CFTC Gets Facts of Bullion Manipulation

By Patrick A. Heller March 30, 2010

Other News & Articles

• CFTC Gets Facts of Bullion Manipulation
• Morgan Dollars Still Active
• ACCG Seeks Judicial Review

Last Thursday, the Commodity Futures Trading Commission held hearings on the possible imposition of commodity futures and options trading limits in the precious metals markets. Each of the five commissioners plus two CFTC staff members made presentations. In addition, 14 outside parties accepted invitations to make presentations.

This hearing came about in part because of long-term complaints from organizations such as the Gold Anti-Trust Action Committee and individual analysts such as Ted Butler, Reg Howe, James Turk, Frank Veneroso and Adrian Douglas that the gold and silver commodity markets have been subject to blatant extensive price suppression manipulation by the U.S. government and its trading partners.

Among the outsiders making presentations at this hearing were Bill Murphy, in his capacity as chairman of GATA, and Harvey Organ, an individual investor.

Murphy was advised to expect a strict time limit of five minutes for his presentation, even though the CFTC chairman Gary Gensler had the option to allow more time. In order to provide the maximum documentation possible into the official written record of these proceedings, Murphy raced through his 6-1/2 minute oral presentation in just five minutes. It was not a graceful presentation, but Murphy introduced a lot information into the record that the CFTC can no longer pretend not to know.

After his formal remarks, Murphy was asked by commissioner Bart Chilton if he could provide some specific instances where such manipulation had occurred. This was the opening for Murphy to introduce a bombshell.

In November 2009, Andrew Maguire, a former Goldman Sachs silver trader in that firm’s London office, had contacted the CFTC Enforcement Division to report the illegal manipulation of the silver market by traders at JPMorgan Chase. He described how the JPMorgan Chase silver traders bragged openly about their actions, including how they gave a signal to the market in advance so that other traders could make a profit during the price suppressions.

Maguire had a series of e-mails with Eliud Ramirez of the CFTC Enforcement Division explaining how the manipulations were tied to the Bureau of Labor Statistics monthly release of non-farm payroll figures and other recurring events. On Feb. 3, 2010, Maguire sent an e-mail to Ramirez and commissioner Chilton saying that he had observed the JPMorgan Chase signal that the price of silver would be knocked down upon the announcement of the non-farm payroll report at 8:30 a.m. on Feb. 5. Maguire then sent them e-mails on Feb. 5 as this suppression was in process, pointing out that it would not be possible for him to have such accurate advance information about this development if the markets were not controlled by JPMorgan Chase.

Maguire asked to be invited to speak at the CFTC hearings this past Thursday. When he was not invited, he contacted Adrian Douglas, another director of GATA, on March 23 to supply this information to be made public at the CFTC hearings. Murphy filled Maguire’s request in response to Chilton’s question asking for specific instances of price manipulation. When I saw him Saturday, Murphy told me that the CFTC commissioners all went pale as he described exactly how the CFTC was provided this detailed information about silver price manipulation but had not yet done anything about it.

During Harvey Organ’s presentation, a question came up about whether large short positions on the London Bullion Market Exchange also reflected efforts to suppress gold and silver prices. Adrian Douglas was permitted to address the hearing on this issue, a subject he has studied extensively. Douglas pointed out that the huge volume of trading levels in the London market (averaging $22 billion per day) could not possibly be settled by delivery of physical metals. To this point, the commissioners asked Jeffrey Christian, one of the other speakers who runs CPM Group – one of the most respected precious metals consultancies, whether Douglas’s contention that the London gold and silver markets could not be settled by delivery of physical metal for all the contracts. Christian rejects the concept that the gold and silver markets are manipulated, but he did confirm Douglas’s analysis.

In effect, the commissioners were told that almost all of the trading activities on the London exchange were merely settled by paper for paper, not for physical metals as the exchange supposedly requires. Further, the commissioners were told that it was impossible for the London exchange to ever deliver all the gold and silver owed to the owners of contracts.

After the hearing, GATA publicly released copies of Maguire’s e-mails with the CFTC. Murphy also revealed that Maguire had recorded all of his telephone conversations with the CFTC without asking for their permission to do so. This is legal to do in Britain, but such recordings cannot legally be provided to other parties. GATA is currently working to ensure that these recorded conversations can be legally released to the public.

This past Saturday, Murphy addressed a full room with his Numismatic Theatre presentation at the American Numismatic Association convention in Fort Worth. There, he shared much of the breaking information he provided to the CFTC commissioners. Little did we know at the time, but at about then Andrew Maguire’s car, in which his wife and he were riding, was struck by a hit-and-run driver. Both Maguire and his wife were briefly hospitalized. The police eventually arrested the other driver. The Maguires may be considered more than lucky. There are other past would-be whistle blowers about the manipulation in gold and silver markets that died in unusual accidents before they were able to bring forth their evidence.

