By Jeff Garrett for Numismatic Guaranty Corporation – with Permission

Two of the most basic terms that anyone new to numismatics needs to understand are Business Strike and Proof. Business strike coins are those made by the mint for general circulation. Proof coins are the numismatic delicacies struck for collectors each year. In general, business strike coins are frosty in appearance and coins struck as proof display mirror surfaces. The United States began striking regular issue coinage in 1793. Proof coins are generally believed to first appear around 1819. The Smithsonian collection, which has the finest group of Proof coins in the world, has a set of 1819 Proof coinage. The US Mint still strikes millions of Proof coins each year for collectors.

From the information above, one might think the subject of Proof coins to be straight forward and easy to understand. The truth, however, is much more complicated; there are dozens of variables to consider. An early Proof coin does not have a special marking or mintmark that distinguishes it from business strikes of the same issue. Also, the surfaces on many early Proof coins do not possess the same deep mirror appearance of later issues. The subject is further complicated by branch mint Proof issues. Several issues of business strike coins were struck using dies used for Proof coinage; these can be extremely difficult to identify. Proof Three Cent Nickels from the 1880s are a perfect example of this. They are sometimes, only half in jest, called PRUNC!

The term “Proof” first appeared in Mint correspondence around 1858. Other terms, such as “Master Coin” and “Pattern” were sometimes used to describe these special coins. It is amazing to me that individuals in the US Mint went to such extraordinary effort to create and save these incredible coins; they were obviously proud of their work. Remember, these coins were struck well before there was an active collector market for American coinage. The early run of Proof gold coins from 1821 to 1915 in the Smithsonian (previously the US Mint collection) is a survival miracle. The coins were struck and saved for the collection for over 125 years! Today it is one of the most important reference collections in existence.

As mentioned above, the exact nature of Proof coins can sometimes be confusing. Many of the early issues do not exhibit the same mirror surfaces that collectors have come to expect from Proof coinage. A Proof 1819 Half Dollar looks very different than a Proof Barber Half Dollar. The strike can be extraordinary, but the surfaces lack much of the reflectivity of later issues. The same can be said for other interesting issues as well. The 1849 Double Eagle in the Smithsonian collection is clearly a Proof; it is sharply struck, but the surfaces are much more satiny than the post-1860 Proof Double Eagles. The same can be said of the unique Proof 1854-S Double Eagle in the collection.

Branch mint Proof issues often do not have the exact same characteristics of the Philadelphia Proof issues. Several Morgan Dollar issues are known to have been struck as Proof for special occasions at the branch mints; they can be very similar in appearance to business strike issues, which have deep, mirrored surfaces. Early issue branch mint Proof coins are among the most desirable American coins. Recently an 1855-S Three Dollar Gold coin certified by NGC as PF 64 sold for over $1.3 million dollars. Most branch mint Proof Morgan Dollars sell for well into six figures. In most cases, just a few of these very rare coins are known. Occasionally, a new, previously unknown issue will appear; experts are always on the lookout for these exciting coins.

I am often asked to render an opinion about the proof status of a coin. Luckily, I have examined untold numbers of US coins over the years, and have come to have an understanding of what a normal business strike looks like. Unfortunately, some coins seem to fall between the cracks, and can be very difficult to declare one way or the other. Close study, and the use of reference collections such as the one contained in the Smithsonian are vital tools. The field of Proof coinage is extremely exciting and ripe for discovery, which is one of the reasons I can’t wait to go to work most days!!!

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!

By Richard Schwary – California Numismatic Investments

I just finished with the June 2011 copy of The Numismatist, which is the 120th Anniversary Convention Issue, and contains all the important information about the upcoming ANA World’s Fair of Money held August 16-20th of 2011 at the Donald E. Stephens Convention Center in Chicago. There is also the ANA/PNG Pre-Show August 13th through the 15th so if you want to get started early the water is fine (www.worldsfairofmoney.com).

I have always recommended a coin show or two as one of the best ways to really learn about numismatics, but if Chicago is too far away consider visiting a local show as there are many across the country. Shows usually break down to regional affairs and club shows which can be smaller, but not necessarily, and large national meetings which attract dealers from all over the world. You can be sure that if the American Numismatic Association puts on a show it will be worth attending and also offers a great deal of free educational forums presented by the really smart guys in this trade. Shows house and showcase the big money in this business, but are also family affairs which have something to offer everyone interested in numismatics.

