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Failed Trade Dollar Now Sought After
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By Mike Thorne, Coins Magazine March 30, 2011 |
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This article was originally printed in Coins Magazine.
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China is much in the news today. At the time I’m writing this, for example, the headlines talk about the president of China’s visit to our leaders in Washington. In addition, it sometimes seems as though everything we buy nowadays has a “Made in China” sticker on it. As a consequence, our nation’s trade with China is badly imbalanced in their favor.
Believe it or not, trade with China figured importantly in the desire for a new silver coin in the latter part of the 19th century. I’m referring to the Trade dollar, minted from 1873-1878, and then as proofs only from 1879-1885.
The idea for a trade dollar originated in the late 1860s, according to David Bowers, writing in his monumental encyclopedia, Silver Dollars & Trade Dollars of the United States:
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“During this time there was extensive commerce between American merchants and banking interests in China. Distrustful of paper currency, Chinese suppliers preferred to receive payment in silver coins.”
Unfortunately for American interests, the Seated Liberty dollar (the “standard” U.S. dollar of the time) weighed 412.5 grains. This was slightly lighter than the then-circulating Mexican eight-reales coins, which Chinese merchants preferred. U.S. silver dollars were accepted, but only at a discount.
With prodding from silver-mining interests in the West, Congress decided that a special coin, a “trade” dollar (or, as it was initially called, a “commercial” dollar) was needed. The specifications called for a greater silver content than in the standard dollar, and the resulting Trade dollar actually contained slightly more silver than the Mexican eight-reales coin.
The Trade dollar was authorized by the Coinage Act of 1873. The Act also made Trade dollars legal tender in the United States, which was fine at first, as the coins contained slightly more than a dollar’s worth of silver. However, as the price of silver declined, enterprising people began to deposit silver bullion in the Treasury, receive Trade dollars in exchange, and then spend the Trade dollars for their face value, which was now greater than the value of the silver bullion in them.
As a result, in 1876, Congress removed the legal-tender status of Trade dollars. As Bowers writes, “After 1876, trade dollars could not legally be spent at face value within the United States.… Nevertheless, employers often flouted the law, putting them into pay envelopes.…”
The Trade dollar was designed by William Barber, chief engraver at the Mint. The obverse is dominated by a seated figure of Liberty. In her left hand, Liberty holds a ribbon inscribed “LIBERTY,” and with her right hand she is extending an olive branch westward toward China. She is seated on a bale of cotton, which is tied with ropes, and at her back is a sheaf of wheat. Below the bale is another ribbon inscribed with the motto, “IN GOD WE TRUST,” and below that is the date.
On the reverse is a perched eagle, holding an olive branch in its left talon, three arrows in its right. Around the top border are the words “UNITED STATES OF AMERICA”; around the bottom border, “TRADE DOLLAR”. Immediately above these words are the coin’s specifications: “420 GRAINS, 900 FINE”. Over the eagle’s head, a ribbon declares “E PLURIBUS UNUM”.
So, how did the coin fare in trade with China? If we could believe the Professional Edition of A Guide Book of United States Coins, the Trade dollar was a winner. “Produced in quantity from 1873 through 1878, the trade dollars were a great success, particularly in China, where merchants preferred silver to gold and would not accept paper money of any kind.”
However, perhaps the picture was not as rosy as that account would have us believe. In Chapter 11 of Bowers’ encyclopedia, R. W. Julian writes, “…in China matters were going rather slowly. Despite optimistic reports made in 1873, the progress was not that good.…American consuls and commercial representatives did their best, but it was difficult for them to persuade the Chinese to accept anything new.”
In his mammoth Complete Encyclopedia of U.S. and Colonial Coins, Walter Breen, who can always be relied upon for an entertainingly negative comment, wrote the following about the Trade dollar:
“The issue of this coin was an expensive mistake its motivation mere greed, its design a triumph of dullness [Breen made similar comments about the designs of William Barber’s son, Charles Barber, who succeeded his father as chief engraver at the Mint], its domestic circulation and legal-tender status a disastrous provision of law leading only to ghastly abuses, its repudiation a source of hardship for Pennsylvania coal miners and other laborers held in virtual peonage by company stores, its recall a long overdue but very mixed blessing, and its collection a source of decades of frustration.”
Success or failure, Trade dollar coinage for circulation came to an end in 1878, with the passage of the Bland-Allison Act. This authorized the purchase of millions of ounces of silver to be made into standard silver dollars, and the Morgan dollar was the result.
Today, Trade dollars can be collected in a number of different ways. For most collectors, obtaining one for a type collection will be sufficient, and the most common dates for this purpose are dollars minted in San Francisco from 1874-1878. Mintages for this group range from 2,549,000 (1874-S) to a whopping 9,519,000 (1877-S).
Although values for Trade dollars in “Coin Market” (Numismatic News) are given beginning with the grade of Good-4, if you’re looking for a coin for a type set, surely you’ll want one with as much of the original detail as possible. A coin in Extremely Fine-40 will have all the major details and most of the minor ones, and a common date should be modestly priced. An EF-40 1877-S, for example, should cost around $225. In About Uncirculated-50, the date lists for $275, and it’s worth $940 in Mint State-60, $1,950 in MS-63, and $13,750 in MS-65.
In MS-65, the least expensive date by a rather large margin is the 1876, which lists for “just” $7,500 in this condition. Bowers notes, “Many Uncirculated coins seen in collections today have deep gray or even black toning and may represent specimens saved by the public as a souvenir of the 1876 centennial year.”
Another way to collect Trade dollars by type is to look for major varieties within the business strike dates. Bowers discusses two different obverse and two different reverse types (obverse Types I and II, reverse Types I and II). Both obverse and reverse types are apparently found on pieces from all three mints (Philadelphia, San Francisco, Carson City) dated 1875 and 1876. Although these types are noted and valued in the A Guide Book of United States Coins, they’re not mentioned in “Coin Market.”
Beyond type collecting, another obvious way to collect Trade dollars is to obtain one of each date and mintmark combination of the dates minted for circulation. Such a collection would consist of 17 different coins: 1873-1877-P, -CC, -S, and 1878-CC and -S (proof-only coins were struck at the Philadelphia Mint in 1878).
