J&T Coins LLC Blog

Days Not to Buy Gold Identified

By Patrick A. Heller, Numismatic News March 09, 2010

Despite the fact that the price of gold rose more in the previous decade than almost all U.S. paper assets, the rise has no short rapid spurts. Actually, the market action that limits gold from breaking upward is just one more bit of evidence of the manipulation of gold prices.

Savvy analysts have long noted that as the price of gold might trend upward during daily trading, it has almost never increased by more than 2 percent from the previous day’s COMEX close. Once the price of gold might increase by 2 percent, that event would almost automatically trigger a round of sell orders to either cap the rise or even cause the price to retreat. Even if buyers stepped up their purchasing, it was obvious that a maximum of a 2 percent daily increase at the COMEX close was the unpublicized “rule” imposed by the U.S. government and its trading partners.

This rule of gold price manipulation also has an accompanying rule. If the price of gold goes up by 2 percent in one day, it is prevented from rising by more than 1 percent the following day. Further, under no circumstances is gold to be allowed to rise consistently, as this pattern would attract more buyers.

A few months ago, commodity researcher Adrian Douglas (whom I cited in last week’s column) reported on his long-term study of the COMEX gold closes. He tracked the percentage change from one trading day to the next. Over the course of the study, the price of gold declined from one day to the next by more than 2 percent over 100 times. It increased by more than 2 percent only six times – and this in a market where the price rose by a huge percentage over time. Only once, as best I recall, did the price of gold increase by more than 2 percent one day and by more than 1 percent the next day. Yet there were numerous instances of consecutive daily price declines of 2 percent or more.

A market free of manipulation with prices rising over time would normally show a greater percentage of strong up days than down days. A pattern of continuous price rises would encourage the “momentum” investors to enter the market. Those wishing to hold down the price of gold have an incentive to discourage such investors from helping to drive up gold even higher. The unusual consistency of this 2 percent rule is signature of a manipulated market.

Short term traders can try to take advantage of this pattern. On any day that the price of gold rises by 2 percent, consider selling and replacing at the expected lower price in the next 24-48 hours. If you are looking to buy for the long term, don’t buy on a day where the price of gold is up 2 percent. Instead, wait for a quick retrenchment within a day or two. Just keep in mind that every once in a while the gold market will act contrary to this “2 percent rule.” If you can live with that risk, then you can take advantage of the manipulation of the gold price.

Baltimore Show Report

At the Baltimore show last week, dealers continued to be tentative at buying and selling common classic U.S. gold coins (and most other rare coins). In many instances, dealers were waiting for orders before stepping up to buy coins at the bid side of the market. There was more than usual interest (as we saw in Long Beach a month earlier) in purchasing damaged U.S. gold coins, including those used in jewelry, but only at price levels that were close to scrap metal value. My own company’s sales were solid and higher than expected, given the state of the market. There was, however, one dealer who told us late in the show that he had only sold three coins up to that point.

Patrick A. Heller owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” the company’s monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Coin Update (www.coinupdate.com) and Financial Sense University (www.financialsense.com). His periodic radio interviews can be heard on the Korelin Economic Report at http://www.kereport.com.

By John Waggoner, USA TODAY If you like to have your investments close at hand — say, buried 12 paces northeast of the old apple tree — then gold bullion is the kind of investment you’d like. But even if you’re not worried that the dollar will plunge, owning gold isn’t a bad idea. You hear many people pushing gold these days, citing our nation’s $12.4 trillion debt. Gold is the classic hedge against inflation. If the U.S. resorts to printing money to repay our debts, the value of paper dollars will fall, and gold prices will skyrocket.

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Of course, given that gold has soared to $1,132.60, a 348%, gain from its July 1999 low of $252.80 an ounce, gold is a pretty easy sale these days. But gold hasn’t skyrocketed because of out-of-control inflation, which has risen at a 2.53% annual pace since July 1999.

 And inflation probably won’t rear its ugly head this year, either. True, the Federal Reserve has pumped trillions of dollars into the economy to keep it from depression, and unless it drains some of that money, inflation will be an issue later.

 But not just yet. For persistent inflation, you also need a rip-roaring economy and low unemployment. In an overheated economy, prices rise as demand outstrips supply. Workers demand higher wages to keep up with prices — and they can get them, because unemployment is low, and employers have to bid for talent. Eventually, the combination of easy money, low unemployment and rising prices combine to create an inflationary spiral.

 We’re missing two out of the three elements necessary for high inflation. That little something extra in your pay envelope is more likely to be a layoff notice than a raise: Unemployment was 9.7% in January. And demand is weaker than a cup of vending-machine coffee.

 ”We think we still have deflation,” says Frank Holmes, CEO of U.S. Global Investors.