Curiously, the live television broadcast of the CFTC hearing suffered a technical failure right as Murphy was set to begin his testimony. This was corrected right after Murphy was finished. At the same time, at least one live voice broadcast failed during Murphy’s presentation. Coincidence?

Now that this information about silver price manipulation and about the massive shortage of physical gold and silver on the London exchange is part of the official record, I expect huge fallout. Remember, after the five men were arrested for breaking into the Democratic headquarters in Watergate in June 1972, it took more than two years for President Nixon to resign. I don’t think it will take anywhere near this long for last Thursday’s revelations to blow back against the U.S. government and the U.S. dollar. Once the public realizes the extent of the manipulation, gold and silver prices are likely to skyrocket.

I think this hearing will be the beginning of the end for those trying to suppress gold and silver prices. If you would like to view what happened yourself, please check the video clips listed below.

• To view Bill Murphy’s prepared statement to the CFTC, see http://www.youtube.com/watch?v=9wIMpe9SjfQ

• To view Bill Murphy’s citation of specific instances of silver market price manipulation to the CFTC, see http://www.youtube.com/watch?v=e9bUOr6JP4s

• To view Adrian Douglas’s discussion of the Ponzi-like gold trading on the London Bullion Market Exchange to the CFTC, see http://www.youtube.com/watch?v=jok3XLBz_SI

• To view all or part of the March 25 CFTC hearings, see http://www.capitolconnection.net/capcon/cftc/032510/FCTCwebcast.htm

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).

J&T Coins LLC is now selling NGC MS 70 and NGC Proof 70  1 oz Silver Disabled Veterans Commem. Priced at $99 for either version with shipping and insurance included in the USA.  These are limited in supply and are expected to be a big seller as we honor our Nations Disabled Vets. To order call 866-267-6024.

Published on Gold Anti-Trust Action Committee (http://www.gata.org)

A London trader walks the CFTC through a silver manipulation in advance

By cpowell Created 2010-03-25 23:41

Additional Statement by Bill Murphy, Chairman
Gold Anti-Trust Action Committee

to the U.S. Commodity Futures Trading Commission
Washington, D.C., March 25, 2010

On March 23, 2010, GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Maguire is a metals trader in London. He has been told first-hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets, and they have bragged to how they make money doing so.

In November 2009 Maguire contacted the CFTC enforcement division to report this criminal activity. He described in detail the way JPMorgan Chase signals to the market its intention to take down the precious metals. Traders recognize these signals and make money shorting the metals alongside JPM. Maguire explained how there are routine market manipulations at the time of option expiry, non-farm payroll data releases, and COMEX contract rollover, as well as ad-hoc events.

On February 3 Maguire gave two days’ warning by e-mail to Eliud Ramirez, a senior investigator for the CFTC’s Enforcement Division, that the precious metals would be attacked upon the release of the non-farm payroll data on February 5. On February 5, as market events played out exactly as predicted, further e-mails were sent to Ramirez while the manipulation was in progress.

It would not be possible to predict such a market move unless the market was manipulated.

… Dispatch continues below …

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In an e-mail on February 5 Maguire wrote: “It is common knowledge here in London among the metals traders that it is JPM’s intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits. I feel sorry for all those not in this loop. A serious amount of money was made and lost today and in my opinion as a result of the CFTC’s allowing by your own definition an illegal concentrated and manipulative position to continue.”

Expiry of the COMEX April call options is tomorrow, March 26. There was large open interest in strikes from $1,100 to $1,150 in gold. As always happens month after month, HSBC and JPM sell short in large quantities to overwhelm all bids and make unsuspecting option holders lose their money. As predicted by GATA, the manipulation started on March 19, when gold was trading at $1,126. Last night it traded at $1,085.

This is how much the gold cartel fears the CFTC’s enforcement division. They thumb their noses at you because in more than a decade of complaints and 18 months of a silver market manipulation investigation nothing has been done to stop them. And this is why JPM’s cocky and arrogant traders in London are able to brag that they manipulate the market.

This is an outrage and we are making available to the press the e-mails from Maguire wherein he warns of a manipulative event.

Additionally Maguire informed us that he has tape recordings of his telephone communications with the CFTC, which we are taking the appropriate legal steps to acquire.

* * *

From: Andrew Maguire
Sent: Tuesday, January 26, 2010 12:51 PM
To: Ramirez, Eliud [CFTC]
Cc: Chilton, Bart [CFTC]
Subject: Silver today

Dear Mr. Ramirez:

I thought you might be interested in looking into the silver trading today. It was a good example of how a single seller, when they hold such a concentrated position in the very small silver market, can instigate a selloff at will.

