Prices Are Low Considering Mintages

By Paul M. Green, Numismatic News May 02, 2012

This article was originally printed in Numismatic News.
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It was the product of the inflationary time of the silver war. It is not made of silver. In 1865, that was the charm of the copper-nickel 3-cent piece. Silver and gold coins were not circulating. Today, if you are looking for an interesting collection from the 1800s at an affordable price, the copper-nickel 3-cent piece has a lot to offer. It’s an interesting coin and a historical one thatt while short-lived was in production for an important time in American history.

The idea of a 3-cent coin did not come naturally to the United States. It is not a natural fit in a decimal system nor does it seem to have any roots in the British system of pounds, shillings and pence.

With that in mind you will say no wonder there was apparently no consideration of such a denomination back when the first denominations were authorized in 1792. There was no U.S. Mint at the time and once one was established it was not capable of producing even the denominations that were authorized for a variety of reasons.

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In reality, the 3-cent piece while oftentimes joined with the other denominations no longer in production such as the half cent, 2-cent piece and 20-cent piece, it does have its own history as do the others. The half cent was approved in 1792 and had somewhat sporadic use until 1857 when it was discontinued.

In the case of the 2-cent piece it seemed to be an idea waiting for its time to come. It was not approved in 1792 but by the early 1800s there was a proposal in the Congress in 1806, which actually was gaining support before the Mint director raised potential problems with the proposed alloy. That would stall the idea for a few decades, but it was considered again in the 1830s, but that time too it was not approved. Ultimately, the Civil War would produce an emergency where the 2-cent piece could help and that would prove to be the case with a copper-nickel 3-cent piece as well.

The idea of a 3-cent piece did not really surface until the late 1840s. At that time there were problems on the horizon as the discovery of gold in California had upset the normal silver-to-gold ratio, making silver more expensive in terms of gold. As that was happening, a congressional committee was looking into the idea of new denominations. One of the denominations being considered was a 2.5 cent piece, which sounds ridiculous but actually made some sense as at the time there were still Spanish issues in circulation with one of the most frequently encountered being the “bit,” which was valued at 12.5 cents. Under the circumstances, the 2.5-cent piece if approved would make change for a “bit” possible. There are 8 bits in the Spanish dollar, also know as the 8 reales. The U.S. dollar was based on this coin. The proposal for the 2.5-cent coin was not approved perhaps in part because they were hoping to get the Spanish silver removed from circulation, and by 1857 this is in fact what happened.

As silver coins started to disappear from circulation because they were being hoarded in the late 1840s as they cost more than their face value to produce there should have been action to slightly reduce the amount of silver in the silver coins. The Congress, however, had a track record of moving very slowly with such reductions. The amount of gold in gold issues had needed a reduction for more than a decade before any action was taken in 1834.

Things were no faster when it came to silver. Rather than reduce the amount of silver, the Congress instead authorized a 75 percent silver 3-cent piece. The claim at the time was that it would help make change for the new lower priced first class postage stamps. It was a classic case of political spin as making change for postage stamps, which relatively few used anyway, was hardly a significant problem. It did, however, perhaps make the new denomination look like a public service and not a debasing of the coins thus making it a better political option.

As it turned out, the 75 percent silver 3-cent piece introduced in 1851 worked although only in a limited way. It did circulate at a time when no other silver coins would, but it could not be expected to solver all the problems presented by a lack of other silver denominations. Eventually the Congress had to face the fact that it needed to act, which it did in 1853, by reducing the amount of silver in the regular issues and increasing the silver to 90 percent in the new 3-cent piece.

With the change the 90 percent silver 3-cent piece had a problem in that it was not really needed for making change any longer. What little lingering problem there might have been because the copper half cents and large cents were bulky was solved in 1857 when the new and smaller Flying Eagle cent was introduced. The lack of demand for the silver 3-cent piece is clearly seen in decreasing mintages during the 1850s.

The silver composition of the 3-cent piece was to set it up for future problems and they were not long in coming. With a silver composition if there was another time of massive hoarding, while small the 3-cent piece was going to be hoarded right along with the other silver denominations. That problem was to surface the minute the first gun was fired in the Civil War.

