Melting Coins a Sign of Life and Hope

By David C. Harper, World Coin News May 13, 2011

This article was originally printed in World Coin News.
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I have been reading some laments lately that the high price of silver will lead to the melting of coins and thereby deprive future collectors of the opportunity to own them.

While I certainly can’t quibble with the logic that future collectors can’t own something that is melted in the present, I do not find the present prospect of melting to be a bad thing. Quite the contrary, it is a very good thing.

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Coin collecting is supposed to be a living hobby of assembling useful objects, not simply a small group of people who purchase made-to-order pieces that have no connection to the wider world.

We are living through uncertain times. The state of the world’s economy has shaken many people’s belief that the future will inevitably be an improvement on the past. They see dark times ahead and take refuge in precious metals.

Their actions have driven up the price of precious metals beyond what collectors are willing to pay for certain previously collectible coins. These coins are sold for their melt value by individuals who want or need the cash their sale will generate.

It is a symptom of the times. It is a reflection of real people taking real actions. The odds that anybody will sell something of truly historical value for melting is virtually nil. The odds that something previously common will become scarce are also nil if the great melt of 1980 is any guide.

Mintages of these items will no longer be an accurate guide, but then many modern issues have no publicly available mintage figures. It will be up to collectors to re-establish relative rarities when the price of silver stabilizes.

I celebrate the fact that these coins once again have economic value and serve a purpose important to a wider population.

Throughout history coins have been melted as part of their useful purpose. These events tell stories.

Jewelers around the world have melted coins for the raw material of their craft for centuries. Modern factory produced jewelry may make us forget that.

When France paid its huge indemnity to Germany after the Franco-Prussian War, it allowed Germany to adopt the gold standard in 1873, and many silver coins hit the melting pots.

When the euro was introduced to circulation in 2002, the national coinages previously used were destroyed.

When India needed silver in 1918 to stabilize its currency, the United States melted 270 million Morgan dollars and then replaced them over 10 years with new Peace dollars.

When the terrible costs of World War I upset the British economy, the old .925 fine silver coins were replaced by .500 fine coins. After World War II, Britain had to take .500 fine silver out of coins altogether. Both are stories of sacrifice.

Great historical events led to the destruction of a certain number of coins, thus depriving future generations of having them to collect.

However, enough survive to keep the hobby alive, growing and interesting. Collectors tell and retell their historical stories. We are living through another epoch where some coins are casualties. We will tell the stories – as we should.

Fractional gold has purpose, or does it?                                      
Posted by Dave

Since sales of fractional gold American Eagle bullion coins began in June, the tenth-ounce coins have moved out the door at a reasonable pace.

As of July 13, buyers had taken 300,000 of the small coins. They are popular as jewelry and they also are popularly used by promoters to entice novice gold buyer’s to get genuine U.S. Mint gold at a price that doesn’t choke a horse.

One-tenth of the present $1,200 price of an ounce of gold is much easier for novice buyers to part with than the cost of the one-ounce coin.

Obviously, though ,with sales approaching 700,000 pieces, demand for the one-ounce coin is not hurting. Savvy investors need no introduction to it.

Sales of the half-ounce coin at 31,000 pieces and the quarter ounce at 44,000 coins are betwixt and between. They aren’t the standard investment coin and they are not nearly as popular as jewelry. So what exactly are they?

In days when $2.50, $5 and $10 coins were needed to make change for gold $20s, the smaller sizes had a purpose.

With investment coins, you don’t need to make change, though I have seen the concept bruited about online as the fractional gold coins are tipped as needed when the currency system breaks down and change in gold will again be required.

Judging from current fractional gold American Eagle sales, perhaps that point is a rather hard one to make.

Being Talked About is Great
June 29, 2010

by Dave

It is good that my blog is being read by some people who are prominent in numismatics. I appreciate it.

I had an e-mail waiting for me this morning from Donald Scarinci of the Citizens Coinage Advisory Committee and he sent a tweet last night during the meeting of this body that was being held in Colorado Springs, Colo., during the American Numismatic Association Summer Seminar.

His tweet: I just corrected Dave Harper’s blog comment that suggests that the CFA and the CCAC blame Congress for proliferation causing quality issues.”

I thank him for thinking that my blog comments of last Friday need correcting. I don’t think they do. I stand by them.

