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Monday, October 1, 2012

Fall auction season: India is buying Indian gold coins

As we enter into the Indian and Chinese wedding and New Years season which is marked by massive physical gold purchases in these two nations which have regarded gold as real money for the last 5000 years, there are questions about whether the high gold price and a weakening global economy will put a damper on purchases this year.

It has been my experience that the purchase of high end gold coins is a leading indicator for the purchase of bullion.  The rising Chinese wealthy class bought in most of the valuable Chinese gold coins over the last several years, presaging the tremendous bullion demand that has been occurring in China.

Now the emerging wealthy class in India - is scouring the auction houses for high end Indian and especially British Indian coinage.  An original strike Double Mohur of William IV, like the one pictured above, just sold in a Spink auction for $30,000 dollars.  That's triple what the same coin sold for 2 years ago.

At the same time a run of fairly common mohurs of Victoria just sold in the St James auction for about the same mark up.  The nicest of the lot was an uncirculated but ungraded restrike specimen that sold for $8500.  Two years ago the same coin could have been had for $3000-$3500.

In the same auction a rare Victorian age British Indian gold medal sold for $10,000 while a British medal of the same period and weight sold for half that amount.  As one economy rises another sets.  Though, to be fair, there are far more British Victorian gold medals than British Indian Victorian gold medals - But it is only recently that prices reflect that reality.

To be sure, there are very varying prices according to different variations and grades of these coins, as is always the case.  But the trend is unmistakable.  And just as the Chinese gold coin frenzy has culminated in a Pan-Asian Gold exchange and a massive purchase program by the Chinese Central Bank, I would bet we'll see a South East Asian Gold Exchange and a massive purchase program by the Indian Central Bank in the near future.

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