 And, in fact, gold isn’t closely tied to inflation. In the 20 years from January 1981 through January 2001, gold fell 69%, while prices doubled.

 Gold prices are closely tied to the value of the U.S. dollar on the currency exchanges, however. When the dollar falls, gold tends to rise, and vice-versa. The dollar has fallen 46% vs. the euro since 1999.

 The dollar has been gaining strength since December but only because other currencies look so awful. Investors have been dumping euros because they’re worried about a default on Greek government bonds. They’re buying dollars, if only because the U.S. seems more stable in comparison.

 Keeping 5% or so of your portfolio in gold isn’t a bad idea as a hedge against financial catastrophe. “It’s the ultimate downside protection for events we can’t forecast,” says Rachel Benepe, co-manager of First Eagle Gold fund.

 Most gold mutual funds buy shares of gold-mining companies, which often soar when gold rises. Top-performing gold funds are in the chart.

 If you want physical gold, consider 22-carat U.S. gold Eagle coins. You can also buy 24-carat Canadian Maple Leaf coins, which have the same amount of gold as Eagles, but not the other metals used to harden the coin. Toss an Eagle from a skyscraper, and you’ll still have a coin. Toss a Maple Leaf from a skyscraper, and you’ll have a gold pancake.

 Coins also don’t have to be tested for weight and gold content, as gold bars sometimes do. “With a 100-ounce bar, there’s a greater chance someone has shaved a few ounces off it,” says David Beahm of Blanchard & Co., a New Orleans gold dealer.

 Shop around. Prices can vary considerably from dealer to dealer. And don’t buy gold through the mail unless you’re 100% certain the dealer is legit.

 Physical gold has to be stored somewhere. Most people are happy to put their gold in a safety deposit box. If you don’t trust banks, however, you have to figure out where to keep your gold, which can lead to guns, dogs and treasure maps.

 If you don’t want to own physical gold, consider a gold exchange traded fund, such as iShares Comex Gold Trust (ticker: IAU).

 Rising inflation or a falling dollar may be in the cards — but you have time before it happens. For most people, a modest investment in gold isn’t a bad idea. “By no means should you have the majority of your portfolio in gold,” Benepe says. “But you never know when you’ll need it until you need it.”

 John Waggoner is a personal finance columnist for USA TODAY. His Investing column appears Fridays. His book,Bailout: What the Rescue of Bear Stearns and the Credit Crisis Mean for Your Investments, is available through John Wiley & Sons. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com. Twitter: www.twitter.com/johnwaggoner.

By MICHAEL SASSO msasso@tampatrib.com

The Tampa Tribune

Liquidation looms for National Gold

Published: March 5, 2010

TAMPA – Mark Yaffe, a Tampa businessman who became one of America’s leading gold coin dealers, will see much of his empire dismantled after a bankruptcy judge’s decision Wednesday.

U.S. Bankruptcy Court Judge Michael Williamson on Wednesday converted National Gold Exchange’s Chapter 11 bankruptcy case to Chapter 7 bankruptcy. The judge’s action spells the end for the gold and rare coin company because Chapter 7 bankruptcy leads to a company’s liquidation.

National Gold’s chief creditor, Sovereign Bank, already had seized most of the company’s assets months ago, but was prevented from selling them when National Gold filed for bankruptcy protection last summer.

Those assets include millions of dollars in gold and rare coins and Yaffe’s unusual collection of antique music boxes, which are similar to player pianos.

Now, with the judge’s order, the bank is authorized to liquidate the items. Richard McIntyre, National Gold’s bankruptcy attorney, expects the music boxes could sell for at least $7 million, while the coins should sell for more than $5 million.

Meantime, Yaffe is trying to sell his opulent mansion in Tampa’s Avila community to pay his creditors. The 29,000-square-foot residence is stocked with his renowned collection of music boxes.

Yaffe’s troubles started last summer when a lawyer sent a letter to Sovereign Bank claiming Yaffe was improperly using some National Gold assets to pay for his mansion.

Acting on the tip, Sovereign Bank quickly began an investigation and found several problems at National Gold, including missing coins and faulty accounting.

Despite his company’s liquidation, Yaffe expects to continue in the gold coin business, McIntyre said. He recently has received loans from his father and others allowing him to launch a new, if much smaller, coin operation called Phoenix Gold, McIntyre said.

J&T Coins LLC is please announce they are now selling 2010 1 oz Silver American Eagles NGC MS69 Early Release.

They sell for $32 each which includes shipping and insurance in the USA. 10 of them sell for $310 with shipping and insurance in the USA  included. Click here to order from our website. For larger quanties contact J&T Coins LLC at 866-267-6024.

J&T Coins LLC which started in 2001 is an authorized NGC dealer.

Just What are Those KM Numbers?
March 02, 2010

by Dave

I had a phone call. It was one I had been expecting for several years, but in that time it has hardly happened.

