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Industry Insider: COVID Business Landscape, Part IV

View all installments of the five-part Industry Insider series.

By Tom Michael

In our first three articles we have shared information on the rise in retail sales for bullion coins and the difficulties arising for mints in acquiring materials and shipping those investment products. We have also relayed to readers the inside news from dealers and auction houses illustrating how the collector coin market is reacting to functional changes brought on by the pandemic.

This week we continue our coverage of numismatic life during the pandemic with a look inside two of the largest auction firms in Europe, plus some good news from government issuers of modern legal tender commemorative coins. 

At Fritz Rudolf Künker GmbH & Co. KG, headquartered in Osnabrück, Germany, business has continued very smoothly during the pandemic. Ulrich Künker, general manager of this multi-layered numismatic firm, explained their first experience with an auction during a pandemic, “We were to my best knowledge the first auction house conducting a sale under the new circumstances. We started our spring sale on Monday, March 16 just to learn that from March 17 onwards there will be a nationwide lockdown with travel restrictions practically all over the world. Luckily we made online bidding available for this sale (first time in Künker history). The auction ended very strong with a hammer of over 10 Mio Euro (estimates 6.7 Mio Euro).”

Showcasing Duke Friedrich, this coin is one of the great rarities in numismatics, being the first Danish portrait coin. Struck in 1522, only a few examples of the Husumer taler are known. This one will be sold by Künker Münzauktionen in June as the firm returns to a live auction format. (Images courtesy Künker.)

With auctions and website sales, Künker has found that the business improved in some ways even though expectations and processes sometimes have to be adjusted.

As Künker explained, “the demand for coins has been strong. We sold a lot of coins over the internet; in fact we had the highest turnover in our webshop in April 2020. Packing and shipping does take a little longer, but as everybody knows the reason we don’t see a real problem in that. All our clients are patient.”

The company opened its new building in 2014, with a larger space of about 2,000 square meters. With distancing workers a major requirement during the pandemic, this space really helped, as Künker said, “This allows us to let in the office more or less the entire team. We decided not to have huge meetings and avoid unnecessary visits among the employees. Communication does happen over phones and email. The employees are free to work from home, but most of them feel safe enough in our building. Of course we do telephone and video conferences much more often than before. They do work really well!”

Künker has been very cautious and careful concerning employee health and continues to monitor the numbers of cases in Osnabrück on a regular basis. As of this writing, they were maintaining a downward trend in the city and no member of the Künker staff was sick, although a few people have been home quarantined by choice as a careful risk management decision. Overall, the strict distancing and recommended hygiene policies have worked very well.

Throughout our conversation with folks in the numismatic industry, the theme of using video communications has been evident. We should note also that groups have been established or reinvigorated on the internet, particularly through social media outlets, during the pandemic. We are seeing networks for collectors, dealers, clubs, auctions and traders expanding every day as people successfully pursue their hobbies and livelihoods online. 

But the desire for live venues and personal interchange is strong in numismatics, and in the case of Künker Münzauktionen plans are being made for the possibility of a live and online auction in mid-June.

Künker shared these details with great enthusiasm: “The most exciting event will be our June sale, which will be hopefully conducted as a regular public sale in the close-by hotel named Remarque Hotel. The only changes are, we won’t have viewing in the hotel as we need the space to be able to conduct the sale with the obliged distance concept. We will have no more than one person per 10 square meters in the auction room. That limits us to 40 customers on the floor. Of course that doesn’t restrict the number of visitors in total. It only limits the amount of people in the auction room. As we will hold the sale in the summer, our guests are free to wait on the terrace of the hotel for the requested lots. Online live bidding will also be available, and we will of course offer phone bidding as well. Both ways to participate in our sales are free of charge for all our clients. We expect that travel restrictions will be waived one week before our sale on June 15. As we still expect less people willing to travel to Germany, we send a huge amount of our coins to NGC to be certified by them. Grading results will be available online soon. In addition, we will provide small video clips on our webpage for a limited number of coins. The video shows the coin in the hand of an employee who is turning the coin in the sunlight. That way you almost see every little detail of the coin, especially if the coin has problems in the fields or carries rim damages. We think these little innovations will be very helpful to avoid unnecessary trips to Osnabrück for viewing purposes.”

There should be about 3,600 lots in the sale, with a total pre-sale estimated value of about 5.2 million euros. Auction dates are currently set for June 22-26. Expect to see several significant collections in this sale, including the Dr. Hergen Boyksen Collection with coins and medals from Schleswig-Holstein, a comprehensive collection with coins and medals of the counts and princes of the House of Lippe, and The Mining Collection from Dr. Werner Oschmann. 

In our second installment of this COVID Business Landscape series, we covered changes at Heritage Auction Galleries in Houston, Texas. Much of their business was moving on with great success through minor adjustments, but Steve Ivy told me that their sister firm across the pond, Heritage Auctions Europe had been a bit more affected in the Netherlands. Jacco Scheper, managing director of Heritage Auctions Europe, gave us more direct information on the ground.

“The corona-crisis is heavily influencing daily life in Europe and therefore also in the Netherlands,” said Scheper. “Fortunately, HAE has a very large office in IJsselstein, so social distancing is easy for our employees. Most employees are still working in the office, only a few are working from home. Only one of our part-time employees, a young IT specialist, spent eight weeks (!) at home with corona and is slowly recovering from it.”