These events trade to a regular pattern and we see orchestrated selling occur 100% of the time at options expiry, contract rollover, non-farm payrolls (no matter if the news is bullish or bearish), and in a lesser way at the daily silver fix. I have attached a small presentation to illustrate some of these events. I have included gold, as the same traders to a lesser extent hold a controlling position there too.

Please ignore the last few slides as they were part of a training session I was holding for new traders.

I brought to your attention during our meeting how we traders look for the “signals” they (JPMorgan) send just prior to a big move. I saw the first signals early in Asia in thin volume. As traders we profited from this information but that is not the point as I do not like to operate in a rigged market and what is in reality a crime in progress.

As an example, if you look at the trades just before the pit open today you will see around 1,500 contracts sell all at once where the bids were tiny by comparison in the fives and tens. This has the immediate effect of gaining $2,500 per contract on the short positions against the long holders, who lost that in moments and likely were stopped out. Perhaps look for yourselves into who was behind the trades at that time and note that within that 10-minute period 2,800 contracts hit all the bids to overcome them. This is hardly how a normal trader gets the best price when selling a commodity. Note silver instigated a rapid move lower in both precious metals.

This kind of trading can occur only when a market is being controlled by a single trading entity.

I have a lot of captured data illustrating just about every price takedown since JPMorgan took over the Bear Stearns short silver position.

I am sure you are in a better position to look into the exact details.

It is my wish just to bring more information to your attention to assist you in putting a stop to this criminal activity.

Kind regards,
Andrew Maguire

* * *

From: Ramirez, Eliud [CFTC]
To: Andrew Maguire
Sent: Wednesday, January 27, 2010 4:04 PM
Subject: RE: Silver today

Mr. Maguire,

Thank you for this communication, and for taking the time to furnish the slides.

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]
Sent: Wednesday, February 03, 2010 3:18 PM
Subject: Re: Silver today

Dear Mr. Ramirez,

Thanks for your response.

Thought it may be helpful to your investigation if I gave you the heads up for a manipulative event signaled for Friday, 5th Feb. The non-farm payrolls number will be announced at 8.30 ET. There will be one of two scenarios occurring, and both will result in silver (and gold) being taken down with a wave of short selling designed to take out obvious support levels and trip stops below. While I will no doubt be able to profit from this upcoming trade, it is an example of just how easy it is to manipulate a market if a concentrated position is allowed by a very small group of traders.

I sent you a slide of a couple of past examples of just how this will play out.

Scenario 1. The news is bad (employment is worse). This will have a bullish effect on gold and silver as the U.S. dollar weakens and the precious metals draw bids, spiking them higher. This will be sold into within a very short time (1-5 mins) with thousands of new short contracts being added, overcoming any new bids and spiking the precious metals down hard, targeting key technical support levels.

Scenario 2. The news is good (employment is better than expected). This will result in a massive short position being instigated almost immediately with no move up. This will not initially be liquidation of long positions but will result in stops being triggered, again targeting key support levels.

Both scenarios will spell an attempt by the two main short holders to illegally drive the market down and reap very large profits. Locals such as myself will be “invited” on board, which will further add downward pressure.

The question I would expect you might ask is: Who is behind the sudden selling and is it the entity/entities holding a concentrated position? How is it possible for me to know what will occur days before it will happen?

Only if a market is manipulated could this possibly occur.

I would ask you watch the “market depth” live as this event occurs and tag who instigates the move. This would surly help you to pose questions to the parties involved.

This kind of “not-for-profit selling” will end badly and risks the integrity of the COMEX and OTC markets.

I am aware that physical buyers in large size are awaiting this event to scoop up as much “discounted” gold and silver as possible. These are sophisticated entities, mainly foreign, who know how to play the short sellers and turn this paper gold into real delivered physical.

Given that the OTC market (where a lot of the selling occurs) runs on a fractional reserve basis and is not backed up by 1-1 physical gold, this leveraged short selling, where ownership of each ounce of gold has multi claims, poses a very large risk.

I leave this with you, but if you need anything from me that might help you in your investigation I would be pleased to help.

Kind regards,
Andrew T. Maguire

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Sent: Friday, February 05, 2010 2:11 PM
Subject: Fw: Silver today

If you get this in a timely manner, with silver at 15.330 post data, I would suggest you look at who is adding short contracts in the silver contract while gold still rises after NFP data. It is undoubtedly the concentrated short who has “walked silver down” since Wednesday, putting large blocks in the way of bids. This is clear manipulation as the long holders who have been liquidated are matched by new short selling as open interest is rising during the decline.

There should be no reason for this to be occurring other than controlling silver’s rise. There is an intent to drive silver through the 15 level stops before buying them back after flushing out the long holders.

Regards,
Andrew

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Cc: BChilton [CFTC]; GGensler [CFTC]
Sent: Friday, February 05, 2010 3:37 PM
Subject: Fw: Silver today

A final e-mail to confirm that the silver manipulation was a great success and played out EXACTLY to plan as predicted yesterday. How would this be possible if the silver market was not in the full control of the parties we discussed in our phone interview? I have honored my commitment not to publicize our discussions.

