By Steve Roach – http://www.steveroachonline.com
First published in the October 10 issue of Coin World

The rare coin market continues to expand globally, while closer to home the fall coin show season is in full swing.

For sure, it’s been a busy month for the coin market. The Long Beach Coin, Stamp and Collectibles Expo was held Sept. 8 to 10, and the next weekend the Whitman Philadelphia Coin and Collectibles Expo took place.

Just a few weeks later is the inaugural American Numismatic Association fall National Money Show, set in Pittsburgh Oct. 13 to 15. The coin market then gets a much-needed breather until the Whitman Baltimore Expo, Nov. 17 to 20.

It’s been a huge few weeks for coin auctions with more than $115 million being sold at auction in the past six weeks, including $71 million sold at the summer ANA auctions in August, $34 million at the Heritage Long Beach auctions, nearly $6 million at Larry and Ira Goldberg Auctions pre-Long Beach sales and $4.5 million at the Stack’s Bowers Galleries Whitman Philadelphia auctions.

The Stack’s Bowers auction saw strong prices for numerous early American pieces that saw bidding that went beyond the realm of the specialists, including a rare 1781 Nathanael Greene at Eutaw Springs medal with documents from the Continental Congress on its presentation that sold for $86,250. Its strong price again confirmed the importance of provenance to today’s collectors.

Also noteworthy, the Heritage world and ancient coin auctions at Long Beach realized $20.4 million, showing the increasing globalization of the rare coin market and the ability of U.S. based coin firms to reach beyond U.S. coins to expand their bidder pool.

Equally impressive is that Heritage noted a 97.74 percent sell-through rate by value — meaning that the top lots found buyers.

Among the rarities changing hands was a legendary Marcus Junius Brutus Ides of March silver denarius, which sold for $546,250. It is undoubtedly among the most famous ancient coins, with a recognizable design that transcends the rare coin market.

As bidders continue to compete for a finite number of rarities, the most logical way for the coin market to expand and for prices to increase is by enlarging the pool of bidders. The global expansion of the coin market will hopefully bring more deep-pocketed international buyers into the U.S. coin market.

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 who writes on legal topics involving fine art and collectibles, 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

By Louis Golino for Coin Week

During the week that ended September 23, gold and silver saw their biggest declines in decades.

Gold suffered its largest one day drop (5.9%) in five years, and for the week it lost 10%, the most since the early 1980′s.

Silver dropped even more, declining by 18% on September 23, its biggest one-day decline since the 1980′s, and it was down almost 24% for the week.

Silver is still viewed primarily as an industrial metal, and thus as an indicator of future economic activity, like copper. As the prospects of a U.S. and global recession increase, silver is coming under more pressure.

It fell more sharply than gold did because it lacks gold’s status as a safe haven asset and alternative currency. It also normally trades in a more volatile way than gold does.

This was clearly a major sell-off and it continued into early trading on Monday, although it is interesting than after new lows were set during Asian trading, both metals rebounded to roughly the same levels where they closed last week.

While it is impossible to predict what will happen next, it is possible to analyze the reasons for the dramatic decline and to try to understand the implications for future precious metal prices.

First of all, global financial turmoil reached the highest point this past week since the height of the financial crisis in September 2008, when lending began to freeze up between banks and there was a real risk of a global financial meltdown.

The European sovereign debt and banking crisis is clearly the principal factor, with the prospect of some kind of Greek debt default looming larger all the time.

Although Greece is not a major player in the world economy, many large European, and to a lesser extent American, financial institutions are heavily invested in Greek debt.

The European crisis is likely to continue to weigh heavily on investor confidence and could have major contagion effects on the U.S. economy.

A Greek default could trigger a collapse of the euro, and a run on European banks, which would probably make the crisis that began with the collapse of Lehman Brothers seem mild in comparison.

That is not to say that it is certain these events will take place, and this week there will be a number of important developments that will affect the crisis.

For example, there will be a key vote in the German parliament on Thursday on whether or not to approve the next tranche of financial support for Greece.

At the same time, the recent move by the Federal Reserve to reduce long-term interest rates by selling short-term treasuries and using the proceeds to buy long-term ones, coupled with greater emphasis in the Fed statement on the negative outlook for the U.S. economy, helped roil the U.S. and global equity markets.

Stocks declined almost as much as gold and silver did last week, as investors fled riskier assets and chose the perceived safety of U.S. Treasuries. That helped cause a rally in the dollar, which played a role in the sell-off of precious metals.

In a financial crisis the dollar is always the go-to asset, though that may not be the case years from now. The Fed’s recent “Operation Twist,” as explained above, helped make the dollar a more attractive asset in part because it apparently did not involve the printing of more money.

Probably the key factor in the massive metal sell-off was the simple fact that, as was the case in the 2008 crisis, large hedge funds and other investors needed to cover their large equity losses. So they sold the assets that were most liquid and on which they had made the greatest returns, namely, gold and silver.

In 2008, the need for cash led major metal holders to sell so much that gold and platinum both declined to $800 an ounce, with gold even going below that level briefly, before beginning an upward trend that has been quite amazing. That can not be said of other asset classes.

Another important consideration is that gold in particular has risen too far too fast since the summer and was due for a major correction. Silver already started to correct during the spring.

Jeffrey Nichols, a precious metals analyst and columnist for Coin World, said in August that “At some point, however, we will see a correction, perhaps a sizeable one. After all, even the strong bull markets never move up in straight lines. I would not be surprised to see gold stumble – falling back $100, $200, or even $300 – before prices begin working their way higher once again.”

In addition, as was the case with silver this past spring, which also rose too quickly to be sustainable, gold’s rise was driven partly by speculators, rather than just longer-term investors.

