The coin market is fascinating. A coin will be released with a low mintage and a beautiful design but won’t sell out. On the other hand, a mass-produced coin will sell out in minutes with very little scarcity and nothing particularly noteworthy about it!
This brings me to the 2012 Red Poppy $2 coin. This coin has reached extraordinary heights. Rolls, which cannot be guaranteed regardless of what the seller claims, are starting to move north of a retail price of $6,000. It is critical for the reader to understand that as the price continues to grow, the incentive for people to make fraudulent rolls is increased. Please see my article on this issue for more information…https://ensleighcoins.com/blogs/news/fraudulent-rolls
While single uncirculated coins are moving towards a retail value of $300. Given the massive growth in the value of the 2012 red poppy, are these a good investment moving forward? Well, the answer is almost certainly no.
First, let me discuss the reasons why these coins have increased in value. They are the first coloured circulating coin produced in Australia and will always hold that distinction. They are the lowest minted of the $2 coloured coin series (currently). They have been in circulation long enough that they are now quite a rarity to find and one needs to purchase one to complete a collection. In terms of rolls, there was no RAM roll release and a significant percentage of rolls have been opened over the years. All of these factors are legitimate reasons why the price of these coins has increased.
Now, there are additional reasons why these coins have increased in value, that are not so legitimate in my mind. The major reason is that they are seen as investment pieces. Essentially, those who buy them hoard them and create artificial scarcity. This in turn drives up market prices as these coins appear much more scarce than they are.
The 2012 red poppy is not a rare coin by any standards. The reported overall mintage on the coin was 560,000 which is quite a significant mintage especially when one considers some of the much scarcer pre-decimal coins. The other issue for the 2012 red poppy is that most of them were collected in uncirculated condition in either rolls or RSL cards. This means that the population of these coins that are in uncirculated grade is uncommonly high for a circulating coin.
This coin is a prime example of FOMO (fear of missing out) driving up prices. I have seen individuals with dozens of rolls. I would point out that rare coins are not hoarded in this way as they are not available in such quantities!
The fundamental issue with the 2012 red poppy is that the market is a bubble in my mind. At some point, it will reach such heights that the demand for the coin will be reduced. This in turn will lead to more supply which will lead to the coin reducing in value. Another reason is that eventually, tastes within the market will change. People will move on to the next market trend and interest will eventually be reduced overall in this coin. At this point, there will still be literally hundreds of thousands of these coins in uncirculated condition. I believe that the demand side will try up and this will reduce prices.
When investing in coins, it is my view that you will do best with coins that are valuable due to supply-side economics. I speak of course about rarities and scarce coins. This issue with coins that are valuable due to demand is that once that demand reduces, the value of the coin quickly drops.
Having coins in high grades has historically been a solid investment, but it is still very early days in figuring out what the long-term market will be for the 2012 red poppy.
I should also point out that of course there is potential for the price to continue to grow. This market is a self-fulfilling prophecy. The logic goes that the coin has increased many times in value and that it is likely to continue doing so. This creates demand and an expectation from buyers that they will not sell without a profit reducing the availability in the market and driving up prices.
It is also important to note that this is my opinion and is not necessarily reflective of what will happen. Time may very well prove me wrong. However, I urge you to be sensible with your investments and not look for an easy dollar. As the saying goes, ‘if it looks too good to be true, it probably is’.
Lastly, I would like to thank you for reading this article. Please feel free to contact us at contact@ensleighcoins.com with any feedback, questions or if we can help in any other way.