I hope you took note of how and who added the short sales (I certainly have a copy) and I am certain you will find it is the same concentrated shorts who have been in full control since JPM took over the Bear Stearns position.

It is common knowledge here in London among the metals traders that it is JPM’s intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits. I feel sorry for all those not in this loop. A serious amount of money was made and lost today and in my opinion as a result of the CFTC’s allowing by your own definition an illegal concentrated and manipulative position to continue.

Bart, you made reference to it at the energy meeting. Even if the level is in dispute, what is not disputed is that it exists. Surely some discussions should have taken place between the parties by now. Obviously they feel they can act with impunity.

If I can compile the data, then the CFTC should be able to too.

I would think this is an embarrassment to you as regulators.

Hoping to get your acknowledgement.

Kind regards,
Andrew T. Maguire

* * *

From: Andrew Maguire
To: Ramirez, Eliud [CFTC]
Sent: Friday, February 05, 2010 7:47 PM
Subject: Fw: Silver today

Just logging off here in London. Final note.

Now that gold is undergoing short covering, please look at market depth right now in silver and evidence the large selling blocks in a thin market being put in the way of silver regaining the technical 15 level, which would cause a short covering rally and new longs being instigated. This is resulting in the gold-silver ratio being stretched to ridiculous levels.

I hope this day has given you an example of how silver is “managed” and gives you something more to work with.

If this was long manipulation in, say, the energy market, the shoe would be on the other foot, I suspect.

Have a good weekend.

Andrew

* * *

From: Andrew Maguire
Sent: Tuesday, February 09, 2010 8:24 AM
To: Ramirez, Eliud [CFTC]
Cc: Gensler, Gary; Chilton, Bart [CFTC]
Subject: Fw: Silver today

Dear Mr. Ramirez,

I hadn’t received any acknowledgement from you regarding the series of e-mails sent by me last week warning you of the planned market manipulation that would occur in silver and gold a full two days prior to the non-farm payrolls data release.

My objective was to give you something in advance to watch, log, and follow up in your market manipulation investigation.

You will note that the huge footprints left by the two concentrated large shorts were obvious and easily identifiable. You have the data.

The signals I identified ahead of the intended short selling event were clear.

The “live” action I sent you 41 minutes after the trigger event predicting the next imminent move also played out within minutes and exactly as I outlined.

Surely you must at least be somewhat mystified that a market move could be forecast with such accuracy if it was free trading.

All you have to do is identify the large seller and if it is the concentrated short shown in the bank participation report, bring them to task for market manipulation.

I have honored my commitment to assist you and keep any information we discuss private,however if you are going to ignore my information I will deem that commitment to have expired.

All I ask is that you acknowledge receipt of my information. The rest I leave in your good hands.

Respectfully yours,

Andrew T. Maguire

* * *

From: Ramirez, Eliud
To: Andrew Maguire
Sent: Tuesday, February 09, 2010 1:29 PM
Subject: RE: Silver today

Good afternoon, Mr. Maguire,

I have received and reviewed your email communications. Thank you so very much for your observations.

* * *
http://www.gata.org/node/16 [6]

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Or a colorful poster of GATA’s full-page ad in The Wall Street Journal on January 31, 2009:

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Or a video disc of GATA’s 2005 Gold Rush 21 conference in the Yukon:

http://www.goldrush21.com/ [4]

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Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

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To contribute to GATA, please visit:

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Gettysburg Commem Bill Introduced

By David L. Ganz, Numismatic News March 25, 2010

Sen. Arlen Spector, D-Pa., introduced a bill on Feb. 11 to require the Treasury secretary to strike commemorative coinage recalling the 150th anniversary of the Battle of Gettysburg in 2013 and the address that President Abraham Lincoln made famous while dedicating the battlefield cemetery in November 1863.“We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live,” Lincoln said in remarks that took less than three minutes to deliver, and rang out for all time. Spector’s bill would commemorate that with 100,000 half dollars, 350,000 silver dollars and 75,000 $5 gold coins.

A previous generation, in 1936, commemorated the Battle of Gettysburg; some 26,938 half dollars were produced honoring the blue and gray at a time when Union and Confederate army veterans were still alive and holding annual reunions to recall what another speaker at that cemetery, Edward Everett, spoke of in a two-hour long oration on the battlefield:

“As we bid farewell to the dust of these martyr-heroes, that wheresoever throughout the civilized world the accounts of this great warfare are read, and down to the latest period of recorded time, in the glorious annals of our common country, there will be no brighter page than that which relates the Battles of Gettysburg.”

Two comparable measures have been introduced in the House, one with 87 co-sponsors; Spector’s bill has a single co-sponsor. Under congressional rules, two-thirds of each body must co-sponsor before a coin measure will be put up for a vote.

