and countermarked them with the Japanese word “gin” or silver.  These demonetized coins were then exported as bullion pieces to the Imperial Japanese possessions of Taiwan, Korea and Manchuria.  The “gin” countermark denoting these as special trade pieces was stamped on the reverse of the coins, to either the left of the denomination (indicating the Osaka mint) or the right (indicating the Tokyo mint).

The Japanese silver one yen coin contained 24.26 grams (0.7800 troy ounces) of fine silver and was struck from 1874 to 1897.  It featured an Asian-style dragon on the obverse and the stately Japanese imperial crest, along with a wreath and the denomination on the reverse.  These remarkable Japanese silver trade dollars were a far cry from the feudal-style, “samurai money” the Tokugawa shogunate had struck just a few decades before.

 

Japanese Countermarked Silver One Yen Coins for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

Not to be outdone by its trade rivals, the United States also minted an East Asian silver trade dollar that is extremely popular with collectors today.  But this silver trade coin had a story behind it.

In the early 1870s the United States had two problems.  First, it needed to find a way to off-load massive quantities of silver that had been discovered in Nevada’s famous Comstock Lode.  Second, the U.S. was worried about the competitiveness of its existing silver dollar in the Far East trade versus the preeminent coin of Chinese commerce at the time, the silver Mexican 8 reales.  Foreign silver coins other than the Mexican 8 reales – like the U.S. dollar – were often significantly discounted in transactions.

As a way to address both problems at once, the U.S. authorized the striking of a special, slightly heavier version of the silver dollar.  This resulted in the U.S. trade dollar, a coin struck from 1873 to 1885 that was intended to circulate solely in China and the Far East.  The U.S. trade dollar showed Liberty seated on the front and an eagle with wings spread on the back of the coin.  The coin was struck in Philadelphia, San Francisco and Carson City (in Nevada) to a standard of 24.49 grams (0.7874 troy ounces) of pure silver.

 

U.S. Silver Trade Dollars for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

An ambitious connoisseur could assemble a very impressive traditional collection of these large, enticing silver coins by date and mint.  Alternatively, one could assemble a good “short set” by acquiring a single example of each type of trade crown – a French Indo-China piastre de commerce, a British trade dollar, a “gin” countermarked Japanese yen and a U.S. trade dollar.

Another fine set would be a French Indo-China piastre from every decade of its production run – one from the 1880s, 1890s, 1900s, 1910s and finally the 1920s.  This type of abbreviated set would work well with the British trade dollar as well.

Yet another variant would be collecting every different date of a U.S. trade dollar struck at a particular mint.  A San Francisco U.S. trade dollar set would consist of six common-date coins and be eminently achievable.  On the other hand, a Carson City set – although the same number of coins – would be substantially more challenging and expensive to assemble due to their lower mintages and high collector demand.

When purchasing silver trade dollars it is important to acquire coins in Very Fine (VF) or better condition.  Coins in VF condition will retain most details on figures and devices, although the exact grading varies by the coin series.  One potential exception to this rule is key date coins, where a lower grade may be acceptable.

For example, the 1878 Carson City U.S. trade dollar only had a mintage of 97,000 pieces.  But according to U.S. mint records, 44,148 trade dollars were melted in that year.  Almost all of these were undoubtedly 1878 issues from the Carson City mint.  So it is likely that net issuance was only around 50,000 specimens, with many of those subsequently destroyed or heavily damaged.  Therefore, unless your budget is unlimited, acquiring an 1878 Carson City trade dollar below VF condition may not only be acceptable, but your only realistic option.

The other primary consideration when choosing silver trade dollars is ensuring the coins are problem free.  It is imperative to avoid pieces that are scratched, holed or damaged in any way.  It is also wise to bypass coins that have been harshly cleaned at some point in their lives.  A well-worn coin that is brilliantly lustrous is suspect and highly likely to have been cleaned.  Instead, look for examples with original surfaces even if it means the coin is toned, dark or slightly tarnished.

Some trade pieces have chopmarks.  These are Chinese characters stamped onto the coin by private Chinese banks or moneychangers to guarantee their silver content.  In years past, chopmarked coins were considered damaged and thus traded at a discount to non-chopmarked examples.

However, this outdated opinion may be changing as the market for these attractive coins matures and becomes more sophisticated.  At a minimum, chopmarks on a silver trade crown prove that the coin in question definitely circulated in the Far East – and more specifically the Chinese market.

With their impressive size, precious metal content and historical significance, silver trade dollars are highly desirable investments.  In fact, as of early 2018, prices for these stunning coins have risen by almost 50% in just the last few years alone!