In EF-40, only one of the 17 dates is valued above $1,000, and it is from the Carson City Mint (1878-CC, $2,400). Not counting the proof-only issues, the 1878-CC has the lowest mintage of the series, at only 97,000 produced. Even worse from a collector’s standpoint, Bowers reports that 44,148 undistributed Trade dollars were melted in July 1878, and all of these were 1878-CCs. This leaves a total of just 52,852 coins distributed, and Bowers estimates a population in grades of VF-20 and up of between 186 and 365 pieces.
Not counting CC dollars, the range of values in EF-40 of the Trade dollars struck for circulation is from $225 to $590. Actually, all but one of the non-CC dates are close to the bottom figure. The oddball is the 1875, with a mintage of 218,900 pieces. This is the lowest mintage of any of the P-mint issues and the third lowest mintage of any of the circulation-strike dates.
About this date, Bowers writes, “Worn unchopmarked specimens are scarcer than any other Philadelphia Mint business strike Trade dollar. Still, somewhere between 750 and 1,500 coins are believed to exist in grades from VF-20 to AU-58.” Bowers estimates that there are between 190 and 335 uncirculated 1875s.
Yet another way to collect Trade dollars discussed by Bowers is as chopmarked pieces. As defined by the International Encyclopaedic Dictionary of Numismatics, a chopmark (also chop mark) is a “small oriental character or special symbol counterstamped into the surface of a Trade dollar or other large silver coin to show that the coin’s weight and purity had been examined and approved.”
Although Bowers is quite favorably disposed toward collecting chopmarked Trade dollars, collectors and investors today are likely to see such coins as damaged and thus not as valuable as their unchopmarked counterparts. In the past, this wasn’t necessarily true, as “some numismatists paid a premium for chopmarked coins, considering them to be especially historical and valuable.” Rather than considering the coins damaged (or “mutilated,” as the government called them in order not to have to redeem them), “A more enlightened view would be to consider them to be ‘countermarked’ coins with an added bit of history literally two coins in one.”
Of course, the well-heeled collector may choose to collect proof Trade dollars. Such a collection, not counting the two incredibly rare dates at the tail-end of the series (1884 and 1885, which I’ll discuss below), would consist of 11 coins: 1873-1877 and the proof-only dates, 1878-1883.
In Proof-65, these 11 dates range in value from $10,500 to $13,500. Actually, all are valued at $11,000 or less except for the 1878. It’s hard to see why the 1878 is significantly more expensive than the other dates, as its mintage (900) is not the lowest among the proof-only issues. Not counting the two anomalies at the end of the series, the lowest mintage goes to the proof 1877 Trade dollar (510, although Bowers suggests it should probably be 710). Either figure is lower than 900, of course, and Bowers also notes that most of the 1878 mintage has survived, which you would think would make it less expensive than the 1877.
There’s no question of why the 1884 and 1885 Trade dollars are so expensive (“Coin Market” lists a value for the former in AU-50 of $100,000 and a value for the latter in PR-65 of $200,000). Both are incredibly rare, with listed mintages of 10 and five, respectively.
Actually, it’s a mystery to me why “Coin Market” has the 1885 valued at just $200,000 in PR-65, as there’s a note below the listing giving the amount such a coin sold for in 1997 ($907,500). The 2009 A Guide Book of United States Coins prices the 1884 in PR-63 at $450,000 and the 1885 in the same grade at $1,750,000. A Guide Book of United States Coins further notes an auction price in 2005 of $603,750 for the 1884 in PR-65 and a 2004 auction value of $1,006,250 for the 1885 in PR-62.
Obviously, these are not coins that you and I are going to feel we must have, and whenever one comes on the market, it’s a newsworthy event. I see both dates as having the same place in the history of numismatics as the 1804 silver dollar and the 1913 Liberty Head nickel. They were not official Mint products. As Bowers notes, “So far as the government records are concerned, there is no such thing as an 1884 Trade dollar, either in business strike or Proof form (although there is an official record of dies having been made for the issue).”
In his closing commentary about 1884 Trade dollars, Bowers writes:
“Made in limited quantities by Mint personnel and filtered into the collecting community via William Idler, Philadelphia coin dealer. Date(s) when the coins were made unknown. Although such pieces were rumored to exist as early as 1884 (the date on the coins), they were generally unknown to the collecting fraternity until 1908.…”
About the 1885, Bowers writes, “In the year 1885 there was no business strike mintage of trade dollars, nor was there an official Proof coinage.… No Proof 1885 trade dollars are listed in Mint reports or records, and it is supposed that the coinage was unofficial, although not illegal.” Like the 1884 Trade dollar, the 1885 didn’t become known to collectors until 1908.
Whether you collect Trade dollars by type, by date/mintmark combination, by chopmarks, as proofs, or by some combination of these ways, you will find that such collecting is not for the faint of heart. Unless you are willing to settle for heavily circulated pieces, any Trade dollar you buy is likely to be expensive, as you will see if you look at any pricing guide.
In addition, I suspect that the “better” dates are likely to be hard to find. Actually, I should qualify this comment: It’s likely to be hard to find the scarcer dates in decent condition. I just looked on eBay and found at least 15 different dates listed. Unfortunately, many of the coins had problems such as cleaning, damage, stains, and so on. Many of the coins were noted as being rare, even when they were in fact common-date examples. Prices were often “out of sight.”
I’m reminded of Breen’s comment quoted above about the Trade dollar: “its collection a source of decades of frustration.” I can’t promise you “decades of frustration” if you choose to collect Trade dollars, but I think you’ll find accumulating a decent collection quite a challenge. Still, if you have the mental fortitude and the budget for it, I can guarantee that such a collection will be a source of great satisfaction for you. Good luck!
Coin Auctions, eBay and the Games People Play, Part One.
