What's going on with Russian commemorative coins for circulation

[ciscoins]

A message from a forum member have made me look closer at the prices for circulating commemoratives - 1, 2, 5 and 10 roubles. And I was shocked: for the last few months they have risen enormously. All of them.

First, all the bimetallic coins have already disappeared from circulation. Before 2008 it was rather easy to get 50-70% of all the types just by walking around the city and asking in shops (and in the province it was much easier than in big cities). Then these coins started to disappear from circulation, and by this moment they disappeared completely.

Second, there are too many coin collectors in Russia. Maybe the number of "professional" collectors is not so big (though much bigger than in most countries of the world), but there are lots of "situative" collectors - the people who are working with cash, their relatives and friends. They had got many different 10 roubles from circulation and became engaged; now they want to get all the others. The amount of collectors must be bigger that 100 thousand, because the coins with this mintage are becoming rare.

Third, there's a strong possibility that not all the minted coins were put into circulation. The first two 10-roubles coins had mintages of 10 mln., and you could easily find them everywhere; some coins of the next years had the same mintages, but it was much harder to find them.

As the result, the prices are now rising and rising. Bimetallic 10 roubles 2000-2003 cost about 10-15 USD for each coin in UNC; and coins of other years have also started to exceed the prices that are in Krause - for the first time in history. I don't even know at which level will they stop.

Only the brass plated steel 10 roubles are still reasonably cheap. But after the problems with two coins with reduced mintages - "Chechen Republic" and "Yamalo-Nenetskiy Okrug" - all the dealers are afraid to miss another similar situation. So when a coin just appears, it costs about 2 USD; then, if nothing happens, the price goes down, to about 1 - 1,5 USD; and then it starts rising again.

[paisepagal]

Very interesting. I think Indian collectors can understand the situation in Russia. Although there are supposed to be 20mln circulation pieces of each commemorative, you will be hard pressed to find any in your pocket change for long stretches of time.

The Rs10 coin which has been issued in fairly good quantity and has indeed been released into circulation, are hoarded by people who you wouldn't even classify as collectors of any sort. I suppose it's the novelty factor of seeing a bimetallic coin, but it's been 7 years now and they are still very scarce.

The other problem seems to be that banks have hoarded various issues in the past.. And many that have just started releasing coins, have held them for nearly a decade now. All these coins are quoted anywhere between 3 and 10 times their face value by dealers, who bought over all the stock from the banks and now hoarding the coins in their own go-downs

[augsburger]

Maybe it's getting like China where people want to invest in things they think are going to get more expensive in the future. Coin collecting in China is a complete waste of time unless you go for the much older coins.

[Ukrainii Pyat]

In Ukraine is very similar situation where I think even recent commemoratives rise in price to ridiculous points.  In rare instance when you can find coin in circulation it is usually only beaten up.  The coins in bazaar are overpriced usually as are the coins you can buy over the counter in the bank - they sell at premium usually and don't sell at face value.

[gxseries]

I believe it's the low face and what you can sell it for that's not helping. Plus due to the high production cost of the bi-metallic coin and the mints replacing the bi-metallic coins with brass plated steel coins - this might have lead to the public thinking that the bi-metallic coins are going to be scarce, leading to the coins to disappear a lot quicker.

10 ruble coin is worth about 30 cents. You might be able to sell it for 2 dollars overseas even in circulated condition. That's a good 6x return.

Back in 2001-2002 when I was in Russia, I struggled to find a bi-metallic 10 ruble coin from circulation. Managed to find one. I managed to buy the Chechen and Yamolo 10 ruble coins at a reasonable price - not some silly 100+ dollars for each of them. I'm not surprised if there are politics related to why the mintage are low for these coins.

[mmiguel]

I've tried to find 2010 10 Rouble coins (Chechen-Yamalnenets-Perm) at a reasonable price, but I think I'll never get them.

Now, in ebay, there are only 2 of them: Perm at 100USD, and Chechen at 230USD. And in the only online-coin shop in Russia I can find, they only have the Yamal Nenets at 440USD.

It's crazy. In Russia is it possible to find them cheaper? Thnx.

[ciscoins]

Perm is available for 50-55 USD through the internet (though at the beginning it was not an expensive coin, for several months after the issue it costed 2-3 USD). Chechen republic - 125 USD, and Yamal - 250 USD. Also someone has made souvenir tokens - "copies" of these two coins, they are cheaper.

[chrisild]

A dealer from around here usually has those pieces; now he sells the Nenets coin but not the other three (Yamal-Nenets, Perm, Chechen Rep.) due to low mintages and "distribution policy rumors". (Please note that I do not collect these, so I have no idea about the situation.) From what he writes at his Nenets page - my rough translation:

"The sixth set in the Russian Federation series consists of four coins:
Nenets Autonomous Okrug - mintage 1.95 million
The Yamal-Nenets Autonomous Area - mintage 100,000
Perm Krai - mintage 200,000
Chechen Republic - mintage 100,000
The earlier mintage of 10 million per issue has been significantly reduced, for reason that I do not know. There is also a rumor that the few (100,000 to 200,000) copies are issued solely by banks in the region."