And if all of this is new to you but sounds interesting why not consider finding a copy of the June 2011 The Numismatist, which is a wonderful periodical printed and issued by the ANA for more than 100 years. Now if you were a member of the American Numismatic Association you would receive your copy free on a regular basis, and it would also contain important information about all things relating to coins, banknotes, tokens and general information relating to this wonderful hobby. You would even have free access to the amazing ANA Library named after Dwight Manley. All of which makes you a smarter and more informed numismatic buyer and all the fun part is thrown in for almost nothing. So what are you waiting for? Why not find out more or better still join the ANA for a pittance at www.money.org?

And while we are talking about the ANA let me share Larry Shepherd’s excellent article included in the current The Numismatist. Larry is the ANA Executive Director and his leadership is top notch in my book.

Bourse Etiquette by Larry Shepherd

(1) Don’t interrupt a dealer and customer who are talking or in the middle of a transaction. Don’t ask to see the coins being discussed or inquire about their prices.

(2) Do return to the dealer’s table when he or she has concluded the transaction.

(3) Don’t block customer access to a dealer’s table.

(4) Do spend some time learning before you buy.

(5) Don’t search a dealer’s entire inventory for the best pieces, then expect him to sell you the coins at the wholesale price.

(6) Do allow the dealer to make a reasonable profit.

(7) Don’t try to negotiate when the price is fair. Ask for a discount only if you truly believe a piece is overpriced.

(8) Do ask permission to show a coin to another collector or dealer for a second opinion.

(9) Don’t buy a coin on the first day of a show, then try to return it on the last day because you found something else

Richard Schwary – California Numismatic Investments

It would be a great deal more fun to consider what R.W. Julian has to say about Gobrecht dollars but at this point in time the consideration in front of us is the rather murky numismatic subject called coin doctoring. I have talked with both David Hall of the Professional Coin Grading Service (PCGS) and Mark Salzburg of Numismatic Grading Corporation (NGC) about this problem and believe these folks along with other industry leaders understand that not taking unilateral action against the growing danger of radical coin doctoring will at some point come back to haunt us all. And in the bargain we will be criticized historically for a simple lack of leadership within the rare coin industry.

Fortunately for all of us there is still time for aggressive action but let’s not put this issue on the back burner because the window of opportunity we now enjoy will shrink as fast as this extreme danger expands. I applaud both PCGS and NGC as well as the Professional Numismatists Guild (PNG) for working toward an understanding as to what criteria should be used when considering coin doctoring. And it is not my intention to solve this Gordian knot in a few paragraphs but I do see a problem if we do not insure progress from this point forward. There must be a tipping point for this industry when we all come together on this definition or forever be condemned as showing great promise but failing to deliver on difficult issues.

A review of Vic Botharth’s well developed statement Coin Doctoring and the PNG Decision (Coinweek.com) will help greatly because it clearly states what I believe is the professionally safe position many dealers have adopted now that the initial smoke has cleared. And at the same time it raises questions which will move the discussion forward, like the notion that the grading services did not equivocate on their expertise and in fact guaranteed the product. So as the stated experts they led the way into this mess and so the problem is theirs to fix and the trade should not be concerned. Fair enough but certainly not comprehensive especially when dealer and consumer organizations like the PNG and ANA place themselves in positions of authority.

Let me also add a general feeling I think every dealer has to some degree but was raised nicely by a friend of mine and old time PNG member at the last Long Beach Show. He admitted the obvious in that we all face this coin doctoring problem but said he did not want to get involved as he did not trade in the stealth damaged goods and his hands were full with regular day to day business. I was not at the PNG General Meeting when the modified definition of coin doctoring was not accepted but I talked with members who were and appreciate the difficulty of trying to parse words when it comes to doctoring. What is and what is not has been a part of the industry dialogue for as long as I can remember and the PNG already includes in its ethics rules an admonition concerning doctored coins.

I have also talked with Laura Sperber on the subject and believe she deserves not only trade recognition but an award from the American Numismatic Association (ANA). ANA President Cliff Mishler and ANA Executive Director Larry Sheperd are great leaders and will not cut and run on this subject so public recognition from the ANA can only serve to move this discussion forward.

