Jacek Jakóbczak Director, International Coin House AG Winterthur, Switzerland The coin market development forecasts Coin conference COINS 2016, Moscow, 23rd September 2016

“In gold we trust”*  Gold price performance over H overpassed 25%.  Record H1 investment amount (1024 t), overtaking the previous high in H (917t).  Dynamic rise in the traded volumes of ETFs.  Central Banks made sizeable purchases of gold in Q for diversificating their assets.  Commercial banks have also been increasing reserves in gold. * „In gold we trust” is a title of a gold report/analysis by Incrementum, Lichtenstein

“In gold we trust”

4 7% 1% 2% 9% 2% 13% 23% 42% 1% GOLD DEMAND PER REGION Source: Metals Focus, World Gold Council Demand includes jewellery, bars and coins, and technology. It excludes ETF investment, over-the-counter investment, and central bank net purchases.

“In gold we trust”

"Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted." Alan Greenspan, speaking to the US Congress in 1999

© Copyright  All rights reserved by International Coin House AG 1. New component of uncertainty in the market - geopolitical concerns: -Conflicts and their potential escalation up to the extremes. -Conflicts resulting in huge migrations – changing drasticly the social scene, especially in the EU. -Uncertainty as to the future of the EU (Brexit /”luckily the UK was not part of the monetary union or else it would be game over”/ and …….). 2. Economic factors: -The future of the Euro currency and the Euro zone. -Fiat monetary system does not perform in extremes, gold remain the only reliable asset. -Falling real interest rates (negative performance ofthe cash deposits). -Destabilized oil market. -Destabilized and falling stock market. -Increasing money supply. -Growing emerging markets physical and investment demand. Main Factors – Uncertainty?

“There is some evidence that we are learning how to manage a fiat currency, I’ve always had some considerable skepticism wheatear in the long run it can succeed…” Alan Greenspan, 2002

-Vintage coins -Bullion coins (investment) -Collector coins (commemorative, gift, others) PRECIOUS METAL COINS © Copyright  All rights reserved by International Coin House AG

-Vintage coins market has a specificity similar to the works of art market due to rarity and high emotional component of the coin price. -Vintage coins market is based on a good infrastructure: -Internet auctions assuring elementary price transparency, -Grading system – control of authenticity and quality of te coins -Vintage coins market performing very well. VINTAGE COINS © Copyright  All rights reserved by International Coin House AG

-Vintage coins -Bullion coins (investment) -Collector coins (commemorative, gift, others) PRECIOUS METAL COINS © Copyright  All rights reserved by International Coin House AG

1967 South African Krugerrand Coin 1979Canadian Maple Leaf Coin 1981 Mexican Libertad Coin 1982Chinese Panda Coin 1986US Eagle Coin 1987British Britannia Coin 1989Austrian Philharmoniker 1990Singaporean Lion Coin 2006US Buffalo Coin Bullion market milestones

“In gold we trust”

“In gold we trust...”

“In silver we trust...”

-Vintage coins -Bullion coins (investment) -Collector coins (modern - commemorative, gift, others) PRECIOUS METAL COINS © Copyright  All rights reserved by International Coin House AG

-Many mints and coin dealers facing problems with declining sales. -Only a few mints (being commercially oriented) are performing very well in the changing collector coin environment. -Twilight of the traditional commemorative coin market? (Germany 20% decrease in 10€ mintages 2015/2016, Poland – almost 10 times lower mintages over past 5-6 years). -Traditional coin distribution systems do not perform well in competition with the new, aggresive marketing models. -Dealers offering mostly regular modern NB issues are in troubles, must complement their offer by vintage, bullion or mass market products in order to assure continuity and business efficiency. Coin Market – current problems © Copyright  All rights reserved by International Coin House AG

-New collector coins style (designing and technologies – more expresive, attractive coins) -Innovation as a must in order to increase the attractiveness (now understood even by a formerly very traditionally oriented mints). -New product development and marketing models (royalty programs, DM, Internet) -„Regular” coins vs. a swing towards the gift market. -New collectors coming to the market and start collecting „modern” legal tender coins and coin like medals series. -High importance of innovation in managing the client relationship and loyalty (CRM). -Mass production changing the collector’s attitude and expectations (declining quality and value). Coin Market – Times of Change © Copyright  All rights reserved by International Coin House AG

-Acquisition of new collectors is becoming now a crutial function in the context of the business continuity. -Mints and traditional coin dealers are facing an aggresive competition from the side of big dealers using new marketing technics (DM). -In order to get new clients the following strategies are in use by the DM firms (for for contact initiation): a/ offers of coins for free (mostly cheap medals), b/ sales of most popular bullion with zero margin (like Silver Eagle) c/ sales of the government coins at the nominal value (like 10€ for the price of 10€. -The new clients acquisition is going therefore to be a permanent and indispensable task (only those who adjust their new clients acquisition strategies will have the chance to survive in the market in the years to come). Coin Market – New clients acquisition © Copyright  All rights reserved by International Coin House AG

The future of the coin market: -Vintage coins – quite limited market but having long term perspective, similar to the works of art market. -Investment coins: -Generally having long term perspective – componet of portfolio management; -Currently - potential medium term growth, -Currently driven by the economic but also significantly by geopolitical uncertainty. -Future economic and geopolitical stabilization may cool down the growth in this market. Summary

The future of the coin market: -Collector coins market: -market of the CB coins will never desappear – although may decline. -Requires for further growth: adjustments in product development and managing the clients relationship, as well as better legal control and regulations. Summary

Thank you! Jacek Jakóbczak Director International Coin House AG