In spite of these rising prices, good examples of common date French Indo-China piastre and British silver trade dollars are still available in the $50 to $250 range.  Countermarked Japanese one yen pieces run slightly more, with pricing starting at around $100.  U.S. trade dollars are the most expensive of the group with common date varieties in reasonable condition trading for over $200.

Scarce or key dates of any of the series can cost anywhere from several hundred dollars to several thousands of dollars, depending on condition.  Key dates of the U.S. trade dollar in particular are difficult to find and correspondingly expensive. However, even an abridged set of these celebrated Far East silver trade coins would constitute a magnificent and compelling tangible asset.

It has been more than 150 years since Horace Greely’s famous pronouncement to “Go west, young man”.  With the rise of China in the modern age, Horace Greeley’s illustrious advice to seek fortune on the edges of the globe has stood the test of time.  And there are few finer ways of honoring the spirit of that astute motto than by investing in the silver trade dollars of East Asia.

 

Read more in-depth Antique Sage rare coin investment guides here.

-or-

Read more in-depth Antique Sage Japanese antiques investment guides here.


1985 British Gold Sovereign Proof Set

1985 British Gold Sovereign Proof Set
Photo Credit: APMEX

1985 British Gold Sovereign Proof Set

Buy It Now Price: $2,987.50 (price as of 2017; item no longer available)

Pros:

-This impressive British gold sovereign proof set from 1985 contains four different coins: a 1/2 sovereign, 1 sovereign, 2 sovereign and 5 sovereign piece.

-All of the coins in this British gold sovereign proof set are struck from solid 22 karat (91.67% fine) gold.  A sovereign, or one pound, gold coin contains 0.2354 troy ounces (7.32 grams) of pure gold.  The 5 sovereign coin, in particular, is a monstrously large coin, weighing in at a hefty 1.2841 troy ounces, or 39.94 grams, of gross weight!

-This 1985 British gold sovereign proof set comes with its original Royal Mint presentation case and certificate of authenticity, which boosts its desirability.

-The original issue price of this British gold sovereign proof set was £1,150 back in 1985.  This would be an extravagant £3,404 in 2017, once adjusted for U.K. inflation.

-Although it had a medieval predecessor, the British gold sovereign as we know it today was first coined in 1817, during the waning years of the reign of George III.  The obverse has a portrait of the ruling British king or queen, in this case Queen Elizabeth II.  The reverse has the iconic rendering of St. George on horseback slaying a dragon, designed by the famous engraver Benedetto Pistrucci.

-Gold sovereigns were incredibly popular as trade coins throughout the 19th and early 20th centuries.  They were renowned for their consistent weight and fineness, so much so that imitation sovereigns (often with full gold content) were sometimes struck by private goldsmiths in far-flung British colonies to supplement the existing supply.  In fact, gold sovereigns continue to be used for jewelry and trade to this day in the Middle East and Indian subcontinent.

-The gold sovereign is one of the only coins to have made the jump from circulating coinage (before 1931, when Great Britain abandoned the gold standard) to modern bullion coin.

-Although 12,500 British gold sovereign proof sets were authorized in 1985, only 5,849 were actually minted.  This is an exceedingly low mintage, even for modern proof bullion coins.

-The total set contains 2.001 troy ounces (62.24 grams) of fine gold.  With gold currently trading at around $1,243, this British gold sovereign proof set has a bullion value of $2,488.  With a buy-it-now price of $2,987.50, this magnificent proof set has a premium of just 20% over its intrinsic value, which I find very reasonable.

 

Cons:

-If you just want to invest in gold bullion, it is possible to buy generic gold bars or American gold eagle coins for lower premiums, generally on the order of 3% to 5% over spot.  However, I like the optionality value that numismatically-oriented gold coins give the intelligent hard asset investor, provided you don’t pay too much additional premium.

Why I Hate Index Funds and You Should Too

Why I Hate Index Funds and You Should Too

Index funds – ETFs or mutual funds that strive to track the performance of a securities index – are incredibly popular right now.  And why not?  They combine some of the best aspects of simplicity and diversification into a single, easy to trade investment vehicle.  Not surprisingly, index funds are ubiquitous at the moment.  You can find them in your IRA, 401-k and even in sophisticated hedge funds.

But the big reason investors love index funds is because of their low costs compared to actively managed mutual funds.  Many large, passively-managed index funds have expense ratios of only 0.05% to 0.20% annually.  This translates into $5 to $20 in fees per annum for every $10,000 invested.  These costs are far, far lower than actively managed equity mutual funds that typically have expense ratios between 0.60% and 1.00% every year.

