Silver Investors Should Diversify, Too

By: Dr. Jeffrey Lewis

– Posted 18 May, 2010 | Share this article| Discuss This Article – Comments: 1 Source: SilverSeek.com Diversification is the most important part to any solid financial plan, and precious metals are no exception.  Silver investors should plan to diversify within their silver holdings to protect their wealth and to allow for opportunities to profit in the future.   Diversification in Silver The variety of silver products available to investors is unreal.  From junk silver and American Eagles to the generic silver round and bars, silver investors have more choices than any other kind of investor.  However, despite having numerous choices, silver investors often choose to buy only their favorite coin, bar, or round without effectively diversifying their metal portfolio.   Size Diversification Size is one area where many silver investors fail to diversify.  Rather than owning a few 1 ounce rounds, 10 ounce bars or bags of junk silver, many investors just buy the same kind of silver week after week, year after year.  Most investors would be better served with at least some size diversification to protect themselves from surging premiums or a shortage of a certain type of silver.  For example, a silver investor who typically buys 1 ounce coins is paying a far higher premium per ounce than an investor who purchases 10 ounce bars.  The same silver investor could easily drive down his or her cost per ounce by making larger purchases, as well as purchasing small coins.  The same is also true for buyers of large silver pieces; they fail to account for the times when small coins or rounds may be suitable for barter, or when they can make a few dollars in times of crisis premiums.  When fears about Y2K emerged, premiums on small silver coins skyrocketed, while the premiums on bars remained mostly flat.  In that case, an investor could have easily sold or traded his small coinage for larger bars, increasing his net silver holdings.   Purity Diversification Contrary to popular belief, there is nothing wrong with owning junk silver coins from pre-1964 American mints.  Although these coins are not 99.99% pure, they are 90% silver and rise and fall in value proportionally with silver prices.  For extreme scenarios, these coins also serve as spectacular bartering commodities, having satisfied the need for smaller denominations and weights for small transactions.  Since many investors tend to look over silver that is not 99% pure, bags of junk coins sell at a discount to other products with the same weight, making them a great bargain for an investor.   Be Careful with Numismatics Although the American Eagle silver coins are not numismatics, and they actually sell for a price close to the current silver spot price, they do have collectable value.  If you’ve ever shopped for bullion, you’ve found that these coins are often the highest price, but offer little extra value to investors.  For this reason, try to avoid coins in which collectors are a large part of the purchasing volume.  Collectors are largely disinterested in total weight and instead want attractive pieces that fit into a collection.  Other silver rounds, such as presidential rounds or Olympic rounds, also have similar collector appeal, so avoid them if your number one goal is to obtain the most silver for your dollar.  There are probably better deals to be found in the same place. Dr. Jeffrey Lewis www.silver-coin-investor.com

Gold Steps Up to Set Record

By Numismatic News May 13, 2010

Gold set a new record price of $1,242.70 a troy ounce May 12 as Europeans began chasing the precious metal in the wake of the Greek financial crisis. The crisis, quelled with a $1 trillion European Union-International Monetary Fund aid package, did not shore up the value of the euro, which had been falling in recent weeks to a recent low of $1.26.

Silver also perked up, though it is still far from reaching its old 1980 record of $50 a troy ounce, or even its approximately $24 high in early 2008.

However, the white metal was nearing the $20 mark, trading at $19.64.

So far, the U.S. Mint has not had to reimpose a rationing system for its gold American Eagle bullion coins or its newly available Buffalo bullion coins. However, the allocation of silver American Eagles continues as demand for the popular coin continues to outstrip supply.

By Dave:

Make Sure You Have Something Real
May 07, 2010

Each morning as I start my day, I check the Kitco website to see what precious metals are doing.

Yesterday I wrote down $1,180.10 for gold and $17.52 for silver. This morning I wrote down $1,197.80 and $17.63.

If those numbers were the only information you had, who would think that the financial system almost melted down again yesterday purportedly due to some glitch?