The hoarding which began with the start of the Civil War was far worse than had been seen in the early 1850s. The 1850s hoarding was driven by economic considerations, which could be solved. The Civil War hoarding was driven by fear as the outcome and consequences of the conflict were unknown. It was not only silver and gold that were hoarded, but even copper-nickel Indian Head cents disappeared. Worse, there was no way of solving the problem other than ending the conflict and that was not possible. In fact, if anything the early years of the war suggested than if anyone was to win the war quickly it would be the Confederate States of America.

As the war dragged on, the situation became less tolerable. To conduct regular commerce people resorted to using postage stamps, tokens and then Fractional Currency with denominations as low as 3 cents, which they definitely did not like. The fact that they were hoarding cents simply made a bad situation worse. The first steps were taken with the approval of a change in the composition of the cent from copper-nickel to bronze in 1864. Bronze was also approved for a new 2-cent piece in that year.

The change from copper-nickel in the cent was not exactly music to the ears of a fellow named Joseph Wharton. We may not realize it, but even by the Civil War there were significant efforts on the part of lobbyists to get what they wanted from the Congress. Wharton was part of that tradition as it was his purpose to get the government to use nickel wherever possible and that included coins. Realistically there was no such thing as a copper-nickel coin that Wharton did not like as he just happened to have a small interest in the matter as he owned the only functioning nickel mine in the United States in Lancaster Gap, Pa.

Actually Wharton was not unusual in American history or even in the 1860s. The mining interests in the West had championed the idea of a new gold dollar and double eagle back in 1849. They had also gained approval for a new $3 gold piece a few years later and had only been stopped when they also made proposals for $25, $50 and $100 gold coins. Wharton had the same idea, but a different metal.

Wharton had been championing the idea of using nickel for years. It was used in Indian cents 1859-1864. He had a number of important friends in Congress and in 1865 they took action to approve a 3-cent piece with a 75 percent copper and 25 percent nickel composition as well as a 5-cent coin with the same composition. In both cases it was felt that without silver the coins could circulate and in both cases that proved to be the case. In fact, the composition worked so well that even today the composition of the nickel is the same one that was approved back in the 1860s.

Once approved the new copper-nickel 3-cent piece was rushed into production with an 1865 mintage of 11,382,000 pieces. That mintage was despite the fact that the silver 3-cent piece was still technically in production although with the suspension of specie payments and the hoarding the mintages of the silver 3-cent piece were small.

Actually the situation in 1865 was interesting as with the addition of the copper-nickel 3-cent piece the United States had a silver and copper-nickel 3-cent piece as well as Fractional Currency of the same denomination. It was an ironic situation when only 15 years earlier there had been no coins or notes of the denomination.

The arrival of the copper-nickel 3-cent piece would basically spell the end of the silver 3-cent piece, but it wasn’t officially discontinued until 1873. There is probably a case to be made that the silver 3-cent piece was on it’ way out anyway, but the copper-nickel 3-cent piece certainly did not help and it did allow the Fractional Currency of the denomination to be more quickly retired. The impact on the silver 3-cent piece is seen in its 1865 mintage of just 8,500 pieces and until the end in 1873 the mintages remained low.

In fact, the copper-nickel 3-cent piece had a large mintage in 1865, but it would experience some of the same problems as the silver version. The mintages would drop off quickly as there was limited demand and there were other production priorities as the Mint was trying desperately to get as many possible denominations in circulation as quickly as was possible and that saw the emphasis shift the following year to the new 5-cent coin. The 1866 3-cent nickel mintage was still 4,801,000, but that was still down from the first year and the 1867 total would be another million pieces less than 1866. In 1871 there would be the first copper-nickel 3-cent piece to have a mintage of less than 1 million pieces.

The trend of lower mintages would not be a perfect pattern. There would be ups and downs. In 1873 when the silver 3-cent piece was officially eliminated there would be another mintage of more than 1 million copper-nickel coins and that would happen again in 1881. Generally speaking, however, the mintages were low and slowly declining as the 3-cent piece no matter what its composition was not really playing a major role in commerce.