At root is the basic question: what is the difference between a blog and a news story?

There is a big difference.

My blog is my blog. I do not claim that what I post here is a news story, though certainly having news in the blog is a good thing.

A blog is my opinion about news.

His e-mail asked this:

“Wherever did you get this from:

“‘They would rather point the finger at Congress, current legal statutes and Mint processes.’”

He then continued:

“Both the CFA and the CCAC are blaming the Mint processes for the lack of excellence in coin design. We are not blaming Congress or any statutes. The fault is with the Mint and if we, the CFA, are unable to do anything to help solve the problem, then we too are part of the problem. Gary Marks said that in his remarks tonight.

“We had a productive meeting tonight. For the first time since it was created by Congress, the CCAC formed a subcommittee to propose a process to create excellence in coin design. It was a historic meeting. Take a look at my tweets when you get a chance.

“I mentioned your blog at the meeting, tweeted my comment, and made it very clear that the CCAC is not blaming Congress.

“It’s good to have this dialog and it certainly helps generate interest and attention to coin designs. It’s a good thing.”

He signed it, “Donald.”

It wasn’t a particularly long e-mail, but it seems longer here.

I support Donald’s goal of improving the artistic quality of American coins. I think most collectors do.

The only way he can do so is to attack the Mint processes, because as I wrote, Congress cannot be challenged and the statutes will not change.

It is absolutely necessary to understand that background. If you don’t, the current CCAC effort makes no sense.

If dissatisfaction with coin designs had not been chronic in those bodies for many years, prompting many a cry of frustration of having to do what Congress wants and working with all of the legally mandated inscriptions by members, you would then think the sole motivation for the effort last night simply was a bad batch of designs shown at the May meetings.

That certainly isn’t the case.

How do you communicate all of this in a blog sentence or two?

I think I did that last Friday with what I wrote.

The fact that this blog post is already very long is a perfect demonstration of the necessity of distilling issues to their barest essence in an ordinary blog post.

Tomorrow, I promise to be brief.

Knowledgeable Gold Buyers Wanted
June 08, 2010
By Dave

I had a call from a married couple yesterday. They did not identify themselves to me, though it is possible they did so when they first reached my colleague Debbie Bradley.

After the call was transferred to me, it was the wife on the phone. She wanted to know if there was such a thing as a $50 gold piece.

I told her about the $50 American Eagle one-ounce coin.

I explained that these coins had been struck by the U.S. Mint since 1986 and that they were then sold into the bullion market, priced and traded at the current price of gold plus the mark-up.

She wanted a ballpark figure, so I said $1,250 plus the mark-up, which I said fluctuates.

She wondered why she couldn’t find this information in her book, though she never told me what it was. Perhaps she would have, but her husband was asking questions in the background and finally his wife gave him the phone.

He wanted to know about $20 gold pieces and what they were worth. I told him they traded among collectors based on condition.

He was impatient with that. He asked what’s the base price if the coin was in terrible condition.

I said it was worth the gold price or roughly $1,250 because it contained 96 percent of an ounce of gold.

He retorted that that’s what I had told his wife was the base price of the gold $50.

I said that’s because they are both approximately the same weight.

“You mean the $20 weighs the same as the $50? How can that be?

More or less, I replied, because the $20 was struck 1933 and before and the American Eagle was struck to a different standard starting in 1986.

He couldn’t seem to wrap his mind around the concept of the $20 and $50 coins being roughly the same weight and repeated the same questions.

Then he threw in the statement that someone was offering him coins for $500.

I replied that if they were one-ounce coins they were probably fake. I suppose I could have said stolen, but I didn’t get that far before he blurted out:

“I don’t buy fakes,” he exclaimed indignantly.

I asked why anyone would sell a coin to him with a base value of $1,250 for $500.

He was silent and still indignant.

He did not volunteer the identity of who was offering him the coins or what this person or firm claimed the coins to be.

After 10 minutes of this, he was ready to go, said good-bye and hung up.

I fear that the callers are going to end up having less money at the end of the week than what they started with.

Bullion buyers out in force
Posted by Dave

Iola sure isn’t Nashville, Tenn., or Baltimore, or any other national show location, but when the Numismatists of Wisconsin held their 50th anniversary show here Friday and Saturday, attendees were behaving like their national counterparts.