That’s some glitch.

While it is easy to get wrapped up in online virtual reality, it is important to take a step back from it. Even the stuff that is supposed to be real online might not be.

That’s hard to wrap my mind around.

A little typing mistake can disrupt the world economy or worse.

That sort of puts typos in newspapers and blogs into perspective, doesn’t it?

That isn’t really my point, though. What I think is important to take away from this episode is the necessity of having some things in your life that are real and not affected by virtual reality. Obviously, home and family come to mind, but to whatever list you might compile, keep in mind that a coin collection is very real. You have it no matter what. There is some value there no matter what.

The same is true about gold and silver. Whatever happens, both metals are real. There is value there. There always will be. Market analysts simply argue about current and future prices not about whether they will have any value at all.

That’s something to hold onto.

My point, I think, is true whether next year’s gold price rises or falls. Gold is real. Real is good and it is something that can’t be trumped by whatever happens online.

By Patrick A. Heller May 11, 2010

With all the financial turmoil in Europe over the past week, the U.S. dollar has risen in value against almost all other world currencies.  Even with the $1+ trillion rescue package (including significant assistance from the U.S. government – meaning U.S. taxpayers) set up to assist Greece and other European countries with their sovereign debt crises, currencies like the euro are shaky enough that investors are scurrying to get out of it.

Most mainstream investors think in terms of which currency into which they will park their investments. Generally, they don’t think of gold (or silver) as representing an alternative currency at all. Among all the paper currencies, the U.S. dollar looks to be the “least bad” right now.  Therefore, in the past few days, investors are flooding into U.S. Treasury debt and other dollar-denominated paper assets

All of this positive news for the value of the U.S. dollar is just temporary. In reality, the U.S. government has grown the size of its debt and budget deficits past the point of no return. According to David M. Walker, the former comptroller general (chief accounting officer) of the federal government, and others, the U.S. government’s actuarial liabilities and debt now exceeds $100 trillion. This is so large, more than six times the size of the U.S. economy, that it can never be paid off except through hyperinflation of the U.S. dollar into becoming worthless.

The size of the “official” federal government budget deficit for the 2010 fiscal year is forecast to be $1.4 trillion dollars.  This is the much smaller “cash-flow” figure rather than the correct “actuarial” deficit which would include all the commitments that the U.S. government is now incurring but postponing payment into the future. Even using the smaller number, the size of the deficit is so huge that, at current gold prices, the deficit could purchase more than 30 percent of all gold mined worldwide over the past 5,000 years.

Keep in mind that this is just the “smaller” deficit figure for just one nation for just one fiscal year. Future federal budget deficits are projected by President Obama and his staff to continue on this scale for at least the next several years (which I consider to be hopelessly optimistic).

As more investors realize that the U.S. dollar is no more stable in the long run than other currencies, the demand for physical precious metals will inevitably continue to rise. So, even though the dollar may look somewhat strong at the moment, it is destined to collapse in value. Unfortunately, as we saw with the Dow Jones Industrial Average last Thursday, the value of the dollar could suddenly plummet so quickly that the average investor has no opportunity to get out “just in time.” With such a high risk of being hit with a sudden loss for holding U.S. dollars and dollar-denominated paper assets like stocks and bonds, the sensible step is to get out of the dollar right now – at a time when it looks to be temporarily overvalued.

In years past, value of the U.S. dollar typically had an inverse relationship with the price of gold. If one was rising, the other was declining. That has not been true for the past week or two. It is entirely possible that the current temporary jump in the value of the dollar could lead into a much higher gold price in the coming weeks.

Other news notes:

1.  The investigation into JPMorgan Chase’s silver trading practices is expanding. Commodity Futures Trading Commission officials have unofficially announced they are conducting a civil investigation of JPMorgan Chase. The Anti-Trust Division of the Department of Justice has now sent e-mails stating that it has started a criminal investigation against the company. The investigations would include trading conducted on the London Bullion Market Association by the bank’s London office. JPMorgan Chase does not yet face any charges from either agency.