The mintage pattern makes for a collection that can really be divided into sections. The coins of the first years are available and at low prices with no G-4 from 1865-1876 topping $21. In fact some of those dates are good deals as the 1875 had a mintage of just 228,000 while the 1876 was just 162,000 and those totals are well below something like a 1916-D Mercury dime, which has a $1,000 price in G-4. Certainly the demand for the 1875 and 1876 copper-nickel 3-cent piece is far less than for a 1916-D Mercury dime, but the fact remains that at today’s prices the copper-nickel 3-cent pieces are excellent values on low mintage dates.

With the exception of the higher mintage 1881, the years after 1876 are much tougher. Two dates that stand out are the proof-only 1877 and 1878, which had mintages estimated at 900 for the 1877 and 2,350 for the 1878. Those mintages result in Proof-65 prices of $3,750 for the 1877 and $1,20 for the 1878.

The prices of most of the lower mintage business strikes from the period are very reasonable. While certainly higher, when you consider the mintages you have to feel you are getting good values. The 1883 with a mintage of 10,069 is a good example as it lists for $200 in G-4. The 1889 meanwhile with a mintage of 21,561 is just $90 in G-4. The most expensive business strike of the period is the lowest mintage 1885, which is $470 in G-4. The 1885, however, had a mintage of just 4,790 and it is not often when you can find a coin with a mintage of less than 5,000 for under $500 in G-4.

There was another proof-only date in the form of the 1886, but it had an estimated mintage of 4,290, which was high for a proof and that results in a price of $715 in Proof-65 as with proofs the chances of survival are far better than they are for top grade business strikes. In fact, many proofs of the period for dates where there are both proofs and business strikes can be found at surprisingly affordable prices and that even includes the 1887/6 overdate which is just $940 in Proof-65. With limited demand a copper-nickel 3-cent piece collection is possible in upper grades at reasonable prices. For example, in MS-60 other than the proof- only dates, the only business strikes even close to $1,000 are the low mintage 1884 and 1885 and they are $800 and $900, respectively. In the case of other low mintage dates the prices are usually $525 or less with some of the earlier dates at just $200.

Things are more complicated in MS-65 as realistically finding some dates in MS-65 can be a challenge. The cost is sometimes not the issue as much as the chance to buy one of the better dates. The most expensive is the 1884 at $6,250 while the 1883 is $4,850 and the 1885 is at $2,300. There are a couple other dates that are higher like the 1876 at $1,550, but generally speaking the set is not as expensive as might be expected.

There is an option that might surprise some and that is to assemble a set in proof as in the case of many dates a Proof-65 is much more available and much less expensive than an MS-65. It was a simple case of the proofs being obtained by collectors and then receiving better care leading to greater numbers that have managed to survive to the present day. The price differences can be striking with a Proof-65 1883 at just $690 while an MS-65 is $4,850. In the case of the 1884 which is $6,250 in MS-65 it is just $700 in Proof-65. The prices are no mistake as the Professional Coin Grading Service has seen just 8 examples of the 1883 and 6 of the 1884 in MS-65 but the Proof-65 totals of either are in the hundreds.

The one tougher proof is the 1865, which is currently listed at $6,500 in Proof-65 as proof sales when the copper-nickel 3-cent piece was introduced were lower. Even at that price the 1865 is still relatively inexpensive when you compare it to the proof rarities in other denominations where a set in proof might also be an option as the 1864L Indian Head cent or 1867 with rays Shield nickel are much tougher and more expensive.

Not many think about it, but realistically the copper-nickel 3-cent piece is a set that is well worth considering in proof as roughly one-half the dates are under $1,000 and some are below $700. For a set in top grade it’s really a bargain.