Meanwhile, Rep. Ron Paul, R-Texas, a ranking member of the House’s minority, introduced last Dec. 9 H.R. 4248, a bill to repeal the legal-tender laws, to prohibit taxation on certain coins and bullion and to repeal superfluous sections related to coinage. It received a boost in March when it was referred to the Subcommittee on Commercial and Administrative Law, rather than the House financial services committee.

It provides that “no tax may be imposed on (or with respect to the sale, exchange, or other disposition of) any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion, whether issued by a state, the United States, a foreign government, or any other person.”

It would also repeal what is termed “superfluous” sections of law concerning counterfeiting and reproductions of coins with a political theme; “Title 18, United States Code, is amended by striking sections 486 (relating to uttering coins of gold, silver, or other metal) and 489 (making or possessing likeness of coins)” would be repealed and convictions of those previously prosecuted would be voided.

This is similar to the current claims against Bernard von NotHaus, and prosecutions during the Nixon Administration of those who used coin and currency for political or revolutionary advocacy. The bill is also straightforward: “Section 5103 of title 31, United States Code (relating to legal tender), is hereby repealed.” That would eliminate legal-tender laws and allow gold, silver or lumps of coal to become money of the land.

The first key factor relates to the legal- tender status is that which connotes that a coin (or currency) may be used for all debts, public and private, public charges, duties, taxes and dues. Congress took this precise position in 1982 when it revised the U.S. Code to make title 31 (coin and currency) positive law. H. Rep. No. 97-651, 97th Cong., 2nd sess. 148 (1982) (31 USC §5103) makes this clear.

It is true for foreign coinage as well. Even Krugerrands owned primarily for bullion are a legal tender. But this is by virtue of legislative action. The South African Mint & Coinage Act No. 78 of 1964, as amended by the South African Mint & Coinage Act of 1966, and the South African Mint & Coinage Further Amendment Act. No. 40 of 1966, §§11 through 12.

For the same reason, the Canadian Maple Leaf is a legal tender by virtue of the Currency Exchange Act, Canadian revised Chapter C-39 §4, Schedule 1 (1970) (Amended by Order of the Privy Council No. 3048 (1979)).

The “power to ‘coin money’ … is a prerogative of sovereignty,” something that the U.S. Supreme Court enunciated more than 90 years ago in the case of Ling Su Fan v. US, 218 U.S. 302, 310 (1920).

Thus, Congress could deny the Trade dollar legal tender status (1876) and grant it again (1965). Or, as Rep. Paul suggests, eliminate legal tender entirely and turn money into a Wild West shootout.

Leading Coin Grading Services PCGS & NGC Announce “Plus” Designation

 Print This Article Comment On This ArticleBy NGC on Thursday, March 25, 2010
Filed Under: Coin Grading & Authentication, NGC, PCGS, Press Releases

The plus designation, a notation of premium quality, has been announced by NGC and PCGS. The service will be available from NGC beginning in approximately 60-days and launched formally by PCGS on March 25, 2010.

Denoted by a + symbol appearing after the grade, the plus designation indicates that a coin is of superior quality for the grade and that it approaches the next technical grade level. In numismatics, in addition to plus, several terms are used interchangeably to indicate this including premium quality, PQ, and high-end.

Aspects of the service offered by NGC and PCGS are similar. The plus designation applies only to US coins from select classic series, and it is not currently planned to be applied to modern coinage issues. Additionally, it will be used on eligible coins grading from the XF-range up to MS 68. For coins to be evaluated for the plus designation, submitters will have to opt-in to a plus designation review service in addition to the standard grading tier.

After the service launch, in approximately 60-days, coins with the plus designation will receive a point premium in the NGC Registry and be reported in a forthcoming enhancement of the NGC Census. Additionally, price guides and coin trading networks including the Certified Coin Exchange will be supporting the plus designation.

“The coin marketplace has evolved in the nearly 25 years since NGC and PCGS began certifying coins, and this is a very logical progression. We have always been conscious of the variation within grades. By providing this information on the label in the plus format, it is communicated in a simple and direct way that allows these distinctions to be readily understood,” comments NGC Chairman, Mark Salzberg.

PCGS founder David Hall stated, “The reality of the market place is that coins considered high end for the grade are recognized by sophisticated dealers and collectors and such coins are worth a premium in the marketplace. The term plus has been part of the everyday trading and grading lingo for years. For the market’s two leading grading services to recognize this reality and designate these premium coins as part of their grading services is a huge benefit to all participants in the rare coin market.”

During the next two months, NGC will be finalizing and announcing service details. Comments from dealers and collectors are welcome on any aspect of this new service. Correspondence should be directed to plus@ngccoin.com, and all messages received will be thoughtfully considered. Additional information about the service will be reported on NGC’s website, www.NGCcoin.com, and can be requested by e-mail.