Posted by Vic Bozarth on March 28, 2011 11:22 AM
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In this month’s RCMR I am going to talk about rare coin auctions and the ‘games’ some individuals play to manipulate the system. This is a two part series in which I will discuss auction venues where rare coins can be purchased. In next month’s Rare Coin Market Report I will discuss some of the less obvious and insidious aspects of the coin auction game. This month I also want to discuss critical issues facing the rare coin business including counterfeits and taxation issues.
EBay has been a tremendous marketing success for thousands of products. EBay has also evolved into one of the largest market places for individuals to sell items to other individuals without physical stores. Virtual stores like eBay stores and websites have largely replaced the traditional hardcopy pricelists and coin listings in publications like Coin World and Numismatic News. The traditional coin auction houses, like Heritage, Stacks/Bowers, Goldberg, David Lawrence, and Teletrade still have the majority of the rare ‘power’ coins, but the volume of coins sold on eBay is absolutely incredible. Overall coin auctions allow many coin enthusiasts to purchase great coins at competitive prices from the comfort of their own homes or offices.
The coin business, like all businesses, is always evolving. Some of the most successful coin companies in the U.S. recognized the potential of the internet back in the nineties and have profited from it handsomely. EBay has also allowed many smaller (and larger) coin businesses to flourish because of the incredible amount of customers this huge market represents. As a coin dealer, I will admit, I dragged my feet before deciding to take the leap and try both eBay and a website. Frankly, I like the personal interaction between real people at coin shows. After all, that is why I write the Rare Coin Road Warrior and attend 40 coin shows a year.
The major coin auction houses run very ‘clean’ ships and in my opinion are above reproach, but….EBay isn’t a traditional auction house and answers to NO ONE. In fact, counterfeit and over graded and misrepresented coins are constantly being listed and sold on EBay. Let me give you an illustrative example.
Company X lists hundreds of uncertified and ungraded items on EBay. Why do they list uncertified and non-professionally graded items? The answer is GREED, pure and simple. Greed on the part of the potential customer is most often the major factor that makes this fraud work. Greed on the part of the listing dealer, like dealer X, perpetrates the fraud. The customer believes they are getting a coin at a bargain price because the price for the grade the coin is advertised at is substantially below wholesale levels. THERE ARE NO BARGAINS.
I have always been amazed at the ability of people to con themselves. What is the old saying, ‘you can’t cheat an honest man’? The individual buying these raw coins at an advertised grade REALLY believes they are getting a bargain until…..you guessed it, they get a couple of other opinions. Most often they take their BARGAIN and try to sell it. You know what happens? They are told the coin doesn’t grade as ‘high’ as what they purchased it at, or worse, the coin is counterfeit or doctored. The return privilege that EBay offers and PayPal guarantees has lapsed. Dealer X feigns innocence. Another potential numismatist and coin buyer is soured to coins. Sound familiar?
In the last year, I have personally seen examples of this fraud on numerous occasions. Dealer X is running around coin shows buying coins like a madman, buying both slabs and raw coins. He is breaking the slab coins out of holders and listing them at a higher grade than what they had graded in the PCGS or NGC slab. He is also buying raw coins that are often cleaned or otherwise not eligible for a legitimate grade at PCGS or NGC. Although I have not personally witnessed counterfeit coins being purchased on EBay, I have heard that the Chinese counterfeits being listed on EBay are numerous and some are quite good for the counterfeit/reproductions they are. Counterfeit slabs are also being reported.
The laws are on the books to prosecute the perpetrators of fraud like I have mentioned. Counterfeits especially are the responsibility of the U.S. Secret Service, BUT and this is a huge BUT, they won’t even BOTHER to deal with coins because of the low face value that these coins represent. If you have a counterfeit $100 bill they might take your call. Call about a coin and you won’t get any attention whatsoever. They DO NOT CARE.
The FACT of this lack of concern brings me to my next subject in this month’s RCMR. The PNG and many of the major forces in the rare coin business are attempting to join forces to combat both fraud and unnecessary and possibly crippling taxation for our business. Just this week we heard that recent additional taxation efforts in Maryland have been tabled because of the lobbying efforts of Whitman publishing and others in our industry.
Indeed, not only did we write letters ourselves, but we requested you join us in attempting to block this legislation. The threat of moving the Whitman Baltimore Coin Expo out of Maryland may have forced the Maryland legislature to REEVALUATE their position on the taxation issues proposed for their state. I believe they saw the writing on the wall. The obstacle for the coin industry is getting this ‘Writing on the Wall’ in the first place.
Industry Council for Tangible Assets, PNG, ANA, and many other numismatically concerned groups have long fought to head off additional taxation and legislation detrimental to the coin industry. Not only are we members of most of these major professional organizations, but we support wholeheartedly their efforts both on the financial and fraud concerns to our business. This week in Baltimore U.S.
Congressman Lamar Smith, Chairman of the House Judiciary Committee, is attending a reception being held by the Gold and Silver Political Action Committee at the Baltimore Convention Center Thursday night March 31st. Lamar Smith is a U.S. Congressman from District 21 in Texas. Congressman Smith is a potentially powerful advocate for our business. Not only will we be attending the reception, but we will be contributing to the efforts of the group.
Bozarth Numismatics Inc. is a full service rare coin company. My wife, Sherri and I, travel to 40 shows a year buying scarce and high grade coins for our customers. I also write the Rare Coin Road Warrior each month about our show travels and the action ‘on the bourse floor’ at all major and most regional coin shows. We list our coins for sale on both our website Bozarthcoins.com and in our EBay store. We also offer free no obligation want list services. If you are looking for a particular item or building a meaningful set of U.S. coins, please let us know. Although rare coins ‘don’t grow on trees’ we are often able to locate items other dealers cannot find.
2011 Silver Eagles – Bullion, Proof, Uncirculated, and 25th Anniversary?
One of the US Mint’s most popular offerings is the American Silver Eagle. After a few years of turbulence, it appears that the US Mint is prepared to issue all three anticipated versions of the 2011 Silver Eagle. This includes the regular bullion coins, which have already been released, and the collectible proof and uncirculated versions, scheduled to be released later in the year.