As it began to stumble recently, those speculators quickly headed for the hills, creating a self-fulfilling dynamic of selling that produces more selling.

Some people also believe that a leaked decision on September 23 that the Chicago Mercantile Exchange would raise margin requirements once again, effective on September 26, may help explain the violence of the sell-off. Gold’s margin is to be increased by 21.5% and silver’s by 15.6% in an effort to reduce volatility.

It is also worth bearing in mind that even with this dramatic sell-off, gold is still up substantially for the year, while virtually every other investment class, especially stocks, is down significantly for the year.

Moreover, as most metals experts agree, the fundamentals driving gold and silver have not changed.

Looking ahead, there are three factors that could drive prices lower, as identified by participants at a recent conference of the London Bullion Market Association.

These are rising interest rates, a resolution of the sovereign debt crisis, and reduced investment demand because of increased price volatility. Only the third of these strikes me as something that investors need to worry about any time soon.

I would not be surprised to see at least some kind of rebound and stabilization of prices in the after such a major sell-off.

Physical supplies of both metals are tightening, as buyers take advantage of the fire sale, the traditional Asian and Indian buying season is about to begin, and retail premiums are running high.

Quoted spot prices mean little when no one can actually buy at anywhere near those levels.

As Mr. Nichols explains, violent equity sells-offs, like that of the past week, “typically spill over into the gold market.” But following a first wave of extreme selling of the metal, “gold tends to disassociate itself from and act independently of other asset markets.”

It could be days, weeks, or longer before that happens, but I think the fundamentals that support rising prices will reassert themselves eventually.

Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for Coin Week, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

In an interview for Heritage Magazine, NGC Chairman Mark Salzberg shares his passion for collecting. Read the full interview by Johannes Werner, here.

Certified Success From Zsolnay and Redmond to Chagall and Van Erp, NGC Chairman Mark Salzberg has extended his collecting far beyond the world of coins.

Mark Salzberg has a knack for collecting — his thriving coin grading business is living proof of that. In a fast-changing, dynamic environment, Salzberg and Numismatic Guaranty Corporation within two short decades have become accepted as standard-setters by a generation of coin collectors.

But his passion goes beyond coins. To find out about Salzberg the collector, Heritage Magazine caught up with him in Sarasota, Fla., at NGC headquarters. The site, itself, is a collector’s dream. In this 60,000 square-foot building, tucked safely behind automatic gates and an electronic security system, more than 100 employee-experts examine some of the world’s rarest coins, paper money, comic books and magazines.

At the core of the industrial, neon-lit building is Salzberg’s private office. No hint of the coin-grading business is evident in his spacious, tastefully furnished room. Protected by shutters that keep the sun completely out during a bright morning in Florida and bathed in the warm glow of four handmade Van Erp lamps, the office is home to a lush selection of California impressionist paintings, Martin Brothers pottery and Zsolnay vases. In brief, precise sentences, Salzberg calmly lays out his personal views on collecting, often delving with gusto into details about a particular coin or painting.

If you ask Salzberg, the foundation of his success is a passion for collecting. Even though running the company consumes time and energy, he continues to spend the bulk of his mornings and afternoons grading rare coins, an employee told us.

Scott Schechter, a former coin dealer who has worked with Salzberg for five years, points out three particular talents: Salzberg knows how to cultivate relationships with experts who can hunt down objects, advise him on values and provide additional insight. He also recognizes opportunities and is prepared to strike when a piece comes up, even if forced to pay a 10 percent or 15 percent premium. And finally, like most successful collectors, he has a crucial critic’s eye for quality.

Let’s start with the emotional side. You once said that coins are a buffer against life’s misfortunes.
Many of the successful collectors and dealers have had a traumatic upbringing, for one reason or another. It’s pretty standard, when you talk to the successful guys. They lose themselves in coins. They find a refuge in numismatics.

A small, safe universe …
They’re beautiful, they’re historical, they represent value. They’re interesting from a mathematical standpoint, because of all the data that’s associated with it, and they’re interesting from a historical perspective. They also lend themselves to portability. In today’s world, many people have become concerned about the economic environment and are gravitating toward items that can be transported — gems, precious stones, high-value coins. They’re universally traded, and
the market in coins is very mature.

You got your first exposure to coins from your parents, who are Holocaust survivors.
When I was 7 years old, my father gave me a book on coins because I had told him a girl had walked up to me on the street and given me an Indian-head penny. I was fascinated by U.S. coins from that point on. Years later, he started discussing his post-concentration camp life. He was under Schindler, and after the camps he traded in 20-dollar gold pieces on the black market. I was fascinated by that. He explained to me that he helped CIA agents by converting their dollars into 20-dollar gold pieces. On another note, my mother was hidden by a family under the floorboards of a barn for two years.

In Germany?
I believe in Ukraine. She told me the story of how her father paid for a bowl of soup with a 20-dollar gold piece. These things were very close to me and very meaningful.

Is that what you mean when you say coins are a tangible link to our ancestors?
I love to explain numismatics to children. Take, for example, very low-mintage Civil War era coins. You can get through to children by showing them a coin of 1864. It’s a frame of reference for them. From there, you can explain the economics, why there was such low mintage. During the Civil War, the mints were having trouble getting the coins out to various locations. It starts progressing from there, once you understand that coins really are a link to our history — the portraits, the dates. In the 1860s, we really ran out of small coinage, and they had to make fractional currency.