The question had to do with the Coin Market Price guide section.

What are those KM numbers and what do the letters stand for, I was asked?

Ever since my firm started applying the world coin numbering system to U.S. coinage I have been expecting questions.

KM stands for Chet Krause and Cliff Mishler who invented the numbering system that is used as a shorthand by the world’s collectors. Instead of giving long descriptions, all you need do is give country, date, denomination and the KM number and any collector with the Standard Catalog of World Coins can tell you what it is.

This shorthand is necessary for making concise price lists.

This kind of numbering system never caught on with U.S. collectors because there is much less to keep track of.

However, our computer system is such that it is easier to apply numbers to all coins than to try to go on listing U.S. coins without numbers.

The change made collectors of U.S. coins who live outside the United States very happy.

For American collectors, it was hardly noticed.

As I said, I was expecting this call for a very long time.

Mint Stats: Mint Hikes Prices for Gold Buffalo, Spouse

Other News & Articles

• Mint Stats: Mint Hikes Prices for Gold Buffalo, Spouse
• Think Twice Before Cleaning Any of Your Coins
• Disabled Vet Proof Prices Rise

Keep an eye on sales of gold Buffaloes and First Spouse coins in coming weeks, because they’ve seen a price hike.

When gold edged above a $1,100 an ounce average for a week on the London Fix, the Mint increased prices in accordance with its policy to reflect market prices. The change took place Feb. 24.

The price of First Spouse coins increased by $25 and gold Buffaloes by $50. The proof First Spouse coins went from $704 to $729, uncirculated First Spouse coins went from $691 to $716 and 2009 Buffalo gold coins increased from $1,360 to $1,410.

And in its first week of sales, the coin honoring Disabled American Veterans sold more than 98,000 coins, almost one-third of its total mintage of 350,000.

Think Twice Before Cleaning Any of Your Coins

Forrest Gump’s words rang in his head, “Stupid is as stupid does.” Our numismatist’s 1945 “micro S” Mercury dime had come back from the grading service as “cleaned.” The dime’s value had been greatly diminished by his less than artful cleaning.He remembered the day of his fateful mistake. The sun was shining, birds were singing and flowers were in bloom. Amid all this loveliness, he was sorting his coins.

He had quite a few Mercury dimes in two-by-two holders. Looking through them, the 1945 “micro S” dime literally leaped out at him.

He had forgotten about this purchase of many years ago. It was a gem coin that he had meant to send off to the grading service. Examining the dime, he was impressed by the luster and wonderful strike.

The only thing wrong was some dark “rim toning” from 3 to 6 o’clock. The toning was a genuine distraction to the rest of the coin.

Examining the coin through his loupe, he saw that the coin had never been cleaned as was evidenced by the luster and lack of hairlines. The dark bluish hue of the rim toning just did not sit well. Without the toning the coin would be stunning.

What to do was his quandary.

The toning would not impact the coin’s high grade, but it would have so much more eye appeal if it were totally white. In his head he heard voices saying “Clean the coin. Clean the coin.”

Cleaning any coin went against the advice he always dispensed to newcomers, which was:

“Don’t clean coins unless you’re willing to suffer the consequences from a botched cleaning.”

It was only a little toning and a quick little swish of a commercial coin cleaner would eliminate it. What could go wrong? To be safe he would experiment with a coin or two from his pocket change to make sure he had his technique down so as not to mar the luster or leave any hairlines.

He had cleaned coins in the past with a simple washing, such as his coffee can purchases of coins deposited in can and jars over the years. He seldom used commercial coin cleaning solutions unless the coins had been badly contaminated with dirt, grease, PVC slime/residue and other foreign matter.

These solutions had been used with inexpensive coins. He considered this to be conservation vs. letting the coins deteriorate due to surface contamination.

He used a cotton ball to apply the cleaner in a gentle blotting motion so as not to create swirl marks or hairlines. Still the toning seemed resistant and stubborn.

As he prepared to blot again he heard the voices: “A little more pressure and rub it just a tiny bit to remove it all.” Now other voices called out to him: “Don’t do it. Don’t do it.”

Snapping back to the present, our numismatist murmured, “just a little rub,” as he applied the cotton. He followed the cleaning with a quick rinse of the coin in water. The toning had disappeared and the coin look wonderful, but perhaps with a sense of foreboding he did not examine the coin under magnification.

Now, weeks later, he had the dreaded results. “Stupid is as stupid does.” He would, of course, be quiet about his failure. Had the coin come back without mention of the cleaning and in the grade he wanted he would have proclaimed himself to be a genius.

The moral to our story is that sometimes things are best left alone. With cleaning coins you need to know what you’re doing.