2011 Silver Eagle Bullion Coins
The bullion versions of the 2011 American Silver Eagles first went on sale to authorized purchasers on January 3, 2011. Following the typical procedures for the program, the authorized purchasers are able to buy the coins directly from the US Mint in bulk quantities based on the silver value plus a premium of $2 per coin. The bullion coins are then resold to other dealers for broader distribution to the public.
From the start of sales, the US Mint’s allocation program has been in place, which serves to ration the available supply of coins amongst the authorized purchasers. The US Mint has used this program at times when demand for silver bullion coins exceeds the available supply.
In the month of January, sales reached an astounding 6,422,000 coins, setting a new record for monthly sales. The number of coins sold in the following months dropped, although this might be attributable to the impact of allocation rather than a decline in demand. Through the current date, sales have reached 12,429,000.
CoinWorld recently reported that the San Francisco Mint will strike Silver Eagle bullion coins starting in May. For more than ten years, the coins have only been produced at the West Point Mint. Although the bullion coins won’t carry a mint mark to denote the source, I could see some sellers trying to differentiate the coins, especially if pick up from the San Francisco Mint can be arranged.
At this point, it seems likely that Silver Eagle bullion coin sales will break another annual record. Since 2008, annual sales have set successive record highs. For the 2010 calendar year, Silver Eagle bullion coin sales were 34,662,500.
2011 Silver Eagle Proof Coins
Collectors will remember that the 2009 Proof Silver Eagle was canceled by the US Mint amidst an extended period of high bullion demand. Because the Mint was required to strike the bullion coins in quantities necessary to meet public demand, all incoming precious metals blanks were diverted to bullion production and collector programs suspended and eventually canceled.
In the following year, another cancellation threatened to occur. However, a lull in bullion demand during August and September allowed the 2010 Proof Silver Eagles to be produced. The coins went on sale November 19 and sold out on December 28. The last reported sales were 860,000.
The 2011 Proof Silver Eagle has a release date of June 30, 2011. When the US Mint first provided its scheduled product listing for the year, an exact date was not provided.
There is much more certainty behind this year’s offering than prior years. Late in 2010, a bill was signed into law which changed the legal requirements for American Gold and Silver Eagle coins. Previously, the bullion coins were required to be produced in quantities sufficient to meet public demand. After the change, the law directs the coins to be minted in “quantities and qualities that the Secretary [of the Treasury] determines are sufficient to meet public demand.”
The US Mint (via the Secretary of the Treasury) seems to be ready and willing to use this authority to provide for collector coin production.
2011 Silver Eagle Uncirculated Coins
The second collectible version of the American Silver Eagle, previously issued from 2006 to 2008, seems poised to make a come back this year. The US Mint indicates that the 2011-W Uncirculated Silver Eagle is scheduled to be released in “early fall.”
These coins are struck on burnished blanks and carry the “W” mint mark. As a collector offering, the coins are available for sale directly from the US Mint and priced at a premium to the precious metal value. In the three years of issue so far, the coins have always had a lower mintage than the proof versions.
For both 2009 and 2010, the collectible uncirculated versions had been canceled due to bullion demand.
25th Anniversary Silver Eagles?
In 2006, the United States Mint released special sets to celebrate the 20th anniversary of the American Gold and Silver Eagles. The 20th Anniversary Silver Eagle Set included proof, uncirculated, and reverse proof versions of the coin. With a maximum production of 250,000 units and a unique coin included, the sets were extremely popular. A sell out occurred quickly and prices rose on the secondary market.
As this year is the 25th anniversary of the Silver Eagle, it would certainly be appropriate to celebrate the event with a special set or special version of the coin. Under the modified law covering American Silver Eagles, the door is open to creating such a product despite high bullion demand. Let’s hope the US Mint takes this opportunity to create something unique and appealing for collectors this year.
What is gold?
28/03/11
From Commodityonline.com
Gold, the first metal used by humans, remains one of the most valued metals since prehistoric times. Egyptian hieroglyphs dating 2600 BCE describe gold as something king Tushratta of the Mitanni claimed was as “common as dust” in Egypt. Egypt and Nubia had the resources to make them major gold-producing areas for much of history. Gold is also mentioned several times in the Old Testament.
The south-east corner of the Black Sea was famed for its gold. Exploitation is said to date from the time of Midas, and this gold was important in the establishment of what is probably the world’s earliest coinage in Lydia between 643 and 630 BCE.
The European exploration of the Americas was fueled in no small part by reports of the gold ornaments displayed in great profusion by Native American peoples, especially in Central America, Peru, and Colombia.
Read all the News & Features on Gold Here!Gold has long been considered one of the most precious metals, and its value has been used as the standard for many currencies (known as the gold standard) in history. Gold has been used as a symbol for purity, value, royalty, and particularly roles that combine these properties (see gold album). Gold as a sign of wealth and prestige was made fun of by Thomas More in his treatise ‘Utopia’.
Check out India Gold Spot and Futures Prices Here!On that imaginary island, gold is so abundant that it is used to make chains for slaves, tableware and lavatory-seats. When ambassadors from other countries arrive, dressed in ostentatious gold jewels and badges, the Utopians mistake them for menial servants, paying homage instead to the most modestly-dressed of their party.
There is an age-old tradition of biting gold in order to test its authenticity. Although this is certainly not a professional way of examining gold, the bite test should score the gold because gold is considered a soft metal according to the Mohs’ scale of mineral hardness. The purer the gold the easier it should be to mark it. Painted lead can cheat this test because lead is softer than gold.
Gold in antiquity was relatively easy to obtain geologically; however, 75% of all gold ever produced has been extracted since 1910.[2] It has been estimated that all the gold in the world that has ever been refined would form a single cube 20 m (66 ft) a side (8000 m³).
During the 19th century, gold rushes occurred whenever large gold deposits were discovered, including the California, Colorado, Otago, Australian, Witwatersrand, Black Hills, and Klondike gold rushes. Because of its historically high value, much of the gold mined throughout history is still in circulation in one form or another.
How much Gold is there in the world? Read Here!Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the amount of gold present, with 24 carats being pure gold and lower ratings proportionally less.
The purity of a gold bar can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995.
The price of gold is determined on the open market, but a procedure known as the Gold Fixing in London, originating in 1919, provides a twice-daily benchmark figure to the industry.