PCGS Announces PCGS Secure Plus™, The Most Important Innovation in the Coin Industry Since the Advent of Third Party Grading.

 Print This Article Comment On This ArticleBy PCGS on Thursday, March 25, 2010
Filed Under: Coin Grading & Authentication, Consumer Alert, Featured, PCGS, Press Releases

The Professional Coin Grading Service (www.PCGS.com) has launched PCGS Secure Plus™, a revolutionary new process with high-tech security and scrutiny to increase the confidence of collectors and dealers, and a new certification designation that potentially can increase the value of coins.

The PCGS Secure Plus process uses laser scanning to help detect coins that have been artificially enhanced since their last certification, combat “gradeflation” and excessive resubmissions of the same coins, and can also be used to help identify recovered stolen coins. Additionally, PCGS expert graders can now designate deserving, superior-quality coins as “Plus” within their respective grades, an important distinction when there are big differences in value between one grade point and the next.

Announcement of the unprecedented breakthrough was made by PCGS executives on the opening day at the American Numismatic Association National Money Show™ in Fort Worth, Texas. They explained how the new process of digitally scanning each coin to capture its distinctive characteristics is being integrated into the PCGS grading system and how it helps resolve important issues in the rare coin marketplace by offering:

• Increased precision and consistency in grading
• Improved detection of altered coins
• Less chance of “gradeflation”
• More likely recovery if a PCGS Secure Plus coin is stolen
• Increased value of high-end coins within each grade

Developed after years of extensive software and hardware development and testing in partnership with Coinsecure, Inc. of Palo Alto, California, the PCGS Secure Plus service digitally captures a unique “fingerprint” of each coin that is then entered into a permanent data base.

PCGS Secure Plus will introduce a new level of confidence and security in the coin collecting market” said PCGS President Don Willis. “We believe that PCGS Secure Plus addresses several of the leading issues affecting the industry today. PCGS Secure Plus is a patent-pending process wherein a coin is laser scanned, imaged and registered in a permanent data base. Every coin has its own identifying characteristics. Coins are like snowflakes at the micron level; they are very different from each other. If a coin has been previously registered in our system it will be identified whenever it’s again scanned by us, so duplication of coin information will be eliminated. As a result, population reports, condition census and other potentially distorted information will be much more accurate for PCGS Secure Plus coins.”

“The process also can help detect if a previously registered coin has been artificially toned, dipped or processed in some other way in an effort to get a higher grade. Not since PCGS introduced encapsulated third-party grading in 1986 has such an important step been taken to protect the consumer. We believe PCGS Secure Plus will totally revolutionize the coin grading business,” said Willis.

“Thousands of tests of the current PCGS Secure Plus system now have been performed, and not once did a previously registered coin go unmatched and not once did we get a false-positive match. Extensive testing was done by many individuals in an attempt to break this system, including all the gimmicks and coin altering processes PCGS has seen over the years, such as foreign material applied to a coin’s surface. We even tested coins that had been scratched and marked up. All of them were recognized and matched with the PCGS Secure Plus system. No one has been able to beat this system,” Willis stated.

Secure Plus is an innovative service that also addresses the significant price gaps between one grade point and the next by formally recognizing high-end specimens within respective grades,” said David Hall, Co-Founder of PCGS and President of its parent company, Collectors Universe, Inc. (NASDAQ: CLCT). “The reality of the marketplace is that coins considered high end for the grade are recognized by sophisticated dealers and collectors and such coins are worth a premium in the marketplace. The term ‘plus’ has been a part of the everyday trading and grading lingo for years. The high end for any particular grade represents the top 30 percent of the scale within a grade and I estimate that the plus designation would apply to approximately 15 percent to 20 percent of the coins within a grade. Those technically superior coins in the high end for their grade will now have a plus sign (+) on their PCGS insert label.”

“The evolution of the rare coin marketplace has produced significant price gaps between some coins that are only one grade point apart. For example, the PCGS Price Guide lists 1880-O Morgan dollars as $2,000 graded PCGS MS64 and $25,000 in MS65. PCGS Secure Plus will more accurately reflect the quality and market value of coins designated as ‘Plus’ and meeting our strict requirements,” said Hall.

The Plus designation will be available only in conjunction with PCGS Secure Plus service and in grades XF45 to MS68, except for MS60 and MS61.

Another benefit for the hobby is that if a PCGS Secure Plus-certified coin is ever lost or stolen and subsequently resubmitted to PCGS, it can be automatically identified and the recovery process will begin for the rightful owner.

PCGS Secure Plus is being offered as a separate, new service. All existing PCGS services will continue to be offered without change except for Rarities and Ultra Rarities which now will only be offered with the PCGS Secure Plus service. Initially, PCGS Secure Plus will be offered for Walkthru, Express and Gold Express services only for raw coins, re-grades and re-holders.