You enjoy a close relationship with the Smithsonian Institution. During a speech you recently gave at a coin exhibit there, you mentioned the 1885 Trade Dollar in their collection.
The 1885 Trade Dollar isn’t the highlight of the Smithsonian collection that I recall. I graded the finest known 1885 Trade Dollar. I’ve graded most of them. I’ve had the luxury of having most of them cross my desk. The 1885 Trade Dollar is considered one of the highlights of the museum, but not necessarily for me. I mentioned it because there was another one on display, in a separate case that had been brought in from a dealer. That particular coin was owned by a collector, and we wanted to honor that coin and showcase it. The highlight for me at the Smithsonian collection would be the 1794 dollar in copper. It’s a pattern made to show the [U.S. Mint] director what our coins would look like, for his approval. This coin was eventually approved and made in silver. So theoretically, this is the first pattern, the first prototype of the U.S. dollar. It was made in very limited quantity, small mintage. I actually own a 1794 dollar, one of the finest known. The other aspect of this 1794 dollar is, at the time we were shown the coin at the Smithsonian, it was covered in wax, covered in debris, and we were able to bring out the mirror surfaces, leave the originality, a beautiful color. The depth of mirror was extraordinary. The quality of the manufacturing process was shocking. We’re talking about 1794. This is the first year they made silver dollars. They only had a couple of years to get their act together before they made this particular coin.

They had some skills…
They did. Very impressive.

“We buy gold” could be the catchphrase of this particular conjuncture. How do skyrocketing metal prices impact coin collectors?
It can be a negative. You see it everywhere. Every business channel now talks about how metals should be a part of your portfolio, how liquidity should be part of someone’s portfolio. The common belief is that, say, 5 percent of your portfolio should be in bullion and related items. Metals prices have moved up dramatically. There’s a lot of talk of inflation, and I myself have been asked literally every day what I think of gold, of silver, what I see as the future of metals prices. This country has a tremendous amount of debt. In the long term, that bodes well for metal prices and commodities. In the coin business, you have this obvious link between bullion and numismatic items such as 20-dollar gold pieces. So a certain percentage of the population is buying bullion, or requesting numismatic items. So a percentage of that population is being introduced to rare coins. In the rare-coin world, we have created tools that make the collector-investor comfortable, one being an online registry, where you can list your collection and compete with other collectors. We have approximately 60,000 collections listed on the NGC Registry. There’s a very active social part of our online site, and there’s a lot of competition. We also keep population reports so the collector understands when a coin comes up for auction. When he has a hole in his collection, and that comes up for auction, he is competing with other folks, and he knows how many are available.

How have these collectors been impacted by the newcomers?
Coins are finite items. We have a standard. We have been around for 25 years. The two major grading services have graded 40 million coins. They understand these are truly scarce, and there are more and more people coming into this world. Once you buy a coin, you usually don’t sell it. There’s a hoarding mentality. Collectors, if they have that gene, they understand it. I certainly have that gene, and I have multiple copies of the same coin. This makes no real sense.

So are the hoarders still in charge, or have the speculators moved in?
You have to become market-savvy when you start playing in these kinds of numbers. Coins are sold for multimillion dollars individually. We’ve graded most of the ultra rarities. I don’t think there are ultra rarities now that are under a million dollars in gem condition. So you have to consider all the factors. I think we offer a tremendous amount of tools for a collector to feel comfortable and then become heavily involved in numismatics.

Your personal coin collection is heavy on the American Colonial period. Are there any other areas you like?
I collect coins that I call freaks of nature, coins that really shouldn’t exist. For example, I have an 1864 two-and-half dollar gold piece in MS 67. It’s a Reed specimen. It was very low mintage of 2,824 coins. The next finest is an
MS 61. You have to imagine that this was a coin that was taken off the press and put away. It’s Civil War era. It has incredible color. It’s considered by specialists in the two-and-half dollar field as a real trophy. I like to collect those sorts of items. I’m not a specialist in Colonials, but if you see some of these Massachusetts silver shillings, it’s remarkable. They were minted on a roller press. They’re very primitive and they’re pure Americana to me. Obviously very few pieces survive. It was the beginnings of our country. These truly are museum pieces and I’m fortunate to have them.

So you’re more of a hunter than a gatherer when it comes to coin collecting…
I don’t want to call myself cynical, but I’ve seen everything. Virtually everything. When a coin comes through that I think is just spectacular, that takes my breath away, it really has to be special. I find these coins by simply going to a show, walking on the floor. Or I get calls. At this point, people know the kind of items I want to place in my collection. Very infrequently do I add another coin to my collection. It might be two or three a year, but they’re going to be spectacular.

You recently spent $276,000 on an 1867 Proof Double Eagle 65+ at Heritage Auction’s Florida United Numismatists auction in January. Why was this coin important to you?
Proof Liberty Double Eagles are incredible coins. The design is very distinctly American and particularly beautiful when rendered as a well-made proof. More significantly, they are deceptively scarce. A few major collections have come to market the last decade or so, making these coins seem available. I had a strong feeling that these coins will only become more difficult to find and that now was an opportune time to purchase an important example. More specifically to this coin, it’s a rare date – less than a dozen are known in all, and this is one of the finest. Of the coin type, Type Two $20 Liberty’s, only about a similar number, less than 20 pieces, are of comparable condition. I had the good fortune of grading the collection that this coin came from in the 1990s and the 1867 $20 stood out then. The most noteworthy factor was that this coin’s visual appeal and originality are superior to even most of its peers. To me, everything was right about it for my collection.