In some ways Sperber reminds me of the heroine Calamity Jane played by the beautiful Robin Weigert in the famous HBO Series “Deadwood”. Laura’s fire breathing oratory in the middle of a mostly male audience should be admired. If we were honest with ourselves her “over the top” approach to this danger should be seen as the most important tactic ever used in moving this nightmare out of the closet. Some might believe she is grand standing but when we talked Laura came across as sincere and hardly out of gas on this controversial subject. She also has a wonderful regard for rare coins and continues to warn readers about treasures at risk in the name of raw profit and greed.

Ultimately I choose to believe the PNG will once again address this growing problem and take a stand which better defines coin doctoring if only to state the most obvious cases. I do not want to speak for PNG President Paul Montgomery even though he is a great friend of mine. But as a Past PNG President I can say with certainty that leadership always comes at a premium especially when “no one is happy”. And it seems to me that true leadership, especially in the face of hostile fire is never easily accepted. But great leaders tough it out and understand the mission and are willing historically to be applauded after the fact.

In the meantime let’s appreciate one of the most important gains this industry has made regarding coin doctoring: We all can now talk openly about this problem and so it is forever outside the numismatic shadows. Most of us know that progress is often tedious but because of this discussion we will eventually get a sense of where improvement makes sense.

No coin professional needs to be told that radical doctoring of coins is a pathetic reality so I hope we all applaud PCGS and NGC for constant vigilance. And the PCGS attempt at scientifically killing this monster with new technology like the Shield or the Sniffer is certainly a numismatic milestone. But we should understand the trade is now facing a new and much more virulent twist to an old numismatic problem so creative work and probably a great deal more money will be needed to tame this creature.

Perhaps policing it is not the job of the PNG but taking no action must prove ultimately dangerous. For you academic or religious readers doing nothing would be a violation of what German philosopher Immanuel Kant (1724–1804) called the Categorical Imperative. And so my contention is simply that taking no action is not rational for any group which makes a rightful claim to be good for the rare coin industry.

Let’s make sure the coin industry does not stand in the way or worse tacitly contribute to this abuse while claiming the problem either cannot be defined or is not our business. No industry action or worse vague definitions fail to protect the good people who turn to rare coin professionals for proper advice and an honest deal. Inaction will also cost the industry its moral high ground and we will have no one to blame but ourselves. So in the end let us solve this problem while there was still time to set the record straight.

People have asked me, “What should I collect,” or, separately, “What are the best coins to buy now.” People frequently become angry when I decline to answer such questions with simple, encompassing statements. Much depends upon the budget and interests of the individual coin buyer. Each collector should read, learn, examine coins or at least view quality images of coins, and develop a plan before spending an amount that is ‘a lot’ to him or her.

With input from John Albanese and Kris Oyster, recommendations for true beginners are presented here. Back on Sept. 22nd, my column focused upon advice for beginning and intermediate level collectors who are planning to spend from $250 to $1000 per coin.  The discussion here is more general and much of it applies to collectors of ALL INCOME LEVELS. Collectors who plan on spending just a few dollars per coins and collectors who will spend thousands per coin will, I hope, find the material here to be helpful.

The current approach is very general and is aimed at true beginners, who are often puzzled as to how to get started. Although I believe that many rare world coins are excellent values, the advice provided pertains to U.S. coins. Realistically, most collectors in the U.S. prefer U.S. coins. Moreover, collecting world coins, colonial coins, or medals is more complicated. There are fewer resources available from which to learn. It is very easy to find a good deal of valuable reading material and pricing information relating to U.S. coins.

I. Decide on a Budget

A coin collecting budget should not be limited to one year; it should be part of a long run plan. A collector should decide how much he or she is willing and able to spend on coins each year, for ten years or more. If a collector is unsure how much he wants to spend, or can spend, then set an annual minimum, with the idea that, if the collector becomes much more interested or his financial situation improves, the maximum may be greater than the minimum. It is important, though, to be realistic about how much a collector can really afford to spend on coins.

A collector should not spend money that may be needed for retirement, health care or family emergencies. While this may sound obvious, it is common for collectors to financially over-extend themselves. A passion for coins may lead to runaway spending.

II. Read About Coins

Beginners should spend “time reading before buying anything,” Kris Oyster emphasizes. “Read Numismatic News [weekly newspaper], CoinWeek.com, and books about coins.” Oyster is the managing director of numismatics for DGSE. (Click here to read my interview of him.)