Green Bay dealer Paul Reiser said, “Gold bullion was our best seller.” He noted that buyers were taking advantage of a price dip that occurred last week.

“I sold out of Krugerrands and Eagles,” Reiser explained.

“We did a lot in silver bullion,” he said of his 100-ounce and 50-ounce bars.

I can attest to that. One NOW member came by the Krause table as he was walking around the bourse and he was so pleased with his purchase of 10 ounces of silver that he showed me the A-Mark bar.

We had a nice talk about what the future might hold for it.

Nathan James Lord of Grant and Clemens, Watertown, Wis., pointed to an empty spot in his case on Saturday when I came around and he said that is where his 90-percent silver coins had been.

He wished he had had more, but he was not expecting to get a table when he came to Iola. A last-minute cancellation had given him a prime corner right at the show entrance. His results benefited.

Bullion might be hot, but the NOW show was full of typical collectors as well.
The Krause booth did a booming business in coin and paper money books.

I was personally chewed out by one attendee for not having non-numismatic books on hand that Krause published. She was in the mood to buy.

All I could do was invite her back to Iola July 8-11 when the annual car show will be held and Krause will have a book tent.

If that interests you, too, mark the dates on your calendar.

What Kind of Gold Buyer Are You?
May 18, 2010

By Dave

Everybody knows gold has been going up, right?

You would think so. However, I had an e-mail from Pat Heller an online writer for our e-newsletter and he mentioned that some dealers were taken unawares by a 10 percent move higher in the price of Mint State gold $20 coins as they were setting up at the Texas Numismatic Association show.

That is the definition of volatility – when even professionals are taken by surprise.

With Europeans rushing into the gold market because the euro has been sinking, it would seem that this becomes a selling point for more American investors to jump in. They bid up the price of Mint State U.S. gold in consequence.

Is it rational to buy fairly common gold coins and pay high premiums just because they are Mint State?

Rational is probably not the right word. But it does happen a lot.

Buyers pay premiums over bullion value for common coins in strong markets that disappear in weak markets. This has happened time and again.

That’s why it is so necessary to stay on your toes if you want to make moves in this area.

Traders love volatile markets because they can make money on the price swings. Investors who buy at market low points and sell at high points over long periods of time make money, too.

Buyers who stampede into things on an adrenalin rush generated by rapidly rising prices can easily be whipsawed with large losses. The rush turns into buyer’s remorse.

So be a long term investor, or trade day to day, but don’t be an investor who acts only when gold generates a new headline.

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.

Tale of Two Central States

By David C. Harper, Numismatic News May 06, 2010

Dealers had two points of view about the Central States Numismatic Society convention April 28-May 1 in Milwaukee, Wis.

They either had a great show or were unhappy with low public attendance. There wasn’t much sentiment in between.

Dealers faced an experimental schedule that saw Wednesday’s Professional Numismatists Guild Day followed by Professional Preview Day on Thursday. On that Thursday the public was turned away as only people who paid $75 were allowed in.

The result on the bourse floor was predictable: empty-looking aisles. Many dealers left their tables unattended to walk the aisles in hopes of making business happen.

When public hours began Friday, dealers found that some would-be customers who had been present on Wednesday simply had gone home.

“I think it should have been opened up to Early Bird holders from 10 a.m. to 2 p.m. with the public after,” said Owosso, Mich., dealer James Beach.

“I did have a little collector activity, but overall, I’m disappointed,” Beach stated. “My show was actually OK,” said New York City’s John Kraljevich. “I only set up at this show in the Midwest.”

Of his Midwestern customers, he said, “I’m here to see them. They came by.”

Brian Kendrella, director of operations of U.S. collectibles for Spectrum Group International, which includes Bowers and Merena and Teletrade, said although the show got off to a slow start, “We’ve gotten a lot of good stuff, a lot of great consignments. We met a lot of people. I am looking forward to coming back to Chicago next year.”

A dealer who wanted to remain anonymous said, “It’s one of the worst shows I’ve ever attended. It’s the worst Central States I’ve been to.”

He said there was very little public attendance.

“I attended a small Milwaukee show three weeks ago and my sales were four or five times Central States. Sales are just dismal.