I have a list of your other collecting activities — Martin Brothers pottery, Van Erp lamps, Bordeaux and California wine, California impressionists. Is there anything missing?
No. I try to stay focused [laughs]. I know, this sounds kind of absurd. This is a broad base, but within those categories I stay focused. I wouldn’t say wine is a collection. Maybe it’s a diminishing collection, if you will. My wife and I love to drink it. We invite people over and we open whatever we can, whatever there is down there. I used to basically deal in wine, in a very informal way. I had at one point 13,000 bottles. It was an obsession, before the run-up on wine. I just had to have it all. I had it at wine storage facilities in New York, in my office, in my home. My wife got crazy and started to give me a really hard time. Fortunately, it went up so much that now, what I have left over is basically free. It doesn’t bother me to go down there and open anything.

How did you sell?
In various places — auctions primarily.

Your art collection is thriving …
My California art to me is another passion. I lived in Newport Beach in 1986, and the colors and the light of California, particularly Southern California, just kicked me in my stomach. I couldn’t tell you why I love it so much, but other people have mentioned the same thing. It’s a beautiful place. There’s something special and spiritual about it. At the time, I was a coin dealer and fell in love with a particular artist named Granville Redmond. He was deaf and mute at the age of 2. He was best friends with Charlie Chaplin, and he was in a number of his movies. Granville Redmond would do the most beautiful landscapes of poppies and lupines, in vibrant and high-key colors — just magnificent, looking through a window back in time. I fell in love with him and at the time, they were $5,000 or $10,000 a painting. I didn’t buy one, because it was out of my comfort level. I would regularly buy coins for that, but I couldn’t get my mind around a $10,000 painting. So when I later moved from California, one came up in auction, and it was my first purchase of a California painting. It was a Granville Redmond, and I paid $36,000.

Quite a jump …
Quite a jump. I try to stay focused on collecting all the early California artists. I try to get one of each style. To me, they have to be 9s or 10s. Many of my paintings have been in exhibitions and museums. They’re a pleasure to live with.

Van Erp lamps, the pottery — are you working on a similar level?
No, I’m not. The most significant collection is the Martin Brothers pottery. I was drawn to Martin Brothers by a friend in California, a fellow coin dealer, Kevin Lipton. I just love how they were made. The ceramic is some of the best made in the world. I love the story of the Martin brothers. They specialized in making grotesque figures and particular birds that would be used as snuff and tobacco jars, and their heads would come off. The ceramics and the birds looked like political figures of the day… and they would be bald or would have funny expressions. These were made in the 1890s. Their shop was next to an opium den in London. They became more and more creative, and their pottery became more and more grotesque and strange. Those are the most desirable today. They’re very rare. They’re very desirable. They come up infrequently. I have 12 birds, which is a lot of birds for one collection. I have probably 30 pieces, and it’s taken me a good 20 years to acquire those. You either love them or you hate them. I just love them. My wife has grown to love them.

Some initial resistance had to be overcome?
She was freaked out by them. [Laughs]

Van Erp lamps…
Again, it’s a California draw. I think this is as far as the collection will go. Four is enough for me at the moment, and I have a large, large cat at home, and I’m not going to have the cat playing with these. So I have them here in the office. They represent quintessential California arts and crafts — hand-hammered copper, hand-wrought with mica panels. Van Erp was an innovator of this particular style. I love that aspect, if you’re an innovator. It equates to the impressionists. Chagall had his own style, Renoir, Monet — these were innovators.

You made coins your business, your living. Are you moving in this direction with your other passions? Do you automatically fall into doing things in a systematic, business-oriented fashion?
California art started as a passion and continues to be a passion. However, when you get into six-figure paintings, you have to do your homework. Everybody who is playing in this world does. They have to have a very, very knowledgeable dealer. I suggest that they do the homework themselves. And you have to have a long-term perspective because it’s not like stocks or bonds. It’s not a short-term investment. California art didn’t start out as an investment for me. But now that I have been acquiring these paintings, they have grown in value. I have to be very careful what I’m adding to the collection. So I’ve naturally become a vest-pocket dealer. I have to understand the values, I have to have a frame of reference, and I have to work with a dealer that I really, really trust. I have to understand what the marketplace is doing, and have knowledge of the auctions. It’s a natural progression.

Do you sell?
I rarely sell, but I do trade. I hate selling [laughs]. It’s one of those things — once I buy something, I usually don’t regret owning it. I am very careful on my purchases. Part of the fun is the hunt. I love the fact that at any given moment, a great item could pop up and be offered to me. I have limited resources, like everyone else, but I want to be prepared for the great thing. So I’m very deliberate in my purchasing.

How do you hunt?
In California art, I am known as stepping up and buying the great items. So I get calls from dealers. I work with one in particular and he sources private material for me. But again, I haven’t added a California painting in six months. I get calls from dealers, I’ll look at auctions, but really the great things — particularly in the California world — don’t come up in auction. They’re traded privately. I get calls occasionally from collectors. But mostly it’s dealers and my own resources for searching. You know, the Internet. I’m so busy I don’t have a lot of time to search these things out, so I get calls from people. Are there any items you’re particularly proud about in your non-coin collections? I have a Chagall. It’s because of the Jewish connection, and the Russian village. I always wanted one. When I went to Israel, I saw Chagall’s windows in museums. I just love his style, he speaks to me. So I’m proud about owning a Chagall. In coins, I started collecting when I was 7. There was one coin in particular. I was working in Miami for a famous coin dealer at the time. At the time, he was considered the top buyer of the most fabulous coins. He would buy “condition rarities.” He wanted the very, very best. He was buying in the 1970s. He showed me his collection, and there was a Trade Dollar he had purchased in the ’70s. It was called “The Coin.” At the time, in the mid-1970s, a gem Trade Dollar would bring $400 in auction. This coin sold for $4,000! It’s the finest silver coin I’ve ever seen. It has every-thing going for it. It has strike rarity, color, it’s pristine, and it’s universally accepted as an MS 69. When I saw the coin, I had to have it, and I kept putting gold on the table. I remember I put Maple Leafs on the table — “Come on, sell it to me, sell it to me!” So he finally did.