In the fourth quarter of 2009, JPMorgan Chase’s derivatives position in the silver market increased by 220 million ounces.  I am confident that most of this was unleashed to help hold down the price of silver.

As JPMorgan Chase is the lead trading partner executing the orders of the Federal Reserve, it is hard for me to think that the ultimate results of these investigations will severely cripple the bank. However, just the existence of the investigations could be enough for the price of silver (then gold) to shoot upwards.

2.  Most major international financial conferences are arranged a year or more in advance.  On May 11, the International Monetary Fund and the Swiss National Bank will be co-hosting a meeting of a number of the world’s major central banks, financial companies, and market analysts to discuss the current global currency crisis. That this meeting was only announced on April 23 is a sign of the urgency and depth of the crisis that is now affecting global markets. I’m not sure how it will be possible to come to any kind of agreement on such short notice that would reassure investors in stocks, bonds and currencies. If this meeting completely fails, you know, I suspect that there will be a lot of pressure for the media to not even report on it. In my judgment, the results of this meeting will give a good indication of where paper asset and precious metals markets are heading in the next couple of weeks.

3. With the nearly panicked reaction in European and other markets late last week, and the loss of trillions of dollars in the value of paper assets, it was almost certain there would be a major effort to prop up European currencies and all stock markets on Monday.  That is just what has happened, with European stock markets up 5-9 percent on May 10, and almost all other stock markets up by a lesser degree.  The market manipulation required to pull off this accomplishment almost looks like it cost more than $1 trillion dollars. These amounts are so large that the central banks simply cannot afford to commit to this level of resources very long. Even with stronger markets for paper assets, gold and silver are not retreating. I think that any sign of weakness in any paper assets could be sufficient impetus to start a flood of investor money into precious metals, accompanied by quickly rising prices.

4.  I constantly complain that the mainstream media is totally ignoring what has really gone on in the world financial markets in general, and in the precious metals markets in particular. That is changing.  “The New York Post” is the source of the inside information on the CFTC’s investigation of JPMorgan Chase. Last Friday, the “Los Angeles Times” included a glowing story on the prospects for owning gold. It even included the fresh information that European demand for physical gold is so strong that it is already almost impossible to find any to purchase (which I consider a sign of what is likely to occur in the U.S. within two weeks).Patrick A. Heller owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” the company’s monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com.  Other commentaries are available at Coin Update (www.coinupdate.com) and Financial Sense University (www.financialsense.com).

By Geena Paul
LONDON (Commodity Online): Who says gold is the safe haven for investors now? It seems, if you take into consideration the present scenario in the global markets, gold is the most unsafe investment now.

As is the tradition, gold thrives whenever there is a crisis or tragedy. This time around, it was Greece financial crisis, Spain and Portugal dilemma and the Iceland volcano mess and the gold ETFs fraud unraveled by the US commodity exchange regulator. Even as analysts made a big fuss about the gold’s safe haven importance at this time and the metal surged to over $1,200 per ounce level riding on this tragic news, there are strong reasons to believe that gold’s safe haven image is set to dent in the coming days.
 
There are indications that the high gold prices won’t last long. As more and more people have become aware that the high prices of the yellow metal are not going to last, they are slowly shifting to other commodities which offer a guaranteed profit much more than gold. If you take the case of China, people started looking for other options like diamonds and platinum instead of gold as the cost of the metal is very high.

Spot gold had crossed the $1,200 an ounce threshold last week, the first such close above the psychological level since December 2009 when report of 200-tonne IMF gold purchase by India’s Reserve Bank of India filtered in.

According to reports from India, these high prices kept people away from bullion market and jewellery shops in the country.

With prices hovering around Rs 17,000 for 10 gm, large sales are unlikely to happen in India now even on Akshya Tritiya, the auspicious day for Indians to buy gold.