“When PCGS opened in February 1986, we ‘flicked a switch’ and changed the rare coin market. We’ve just flicked another switch, and this changes everything. Imagine a world without coin doctoring. Imagine a world without ‘gradeflation.’ This is the right thing to do,” said Hall.

“This is an exceptional development,” declared well-known numismatic consumer advocate Scott Travers, author of the award-winning Coin Collectors Survival Manual and a paid consultant to PCGS. “PCGS is going to be acknowledging what most of us have been trying to increase awareness of for years by recognizing coins that are at the high end of the spectrum. Consumers are now going to have this singularly valuable piece of information available to guide them in buying and selling coins.”

For additional information, contact PCGS Customer Service at (800) 447-8848, or visit at www.PCGS.com.

Health Care Bill Should Boost Gold

By By Patrick A. Heller March 22, 2010

On Sunday night, the House of Representatives passed the 2,500 page so-called “health care reform” legislation. It is accompanied by a presidential order and still needs a ratifying vote in the Senate and a presidential signature to become law. However, it looks like the remaining steps will probably be a formality rather than obstacles that prevent enactment. Given that it will become law, what affect will this legislation have on future gold prices?

I don’t want to get bogged down in side issues, but this piece of legislation is not really “health care reform,” it is socialized medicine. It is also enacts one of the largest tax increases in American history. I heard one report that the Internal Revenue Service was planning to add 16,000 positions to enforce the complicated tax increases imposed by this potential law.

In order for it to appear that passage of the “health care reform” was a positive event for the U.S. government, it was necessary for the prices of gold and silver to be suppressed the following Monday morning. Right after the COMEX began trading early Monday, both metals almost instantly dropped about one percent from Friday’s closes. As the day progressed, prices did recover some. However, I expect prices to be restrained this week. Gold and silver won’t rise until after the Commodity Futures Trading Commission’s Thursday hearings on possible trading limits for gold and silver futures and after Friday’s expiration of April gold and silver option contracts.

Still, the negative economic effects of the “health care reform” legislation will come sooner or later. When Medicare was enacted in 1965, the House Ways and Means Committee projected a 1990 cost of $12 billion per year. The actual 1990 Medicare cost came to $107 billion. The White House Office of Management and Budget in 2003 predicted that the Iraq war would cost $50-$60 billion. The U.S. government has actually spent $713 billion on the Iraq war so far, with more expenditure yet to come. It is so common for any government program to cost far more than the politicians claim at inception that it is scarcely news any more.

Through financial chicanery, the administration is trying to pretend that this “health care reform” will cost less than $1 trillion above and beyond new tax collections over the next 10 years. That ignores $370 billion of expenditures under the legislation that have been allocated to a different part of the budget. That also takes into account that the tax collections will begin about three years before the bulk of expenditures commence. On even the most optimistic actuarial analysis, enactment of this law will increase the federal budget deficit by a few hundred billions of dollars annually.

For February 2010, the U.S. government last week reported tax receipts of $107.5 billion and expenditures of $328.4 billion. The federal budget deficit is now so large that even if Americans were taxed at 100 percent of their income that would not be enough to balance the budget. In fact, if the U.S. government eliminated all expenditures other than for Social Security, Medicare and Medicaid, the budget would still be in a deficit.

As there are not enough taxes that can be extracted from the private sector, the U.S. government will be forced to the other two methods of obtaining assets from others: borrowing and inflation. In February 2010, the federal government paid $16.9 billion in interest on the federal debt, which averages out to an interest rate just over 2.5 percent.

One sleight-of-hand gimmick to make “health care reform” appear affordable is the president’s budget assumption that the average interest rate on public debt will only increase to about 4 percent by 2014. In order to accomplish this, however, the Federal Reserve would be required to leave interest rates at too-low levels almost indefinitely.

However, interest rates well below the inflation rate will only encourage much higher rates of inflation. As inflation takes off, the interest rate on federal debt will have to increase. It is entirely within the realm of possibility that U.S. government annual interest costs could reach $1.5 trillion by 2014, not the $500 billion projected in the president’s current budget. (For details, please see http://inflation.us.)

Higher inflation will cause the value of each U.S. dollar to decline. As the dollar depreciates, gold is bound to rise against it. In my judgment, the machinations of the U.S. government for the past several years have made it inevitable that the dollar will fall (possibly into a death spiral) and that gold will soar.

Enactment of this “health care reform” will not change the end result, but it will certainly accelerate the process. It may have already been too late to save the U.S. dollar. But, with passage of this “health care reform” law, the end could come a lot sooner. Non-perishable tangible assets like food, clothing and precious metals will hold their value. It’s time to stock up sooner rather than later.

Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan 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.