You traded.
I traded. I said, “I will never sell this coin. I’ll give it to my son, if I have a son someday.” Well, I got married a few years later. I was blessed with a son. He’s 23 now. I’ve told him about the coin. He’s promised to keep it in the family. He’s promised me first shot if he ever tries to sell it. Not only is it the finest silver coin I’ve ever seen, it has real meaning to me.

Wine aside, did you ever drift away from collecting something?
I drifted away from coins when I discovered girls. [Laughs]

Drifted …
[Laughs] I really drifted. That’s when I was 11 to 13 or so. But, no. That’s a really good question. I’ve found myself gravitating back to California art. I never left coins, except for the girls. I’ve really tried to stay focused. I really understand myself, and if I don’t stay focused, I’d be overwhelmed with the different areas I’d go into. So I try to stay with California art. I’ve tried to really focus on my coin collection. I have a little bit of French impressionism, but it’s not a significant part of my art collection. It’s important, but it’s not the main part of it. I gravitated back toward these particular areas, and I understand that’s what I really love.

So is it moot to ask whether Mark Salzberg might get into new areas?
It’s likely. Probably, it’s likely. This is Zsolnay you’re looking at [points at a Hungarian porcelain vase on his desk]. The person who introduced me to Martin Brothers also introduced me to Zsolnay. I have five, 10 pieces. They’re fantastic. But does this constitute a new direction? I’m hesitant to say.

How do you research these new areas you’re getting into? Is it guts? Systematic research? Do you consult with experts?
All of the above. For me, there has to be a gut reaction that I love these pieces, and that I want to know more about them. Then I start to look at the market for them. If it’s going to be something that’s impossible for me to acquire, that’s prohibitively expensive, or there’s just not enough of the pieces out there for me to build a collection, then I won’t go down that road. The combination of an honest dealer who has a lot of knowledge is vitally important. I read a lot of books on the subject, and I love to go to museums and look at what they have. Every collector needs a frame of reference. They have to see the very, very best to understand what they’re looking at, or what they’re being offered. I teach my graders here the same thing. “You’re very fortunate to be sitting here every day and see the greatest things come through, so you can compare it, so you can know when you’re seeing something better, or something inferior. This gives you the frame of reference that every collector needs.” From a collecting aspect, you have to really have patience and have a passion for it. I obviously have that gene, I speak that language of other collectors, and we understand what we’re talking about. If you don’t have that gene, you’re looking at me with two heads.

You look like you’re quite content with what you have achieved as a collector. Any regrets?
My overall regret is that I’ve become a little obsessive about a particular piece — not unusual for a passionate collector. I probably spend a little too much time in the hunt. So I’ve learned some discipline over the years and gotten some patience as I matured. That’s the one regret. You always regret selling great items. I’ve had to in the coin business, when I was a dealer. That’s the only way you learn. Some things have gotten away. Can’t keep everything. Can’t own everything. And you want to test the market occasionally, as a collector. I had a particular California piece that I should have never sold. I kicked myself over that. I think it will be years until I can acquire another one of this particular artist.

Any history of having to deal with fakes?
Not in my collecting, but certainly on a day-to-day basis in our coin certification business. Chinese fakes are a significant problem. We are literally sending people over to Asia to visit the mints, visit the museums and building an archive of images. We’ve included new technology to do surface analysis, to determine whether a coin is real or not. Authenticity is becoming a bigger and bigger issue. I did have one case where a dealer offered me one painting. I was very, very excited about it. He said he had it on the arm for a day. He literally got it on a plane and flew it down to me. I liked the painting a lot, it was a Joseph Raphael, a California artist who worked in Holland and sent his paintings back to America to sell. I looked at the painting, and my first comment was, the brushwork doesn’t look very thick, typically thick as a Raphael would look. He said, “Well, I believe it’s right. Here, you can see the handprint of Raphael carrying it. It looks like his children,” because it was a portrait of his children. I agreed to buy it, based on his feeling. I thought it was a very good painting. So I shook hands, he took it home, took it back to his gallery. He called me and said, “Mark, I started to clean up the painting and it disappeared on me.” It just started to melt. It was a fake. It had been made a few years before. The whole thing was set up. It came out of a collection. He picked it up from the house. But once he started to work on it, to remove the dirt, it just started to fall apart. It was a really, really good painting, a really good fake, I should say.

Do any of your children have your inclination toward collecting?
They have not inherited my collecting gene, unless you call buying shoes a collection. My girls love shoes, and that’s about it. They don’t collect anything. My younger one, she’s about to enter college, is starting to get involved a little bit in the ancient coin world. She’s intrigued by mythology and Greek and Roman history. I’m keeping my fingers crossed. I think. I’m not really sure I want to have her involved in coins. [Laughs] But clearly, they don’t have the same gene that I have.

Any advice for collectors?
There are three fundamentals any collector should keep in mind. One, they should work with a very knowledgeable dealer and feel comfortable. Two, they should be passionate about what they’re getting involved in. And three, they need to educate themselves and have a long-term perspective. If you take that approach, you’ll have a very satisfying experience with collecting. Coins, in particular, have a very, very bright future. The world market is embracing certification. Asia is on fire. You can track a particular country’s economic health by looking at the coins that are trading in auctions. For example, Brazil is an up-and-coming market that I’ve started to look at. I think they have a lot of potential. I love South American coins. The U.S. market is very mature and still growing rapidly. The tools that we’ve incorporated in the coin industry lend themselves to making people comfortable. The NGC registry. The U.S. Mint pumps $40 million a year into promoting coins. The Internet lends itself beautifully to coins, with all its data and images. I would say numismatics has a bright future.