The World Gold Council (WGC), however, remains positive about demand for gold in the upcoming festive season on the back of firm prices that have bolstered consumer confidence.

For the past two years, Akshaya Tritiya has been seeing dip in sales of around 10 per cent. From 55 tonnes in 2007, it came down to 48.9 tonnes in 2008 and 45 tonnes in 2009. On May 7, 2008 gold price stood at Rs 11,800 per 10 gm, whereas it was Rs 14,700 on April 27, 2009.

At Rs 17,000, gold prices will have moved up by 15 per cent this Akshaya Tritiya.

So, jewellers are promoting platinum year. Chennai-based GRT Jewellers has launched the first ever platinum coin.

Meanwhile, investment bank Société Générale is calling gold down to below $800 by the end of this year as a stalling in investment is unlikely to be offset by an equivalent recovery in jewellery demand. 

The fact that prices fell very sharply when investment faltered over the turn of February and March is cited as a potential precursor to more of the same later in the year.

The latest quarterly Commodities Review from the bank notes that in late March the major Exchange Traded Funds held 1,589 tonnes of gold, which was a twelve-month increase of 656 tonnes (since then they have added a further 14 tonnes), but that more significantly they had acquired 390 tonnes since the turn of investor appetite in mid-January.  Between then and early February there were only nine days on which there were net redemptions and six of these were concentrated between February 24 and March 6.  During that period, just four tonnes were sold from the funds, but the loss of this inward investment momentum took 10% off the price over that period plus a further three days.

Noting that investment activity is clearly not the only price driver in the market, the bank points out that it is currently one of the few bullish influences.  Absorption of 198 tonnes into the funds in the first three weeks of February accompanied a price increase of $80 or 9%, and then flat activity in the two following weeks saw that gain wiped out, highlighting the importance of sustained investor purchasing if international prices are to remain high.

Did YN Programs Have Impact?
April 19, 2010

Coin collectors often wonder what the future holds for the hobby. Speculation about it makes interesting reading.

One aspect of the future of numismatics is that it is largely determined by demographics.

Current collectors are counted by the number of them born between 60 and 50 years ago.

Why?

Because the prime decade of coin collecting for most hobbyists is their 50s. It has been that way for 100 years.

So the health of the hobby is determined by the number of 50-year-olds who decide to get in there and spend time and money on their favorite hobby.

Subtract the number of collectors who reach 60 this year from the number who turn 50 and the resulting number will tell you whether we will grow or not. If the number is positive, growth is likely.

True, there are collectors who are 49 and 61, respectively, but they are not part of the key demographic group.

In the next 10 years we will begin to see whether all the Young Numismatist programs that became mainstream in the 1970s will have any impact at all on the numbers of collectors in their prime.

About half of all collectors started before they were 20 and we will see if YN programs in their youth makes them return to the hobby in any greater numbers. Most collectors who started as kids put the hobby aside for a while as graduation, jobs and families became priorities. They then return in middle age as time and finances permit. Perhaps more will report that they never left the hobby, or returned sooner.

About 40 percent of collectors begin after age 40.

That leaves the great demographics wasteland of ages 20-40 where only 10 percent had their beginnings in numismatics.

The next 10 years should be a good one for the hobby overall. The question in my mind is what happens to YN programs if we see no evidence in that period that YN programs had any impact on the overall collecting life pattern of those who will be in their 50s during the coming decade and who would count among their number those very first YNs.

Will Gold Shoot to New Records?

By David L. Ganz, Numismatic News April 20, 2010

Gold charged forward, hitting $1,161 a troy ounce on April 12, suggesting perhaps the beginning of an assault on the $1,200 an ounce mark achieved last December.

The Dow Jones Industrial average was 10,452 on Dec. 1 when gold hit $1,214.80 on Kitco’s close; today the Dow is above 11,000. What about gold?