“Buy the Redbook,” Oyster says, “don’t just look at the prices, read about the history of the coins and the types.” The Redbook is the guide book of U.S. coins that is published annually by Whitman. “First learn the basics,” Oyster adds, “types of coins, dates and mintmarks, think about how coins are made. Be open, don’t make quick decisions about what to collect,” Kris states. “Go out and explore. Don’t worry about spending a lot of money, learn about coins in general.”

John Albanese, too, recommends that each beginner buy a current Redbook. In 1987, Albanese was the sole founder of the NGC. In 2007, he was the founder of the CAC. After acquiring a Redbook, Albanese says, a beginner should “spend some time going through each series to see what types of coins catch your eye and fit your budget.”

In addition, Albanese advises obtaining an older Redbook that dates from the 1970 to 1977 time period. There are specialists in coin related literature, as well as a few vendors on the Internet, who buy and sell used coin reference books.

“If you can also find a Redbook from the 1950’s that would also be helpful.” Albanese is “betting most collectors want value for their hard-earned dollars. Forget the old rule of ‘buy the best grade you can afford’ and replace it,” John declares, with the maxim “buy the best value.” Due to PCGS and NGC pop reports and a registry bubble,” Albanese continues, “there are many coins that sold for less than $5 in the 1970’s that are selling for $5000 and up today. These should be avoided. Washington quarters in MS-67 and MS-68” are cited by John as examples of coins that are not good values “today.”

I (this writer) do not find the Redbook to be quite that useful. Certainly, in the Internet era, the Redbook is not as important as it was in earlier times. There is a great deal of educational information on the Internet. Of course, as Albanese, Oyster and others point out, there is an incredible amount of misleading information and coin related fraud stemming from websites on the Internet. Nonetheless, a beginner who spends a couple of months browsing coin related sites on the Internet, without even spending one cent, may learn a great deal.

In addition to the large number of past articles and columns on CoinWeek.com and CoinLink.com, there is much information on the PCGS and NGC websites. Leading auction companies maintain archives of past auctions with prices realized and quality images. The Heritage, Stack’s + Bowers, Goldbergs and DLRC websites all include a wealth of useful information, though it is often necessary for a beginner to consult an expert to interpret such information. Before spending any money, it is a good idea to look and read.

Though I disagree with some of Scott Travers’ opinions and I do not recommend any kind of short term speculation, I have always liked Travers’ classic book, The Coin Collector’s Survival Manual. The seventh edition was released in November 2010. While a beginner may, initially, find this book to be a little confusing, the text will become clearer over time and much of the information included is very valuable.

After browsing coin related sites on the Internet for a month or more, hopefully including my articles, I suggest finding a copy of Walter Breen’s comprehensive encyclopedia of U.S. coins, which was published in 1988. Yes, this mammoth book contains a significant number of errors and some of the material is outdated. Even so, this book features s a wealth of very valuable information and some excellent discussions of U.S. coin types Unfortunately, Breen’s 1988 encyclopedia does tend to fall apart, literally, and a beginner who spends quite a few dollars for a copy that is barely staying together is probably getting a good deal.

For collectors who are interested in Proof coins, Breen’s “encyclopedia” that is devoted to Proof coins, which was published in 1977, is the only worthwhile book on this topic. Again, it contains errors and other faults. Nonetheless, it is extremely brilliant, and perhaps is Breen’s best work.

As for books on U.S. coins that are found in bookstores, libraries, and flea markets, many of them are written by authors who have little knowledge of coins. An effective author may often seem to be much more knowledgeable about a topic than he is in actuality. When I talk about sports memorabilia, for example, I often sound more knowledgeable than I really am. Maybe no one will discover that I really do not know much about baseball gloves, jerseys and bats, or even about autographed footballs.

Invariably, while searching and learning, beginners will come across other books about coins that are well written by knowledgeable authors. Indeed, beginners often find books by Jeff Ambio and Q. David Bowers to be very helpful.

III. Buy Classic, not Modern, U.S. coins

My belief is that the field of modern coins, like the field of contemporary abstract art, is largely a fad and certainly is not grounded in tradition. The pursuits of modern coins lack cultural rules, and stem, in part, from the whims (which are often profitable for the national government) of decision-makers in the U.S. Treasury Dept. and the U.S. Congress. Last year, I wrote a two part series (click for Part 1, or Part 2) on why 1933/34 is the true dividing line between classic and modern coinage. It is indisputable that U.S. coins minted after 1933 are typically much more common than corresponding coins minted before.