Johannes Werner is an award-winning business journalist based in Florida.

Photo Credit: Charles Neubauer and Numismatic Guaranty Corporation

By Wayne Sayles – Ancient Coin Collecting Blog

In today’s Washington Post, on page 19, columnist George Will (one of my favorite people) writes about the problems facing Secretary of Defense Leon Panetta. Mr. Will astutely describes a plenteous list of threats that Panetta has on his plate every day, but sees the biggest threat on that plate as being the congressional super-committee that will deal with the nation’s budget that everyone agrees is out of control.

There will be many heated debates over the need and the cost of programs over the coming months (or years). In fact, those debates are already raging. As a retired military officer I can empathize with Mr. Panetta, albeit on a much lesser scale, as I frequently was faced with severe budget constraints in the post Viet Nam era. Yes, history does repeat itself and it seems we do learn nothing from it.

The national budget may seem very remote from coins and coin collecting, but not really. The federal propensity to throw money around like it’s worth nothing does not begin at the desk of a Leon Panetta or of the President himself (not that they are immune). It begins at the desks of a quadzillion bureaucrats with special interests. One of those seemingly countless bureaucratic agencies is the Bureau of Educational and Cultural Affairs, an element of the U.S. State Department. How much of the government’s budget funds the special interests of this small Bureau and its archaeological coterie’s minions? That’s a riddle wrapped in an enigma shrouded in mystery. In comparison to the dollar cost of America’s wars in Iraq and Afghanistan, that bureaucracy’s war against coin collectors may seem like small potatoes, but the fallout in terms of public disenchantment and lost faith in government is huge. That’s not to say that the budget impact is insignificant, it most surely is not. The programs managed or encouraged by the altruistic sounding Cultural Heritage Center cost taxpayers millions of dollars each year. Worse than that, what shows up on the budget appropriation each year for ECA and CHC is only the tip of the iceberg. Their programs have tentacles that leach dollars from many other government entities.

The State Department is not the only department of government that archaeologists have their claws sunk deeply into. The enforcement of controversial DOS import restrictions on common utilitarian objects, proclaimed by archaeologists as being threatened “cultural property”, has cost Customs and Border Protection (and the taxpayer) dearly. Likewise, law enforcement agencies that are hard pressed for the resources to deal with serious crimes are increasingly involved in cultural property witch hunts that serve neither law, justice nor society. Even the National Park Service has succumbed on occasion to the hypnotic appeal of academic archaeologists. After being pummeled by a vicious and grossly exaggerated campaign of outright lies and distortions by archaeologists about looting of the Baghdad Museum, the Department of Defense is now spending time and money on training combat troops in cultural property sensitivity. This is nothing more than placation of the vocally indignant, and a concession to special interest proselytization, as archaeologists are employed to do the training—just as they do for Customs. It’s little wonder that the law is often misinterpreted by those “trained”. One British web site, Heritage Key, very frankly states: “The history of archaeology is populated with cavalier aristocrats, hard-nosed scientific geniuses — and no small amount of controversy, deceit and downright quackery.” That is a harsh characterization, that calls up a lot of past misdeeds, but there is still an element of the discipline today that is not very far removed from that past. Unfortunately, that element often speaks louder than the silent and intimidated majority.

Just the expense of defending itself in court against public challenges to its own extralegal actions has proven costly to bureaucratic agencies that fall under the spell of radical crusading archaeologists. Add to that the huge cost of public subsidies to archaeology through educational grants, sponsored workshops, institutional funding, government contracts and tax exemptions. The cost of archaeology to the general public is huge and growing, just like the federal budget and deficit. Are we getting our money’s worth? Can we afford this as a public largesse? While Leon Panetta must rightfully ponder the needs and cost of our defense system, he and his fellow cabinet members ought to take a look at the special interests of Washington bureaucrats that are constant and cancerous. They may be too small individually to show up on the radar screen, but in aggregate they form a huge hole that money pours into without restraint. I hope George Will rains a little on their parade.

By Louis Golino for Coin Week

August 15 marked the 40th anniversary of the end of the gold standard. In 1971 President Richard M. Nixon ended the convertibility of the dollar with gold, which paved the way for the system of floating, fiat currencies that exists today.

Ever since then the U.S. dollar has continued to lose purchasing power. More and more printing of dollars has fueled inflation and produced a long-term secular decline in the dollar’s value, although it is still the world’s reserve currency.

Many analysts and economists, especially those of a conservative persuasion, have been calling for an end to the fiat dollar in recent years. They have proposed that the paper dollar be replaced with one backed by American gold reserves.

In recent years some people have questioned whether the gold that is supposed to be held at Fort Knox is actually there, and whether gold owned by other countries is also stored there.

I have read that some foreign gold, including from Germany, has been stored in Federal Reserve banks, but it is not clear whether there is any foreign gold at Fort Knox.

In my view U.S. gold reserves are more than likely safely stored where they should be, but conspiracy theories are fueled by the fact that independent observers are hardly ever given access to Fort Knox. Many years ago CBS’ “60 Minutes” did a segment in which the reporter was allowed to view the gold in Fort Knox.

Periodic proposals for a new gold standard have ultimately gone nowhere.

But the substantial increase in the money supply since the 2008 financial crisis coupled with the continuing decline in the dollar, the increase in the Federal debt, and the significant rise in gold prices, have helped fuel renewed calls for a new gold standard.

It has been estimated that a new gold standard would require that each ounce of gold be valued at $10,000.