Whatever your decision in approaching the copper-nickel 3-cent piece it is a set that is an interesting reflection of its times. It was a coin that was helpful in a time of national crisis but as time passed it became clear that the denomination was not really needed, Th Mint produced its final production in 1889 and the coin passed into history as a lesser known but certainly interesting denomination

 

IN THIS ISSUE: Dealer Alert: New Electronic Check Scam E-filing 8300′s New IRS Form 1099b Secondhand Dealer/Holding Laws Proliferate Ray Gregson on Hiatus Your Congressional Contacts Are Important! ICTA Board Meeting Aug. 8 in Philadelphia FinCEN Reports Going Paperless Contact ICTA   The Washington Wire is published by The Industry Council for Tangible Assets, Inc. (ICTA) Website:  ictaonline.org Executive Office Eloise A. Ullman Executive Director Eloise.Ullman@ictaonline.org PO Box 1365 Severna Park, MD  21146-8365 Telephone: 410-626-7005 FAX 410-626-7007 Industry Affairs Office Diane A. Piret Industry Affairs Director Dapiret@ictaonline.org  PO Box 316 Belle Chasse, LA  70037 Telephone: 504-392-0023 FAX 504-392-0305

VOLUME XXIX, No. 2                    April 2012   Dealer Alert:  New Electronic Check Scam   Ray Gregson has informed us that customers have come up with yet another way to rip off your business:   Example:   A customer comes into your store to sell you merchandise – scrap, coins, or anything else.  You purchase the merchandise and pay the customer by check.  The customer leaves your store and immediately scans the check via his smart phone into his bank account.  Within a few minutes, he returns to your store and says that he’s decided he’d prefer the cash, so could you please just cash the check for him (not an uncommon request).  You cash the check and unbeknownst to you, you have paid him twice for the same transaction – the check payment he scanned into his bank account and the cash you just gave him.  He can then withdraw the money that was deposited to his account when he scanned your check.    How long will it be until you realize you’ve been scammed?  When you get your monthly bank statement?  When you check your online bank account at the end of the day?  By either of these times it will be too late.   Solution:  In order to protect yourself, we suggest you institute a company policy that prohibits changing the method of payment for any transaction.  Also, an ICTA Board member has informed us that his bank has special security features he can opt in to…for a fee, of course.  So you might want to check this out with your own bank.   E-filing 8300’s   We’ve notified ICTA members for several months that, as of June 30, 2012, you will be required to file all 8300 Forms electronically.  We have discovered, however, that FinCEN has changed this requirement so 8300 Forms are NOT included in the electronic filing requirement.  You can check this out at www.irs.gov  and www.fincen.gov/forms/bsa.  Please see the full press release at the end of this email blast to confirm which forms you ARE REQUIRED to file electronically.   New IRS Form 1099b   We have received calls from several dealers asking how to complete the new 1099b Form that includes several additional boxes requesting information that you and your clients likely won’t have, such as “date of acquisition” (box 1b), “cost or other basis” (box 3), etc.  Generally, if you don’t have the information, it would make sense to leave the box blank; however we strongly suggest you review your procedures with your accountant or other tax professional.  Remember the information must be collected now for 1099b Forms you will file in January, 2013.                                               Secondhand Dealer/Holding Laws Proliferate   We continue to get calls from all over the Country that local jurisdictions as well as states are passing laws designed to regulate/control itinerate gold buyers but that cast such a wide net that coin dealers are included in these restrictive laws.  YOU MUST MONITOR YOUR STATE AND LOCAL GOVERNMENTS.  ICTA cannot monitor for you, and once these laws are on the books, it is extremely difficult to get them modified or removed.  We do have materials, arguments, statistics, etc., that can help you make your case with local law enforcement to modify these laws before they are finalized.  Call us if we can help.       Ray Gregson on Hiatus   Ray Gregson has let us know that he will be out of cell phone range from April 26th to May 12th.  He will let his clients know how to contact him during this time, but phone and email reception will be spotty.    Ray advises:  “If someone is contacted by their bank about an audit report, tell them, ‘Get another bank account’ because I or no one else can get to them that quickly.”  For questions about cash reporting or AML plans, contact Diane or Eloise.       