Has the Presence of “Replica” Trade Dollars Depressed the Value of These Coins?
The rules of commerce are not the same everywhere. In China, for instance, there are no rules regarding whether you can make a historic coin – only coins that are currently in circulation. Contrast that with the fact that rare coin projections in the US and throughout the world rely upon an estimated number of specimens of each type (and off-type) coin in existence. Because such valuable coins are horded, this number is, despite all the study, still highly subjective.
A Chinese company is, very legitimately (according to the law) has been making extremely good copies of historical Chinese coins for the domestic market. However, China's is something of a Wild West of an economy. That and a general reluctance (or inability) to enforce international commerce and copyright laws make it easy for these coins to end up for sale in North America as forgeries. This has made many buyers in the US leery of rare coin investments in the types that are commonly found in China.
Among the coins that are most commonly found as forgeries on the market are the silver “trade dollars” that were circulated by the US government. Made between 1873 and 1885, these coins were unique when issued as the first silver coins made by the US with 90% silver. The The Morgan silver dollars the followed it and all subsequent silver dollars until 1965 were also made of 90% silver.
The silver Trade dollars have been popular among those who buy rare coins, partly because of the interesting stories that often accompany them as well as the history of Manifest Destiny expansionism by the US and early US-Sino relations. But of far more interest are their rarity. Nealy all of these coins found there way to Asia and remained there, along with the silver trade coins that were issued by other nations. A very few remained in the United States and over 8 million of them were melted down after being collected by the US Treasury in 1887.
Coin dealers in the US have reported being swamped with fake coins in the mid- to late-'aughts. Some of these forgeries are so good that even highly trained numismatists can't tell the difference between it and the real thing. This causes a crisis of confidence in rare coin projections that can upset the price.
By some reports, there is actually a very highly evolved and active domestic counterfeiting industry that officials have been unable to contain for a very long time. How much of Chinese currency and coinage is actually counterfeit is anyone's guess, but as many as 30% of the branded items in China are forgeries, not to mention the thriving market in pirated intellectual property.
Because of their rarity, trust of the numismatist's pronouncement of authenticity becomes of paramount importance when investors purchase rare coins of this value. Certification by more than service is considered reasonable for coins that are very rare.
The impact of these replicas sold as forgeries, especially those of the very rarest dates is tremendous should one of very high value get through to sale, as may have already been the case according to some sources. For instance, rare coin projections suggest that as few as 15 silver Trade dollar proof coins from 1884 and 1885 are in even in existence. It would be hard to tease out what part of a falling coin price for silver Trade dollars is due to fear of a fake coin or fear of falling markets.
Sam Brown
March 26, 2009