Each time that gold ticks upward, the numismatic consequences are enormous. That’s because double eagles are such a significant component of the rare coin market, and each contains almost a full ounce of gold. The U.S. $20 gold piece, which was produced in circulating quantities from 1850-1932, contains .9675 troy ounces of gold.

At $1,150 an ounce, the current base camp before assault on the golden peak, an uncirculated double eagle has a starting point, before numismatic value, of about $1,112 in gold. Some market analysis say that this makes MS-60 and MS-61 double eagles a great purchase opportunity.

Gold’s movement over the past 12 months has also seen its effect on gold bullion coins. The Engelhard gold quote at $1,161 was $898 a year ago. The Krugerrand and Canadian Maple Leaf have gone from $940 to $1,209. Coming up next is the American Eagle, moving in the same year period from $949 to $1,214. The U.S. Eagle gain is 27.9 percent. Slightly higher at 28.6 percent are the Krugerrand and Maple Leaf.

Meanwhile, silver is at $18.47 (up from $12.74 a year ago); platinum was $1,243 and is now $1,728. The silver gain is over 44 percent, platinum a bit less.

By Geena Paul
LONDON (Commodity Online): Even as the world is watching Iran with suspicion over its nuclear ambitions, Tehran is harbouring plans to tackle the US pressure through gold.

Otherwise, how will you explain the gold hunt Iran has launched after the Gulf war.

To stop an effort by the West to seize Iranian assets in Europe, the Iranian leadership decided to begin a massive, secret repatriation of its international currency reserves.

Therefore, the Central Bank of Iran started buying gold so that it can stall any economic threat by countries like US and England.

And, nobody knows how much gold Iran has already amassed. That too at a time when the world is still reeling under recession impacts and several central banks are hunting for gold to convert their foreign reserves into yellow metal.

So, Iran purchased gold secretly like China does it now and shipped it to their vaults. That was Iran’s intelligent move to shift its currency reserves to gold.

Earlier, Iran’s leadership wanted to purchase 700 tonnes of gold. However, their secret effort to convert Iran’s foreign currency holdings into gold appears to have stopped when word leaked.

The gold is now being held in the vaults of the Bank Markazi in Tehran. The asset repatriation plan was set into motion just weeks after Mahmoud Ahmadinejad took over as president of the Islamic Republic of Iran.

The decision was made during a strategic planning session of top regime leaders in Tehran, who were examining Iran’s options in the nuclear face-off with the West.

In addition to giving the orders to convert foreign currency holdings to gold and to repatriate them from Switzerland, the leaders also gave orders to Iran’s central bankers to move cash accounts from Europe into Arab and Russian banks, which they felt would be more immune to Western pressure.

Ahmadinejad this week visited Zimbabwe and Uganda, with whom he will discuss Iran’s nuclear programme.

Ahmadinejad’s visit to Uganda gains significance as world powers have stepped up pressure for a new round of UN sanctions against Iran for pursuing its nuclear programme.

The Gulf War wreaked devastation of unimaginable proportions on Iran’s infrastructure so much that even economic experts had predicted that it would be impossible to revive the economy in the foreseeable future.

But, Iran’s resilience to win back its lost glory has seen results in the recent past with countries like India even supporting the Iranian cause.

The economy of Iran is the sixteenth largest economy in the world by purchasing power parity (PPP). It is a transition economy with a large public sector and an estimated 40% of the economy centrally planned.

Exports are dominated by oil and gas which constituted 50% of government revenue in 2006. A unique feature of Iran’s economy is the large size of the religious foundations whose combined budgets make up half that of the central government.

High oil prices in recent years have enabled Iran to amass $97 billion in foreign exchange reserves. Yet this increased revenue has not eased economic hardships, which include double-digit unemployment and inflation.

According to the Central Bank of Iran, annual inflation declined to 11.5% as of February 2010. The economy has seen only moderate growth.