This figure, which was reported by Bloomberg on September 15, is the “fair value” for gold if each dollar were backed by an ounce of gold from American gold reserves. According to the most recent data, America’s gold reserves are only enough to cover 18% of the current monetary base at today’s gold prices.

There have been a number of interesting developments recently that involve the use of physical gold as a form of currency.

First, several states have either passed or at least introduced laws to make gold legal tender.

Utah has passed such a bill, while Idaho, Minnesota, North Carolina, and South Carolina have introduced such bills. Georgia introduced but dot not pass a bill requiring that payments to the state be made only with U.S.-minted precious metal coins.

Second, there have been proposals to end the federal capital gains tax on precious metals profits. Currently they are taxed at the rate of 28%, the same rate that collectible coins are taxed at, as opposed to the 15% rate paid on stock profits.

Rep. Ron Paul, who is the Chairman of the Domestic Monetary Policy Subcommittee of the House Financial Services Committee and a Republican candidate for president, recently held a legislative hearing regarding H.R. 1098, the “Free Competition in Currency Act.”

He is a long-time proponent of once again backing our currency with gold and silver to make our currency sound money.

Rep. Paul noted that “This bill eliminates three of the major obstacles to the circulation of sound money: federal legal tender laws that force acceptance of Federal Reserve Notes; “counterfeiting” laws that serve no purpose other than to ban the creation of private commodity currencies; and tax laws that penalize the use of gold and silver coins as money.”

During the hearing, Dr. Lawrence Parks of the Foundation for Monetary Education said that until the 1971 end of the gold standard, the U.S. price level (in other words, inflation) was stable. He also explained that in his view a gold-backed dollar would make collapse of the U.S. and global financial systems impossible.

Third, one of the largest precious metals dealers in the world, the American Precious Metals Exchange (APMEX), recently made a down payment on a 10-year lease of a New York building owned by real estate mogul and former Presidential candidate Donald Trump with gold bullion instead of cash. The gold was three .9999 fine bars totaling 96.45 ounces.

The building where APMEX is leasing an entire floor to expand its operations is located at 40 Wall Street, which is known as the “crown jewel” of lower Manhattan.

There are certain obstacles to the implementation of a new U.S. gold standard.

One major challenge is that according to most experts there is not enough physical gold to create a workable monetary system based on gold.

Lord Robert Skidelsky, a famous British economic historian, has argued that moving to a new gold standard would be highly deflationary to the point that it would cause a worldwide depression.

Deficit spending and money printing are certainly problematic for the long-term financial health of the U.S., but in certain circumstances, such as the current economic crisis, it may serve a useful temporary role.

Under this perspective, when the monetary base shrinks and lending dries up, the government pursues an expansionary monetary policy to increase liquidity and lowers interest rates to encourage borrowing.

Of course, the downside is that if used too much, as many people believe is the case now, such a policy also wipes out the savings and purchasing power of dollar holders.

Some analysts point out that even under a new gold standard, the size of the monetary base would still ebb and flow depending on the price per ounce at which the dollar is pegged, which could be changed over time. That would still amount to a form of devaluation or revaluation of the dollar.

I do not know whether a gold-based dollar would work in today’s world, but I am sure there will be increasing calls for it if the economic situation continues to deteriorate.

In addition, there are some interesting ideas for using our gold reserves to reduce our debts.

One that caught my attention is a proposal from Numismatic News editor David Harper, who has argued in favor reducing the Federal debt by issuing 20-year gold bonds.

Investors in these bonds would be paid a one-ounce American gold eagle each year as a dividend payment on a $360,000 gold bond. This would allow the Federal government to raise $4.68 trillion over 20 years based on gold at $1800.

Contacted for this article, Mr. Harper added that “A new gold standard in the United States would restore confidence in the dollar and the economy only if arrangements for the transition would be considered doable by the financial markets. It took the United States 35 years to move from the financial mess created by the Civil War to formally adopting the gold standard in 1900.”

Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for Coin Week, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

1882 Eaton, CO $10 Brown Back triples estimate to bring $37,000+; Fr. 2221-B $5000 Federal Reserve Note realizes $132,250

DALLAS, TX – Heritage Auctions’ Long Beach Signature® Currency Auction, held in Long Beach, CA, September 7-9, realized $5.52 million – including the two non-floor sessions held on Sept. 11-12. All prices include a 15% Buyer’s Premium.

The auction began with a large selection of World Notes representing 94 countries. The Chinese and Cuban notes, in particular, brought strong prices. The China Commercial Guarantee Bank of Chihli 50 Taels 1912 Pick S2514Ds S/M#P33 Specimen graded PMG About Uncirculated 55 brought $7,475, with several other Chinese notes realizing similar results. The auction included a large selection of rare Cuban material with the top seller being a Cuba Republic 10,000 Pesos 1950 Pick 85s Specimen graded PCGS Very Choice New 64PPQ, which brought $5,750. The Russia 5 Gold Rubles 1924 Pick 188s Specimen graded PMG Choice About Unc 58 EPQ far surpassed the estimate of $500+ when a number of competing bidders drove it to a closing price of $5,463.

Other Session One highlights included a PMG Superb Gem Unc 67 EPQ BC-31bA $5 1954 Devil’s Face Replacement that fetched $28,750. The Kings Mountain Collection, containing primarily Colonial notes from the Southern States, including many rare pieces, saw strong prices for a number of offerings. Foremost among them was the exceedingly scarce North Carolina 1780 $50 Independence PCGS Very Fine 30 example that realized $10,350. Not surprisingly, the Obsolete with the highest winning bid was the Salt Lake City, UT- California & Salt Lake Mail Line $50 1863 graded PCGS About New 53. That coveted note brought $40,250.