Christian

[Bimat]

I was offered those three mysterious Russian commemoratives for €50 each when they were just issued. Didn't buy them as I didn't have that much money then. (Even today, I do not think I'll buy them even for €50, just too much for an ordinary coin!)

Aditya

[natko]

I remember when Chechen and YNAO were in 30-50 euros range and I just laughed and left it be. I was sure it was some kind monopoly going on, like one or two resellers getting exclusive access and bought majority of the circulation for sale. Since they're quite low face valued, I assume it would be extremely profitable and one can easily buy thousands of it, even whole mintage.

I was sure prices will go down after a few months. That did not happen, they only have risen. Now, at shown prices, a seller would pay off entire price of buying the mintage by selling only 50 coins during the years. Imagine that!

So, somebody is extremely stubborn and persistent. Raising number of Russian collectors can't explain the trend, even the euro coins, which have incomparably larger "mania" can't get near to these prices for similar mintages. Also if I'm right, big game collectors in Russia are generally interested in tsarist period. Increasing number of bimetallic collectors can explain why all the other coins disappeared from circulation.

In that case, prices could go down in 10-15 years, but not much, maximally to the level I mentioned at beginning of the post, plus the inflation of course, because the source will still be stubborn, it paid out its investment long time ago but there is no more interest in this coin. There would never be 100000 people in the world willing to pay 100, 200 euros for a new coin with such a mintage.

There is a whole trend of overpricing coins on ebay and it surely does affect both 1$ auctions, regular price settings, other auction sites and traditional auction prices. It's a whole new problem also seen here.

The other option is, like ciscoins pointed out that not all have been minted or put in circulation. If they're held in some bank treasury a considerably few will be able to escape to the market.

[Figleaf]

You may never know what happened. Russia has become a Byzantine place again, full of rumours, plot theories and politically inspired actions behind the scenes. If anything is political in Russia, Chechenia is. In another thread is a report that Russian are stopping coin collecting. That makes sense to me. With the economy tanking and money leaving the country, buying coins is a luxury you can do without. So why don't prices come down? Because coins are not traded in a perfect market. Coin prices are notoriously sticky on the downside, even with zero demand.

Peter

[natko]

Last idea of yours makes sense. However, you surely remember big fall of US dollar just after euro introduction and its impact on coin market. For a year or two everything was really cheap on ebay and US auctions, until market answered with raising prices. It does not go down so easily, that's true, only up.

But I can't agree with tanking economy statement easily. I've read your analysis of Rouble inflation, of course, that holds, but it might be a little bit stretched. Since the beginnings of 2000 Russian economy has developed tremendously, more than any EU country apart from maybe Poland who had best taken advantage of expanded market (didn't check data though). Some outside stereotypical image of rusty, forgotten facilities changed into something like renovated picturesque historical towns and modern highrises in the cities. People live incomparably better, at least from what I talked to collectors and others. Crisis was not felt, just taken advantage of. Everything reflects the coin prices, it's near to impossible to collect Imperial Russian coins anymore, not speaking about rare coins, everything...pieces like small silver change from 1910s that I paid ~2 dollars in UNC anywhere just several years ago now cost 10 times more. I can just compare it with Croatia and cry over all of our incompetent politicians killing any chances for private enterprises while destroying state ones regardless of political option. But that's another subject.
Anyway, I find it hard to believe that all of these unfortunate events will lead to 90s state of Russian economy, especially when you compare the scale of involvement with dozen of US interventions in last 25-30 years which did not really destroy the country. It's nothing to panic about. It could lead to a year or two of GDP deficit should not mean much, well, we all passed through it didn't we. Russia will be fine.

[Figleaf]

I agree that the crisis of the nineties is completely different. That one was due to very low productivity and lawlessness, causing low tax receipts. Productivity has indeed gone up and tax receipts are satisfactory now. Today, the problem is Russia's dependence on oil receipts. Over 50% (estimates range from 30 to 70%, the percentage should go down as oil prices sink) of the government budget is financed by oil. That means the price assumption of oil in the budget is crucial for the budget balance. The oil price today is below that assumption, which is all the more important because oil prices tend to rise in winter. In spring, heating demand will start to go down. If the Saudis do not react and nothing unexpected happens, prices will continue to go down. I remember actually seeing $10/barrel.

A deficit on the government reserves would not have been too serious in normal times, because Russia has built up large reserves when the oil price was favourable. However, those reserves are by definition finite and high military spending without an end in sight will bring the end of the reserves nearer.

In the nineties, the IMF, the World Bank and financial institutions in Austria and the UK provided monster credits (for those days). Today, the IMF will look at Russia unfavourably, the World Bank has wound down its Central and Eastern European activities and there will be no political will to revive the activities of the London and Vienna institutions. This is what global markets are pricing in, but also what the Russian rich fear: a further large fall of RUB and/or a default on Russian government bonds.

Imagine: measured in USD or EUR, all the Russian rich have already seen their RUB wealth cut in half. No wonder they flee RUB and no wonder they stop buying coins. Remember that the Russian rich were behind the crises in Iceland and Cyprus. The top end of the coin market will be bigger and less owned by Russians, but it would be amazing if their influence would not be felt.

Peter