At this juncture, Iran’s policy of buying gold may make the country more self-reliant.

LONDON (Commodity Online): Will gold price zoom past the record of $1227 per ounce that the precious metal achieved in December 2009? It looks gold price is surging once again prompted by a number of reasons that include the Greek financial crisis, volatility in dollar and Euro and several central banks’ decision to raise interest rates.On Monday, gold price started climbing in global markets across several continents from Asia to Europe. Gold prices hit a fresh four-months high in Asian trading on euros rebound as EU offered a bailout package to Greece. Gold for immediate delivery was seen trading at $1165.35 an ounce at 11.30 a.m while U.S. gold futures for June delivery was at $1,166.40 per ounce.Bullion analysts said that gold price is once again on a boom. Gold’s steady ascent to a record of $1227 per ounce began in October 2009 in the aftermath of India buying 200 tonnes of gold from the International Monetary Fund (IMF). IMF decision to sell gold to India at a high price led to a frenzy in bullion markets around the world, resulting in the precious metal’s historic rally to $1227 per ounce on December 4, 2009. Precious metals analyst Mark Robinson says gold price is once again on a surge. “Gold has turned out to be the best investment asset for common people, banks, brokerages and investors around the world. Everyone is betting on gold on increasing political and currency worries in several nations from Greece to Brazil,” he pointed out. “April is going to be the month for gold, it looks. The current gold rally has the potential to cross the $1227 per ounce. I am looking at a gold price of $1250 or above per ounce in short terms. Gold is surely going to achieve another historic record. Gold is on a bullish run on global investment demand,” Robinson told Commodity Online. Analysts like Robinson say that the bull run in gold will continue for some months now as investors are scouting for pouring money into gold funds, gold bars, gold coins and several other bullion-based assets. “In countries like India, one of the largest gold consuming countries in the world, people are buying into Gold ETFs and gold funds based on mutual funds. This is all leading to another bullish run on the yellow metal,” he added..Several bullion analysts are now banking on the bull run theory on gold. David Levenstein, another precious metals analysts posted this report on gold on Monday: “In dollar terms the gold price is now about 5 percent below its all time high, but the weakness of the pound and the euro against the American currency means that the price of the yellow metal in sterling and euros has just made new record highs. The price of an ounce of gold has thus reached record levels of £754 and €865 in recent trading, and the dollar price has reached a three-month high of $1,157. In August last year the gold price in sterling terms, for example, was £562, so British gold investors have made a profit of 34%, compared with a rise in the dollar price of 23% over the same period. During the past week, the Euro was very volatile especially as the financial drama in Greece continued. As expected, the ECB left the main refinancing rate at 1% in April, and both growth prospects and inflation were largely unchanged from previous meetings. ECB President Trichet addressed questions about Greece’s deficit problem and said that ‘default is not an issue for Greece’. Although the Euro edged up higher on Friday, the trend for the week has been down. There were a number of Central Bank events last week. Australia raised rates by 25bps to 4.25% as widely expected, and the Bank of Japan and Bank of England left rates and the quantitative easing program unchanged. The U.S. Federal Open Market Committee minutes for March’s meeting unveiled the Fed’s dovish monetary outlook. While forecasts of real economic activities remained largely unchanged from previous meeting, policymakers were surprised by deceleration of inflation. At the same time, the Fed noted unemployment would be undermining recovery. Nicholas Brooks of ETF Securities, which runs exchange-traded funds, said: “The strong performance of gold, despite the strength of the US dollar, indicates that investors are increasingly viewing it as an alternative store of value, not just to the US dollar but to fiat [paper] currencies more broadly, as sovereign risks continues to rise. “Traditionally, investors concerned about the structural outlook for the US dollar would buy euros, British pounds or yen. However, with policy and debt risks rising in all of these countries, investors – as well as central banks and sovereign wealth funds – are increasingly looking to gold as an alternative ‘hard asset’ store of value.” On April 8, of this month The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings hit an all-time high at 1,140.433 tons surpassing an earlier record of 1,134.03 tons touched on June 1, 2009. The rise in the ETF holdings to a new record level reflects strong investor demand. In my previous report I mentioned that the IMF had turned down a bid from Eric Sprott to buy the remaining 191 tons of gold on offer. Evidently, the IMF claimed that Sprott’s desire to purchase the gold from the IMF did not comply with ‘protocol”, and that the IMF only sells gold to central banks. When Sprott explained what happened, he also mentioned that “I’m a 100% believer that central banks have suppressed the price of gold. I find it hilarious today that they have these programs to sell gold – it’s of no use. It’s one of the dumbest decisions in the last decade.”