In general, Scheper sees the changes in the coin market as positive.

“The coin market (and bullion and many other collectibles) is booming, online sales are up by 50 to 300 percent.”

While others have cited similar results, Scheper detailed the circumstances at Heritage Auctions Europe specifically:

“With so many people at home spending time to their hobbies, this is not surprising. Heritage Auctions is very well prepared with their award-winning ‘Heritage-Live’ and all Heritage Auctions have realized fabulous hammer prices in the past months and consignors are very pleased with their results. Many European auctions have postponed their auctions due to corona. Same for Heritage Auctions Europe; we have rescheduled our May auction to November. There are so many multiple-coin lots in our auctions that we really need lot-viewing for our international clients. In November we will be able to offer lot-viewing with social distancing, and we expect a spectacular (online) auction with up to 8,000 lots of coins and currency.”

As we have seen in the United States, there are always different circumstances to be adjusted to in various regions. We have been glad to see that all numismatic business people have dealt with pandemic problems by focusing on realistic solutions for their areas and businesses. We numismatists are a proactive bunch!

We have also been happy to hear that some state-run entities have sailed through the pandemic with almost no harmful effects to their personnel or business models. For instance, we heard from a representative of the Münze Deutschland that their business had no real changes, did not have to close at all and maintained a healthy staff unaffected by COVID-19. The only changes for the German Mints came from outside factors. Because of the postponement of the European Football Championship 2020, they have moved production of their commemorative coins in honor of that event out until the summer of 2021.

Similarly, the Narodowy Bank Polski (National Bank of Poland, NBP) remains very busy planning and selling commemorative coins in Poland.

Joanna Stępniewicz, head of division – cash & issue department told us that, “Sale of Polish collector coins and bank notes was temporary suspended (from March 23 until May 12) only at the National Bank of Poland regional branch cash desks. Sale of collector items through the NBP online shop and to distributors, who have signed with NBP the framework sale agreement, was preceded as usual.”

On April 10, 2010, a plane carrying the President of Poland, First Lady and some of the most honorable and influential citizens in the country tragically crashed on landing in Smolensk. None of the 96 people aboard this flight survived. On the 10th anniversary of this tragedy, a beautiful and heartfelt silver coin was struck to honor the fallen. During the pandemic of 2020, this coin was released, just 10 days past its planned time, through the dedicated efforts of the National Bank of Poland. (Images courtesy NBP.)

Changes in event dates also affected a few of their releases.

“Due to events postponing, the coins regarding the Tokyo Summer Olympic Games 2020 and commemorating beatification of Cardinal Stefan Wyszyński were withdrawn from the Schedule of Issue of Polish Collector Items and Commemorative Coins for 2020.”

In addition, a few other commemorative coin issues, such as the silver coin for the 10th anniversary of the Smolensk Tragedy, have been slightly delayed or had issue dates rescheduled. Pretty minor problems, with quick and efficient solutions achieved. Great work at the NBP!

Andrea Lang, director of marketing and sales for the Austrian Mint, brought us the good news that their staff has had no cases of COVID-19 and that their production facilities did not have to close during these early months of the pandemic.

Lang told us that, “we never closed our business, only our shop had to be closed from March 16 to April 14. Despite the challenging situation, our production line was fully operational and made a fresh batch of our best-selling Vienna Philharmonic pure gold coins every day and all collector coins were issued on time. Our administration department worked remotely but it worked well and many dealers were surprised when they realized that we were not working door to door.”

Regarding changes to the business, Lang provided this insight: “The spread of the virus, the probable psychological effect of the strict lockdown in Europe and the negative outlook on economic growth triggered a dramatic increase in our business; investment products were particularly fast-selling.”

Several adjustments had to be made to accommodate.

“A huge increase in the number of orders and the safety measures put in place made our work more complicated. Our workforce is currently far smaller than usual since some employees have a medical predisposition that prevents them, by law, from coming to work. At the same time, the safety measures are hindering our work procedures as we are obliged to keep at least one meter apart. We have struggled to ship products overseas and are still facing shipping costs four times higher than before the crisis.”

The limits caused by the pandemic have often impeded acquisition of materials and transfer or shipping of finished products. This is something we have heard from many of the larger production-based businesses we talked with for these articles. In the case of the Austrian Mint, shipping to customers in the United States has been a problem. Another tricky situation for them involves materials acquisition for one of their popular investment products.

Lang explained, “We have noticed a shortage of Platinum and are facing difficulties in sourcing enough of it to have Platinum Philharmonics continuously available.”

With demand for coins so high, it is particularly frustrating for businesses to work with such supply-based problems. Getting materials to strike new issues and acquiring older coins for sale are the first steps. Following that, everyone must cope with arranging appropriate delivery. These issues can be tricky, but we look at them as good problems to have so long as demand remains. 

From our singular viewpoint, these are the truths. For coin dealers who have lots of stock, business is very good. For auctioneers with ready consignments in process, coins are selling very well. For mints and distributors, demand for investment and commemorative coins is very strong. The remaining issues are simply challenges to overcome.

 

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