Historically gold was used to back currency; in an economic system known as the gold standard, a certain weight of gold was given the name of a unit of currency. For a long period, the United States government set the value of the US dollar so that one troy ounce was equal to $20.67 ($664.56/kg), but in 1934 the dollar was revalued to $35.00 per troy ounce ($1125.27/kg). By 1961 it was becoming hard to maintain this price, and a pool of US and European banks agreed to manipulate the market to prevent further currency devaluation against increased gold demand.
On 17 March 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a store of value although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank in New York.
Since 1968 the price of gold on the open market has ranged widely, with a record high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Fixing).[5] On 11 May 2006 the London gold fixing was $715.50/oz.[6]
According to World Gold Council, at US$21.2bn, global dollar demand for gold reached new heights in the second quarter of 2008, rising 9% on year earlier levels. Global investment demand for gold showed the strongest surge, reaching $3.5 billion in Q2 2008, 29% higher than Q2 2007, with particular strength in the US, China, Egypt and Vietnam.
However, with a decrease of 19% on Q2’07 to 735.6 tonnes, the continued high and volatile price of gold dampened total demand in tonnage terms during the quarter, according to Gold Demand Trends, which was released on August 13 by the World Gold Council (WGC). This particularly impinged on jewellery demand, which fell 24% to 504 tonnes and was also affected by tightened consumer spending due to the global credit squeeze and growing inflationary pressures. Markets which saw the largest decline in jewellery demand were India, which fell 47% to 118 tonnes, and the US, which fell 30% to 33 tonnes. However, positive news came from China and Egypt, which saw a 2% and 8% increase in jewellery demand respectively.
Despite a number of markets turning to gold due to its investment attributes as a safe haven in times of rising inflation and unstable equity markets, identifiable global investment demand in tonnage terms was down by 4% over Q2 2007 to 119.8, as some investors took profits. This decline represents a 9% decrease in net retail investment, which was partly offset by a move to positive net investment in Exchange Traded Funds (ETFs) and similar products.
What is silver?
28/03/11
From CommodityOnline.com
Silver is a very ductile and malleable metal used for thousands of years for ornaments and utensils, for trade, and as the basis for many monetary systems. Its value as a precious metal was long considered second only to gold. In Ancient Egypt and Medieval Europe, it was often more valuable than gold.
Silver mining was a driving force in the settlement of western North America, with major booms for silver and associated minerals (primarily lead) in the galena ore silver is most commonly found in.
Notable “silver rushes” were in Colorado, Nevada, Cobalt, Ontario, California and the Kootenai region of British Columbia, notably in the Boundary and “Silvery Slocan”. The largest silver ore deposits in the United States were discovered at the Comstock Lode in Virginia City, Nevada, in 1859.
Read all the hot News and Features on Silver Here!
Technically silver is counted in precious metals category but it is more an industrial commodity. Like all metals, London Bullion Market is the global hub silver trading especially in OTC (Over-The-Counter) while the New York’s Comex Futures dominate the solver fund activity.
Silver is found in native form, combined with sulfur, arsenic, antimony, or chlorine and in various ores such as argentite (Ag2S) and horn silver (AgCl). The principal sources of silver are copper, copper-nickel, gold, lead and lead-zinc ores obtained from Canada, Cobalt, Ontario, Mexico, Peru, Australia and the United States.
This metal is also produced during the electrolytic refining of copper. Commercial grade fine silver is at least 99.9% pure silver and purities greater than 99.999% are available. Mexico is the world’s largest silver producer. According to the Secretary of Economics of Mexico, it produced 80,120,000 troy ounces (2492 metric tons) in 2000, about 15% of the annual production of the world.
Silver is currently about 1/50th the price of gold by mass, and approximately 70 times more valuable than copper. Silver did once trade at 1/6th to 1/12th the price of gold, prior to the Age of Discovery and the discovery of great silver deposits in the Americas, most notably the vast Comstock Lode in Virginia City, Nevada, USA. The resulting debate over cheap Free Silver to benefit the agricultural sector was among the most prolonged and difficult in that country’s history and dominated public discourse during the latter decades of the nineteenth century.
Over the last 100 years the price of silver and the gold/silver price ratio has fluctuated greatly due to competing industrial and store of value demands. In 1980 the silver price rose to an all-time high of US$49.45 per troy ounce. By December 2001 the price had fallen to US$4.15 per ounce, and in May 2006 it had risen back as high as US$15.21 per ounce.
According to U.S. Geological Survey, in 2007, silver prices averaged $13.40 per troy ounce, surpassing 2006’s average of $11.61, and rising to the highest average annual price since 1980. Prices rose to $15.47 in November 2007, which was more than 10% higher than the previous year’s high of $14.89 per troy ounce established in May 2006.
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The rise in silver prices corresponded to investment interest in the newly established silver exchange traded fund (ETF). The ETF was established in April 2006 and was modeled after the gold ETF that was started in 2003. Exports of silver rose dramatically in 2006 owing to movement of physical silver to the ETF inventory agency in London, United Kingdom. ETF inventories at the end of 2006 totaled 3,330 tons of silver and by the end of October 2007 had risen to 4,200 tons.
The demand for silver also continued to rise for fabrication and industrial applications. The use of high-purity silver for color paper in home and other color printers offset the losses to digital photography owing to weak film sales. Overall, the photographic use of silver was relatively stable. Silver is still used in X-ray films, and 99% of the silver in photographic wastewater may be recovered.
Use of silver to help regulate body heat and control odor in shoes and sports and everyday clothing is increasing. The use of trace amounts of silver in bandages for wound care and minor skin infections is also increasing. The deficit in world silver mine production as compared with world silver consumption was about 800 tons in 2007.
Increased production at new and existing mines in North America and South America, such as at the San Cristobal Mine in Bolivia, coupled with lower flow of silver into the ETF inventory, is likely to bring production and consumption for silver in 2008 into closer balance.