Your Congressional Contacts Are Important!   ICTA Board of Directors member Don Kagin (Kagin’s, Inc., in Tiburon, CA) writes:   Recently I had breakfast with Senator Sherrod Brown (D-Ohio) and just 8 others. Senator Brown is on the Senate Banking Committee which has jurisdiction over some of our industry’s issues.  I had met and supported the Senator 6 years ago when I gave him a US 2 cent piece.   Senator Brown actually remembered “the coin guy”, and this time I gave him a $100 trillion Zimbabwe note. He asked me to send him information concerning Chinese counterfeiting and asked if the Chinese were able to counterfeit our currency. I assured him I would respond and that he could always contact me concerning any issues related to our field.   This encounter and (hopefully) lasting impression cost me a $250 donation (each time), plus the aforementioned numismatic items and two hours of my time.  (ICTA of course will now continue to periodically send him educational information about our industry’s issues.)   With 1/3 of the Senate and all House seats up for grabs this November, now is a great time for each of us to develop political “access” and influence which in turn could impact the future of our hobby/business.     ICTA Board Meeting August 8 in Philadelphia   The next ICTA Board of Directors meeting will be held Wednesday evening, August 8 in Philadelphia.  Any ICTA member may attend the meeting but must make a reservation by contacting Eloise.  All Board members and guests pay an equal share of the dinner costs.  If you have items you’d like placed on the Board’s agenda, please contact Eloise.       FOR IMMEDIATE RELEASE February 24, 2012 CONTACT: Steve Hudak 703-905-3770 FinCEN Reports Going Paperless VIENNA, Va. – In an effort to improve efficiency, reduce government and industry costs, and enhance the ability of investigators, analysts, and examiners to gain better and more timely access to important financial information, the Financial Crimes Enforcement Network (FinCEN) today re-affirmed its requirement, with some extensions and exemptions allowed, that FinCEN reports be filed electronically (E-Filed) from July 1, 2012. “E-Filing makes sense from every perspective. Both the government and the filer will save time and money,” noted FinCEN Director James H. Freis, Jr. “We listened closely to the industry’s concerns, balanced those concerns with the needs of law enforcement, and we are allowing some prudent exemptions. As part of FinCEN’s overall modernization of its IT systems, the time has come to move our reporting framework from paper to the electronic age.” Although almost all FinCEN reports fall within the E-Filing mandate, Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) are by far the most commonly filed FinCEN reports and are the primary focus of this initiative. For practical reasons, the Currency and Monetary Instrument Report (CMIR), which is most often completed by individuals upon physically crossing the border into the United States, is not included in the mandate. FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, may also continue to be filed on paper. FinCEN encourages individuals to E-File FBARs (Reports of Foreign Bank and Financial Accounts) and has made that convenient option available. However, the deadline for mandatory FBAR E-Filing has been exempted until June 30, 2013 to allow time for practical adaptation and notice. FinCEN today issued a notice on its Web site detailing three categories for possible exemption, briefly; some Money Services Businesses, or small credit unions, may lack internet access and file a limited number of FinCEN reports; some financial institutions who file a large number of Currency Transaction Reports (CTRs) may need time to adapt their aggregation systems, and; an “other extraordinary circumstances” category. Financial institutions must affirmatively request an exemption within 30 days and await FinCEN’s response. To assist filers with the new requirements a recorded instructional presentation has been made available today. For more information about the benefits of using BSA E-Filing, please review the E-Filing Section on FinCEN’s Web site. FinCEN is committed to working with financial institutions to increase their understanding of the value of E-Filing and has issued a brochure that highlights its benefits. For other technology-related questions specific to E-Filing, please call the BSA E-Filing Help desk at 1-866-346-9478, Option 1. FinCEN’s mission is to enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems.          Any information in this newsletter is provided to assist ICTA members and is not intended to be used as a substitute for actual advice from a professional tax or legal adviser.   ® Industry Council for Tangible Assets (ICTA), Inc. April, 2012