Index funds are the modern no-muss, no-fuss way to invest for people who are overworked and don’t have the time or inclination to learn the intricacies of securities markets.  These incredibly flexible instruments can emulate the makeup and performance of almost any index in existence – anything from the pedestrian S&P 500 Index to the exotic FTSE Japan 50% Hedged to USD Index.  Index funds can also track fixed income or bond indices as well, like the Bloomberg Barclays US Aggregate Bond Index.

But maybe what people prize most about Index funds is how well they have performed over the past few years.  A common belief on Wall Street is that it is tough to beat an index during a bull market.  And that certainly appears to be the case with this bull market.  As an example, the Vanguard 500 Index Fund (Investor Shares) has returned a stellar 15.58% annually for the past 5 years as of November 30, 2017.  Many stock-focused index funds have had similarly phenomenal performance over the same period as well.

So why do I hate most index funds at the moment?  Aren’t they the perfect investment vehicle for a thoroughly modern, globalized world?  In a word: no.  They used to be the perfect investment vehicle a few years ago.  Now index funds are just financial time bombs waiting to blow your retirement dreams into tiny, shattered fragments of sadness.

First, it is important to understand that index funds are what is known in the investment industry as a passive strategy.  A passive investment strategy attempts to exactly replicate an existing index without any deviation.  This means that the money manager running a passive index fund has no input into which securities are purchased, held or sold.  He simply mimics the index he is targeting.  Once you dump your money into one of these vehicles it will be put to work immediately buying whatever is in the index.

This is exactly the behavior that most passive index investors want, but it also comes with a very negative side-effect that isn’t widely appreciated.  Index funds represent a price-insensitive source of buying (or selling) pressure.  In other words, it doesn’t matter how overvalued (or undervalued) the underlying index is, once a buy order is issued, the shares in the index are automatically purchased. Likewise, once a sell order is given, the shares in the index are immediately sold.

And guess what?  Most of the indiscriminate, index fund-driven buying happens near stock market peaks, when the trailing multi-year performance of the indices is strong.  Likewise, panic selling from index funds invariably occurs at the nadir of a bear market, when nobody cares how undervalued the companies in the indices are.  Buying high and selling low is never a recipe for strong investment performance.

Of course, you might be the one person who can stand strong against the overwhelming urge to sell your index funds when the bottom falls out of the market.  But even if you are, the price-insensitive buying or selling associated with the widespread ownership of index funds makes the entire stock market much more pro-cyclical than it would be otherwise.  Market highs are far higher, which isn’t a good thing because you will overpay when you invest for retirement, a house or that cruise around the world.  The lows are also much lower, which is bad because there is the chance you will be forced to cash out at the wrong time for reasons beyond your control.

As you might have guessed, right now the securities in most popular equity indices are egregiously overvalued.  I like the valuation estimates used by the fund manager John Hussman for reference.  According to one of his recent market commentaries, the broad stock market and, by extension, many passively managed index funds, are in line for somewhere close to 0% total returns annually over the next 12 years.  That is an awfully long time for an investor to be sitting on dead money.

Happily, a great alternative to over-hyped index funds exists.  I’m speaking about fine art and antiques of course.  These beautiful, tangible assets have been perennially overlooked by professional asset managers and financial advisors because Wall Street professionals don’t have the skills, knowledge or background to properly evaluate them.

It is one of those great ironies of life that the crowd always chases bad investments while good investments languish forgotten and unloved.  Currently millions of future stock market victims are furiously pouring billions of dollars they can’t afford to lose into index funds filled with securities trading at nosebleed valuations.  And yet, at the same time there are many categories of fine art and antiques that are currently trading at depressed valuations.

So please, consider investing in a World War II era U.S. Naval aviator insignia, or a 19th century old mine cut diamond or even a 2016 Mexican Libertad gold coin proof set.  But whatever you do, please don’t keep dumping your hard earned investment money into stock index funds, blindly expecting the great returns to keep rolling in.  You will almost certainly be sorely disappointed.

Residential Burglaries and Tangible Asset Investing

Residential Burglaries and Tangible Asset Investing
Photo Credit: informedmag.com

One of the disadvantages of investing in tangible assets is that they must be safely stored.  There are really only a few good ways to securely store portable, high value bullion, art, gemstones or antiques.  The first is in a safety deposit box at a local bank.  The second is by using a burglary-resistant safe installed in your home.  The third method is to keep these tangible assets in your house without a safe, but purchase insurance to cover them in the event of loss.  Insurance can also be used in combination with a bank safety deposit box or a home safe for additional protection against loss.

However, bank safety deposit boxes and insurance have one major drawback.  They both have recurring costs every year in the form of premiums for an insurance policy or rent for a safety deposit box.  If your goal is to maximize the financial return on your tangible assets, this negative annual cashflow is undesirable.