If a beginner is planning to spend an amount that he or she regards as “a lot” on an individual coin, it should be for a coin that is at least somewhat scarce and is not a generic commodity. One recently minted “Silver Eagle” coin looks almost the same as the next and these can be ordered over the Internet in seconds. They lack individuality and there is hardly any tradition of collecting them. Furthermore, U.S. ‘silver eagles’ are not scarce and many coin experts do not regard them as true coins. It makes logical sense for a collectible to be scarce and to have individual characteristics, rather than be something that was recently mass produced. Also, beginners should collect coins that sophisticated experts regard as meaningful; such coins do not have to be expensive.

“For the most part, stay with pre-1934 issues,” John Albanese asserts. “If you buy coins later than 1933, avoid top pop coins and coins [certified as grading] higher than MS-66.” Further, Albanese declares that there “is no need to pay a five or ten times premium for a [certified] MS-70 or Proof-70 grade. ” For more opinions of Albanese and Oyster regarding modern coins, along with those of Jeff Ambio, please see my column on Modern Coins.

Some collectors are under the impression that modern coins are less expensive than classic (pre-1934) coins. While I understand how my auction reviews may give that impression to beginners, the truth is that there are numerous pre-1934 coins that are not expensive. A quick perusal of the value estimates at Numismedia.com, PCGS.com and in the Redbook would indicate that there are many pre-1934 coin issues that can be purchased for small amounts of money. There are naturally toned, scarce pre-1934 coins available for collectors of all income levels. It only takes a few dollars to buy some neat coins.

IV. Buy Certified Coins?

Should beginners buy coins that are PCGS or NGC certified? In regard to modern coins, this question is tricky and is covered in my column on modern coins. As I suggest that everyone buy coins minted before 1934, the discussion in this section relates to pre-1934 U.S. coins. Again, colonial coins, medals, tokens and world coins are all different matters and would require separate discussions.

John Albanese notes that “it is a fact” that “most [U.S.] coins in the $3000 and up range are slabbed by NGC or PCGS. If you are not an expert and you buy $3000 and up coins” that are not PCGS or NGC certified, Albanese says, “you are playing Russian Roulette with your collection and your finances.” In another words, it is very risky to buy U.S. coins priced at over $3000 that are not PCGS or NGC certified.

Regardless of whether a beginner buys inexpensive coins or expensive coins, Albanese stresses the need to “find an honest expert advisor. There are experts who are not honest and there are honest dealers who are not experts.”

Kris Oyster agrees that it is important to find “reputable dealers.” Oyster emphasizes that beginners should “beware of sellers offering deals that sound good, [especially] on the Internet. Coins sell at market levels, not below market.” Additionally, Kris maintains that “a gold coin priced at more than 10% over melt, and all silver or nickel coins over $500, should be PCGS, NGC or ANACS certified.”

In my (this writer’s) view, the dividing line should be $250. If any collector is planning to buy a pre-1934 U.S. coin for more than $250, it should already be PCGS or NGC certified. Yes, I have written about grade-inflation and coin doctoring. No one is suggesting that all PCGS or NGC certified coins are desirable. U.S. coins valued at above $250 that are not PCGS or NGC certified often have serious problems, however, or are being mis-represented by sellers. Indeed, many such coins have been rejected and deemed ungradable by the PCGS or the NGC.

While a coin buyer should take other factors into consideration, not just the opinion from a certification service, PCGS or NGC certified coins are much more desirable and much better values, on average, than coins valued at over $250 that are not certified. Put differently, if a beginning or intermediate collector buys 100 coins that are PCGS or NGC certified and then buys 100 apparently very similar coins, in terms of type, rarity and represented quality, that are not certified, the group of 100 certified coins (on average) will usually be vastly superior, in terms of overall quality and originality in particular, than the corresponding group of non-certified coins.

For those buying coins valued at less than $250, the costs of certification may outweigh the benefits. It is really important to examine many such coins and to ask questions of experts. A beginner should spend only a small percentage of his or her coin collecting budget while attaining a basic understanding of the physical characteristics of coins. With experience and effort, knowledge may be attained and grading skills may be developed. Again, it is important to communicate with experts.

In sum, it is easy to get started collecting U.S. coins. Formulate a budget, read a great deal, think and explore, ask questions of experts, and then buy coins.

©2011 Greg Reynolds