PCGS Currency Certifies Inscribed Titanic Survivor’s Note

By PCGS on April 25, 2012 9:47 AM

Where Bullion Investing And Coin Collecting Merge – PART 2

By Al Doyle on April 30, 2012 6:31 AM

Rare Coin Road Warrior – Change is Good

By Vic Bozarth on April 26, 2012 6:43 AM

Fancy Serial Numbers’ Prices Jump

By Bill Brandimore, Bank Note Reporter April 23, 2012

This article was originally printed in Bank Note Reporter.
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This month’s collector tip comes from Scott Lindquist, co-author of the Standard Guide to Small-Size U.S. Paper Money. To help tell the devilish Dark and Light color varieties of the 1934 small-size Federal Reserve Notes apart, use a 1928C series note as a color guide. This series is consistently true to the light color shade. Scarce in their own right, the 1928C $10 Chicago issue is probably the most available and economical of the 1928C issues.

The Lyn Knight auction of the James (Billy) Key collection of fancy serial number notes at the CPMX show in March provided a good insight into the values of these popular and expensive small-size note collecting opportunities. Numerous solid number notes, 11111111 to 99999999 varieties, were featured at this outstanding auction collection. In general 99999999 varieties proved the most desirable and expensive, bringing prices of $20,000 and more in choice new condition. Solid 9s seem to be the rarest of solids as many series stop short of solid 9s. Solid 1s were certainly appreciated as were lucky 8s, but the night belonged to the 9s. More ordinary solids were available to bidders at prices of $1,000 and higher.

Other popular notes featured up and down ladders, i.e., 12345678, or 98765432, etc. Repeaters, low serial numbers, radars and other variations made for some interesting numerical choices and spirited bidding was the rule. Altogether, more than 300 lots were available in the Key collection. The Lyn Knight auction catalog provided some interesting data concerning the rise in value of fancy serial numbers since July of 1987. According to Knight’s charts, the value of solid “9” notes increased in value in Choice CU from $500 to $25,000 in the past 25 years. Clearly this is a shocking growth and a real eye opener.

World currency remains strong and collectors are eagerly anticipating the sale of the top rated Philippine currency and coin collection at Memphis in June. Costa Rican currency was red hot at CPMX as were numerous other South American notes. The growth in interest in the field of world currency has been emphasized by the participation of a number of bidders from around the world. A number of collectors and dealers were absent from the always popular Central States show in April because of their attendance at a giant world paper money show in The Netherlands the same weekend.

Other notes, large and small-size U.S., Colonials and Fractionals, remained stable. It appears that we might be coming out of the doldrums for most issues. Really rare items have maintained their value as these notes only appear every so often and bidders must strike when the iron is hot.

Nationals remain subject to supply and demand. The Wallace Lee collection sold for less than many figured, although without Dr. Lee, himself, bidding on notes the competition for Michigan notes was noticeably softer. This might be a state to look into for some bargains for type collectors.

It pays to keep in mind who the top buyers of any state happen to be. Nationals prices for any number of states can be extraordinarily dependent on one or two enthusiastic buyers.

As always, email me with questions, comments, or information on pricing. With thousands of notes to keep track of I am always on the lookout for information. Email me at billbrandimore@charter.net. If you prefer to talk to me face to face, your next opportunity will be at the Memphis show in June.

The History of U.S. Paper Money

By Arlyn G. Sieber, Warman’s Coins and Paper Money April 23, 2012

Excerpted from Warman’s Coins and Paper Money by Arlyn G. Sieber, available from http://www.ShopNumisMaster.com.

During the Revolutionary War, the states and Continental Congress continued to issue paper money, but its backing in hard currency was spotty at best. Inflation ensued, and the notes’ values plummeted. Some were called “shinplasters” because early Americans put them in their boots to help keep their feet warm. The saying “not worth a Continental” had its roots in the devaluation of Continental currency.

Designs on state notes varied, but most featured inscriptions within elaborate borders. Coats of arms and crowns were also common. During the mid-1770s, designs became more elaborate; farm scenes and buildings were popular design subjects.

Most Continental currency bore intricate circular seals of allegories.

