I agree with fwang, the article is off point.
The way I look at exchanges is they are set up to allow legalized gambling in mainland China, so people no longer need to fly out to Macau. It doesn't matter to those that are participating in the exchanges whether they are trading china mint issued coins or pigs feet, all that matters is the satisfaction (gambler's high) to out smart the electronic market as prices go up and down, for most this will end in tears, similar to 1990s craze in the US for everyone to become instant millionaire day trading stocks as online brokerage accounts were introduced.
The one positive of the exchanges is for truly bullion coins, like newly issued 1oz silver panda or 1oz silver eagle, which are issued by the millions and the chances of them every becoming numismatic are very, very low, For these types of coins it makes sense for both short and long term investor to own electronic shares of these over the actual coins, because the transaction cost is much lower, investment requirement is significantly reduced and the storage hassle is gone.
For example, if I am tempted to buy newly issued 1oz silver eagles at $3 over melt, because I believe silver is going up, I could order 10 monster boxes weighing 420 troy LB for $97,000. Then I have to find a safe storage place for them and pay for the storage. When it comes time to sell, I have to call dealers in town and across the country for pricing, pack them up, haul them to the post office without ruining the suspension on my car and ship 420 LB of silver across the country at a price of $2 over melt (bid/ask spread is $1 for these http://www.apmex.com/apmextop40
). Assuming the price of silver goes up by $4 during my hold period, my profit will be $20,000 less the cost of ownership of $5,300 ($5000 (bid/ask) spread + $300 (storage plus shipping)), so $14,700 profit on an investment of $97,000, 15% return.
Alternatively, I could buy 1 silver futures contract for 420 troy LB (5000 oz) silver with $6,000 deposit with a strike of a key and a round trip transaction of $5. If my bet of higher silver is correct and the price doesn't drop below my purchase price (no additional deposit required) my profit is $20,000 less cost of ownership of $4, so $19,995 profit on an investment of $6,000, 333% return.
15% return owning physical vs 333% return owning electronic shares, you can see why exchanges become so addictive for the newbie or even experienced traders/gamblers.
Key point is, exchanges are great for trading/gambling commodity type items, because cost of ownership of an electronic share is close to zero and the returns are highly leveraged, but for non-commodity type assets like low mintage coins, rare art or hand made watches, owning physical is the only way to currently own these assets. There will come a time when some fund manager will aggregate rare assets into a fund and sell them to the masses, it is already being done for wealthy accredited investors via LLC structure in the US, but the cost to create and administer these is high due to legal risks and same bid/ask spread as owning physical.