Interview with Q. David Bowers on Internet Coin Buying

By Michael Bugeja on March 18th, 2010
Categories: Coin Articles, Coingrader Capsule, US Coins

As a numismatist, I have come to rely more on the views of top authorities who love coins more than the holders containing them, and no one tops Q. David Bowers on coins.

He has been author or co-author of dozens of books since his first in 1962, United States Half Cents, 1793-1857, with several titles in 2008-09, including Grading Coins by Photographs, A Guide Book on Lincoln Cents, A Guide Book of United States Type Coins, and the newly released hardcover Whitman Encyclopedia of Colonial and Early American Coins, edited by Lawrence R. Stack.

I wanted Bowers’ perspective on both raw and graded coins sold over the Internet, as condition and attributions of coins are easily (and sometimes intentionally) misrepresented online, especially in auctions on eBay or Proxibid.

Bowers sees online auctions as an extension of currently available outlets such as catalogs and convention sales. While the Internet is a new mode to showcase coins, he advises all prospective bidders “to know the person with whom you are doing business.”

“In fact,” he adds, “one must be even more careful on the Internet.”

Usually I am skeptical of designations by third-party graders such as NGC, PCGS, ANACS and IGC, remembering we should be purchasing coins rather than the plastic designating their grades. Recently, Bowers wrote about that topic in his Coin World column.

Like me, however, Bowers is cautious about all the online bidding of raw coins on Internet portals.

When I purchase coins in this manner, I try to apply two tenets to my purchases—“buy the coin, not the holder” and “buy coins in holders rather than raw.”

In a word, I am leery of altered or poorly shot photographs in Internet auctions.

Bowers says the best online sellers should be recognized professional numismatists whose membership might be verified through such organizations as the Professional Numismatists Guild or the Professional Currency Dealers Association.

“In that way,” he says, “there is an indication of integrity and a mechanism whereby a transaction, if it goes wrong—and this happens all the time on the Internet—can be addressed and possibly taken care of.”

Bowers also advises against purchasing coins from unknown international dealers unless they belong to the International Association of Professional Numismatists.

“My advice boils down to this,” he says: “Be a smart buyer, know what you are buying, and deal only with people who are recognized professionals. There are very few true bargains on the Internet. If something costs less than a bidder thinks it is worth, it probably really is worth less.”

Bowers suggests bidders go slowly even with recognized dealers, studying offerings carefully, reading terms of sale, and learning what recourse, if any, is available to return unsatisfactory coins. “There will always be coins, tokens, medals, and paper money to buy, and it is far better to be cautious than to buy something and then try to straighten it out through complaints, attorneys, and the like.”

Keep in mind that the Internet is instantaneous and so adds a false sense of urgency to anything it touches, even e-mail. Auctions have their own urgency because buyers bid against the clock. These factors combine online and often result in overbidding.

You don’t have to do that on coins slabbed by respectable companies. They’re plentiful, and it’s a buyer’s market. Look up the retail price in your favorite price guide, and bid no higher than 60% of retail to cover any buyer’s fees, shipping and handling.

J&T Coins LLC is  selling 2010 1 oz Silver BU and Proof Disabled Vet Coins in NGC MS 70 and NGC Proof 70.  Should you wish to order please call us at 866-267-6024. Our inventory for these is very limited.

Dark Gold Thoughts Not Dark Enough?
March 19, 2010

 By Dave

Back when gold ownership was legalized in the United States on Dec. 31, 1974, there was a lingering fear that the coins that had been illegal to own since 1933 would once again become illegal to own.

Advisors told gold buyers to stick to coins like the standard U.S. gold coins struck before 1933 as well as world coins like British sovereigns and French 20 francs of similar vintage.

This seemed to be an unnecessary precaution as the age of the convenient one-ounce bullion coins was dawning.

The fear that gold would once again be called in by the government in a manner similar to what was done by President Franklin D. Roosevelt in 1933 shows up from time to time in the writings in the blogosphere.

Can it happen again? Sure, the legal underpinnings for a recall still exist.

Will it happen? Probably not.

But if you happen to believe the government is cooking statistics to understate inflation and overstate employment, manipulating the gold market, hiding the fact that it has secretly sold all of the gold in Fort Knox (which is a rumor that has existed all the way back to when Ike was President) – if you believe all of this, why would you believe that the government would let you keep your gold if the worst does indeed happen to the economy?

If the American government would default on its debt after not doing so for 221 years through the Civil War, Depression and World War II, would not political pressure in Washington be so intense as not to allow profits to be taken by those owning gold?

In a dollar collapse, would not the authorities be rooting out gold owners with the same zeal as the IRS presently is chasing tax dodgers with Swiss bank accounts?

Would coin collectors get a pass as they did in 1933 because the Treasury secretary was a coin collector and the President was a stamp collector?

In their darkest thoughts, perhaps gold owners are not thinking darkly enough.

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