There are several things along the way one needs to consider before cleaning any coin. The first one is: Why do you want to clean the coin? If it’s because of toning, remember toning is a natural condition that should not affect the grade unless it is covering marks, blemishes etc. Secondly, can you stand looking at a botched job? For instance, a “pink coin” is not attractive. This has been known to happen with copper and bronze pieces.

Thirdly, can you afford to lose the value of your coin if it is damaged in the cleaning? Additionally, get all the advice you can. Discuss the cleaning with a dealer or fellow collector.

There are books that discuss the cleaning of coins and all the pitfalls. Getting educated will help.

Finally, if you have a coin that you are tempted to clean, consider selling or trading in the coin to someone who may appreciate it. There are collectors who actively seek attractively toned coins. This is the preferable route to ruining a coin’s numismatic value.

If after all this you are still intent on cleaning your coin do be careful. Try your cleaning technique on some coins from your pocket change.

Looking over the demographics of the hobby most of us are not chemistry majors. Cleaning, or better said conservation is best left to the professionals.

2010 American Veterans Disabled for Life Silver Dollar is now available for sale at the U.S. Mints website. The coin is being offered in both BU and Proof. The total mintage across all product lines is 350,000.

J&T Coins LLC will also offer these for sale on a pre order basis. To order call 866-267-6024. M-F 8:30AM to 5:00PM CST.

Fakes Share Certain Surface Characteristics

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• Fakes Share Certain Surface Characteristics

If someone asks you to name some of the defects commonly found on counterfeit coins what would you say? What would you look for on a coin that you suspected to be counterfeit?

Did you say weight? One authenticator that I have worked with routinely weighed any coin he suspected might not be genuine. I cannot argue with his thoroughness, yet there were many times I had to suppress a smile or comment.

You see, most of the coins that were out of tolerance were not very good fakes to begin with. Besides, long ago, the people making deceptive fakes became more careful about the weight of their products.

Did you say color? As I have discussed here before, color gives us an important clue about the alloy composition of a particular coin.

What about its surface texture?

Let’s examine a group of recently made counterfeit coins from various countries to see what they have in common. Before looking at the illustrations, I’ll give a short description of what each looks like to the naked eye.

The coin in Figure 1 is a Danish 5 ore, KM#794.1 made of bronze. It grades MS-68 red. There are no marks on it and its surface is fully lustrous and spot free. And why not? It was probably just made to order a few weeks ago.

Figure 2 is a 30X view of a 1936 French 20 francs, KM#879. This coin would also grade very high, perhaps MS-66 because of a few dings. Its reeded edge feels very sharp to the touch and the fields of this fake are almost semi-prooflike. This would be an awesome coin if it were genuine.

Both of these coins fall into the category of “too-good to-be-true” and that alone should make one suspicious of their authenticity. The counterfeiters are not stupid. They have learned that it is easier to pass a dark, slightly circulated coin off as a genuine specimen.

The counterfeit Russian ruble, KM#19.2, in Figure 3 is an example of a coin that might have a better chance of passing undetected because it appears to have circulated. This coin is gray with dark accents around its relief.

Its “details” grade is XF/AU. However, there is virtually no actual friction wear on the coin. There are many “fresh” contact marks on its surface and there are also many depressed marks that were transferred from the original coin used to make the fake dies. These depressions have the same surface as the rest of the coin and will carry over to similar coins having a different date.

Figure 4 shows part of the reverse on a circulated Bust dime that is counterfeit.

Now let’s take a look at the micrographs to see what these coins have in common. All have small pimples on their relief. The Russian coin also has many in the field.

When two dealers get together to discuss a suspect coin you’ll often hear them mention a rough, granular surface or pimples. These characteristics are commonly found on fakes made by casting. More recently, they are seen on fakes struck using dies made by a spark erosion process. Many of the new Chinese counterfeit coins have these defects and they cannot be polished off without affecting the coin’s design. Do you see the tiny pimples in each of the micrographs?

One note of caution is in order. I have found that sooner or later, every defect seen on a counterfeit will turn up on a genuine coin and the reverse is also true. For instance, environmental damage can give a genuine coin a rough granular appearance and a few stray pimples on a coin does not prove it’s a counterfeit. In fact, one variety of 1883-CC Morgan dollar is covered with little pimples on its reverse.

Should you wish to appreciate the severity of the Chinese assault on numismatics, log on to eBay and check out what’s available under copies and replicas. For the moment, most of these coins will fool many collectors but they are easily detected by major dealers and numismatists.

Nevertheless, I have already alerted you to the fact that at least one Chinese outfit, possibly with help from the highest authorities, is producing much more dangerous fakes that the ones I illustrate here.

As always, buy from reputable dealers. If you don’t feel comfortable about your authentication skills, purchase slabs and have any suspicious coins checked by a major grading service.