Loss of Mint Luster Key Grade Point

By F. Michael Fazzari, Numismatic News April 01, 2010

I believe that once you learn how to recognize friction wear, rubbing, cabinet friction, etc., whatever the current term for loss of mint luster on the highest point of a coin’s design is; you can grade anything.

Let me suggest some universal aspects of grading that come into play even while examining unusual numismatic items. These ideas should be obvious to anyone who has given much thought to grading.

Think about these points:

Smaller coins are harder to grade than larger coins because they are harder to see. While it’s true that some sort of magnification aids your examination, the actual parts of the coin you are looking at are small to begin with.

The contact marks on smaller coins are generally less severe than the marks on larger coins. That’s because smaller coins are lighter. Light coins do less damage when they come into contact with each other while circulating.

With all coins, the contact marks become more detrimental the easier they are to see. Marks in a prime focal area are the most important to consider.

The amount of wear on a coin is relative to its size. Take for example an Indian Peace medal with a diameter of 75mm (slightly bigger than three Washington quarters placed end-to-end). A tiny amount of cabinet friction – enough to change the color of the medal’s highest point – would hardly lower the commercial grade of the medal into the AU range; yet that same amount of friction might lower the grade of a small coin one point.

As you grade a coin, no mater what its configuration, you are looking for a changes of color (independent of toning) indicating the loss of originality at that point. Coins these days come in all shapes and sizes. Have you seen the coins from the Somali Democratic Republic in the shape of motorcycles and guitars? Even unusual coins such as this have certain points that will show the first signs of wear.

It is very helpful to know what design details are present on a fully struck example of a coin you are grading but an experienced numismatist who knows the difference between a weak strike and actual friction wear can get around this requirement.

Keeping these points in mind, all the usual criteria used to arrive at a grade remain the same no matter what the coin looks like. These include strike and the number, severity, and location of marks. Eye appeal is always most important. Now let’s take a look at some unusual coins you may encounter and discuss how they might be graded.

I believe any unusual coin can be graded the same as a normal specimen. Fig. 1 shows one part of a double struck silver medal at 10 power magnification. In the micrograph, the fields are dark and the raised portions of the design are white. In the center, you can make out parts of the letters on the first strike that have been flattened by the second strike. Since the fields of this medal are mirror-like and free from marks or blemishes, this error coin has very high eye appeal. It would grade PR-68 or higher as an error or as a normal piece.

An allowance is made for off-center error coins that show an unstruck portion of the planchet remaining. While the originality of the unstruck portion should be judged, original planchet surface marks on this part of the piece should not be factored into the grade unless they are severe.

Figure 2 shows a waffled state quarter at 15 power magnification. Its golden color is due to the lighting conditions in the location where it was photographed. Let’s grade it assuming that the rest of the coin looks the same as the micrograph.

The piece has full, blazing, mint luster with no rub. That gets us into the uncirculated range. There are virtually no perceptible marks on the piece and it has high eye appeal. That gets us into the gem grade. There are some stress cracks from the cancel die used to disfigure the coin but one could argue that the cracks are part of the cancelling process rather than defects. Wouldn’t you agree that this is a beautiful example of a waffled coin?

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