According to World Silver Survey 2008, total global silver fabrication grew 1 percent in 2007 to 843.7 Moz. Most notably, industrial applications, a key constituent of the overall demand complex, posted an impressive 7 percent gain to 455.3 Moz, recording the sixth consecutive year of growth in this category.
In fact, in the period since the technology related slump in 2001, industrial applications have added an impressive 120.1 Moz to silver demand. A key factor behind the increase last year was the more than 6 percent rise in the electrical and electronics sector, which broke the 200 Moz mark for the first time.
India, China and the United States accounted for 70 percent of the world rise in all industrial uses, while Germany, Italy and France also posted gains. Total industrial demand reached 54 percent of total global silver fabrication demand in 2007.
Why Silver prices are following Gold always!
Jewelry fabrication coped well with high and volatile silver prices, slipping by only 2 percent in 2007, the product of weaker offtake in Europe and the Indian Sub-Continent, which offset growth in East Asia, where Chinese jewelry fabrication grew by a noteworthy 13 percent in 2007. Silverware demand fell by a modest 4 percent in 2007 to 58.8 Moz, as losses in India, Europe and Mexico were partially countered by gains for Russia and China.
Photographic demand continued to decrease, falling by 11 percent in 2007 to 128.3 Moz. The bulk of the decline was accounted for by lower consumer demand for color film, this sector being most affected by further inroads from digital photography.
The survey further says that global silver mine production rose by 4 percent in 2007, with particularly solid gains from Chile, China and Mexico. Total silver mine production reached 670.6 Moz last year. Peru was the world’s biggest silver mining country in 2007, followed in the rankings by Mexico, China, Chile and Australia. Last year, silver generated at primary mines drove global totals higher, increasing by 11 percent to account for 30 percent of all silver mined. Cash costs at primary silver mines rose to a weighted average of US$1.52 per ounce, driven by a combination of labor, consumables and energy cost rises.
The net supply of silver from above-ground stocks dropped by 8 percent in 2007 to 173.1 Moz. The decline was mainly the product of lower net government sales and rising producer de-hedging, although scrap supply was also trimmed. De-hedging reduced the overall producer hedge position by a sizable 30 percent last year, the global book declining by 25.0 Moz. Despite higher silver prices, scrap volumes fell in 2007 by 3 percent, to 181.6 Moz, the result of falling Indian recycling with the rest of the world virtually flat on a net basis.
Net government sales took a steep downturn in 2007, plummeting by 46 percent to 42.3 Moz. The decline was the result of two major sellers in 2006, namely China and India, being essentially absent in 2007. In contrast, Russian government sales, which comprised the bulk of net sales in 2006, rose, partly offsetting the others declines.
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Reception for Rep. Lamar Smith The Industry Council for Tangible Assets, Inc. (ICTA) Industry Affairs Office |
Gold and Silver Political Action Committee The Gold and Silver Political Action Committee urges you to support Congressman Lamar Smith (R-TX), the current Chairman of the House Judiciary Committee. The Judiciary Committee oversees many issues including Patents, Trademarks and Copyrights. The House Judiciary Committee is key in enforcing regulations to stop the counterfeit coins and holders coming out of China. There are a number of other issues the Judiciary Committee oversees that can have a direct or indirect impact on the precious metals and rare coins community. To learn more, you can visit the Judiciary Committee webpage http://judiciary.house.gov/about/about.html I expect Congressman Smith will provide a short speech providing his insight on our issues. It is important to have a good turn out to show legislators, like Congressman Smith, that we are a viable industry, and we will be playing a serious role in endorsing and financially supporting legislators in the 2012 elections. Another way you can support Congressman Lamar Smith if you are unable to attend the Gold and Silver PAC fundraiser is to print out the attachment and mail it immediately with your personal checks payable to Texans for Lamar Smith and mail to 104 Hume Avenue, Alexandria, VA 22301 Thank you, Industry lobbyist Jimmy Hayes reports:
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By Patrick A. Heller – Liberty Coin Service
Broadcast on WILS-1320 AM
In just the past year, the price of gold is up more than 27% while silver has soared 107%!
During the past decade the Dow Jones Industrial Average is up about 3% and the NASDAQ and Standard and Poors Index have declined. This kind of result is drawing more interest to gold and silver.
With such a dramatic track record for gold and silver, it is fair to ask if it is “too late” to buy gold and silver. In my judgment, the answer is “No!”
Gold and silver prices peaked in January 1980, with gold at $850 and silver over $50. Factoring in inflation, the price of gold now would need to be well over $2,200 dollars to match the 1980 peak, while silver’s price would have to exceed $84. Even at today’s apparent high prices, gold and silver are trading at a fraction of their inflation-adjusted 1980 peak levels.
There tend to be three waves of asset buyers. First are those who got in on the ground floor. Usually, they had to do their own research as few analysts covered the particular asset.
The second wave of buyers includes those whose interest is sparked by a rising price and a favorable track record. If you purchased gold and silver in the past few years, you are part of this group. Rising price charts draw attention. More analysts start following the asset, of which some will downplay future prospects. For example, there is one widely quoted so-called “expert” who has predicted lower gold ever since the price reached $700.
During this second wave of demand, there will be many people who consider buying the asset but never get around to it. Some listen to the naysayers. Over the years, I have heard a lot of different excuses from people who knew better, but just didn’t take action.
The third wave of buyers jump in when prices have risen so far that the asset captures the general public’s fancy. Barbers, taxi drivers, hairdressers, and shoe shiners all plug the asset as a “sure thing” that is going to the moon. Buyers tend to do much less due diligence, almost panicking to make their purchases right now.
When demand for an asset has reached the stage where almost every potential buyer has made their purchase, that is when prices reach their peak. That is the time to be a seller instead of a buyer.
The staff at my company observed this frenzied buying behavior in January 1980 as gold and silver prices peaked. What we are seeing in customer demeanor today is a long way from the public behavior of 31 years ago.
So, just from a buyer psychology perspective, gold and silver prices have a long way to rise. There are also a huge number of supply, demand, and inventory reasons to expect much higher prices in the coming months and years, which I detail in other commentaries.