Luckily, that leaves us with a remaining option to secure our tangible investments: buying a burglary safe.  A home safe also confers another important benefit; it allows tangible asset investors to retain personal, physical possession of their investments.  Although it may seem paranoid right now, I firmly believe that the phrase “possession is 9/10th of the law” will take on renewed importance in the face of inevitable future financial crises.

Due to this looming future scenario and the rapidly growing trend toward investing in tangible assets, I want to talk a bit about residential burglaries.  In 2015 (the most recent year records are available) there were an estimated 999,446 reported residential burglaries in the U.S.  There were approximately 125 million U.S. households in the same year, meaning your chances of being burglarized are about 0.8%.  That might not seem like a very high number, until you realize that it is 0.8% every single year!  As you can see, the risk of being the victim of a residential burglary really piles up over time.

The following items are most at risk of being stolen in residential burglaries:

  • Cash
  • Prescription drugs, especially pain-killer prescriptions like Oxycodone or Vicodin.
  • Small electronics like laptops, gaming consoles, tablets, digital cameras or cell phones
  • Portable valuables like bullion, fine jewelry, luxury watches or sterling silverware
  • Guns
  • Credit cards, debit cards, gift cards and checks

A burglar can easily fence these items on the black market or turn them into quick cash at a local pawn shop.  This list certainly isn’t comprehensive either; most burglars aren’t picky and will take anything that looks valuable and is easy to transport.  But in spite of a wide array of household items to choose from, residential burglars don’t usually make off with that much loot.

According to the FBI, the average dollar loss per residential burglary in the United States in 2015 was only $2,316.  I strongly suspect that this is a reflection of the fact that many U.S. households don’t have much worth stealing.  But don’t let the modest dollar value fool you.  If you store high-value tangible assets at home, you will be at risk for much greater losses if your home is burglarized.

This statistic underscores a fundamental truth about residential burglaries; they are largely the domain of drug addicts, gangbangers and other amateurs.  Under normal circumstances, a burglar will hit the master bedroom (including its closets) and master bathroom (looking for prescription drugs) before quickly running through the rest of the house looking for anything of value that is sitting in plain sight.  A burglar almost always wants to be in and out of your house as quickly as possible, so it shouldn’t be surprising that the typical burglary is between 8 and 12 minutes in length.

In most instances, a burglar will use a large screwdriver, crowbar or large hammer/small sledgehammer to gain access to your home via a ground level window or door.  In fact, these simple tools are almost ideal multi-taskers for the average burglar, not only giving him the ability to compromise most locks quickly and easily, but also fend off an angry dog in a pinch.  However, because they have to be in and out so quickly, few residential burglars bother carrying additional tools with them.

Commercial burglaries, on the other hand, are where the semi-professionals and professionals of the criminal world gravitate.  The obvious motivation behind this is the larger payoff.  Banks, pawn shops, jewelry stores, payday loan companies and other retail establishments often have large amounts of cash or valuable merchandise on site.  But these businesses usually employ strict security measures like cameras, alarms, and heavy-duty burglary safes.

So commercial burglars have to step up their game – and they do.  The casing process is usually much more rigorous for commercial burglaries, often lasting for days or even weeks.  In contrast, residential burglaries are often a crime of opportunity; a criminal may case a house for only a short period of time before striking.  Once he identifies a convenient target, the residential burglar, equipped with his crowbar or hammer, is ready to go.

This is rarely the case with a professional burglar who cases a commercial establishment.  Once a commercial burglar has deciphered the employee routine, he will then prepare his equipment.  His complement of tools will often include a variety of menacing power tools such as angle grinders, drills and demolition saws.  These tools allow a burglar to cut open steel doors, tough locks and even high-security burglary safes, given sufficient time.  Commercial burglars might even bring a cutting torch with them, although this is less and less common as the welding trades have declined in the U.S.

The takeaway from these statistics is that if you are storing even just a few thousand dollars worth of tangible assets in your home, it makes sense to take security precautions. Layered home security is a great starting point.  But, in my opinion, a good burglary-resistant safe is also a requirement.

Luckily, most residential burglaries are the simple smash-and-grab variety.  Even burglars who are more thorough usually stick to hand tool safe cracking, meaning less expensive, Underwriter Laboratories (UL) residential security container (RSC) certified safes are adequate in most instances.  However, if you need to store valuables worth more than fifty thousand dollars, or just want peace of mind, then stepping up to a high-security floor safe or a UL TL-15 or TL-30 rated safe is the way to go.  These commercial quality safes can withstand a punishing amount of abuse at the hands of burglars using power tools and still remain intact.