“Dealers should be refunded $300 or $400 because they weren’t open to the public Thursday,” he said.

Sebastien Firmenich of the Swiss firm Olivier Chaponniere Monnaies-Medailles attended CSNS to show auction lots.

“It’s successful,” he said. “We didn’t sell. We met a lot of people. A lot of people came.” Another dealer who asked to be anonymous ticked off his complaints like a machine gun, “excessive price (bourse table fee), poor operation, poor attendance.”

But Jerry Binsfeld of J.B. Coins of Kenosha, Wis., said he had a good show.

“I thought it was really good. I sold a little bit of everything,” Binsfeld said. “Silver dollars were real good. I thought it was a very good show.” He also cited exonumia as a hot area.

Arnie Heller of Sun Prairie, Wis., said he sold a little bit of everything and had a great show. “It was a lot better than expected,” he said.

Mid-range coins sold the best, he said.

“I’d say coins are strongest in the $500 to $3,000 range, a little weak on the real cheap stuff,” Heller said. “I didn’t have the real expensive stuff.”

Barry Stuppler of Woodland Hills. Calif., summarized his assessment this way, “There is a continued lack of high-end material. Moderately priced coins under $1,000 are still not selling. There is still strong demand for gold rarities. I’m still having a hard time filling want lists for high-end pieces.”

Neil Shafer, author and hobbyist who had taken a table, said of his results, “The show has been very successful for me in all ways, personally and businesswise.”

Charmy Harker, the Penny Lady of Irvine, Calif., said, “It’s been good. It’s been very good. I do only copper.”

Harker said she bought a 1909-S VDB Lincoln cent.

“There’s an abundance of them out there,” she said.

The show was good for Tim La Pointe, a wholesaler from Maumee, Ohio, who reported good activity the first few days.

“I don’t know how it was for the retail business,” he said.

Central States reacted quickly to objections to the Professional Preview Day. In 2011, the hours will be cut back to 9 a.m. to 2 p.m. on Thursday and the public will be admitted 2 to 7 p.m., according to Kevin Foley, show chairman.

Foley also offered his observations of the show.

“It seemed to me to be especially active,” Foley said. “It began on a well attended PNG Day.” He called public attendance on Friday “phenomenal” and said there were over 250 Early Birds on Thursday.

“At a convention center this large with wide aisles, even a large crowd looks sparse,” Foley said.

“Overall, we simply feel very good. The level of activity at this event leads me to a feeling of optimism.”

Foley also called the all-day Professional Preview Day an experiment that had been conducted at the request of dealers who had suggested that not enough time was given to this part of the show.

Announced over the public address system at the end of the show was a statement that dealers who had stayed three or more nights in Milwaukee would get a $100 rebate.

That might not replace sales to a public who didn’t show up, but it could be taken as a further sign that the experiment of 2010 will not be repeated at the Central States convention in 2011 when the organization gathers in the Chicago suburb of Schaumburg.

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.

Join the ANA Family
April 05, 2010

By Dave

The weekend was family time for many Americans, myself included. Conversations went one way and then another. There was the new baby coming in October. Kids are going back to school today after time off. There was the talk of tickets to a baseball game in Milwaukee today and the Boston-Cleveland basketball game that was playing in the background.

None of these conversational topics would or even should make headlines. What makes them important is that they all are part of family news.

This morning I was thinking of this and a comment Tom Post, the show general chairman of the American Numismatic Association convention in Fort Worth, Texas. made to me a week ago.

Tom did a superb job. If there were any glitches, I didn’t see them or hear of them.

But in a quiet moment Tom and I were just chit-chatting. He said that before 2009 he had never been to an ANA convention. That startled me a bit.

He was no stranger to coin shows generally, so it is not like he had to take a crash course in numismatics.

I’m a regular at ANA events. It is my job. Other regulars have to pay their own tabs and yet I see them show after show, year after year.

There are many conversations that occur at ANA conventions that don’t make the headlines. They are the numismatic version of family gatherings.

These conversations tie many people together in many small ways much as a family is tied together. That’s what makes attendance at these events so important. Certainly not everyone has the free time or money to attend every convention, but every collector should consider going to an ANA at least once to see what the experience is like.

You never know, it might lead you to become a regular, too. You might just find you have a numismatic family there.

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