National Bank Notes were offered during Session Two. Two notes from Palm Beach County, Florida, brought strong prices in particular with the Lake Worth, FL – $5 1902 Plain Back Fr. 607 The First NB Ch. # 11716, graded PCGS Very Fine 30, selling for $44,563, while the West Palm Beach, FL – $10 1902 Plain Back Fr. 634 The American NB Ch. # (S)12057 example, with a PCGS grade of Very Fine 35PPQ, realized $37,375.

Other Nationals of note were the PCGS Apparent Very Fine 20 San Francisco, CA – $20 Original National Gold Bank Note Fr. 1152 The First National Gold Bank Ch. # 1741 that hammered for $43,125, the Tombstone, AZ – $10 1902 Plain Back Fr. 628 The First NB Ch. # (P)6439, graded PCGS Very Fine 30PPQ, that sold for $41,688 and the Eaton, CO – $10 1882 Brown Back Fr. 490 The First NB Ch. # 6057, graded PCGS Very Fine 30PPQ, that catapulted well beyond the pre-auction estimate of $12,500+ to cross the auction block for $37,375.

Small Size Notes and Errors were offered during Session Three. As expected, the top selling lot among the Small Size offerings was the Fr. 2221-B $5000 1934 Federal Reserve Note. PCGS Very Choice New 64PPQ, which realized $132,250. The Grand Forks, ND – $20 1902 Plain Back Fr. 658 The Northwestern NB Ch. # 11142 Double Denomination Error note handily surpassed the estimate and sold for $69,000.

Session Four contained Large Size Type Notes, with the standout among the grouping being the Fr. 165a $100 1862 Legal Tender PCGS Apparent Very Fine 30, which sold for $69,000. Additional highlights included the Fr. 150a $50 1863 Legal Tender PCGS Apparent Fine 15, with a winning bid of $32,200 and the Serial Number One Fr. 897a $10 1914 Red Seal Federal Reserve Note PCGS Extremely Fine 40PPQ, which realized $29,900.

Heritage Auctions, headed by Steve Ivy, Jim Halperin and Greg Rohan, is the world’s third largest auction house, with annual sales more than $700 million, and 600,000+ online bidder members. For more information about Heritage Auctions, and to join and gain access to a complete record of prices realized, along with full-color, enlargeable photos of each lot, please visit HA.com.

By Laura Sperber – Legend Numismatics

THE PHILADELPHIA SHOW MANAGEMENT-MAJOR ADJUSTMENT NEEDED

We adore Mary Counts, David Chrensaw and their staffs tremendous efforts in putting on a great show (as usual they were top notch). Too bad they are not the ones who make the decisions about when or where the shows are. Having this show only one week after Long Beach and three weeks after ANA-is ROTTEN TIMING.

Unless we attended a different show, PUBLIC attendance was miserable, and of course there were practically NO west coast dealers (you know its bad when even PCGS does not attend). The Whitman executives try to blame the convention center and long term contracts for the inability to change time slots. They also feel Philly is a young show (only 3 years old) and can still grow. WRONG! Either they are in denial or they have to realize with all the tactics they are attempting to use (like trying to kill Long Beach) in the end, THEY have killed off their own show. Next years Philadelphia Show is 2 weeks after the ANA-which is also in Phili! They should have learned from the many years and all the money lost trying to make Atlanta a decent show-apparently not.

Even in a good market like we are enjoying, two weak back to back shows DOES affect the markets psyche. There was NO reason for all this to have happened. We highly doubt Whitman will sign up many dealers for next years show because of even worse scheduling. We tried to tell them, this show only dilutes the wonderful shows they run in Baltimore. If they want Phli to survive and thrive, they need to cut the summer Baltimore Show and MOVE Phili 1-2 weeks further away from when the Long Beach show is. We know all about running shows-we spent 4 years and lost thousands of dollars trying to build COINFEST into a regional brand. Even we knew when to stop.

Sadly too many dealers (us included) are creatures of habit. We know a show can be a waste of time, but we hear the word show and have to have a table. Then the show promoters think that because they are selling tables, a show is a success. The Philadelphia show proves if you build it, they will not always come-even in a good market. And the few who did-really did not get their moneys worth this time (based upon what several collectors said to us). We need serious change here!

THE MARKET

Holey cow! There is a coin market! And it is thriving (FOR LEGEND). At least from our perspective, it has NEVER been better. This week we will be announcing a MEGA multimillion dollar deal we just purchased, and the sale of a million dollar plus coin to a collector. We also purchased a significant PR Gold deal as well.

While coins did not sell off our web site every minute last week, we did have strong and steady volume. Our BEST sellers were coins in the $5 -$25,000.00 range-of ALL metals. Interesting in that the premiums of generic gold shrunk. The demand seems s to have slacked off a little. However we can not find enough rare better date and higher grade gold to sell. The demand is still all there and then some for the better coins.

Yet again, we received numerous Want Lists and expansions for current lists. We really do need $20,000,000.00+++ of coins (anyone have a 10C 1902 PCGS PR66 CAC (ONLY)? We’re paying $3,500.00!). Take our word on this, there is plenty of cash sitting on the sideline waiting for the right opportunities. In fact, with people growing very discontent over the stock market, we believe even more money will come into coins shortly.

We also heard about a wonderful PCGS graded Proof set of coins that apparently sold at Long Beach for several hundred thousand dollars. Most likely the dealer was not up to the real market pricing (which is why you need to know who you are dealing with and their abilities) as the set traded hands immediately after it was sold originally. It could have sold one or two more times after that. We saw the set and tried to buy it, but it had been placed for good. Our point is that the better the coins involved, the more active buyers there are. Even a six figure set does not scare off dealers today, demand is strong for the VERY best coins!