To deter counterfeiting, leaves were used in the printing process. The fine detail of a leaf on a note was difficult for counterfeiters to duplicate. Each note was hand signed, sometimes by important figures in early American history. The significance of a note’s signatures can enhance its value. Because of the devaluation of paper money during the Colonial and Continental Congress eras, the Constitution specified that “no state shall … make anything but gold and silver coin a tender in payment of debts.” This provision, however, still allowed banks and other private institutions to issue paper money, which circulated solely on the people’s trust in the issuing entity. Sound banks kept enough hard money reserves to redeem their notes on demand; less scrupulous banks didn’t.

Known as “obsolete notes” or “broken bank notes” today, these private issues were produced in especially large numbers in the 1830s and 1850s. They became obsolete in the 1860s when many of the issuing banks went under while others redeemed their outstanding notes and did not issue more. The notes are valued by collectors today because many of them feature artistic vignettes of local industries, such as shipping or cotton, or patriotic themes provided by the printer. Some show their value in coins – two half dollars and a quarter to represent $1.25, for example. Most obsolete notes are one-sided.

During the Civil War, the public hoarded gold, silver, and even copper coins. In response to the resulting coin shortage, postage stamps were used for small change in everyday transactions. The stamps were placed in small envelopes printed with a value, but the envelopes deteriorated quickly and the stamps soon became a sticky mess.

The solution was to issue small, rectangular-shaped “Postage Currency” in 1862.

Depictions of postage stamps on the currency indicated their value; a 50-cent note depicted 50 cents in postage stamps, for example. They could not be used as postage on letters or packages (they had no adhesive), but they could be redeemed at any post office for the indicated amount of postage.

In 1863, fractional currency replaced the postage currency. It was similar in size to the postage currency but did not contain any reference to postage stamps. Fractional notes were issued through 1876, by which time coinage production had caught up with demand and the hoarding of the Civil War era had ended. Fractional currency is common in the collectibles market today. Many issues can be purchased for $20 to $100, depending on the individual note and its condition. Demand notes are considered the first regular paper money issued by the U.S. government.

Paper money issues are identified first by type, then by denomination and series date, which is not necessarily the date in which the piece was issued. “Series” indicates the year of the act authorizing the series, or the year production of the series began.

Further means of identifying notes include their design, seal color, issuing bank, signers, and size. Through 1928, U.S. paper-money issues were about 7 1/2 inches by 3 1/8 inches and are commonly called “large-size notes” today. Beginning with Series 1928 (released in 1929), U.S. paper money issues were reduced to 6 1/8 inches by 2 5/8 inches and are commonly called “small-size notes

The Coin Analyst: Collectors and the Market Need Better Resources on Coin Values and Mintages

By Louis Golino on April 20, 2012 9:30 AM

75th Anniversary San Francisco Set

Viewpoint: Key Modern Coins Win Profit Race

By Eric Jordan, Numismatic News April 12, 2012

This article was originally printed in Numismatic News.
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Coin collecting is a wonderful and enjoyable hobby that for many represents art struck on precious metals. For astute and patient collectors it represents a useful personal asset. A recent article entitled, “Modern Issues Lousy Investments,” points out that dirt-common modern proof sets have not performed well over the last 20 years, and that modern commemorative issues – with their initial surcharges mandated by Congress – have performed poorly relative to bullion. Based on these minor segment conclusions, the entirety of modern coinage was written off as a lousy holding. Benjamin Franklin once said, “The murder of a beautiful theory by a gang of brutal facts is a terrible thing,” and that is certainly the case here.

Modern Commemorative Coins Do you know which modern commemoratives have the best potential for profit? Start with this reference! Get your copy today!

Classic coins are statistically not any better than modern coins as investments. Both are carried chiefly by their three top key-date issues, which is where the focus of “investing” should be. If you go through Greysheet archives or review market segment indexes like the PCGS3000 for all subsets of classic coinage and index them to inflation or gold, almost every segment of classic coinage has lost ground (in real terms) over the last 20 years. The only classic market segment that has held its own since 1992 is the key date index. The Greysheet shows that for typical complete Mint State sets – in most cases – over 50 prcent of an entire set’s value is contained in the first three key and semi-key dates. Obviously key date material is normally the place to be.