It doesn’t matter what prices were in years past. Focus on where prices are headed in the future. I believe I am being conservative in expecting gold and silver prices to at least double or triple in the next few years. That is why, in my judgment, I don’t think it is “too late” to buy gold and silver today.
Patrick A Heller is the owner and General Manager of Liberty Coin Service, Michigan’s largest rare coin and precious metals dealer since 1971. Mr Heller is the editor of the Liberty’s Outlook Newsletter, and gold market commentator for Numismaster. In addition he is a columnist for The Greater Lansing Business Monthly, and has a radio show on WILS-AM 1320
Jury Delivers Guilty Verdict in Liberty Dollar Trial
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By David C. Harper, Numismatic News March 24, 2011 |
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This article was originally printed in Numismatic News.
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The Liberty Dollar’s creator, Bernard von NotHaus, was convicted March 18 of “making coins resembling and similar to United States coins” and “issuing and passing Liberty Dollar coins intended for use as current money,” among other charges.
In other words, counterfeiting.
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Where the federal jury in Statesville, N.C., and the prosecution sees counterfeiting, the coin hobby sees the creator of beautiful exonomia in gold and silver, or the advocate of the gold standard instead of unbacked paper money.
Federal officials also see gold. On April 4 a forfeiture trial will begin to determine whether the government is entitled to claim almost $7 million in Liberty Dollars and precious metals that was seized when von NotHaus was arrested more almost two years ago.
Von Nothaus also is facing multiple prison terms totaling 20 years and multiple fines that could total as much as $500,000 as well as loss of his seized property.
Anne M. Tompkins, U.S. attorney for the Western District of North Carolina, likened the creation and potential use of Liberty Dollars this way: “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism.”
That characterization caused a fire storm of protest online and in various newspapers by gold standard advocates.
Liberty Dollar coins were created in 1998, though they did not look any genuine U.S. coins, they used the dollar sign, “the words dollar, USA, Liberty, Trust in God and other devices that the Department of Justice said were “associated with legitimate U.S. coins.”
They were marketed by the Organization for the Repeal of the Federal Reserve and Internal Revenue Code, or NORFED for short. It was based in Evansville, Ind.
The investigation began in 2005 and was conducted by FBI, the Buncombe County Sheriff’s Department and the U.S. Secret Service.
Von Nothaus is 67. He first rose to prominence among coin collectors for his operation of the private Royal Hawaiian Mint, which struck medals using the images and devices of the old Hawaiian kings and queens.
US Attorney Says Attempts To Use “Liberty Dollar” As Money Is Domestic Terrorism – Von Nothaus Found Guilty
Posted by CoinWeek on March 21, 2011 10:32 PM
Liberty Dollar creator and self proclaimed “monetary architect” Bernard Von NotHaus was found guilty in US federal court in North Carolina on Friday of Counterfeiting and Fraud. The Justice Department asserted that Von NotHaus was placing gold, and silver coins, along with precious metals currency into circulation with the purpose of mixing them “into the current money of the United States.”
Von NotHaus developed the Liberty Dollar in 1998. as an “inflation-proof” alternative currency to the U.S. Dollar, which he has claimed has devalued since the Federal Reserve was established in 1913. The silver and gold “coins” were produced by a private mint in Idaho on behalf of the Evansville, Illinois-based Liberty Services, which also issues paper notes which the group says are backed by silver reserves.
In November of 2007, federal officials raided the group’s headquarters, located in a strip mall and seized all documents and the gold and silver that backed up the paper certificates and digital currency being distributed thought Liberty Services website. In addition all coins, bullion and even the dies used to strike the Liberty dollar coins held in the vault at the Sunshine Mint has also been confiscated.
The following is the fill statement issued by the US Attorney’s Office after the guilty verdict was announced:
Bernard von NotHaus, 67, was convicted today by a federal jury of making, possessing and selling his own coins, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Following an eight-day trial and less than two hours of deliberation, von NotHaus, the founder and monetary architect of a currency known as the Liberty Dollar, was found guilty by a jury in Statesville, North Carolina, of making coins resembling and similar to United States coins, of issuing, passing, selling, and possessing Liberty Dollar coins, of issuing and passing Liberty Dollar coins intended for use as current money, and of conspiracy against the United States.
The guilty verdict concluded an investigation which began in 2005 and involved the minting of Liberty Dollar coins with a current value of approximately $7 million. Joining the U.S. Attorney Anne M. Tompkins in making today’s announcement are Edward J. Montooth, Acting Special Agent in Charge of the FBI, Charlotte Division, Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Division, and Sheriff Van Duncan of the Buncombe County Sheriff’s Office.
According to the evidence introduced during the trial, von NotHaus was the founder of an organization called the National Organization for the Repeal of the Federal Reserve and Internal Revenue Code, commonly known as NORFED and also known as Liberty Services. Von NotHaus was the president of NORFED and the Executive Director of Liberty Dollar Services, Inc. until on or about September 30, 2008.
NORFED Ron Paul for Predisent Gold Coin 2008Von NotHaus designed the Liberty Dollar currency in 1998 and the Liberty coins were marked with the “$”, the word dollar, USA, Liberty, Trust in God (instead of In God We Trust) and other features associated with legitimate U.S. coinage. Since 1998, NORFED has been issuing, disseminating, and placing into circulation the Liberty Dollar in all its forms throughout the United States and Puerto Rico. NORFED’s purpose was to mix Liberty Dollars into the current money of the United States. NORFED intended for the Liberty Dollar to be used as current money in order to limit reliance on, and to compete with, United States currency.
In coordination with the Department of Justice, on September 14, 2006, the United States Mint issued a press release and warning to American citizens that the Liberty Dollar was “not legal tender.” The Mint press release and public service announcement stated that the Department of Justice had determined that the use of Liberty Dollars as circulating money was a federal crime.
Article I, section 8, clause 5 of the United States Constitution delegates to Congress the power to coin Money and to regulate the Value thereof. This power was delegated to Congress in order to establish and preserve a uniform standard of value and to insure a singular monetary system for all purchases and debts in the United States, public and private.
Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money which is not issued under its own authority in order to protect and preserve the constitutional currency for the benefit of all citizens of the nation. It is a violation of federal law for individuals, such as von NotHaus, or organizations, such as NORFED to create private coin or currency systems to compete with the official coinage and currency of the United States.
Von NotHaus, who remains free on bond, faces a sentence of up to fifteen years imprisonment on Count Two of the Indictment and a fine of not more than $250,000. Von NotHaus faces a prison sentence of five years and fines of $250,000 on both Counts One and Three. In addition, the United States is seeking the forfeiture of approximately 16,000 pounds of Liberty Dollar coins and precious metals, currently valued at nearly $7 million. The forfeiture trial, which began today before United States District Court Judge Richard Voorhees, will resume on April 4, 2011 in the federal courthouse in Statesville. Judge Voorhees has not yet set a date for the sentencing of von NotHaus.
“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” US Attorney Tompkins said in announcing the verdict. “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she added. “We are determined to meet these threats through infiltration, disruption and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.”
The case was investigated by the FBI, Buncombe County Sheriff’s Department and the U.S. Secret Service, in cooperation with and invaluable assistance of the United States Mint. The case was prosecuted by Assistant United States Attorneys Jill Westmoreland Rose and Craig D. Randall and the forfeiture trial is being prosecuted by AUSAs Tom Ascik and Ben Bain Creed.
Are “Honest Money” Supporters Terrorists?
by Walt Thiessen commented on this in the Nolan Chart website:
“Tompkins issued a statement after the trial that defies reason and sanity and that demonstrates beyond doubt that the U.S. government’s greatest enemy, in the government’s view, are the same people the government claims to protect and serve. Tompkins said, “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism. While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” In other words, from her viewpoint, the real question of the trial wasn’t whether the Norfed coins were intended to be counterfeits of the U.S. dollar. The real question, in her view, was whether those who advocate the use of gold and silver as money should be considered patriots or terrorists. In her view, honest people who want honest money that has honest value are terrorists.”
The New York SUN has an interesting editorial on the court case and said in part:
“A unique form of domestic terrorism” is the way the U.S. Attorney for the Western District of North Carolina, Anne M. Tompkins, is describing attempts “to undermine the legitimate currency of this country.” The Justice Department press release quotes her as saying: “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country.” Such language strikes us as hyperbolic. It may be that the monetary authorities in America fear that their own currency will be exposed as unsound. The monetary terror for the rest of Americans is the danger that there will be a further collapse in the value of their dollars or, conversely, a deflation that will make it even harder, or impossible, to pay back their debts.
The Founders of America understood all this. No doubt they wanted a national coinage. The Constitution they wrote forbids the states from making legal tender out of anything but gold or silver coins, and it is to the Congress that the Constitution gives the power to coin money and regulate its value. But they promptly defined a dollar as 371 ¼ grains of silver, which was the same as in a coin called a Spanish Milled Dollar, or the free market equivalent in gold. The record left by the Founders is replete with expressions of horror at paper money. They required our government officials to enforce the laws Congress has passed until a court tells them otherwise. But they would have understood the instinct of a man like von NotHaus to seek protection from a debasement that the Founders feared was, in respect of paper money, inevitable.”
What a strange and hypocritical world we live in.
By Steve Roach - http://www.steveroachonline.com
First published in the April 4, 2011, Special Edition of Coin World
One of the bigger winners among the recent issues produced by the U.S. Mint is the 2009 Saint-Gaudens, Ultra High Relief gold $20 double eagle.
The coins first went on sale the week of Jan. 22, 2009, at an issue price of $1,189.
The price of gold was $860 an ounce then, meaning that the coins were initially selling for a 38 percent premium to their gold content.
Almost immediately after the coins were released – with strict ordering limits – market makers were paying $1,650 each for the coins.
A year later, in February 2010, demand cooled. Mint State 69 coins and those in original packaging were trading at the $1,700 level, carrying a 54 percent premium, as gold had moved up to $1,100 an ounce.
Now in March 2011, the market for these coins has expanded greatly.
The mintage of 115,178 coins is well-distributed, and new collectors are being introduced to the coin for the first time. Add to the mix the increased attention that gold has been getting, and one sees the prices for this one-year type coin rising fast.
In the retail market, based on completed transactions on eBay, collectors are paying a premium for Ultra High Relief pieces with full original U.S. Mint packaging including the rosewood box, the accompanying book and the coins in Mint capsules, and for coins graded Mint State 69 by either Numismatic Guaranty Corp. or Professional Coin Grading Service.
Recently completed “Buy it Now” sales on eBay show multiple transactions at the $2,450 to $2,600 level for UHR coins in Mint packaging, and certified MS-69 coins are selling at the $2,300 to $2,500 level.
Certified MS-70 examples are generally selling at the $2,700 to $2,800 level.
With gold at $1,430 an ounce on March 14, a $2,500 price for a UHR represents almost a 75 percent premium to the gold content.
Many of the highest prices for these coins have been for NGC MS-70 Prooflike examples, which have sold on eBay for $4,500 to $5,000 recently.
The Prooflike coins represent a small percentage of the overall population.
While NGC has graded 14,220 Ultra High Relief coins, only 1,429 have been graded Prooflike. Of those 1,429 Prooflike UHR coins, 749 were graded MS-70 Prooflike. Of all the 14,220 NGC-graded UHR coins, 7,570 were graded MS-70.
That plenty of NGC Prooflike UHR coins are available is a good thing, indicating sufficient quantities exist to create a market, and thus demand, for the NGC Prooflike certified coins.
Both PCGS and NGC use the PL designation for this issue.
Another thing that the Ultra High Relief coin has going for it is that the Mint obviously took great care in producing these beautiful coins.
Coins in slabs designated NGC Early Release and PCGS First Strike are also trading for modest premiums to coins without such designations.
Steve Roach is a Dallas, Texas, based rare coin appraiser and fine art advisor who writes the world’s most widely read rare coin market analysis each week in the pages of Coin World. He is also a lawyer and helps create estate plans for collections. Visit him online at http://www.steveroachonline.com, join him on LinkedIn at http://www.linkedin.com/in/stevenroach or follow him on twitter @roachdotsteve