The rest of the set is just along for the ride and increase in value only as the price of their metal of manufacture rises. Over time Mint State common date collector premiums diminish as a percentage of the coins’ market value if the metals are trending upward. This is why classic coin commentators over the years have correctly stressed the importance of key dates in high grade.

The first of two graphs shows the constant dollar performance of the major classic coin market segments along with the price of constant dollar gold.

Today’s key date moderns are displaying exactly the same behavior, but are still affordable to the broad middle class. While the article mentions the 25th Anniversary silver Eagle set as an unusual exception to the “lousy” performing moderns, it is actually only demonstrating typical key and semi-key date behavior. In the listing under the article there were at least 30 key dates that on average have outperformed inflation and their metal of manufacture since the date of sales closure. Most of them were open for sale at the Mint for extended periods of time.

It is interesting to note that the keys and semi-keys listed directly under the “lousy investments” article have, on average, experienced price increases of a factor of about 3.4 since their year of issue, which has – with little exception – taken place within six years. That is a screaming increase for almost any asset class. The suggestion that one needs to get “lucky” with the purchase of a 25th anniversary silver Eagle set in order to do well with infant key dates is simply not valid. All one needs to do is focus on low population attractive issues in series with rapidly expanding total populations just as collectors with foresight have for generations. Let’s look at the numbers in the chart.

We can learn some things from this listing. Many modern keys and type coins have very low mintages. Rarity and relative series rarity that have not been evident in classic U.S. coinage for nearly a century is becoming evident in Modern Coins. These young series key dates are doing what young key dates do – grow. High cost and high material content suppress value growth in large denomination series because the cost of the complete set gets so high it discourages new collectors from taking up the set. Small denomination key dates, on the other hand (as can be seen above), tend to be resistant to the high material cost dampening effect larger denomination series have on collector growth rates.

Comparing mature series key dates to modern key dates has its flaws – they are not the same. The problem with mature series key dates is that they are so expensive they tend to price the typical collector out of the market therefore stalling collector base growth. Most modern keys – in the midst of massive high grade populations – have a great deal of public exposure. These key issues can be acquired comparatively close to melt thus encouraging continued growth in collector ranks. Collectors who would like to assemble good looking sets struck on precious metals are absorbing these coins at a staggering rate, as is clearly seen by the population report growth at Numismatic Guaranty Corp. and Professional Coin Grading Service. All indicators point to moderns as today’s growth segment of the collecting hobby.

It is possible to get hurt buying key date moderns if you are impatient. As the second graph illustrates, key moderns generally spike in value shortly after release, then settle down for a period before steadily (yet slowly) climbing to ever higher values.

 

Notice that strong young keys tend to have an “out of the box” bounce to 2-4 times issue price shortly after issue. The market has the tendency to drop about 25-40 percent from this peak and stay dormant for about 2-4 years while dealer and speculator inventories dissipate into the hands of the public. Series that enjoy loyal collector interest then begin the growth cycle that can run anywhere from 10 to 50 years. If the opportunity slips to purchase key dates at issue price in cases where they are a quick sellout at the Mint, statistics show it is wise to allow the prices to go through the consolidation phase prior to purchase. In the case of purchasing MS-70 or Proof-70 keys, the best time to make a purchase is late in the coin’s year of issue while they are still plentiful and the rush to buy is over.

Modern series are affordable, good looking, have a high intrinsic metal content backing them and have key date issues that are tight bottle necks. These are classic sign posts of future greatness and opportunity. Those who choose to ignore low mintage moderns forfeit their opportunity to absorb the potential super coins of their generation. Looking back over market history this is an often repeated but serious error.

So before publishing blanket statements bashing modern coins as a lousy investment it might be wise to take a look at their key-date performance as compared to their classic series relatives. While they are different from one another, they exhibit very similar behavior. Giving undue credence to either party is unfair to the other because they both have very supportable merits. Just as modern coins have the common date proof set to answer for, the low grade common date classic coins also gather more dust than value.

Eric Jordan is author of Modern Commemorative Coins: Invest Today, Profit Tomorrow, available at www.shopnumismaster.com.

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