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.

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.

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.

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.

Dark Gold Thoughts Not Dark Enough?
March 19, 2010

 By Dave

Back when gold ownership was legalized in the United States on Dec. 31, 1974, there was a lingering fear that the coins that had been illegal to own since 1933 would once again become illegal to own.

Advisors told gold buyers to stick to coins like the standard U.S. gold coins struck before 1933 as well as world coins like British sovereigns and French 20 francs of similar vintage.

This seemed to be an unnecessary precaution as the age of the convenient one-ounce bullion coins was dawning.

The fear that gold would once again be called in by the government in a manner similar to what was done by President Franklin D. Roosevelt in 1933 shows up from time to time in the writings in the blogosphere.

Can it happen again? Sure, the legal underpinnings for a recall still exist.

Will it happen? Probably not.

But if you happen to believe the government is cooking statistics to understate inflation and overstate employment, manipulating the gold market, hiding the fact that it has secretly sold all of the gold in Fort Knox (which is a rumor that has existed all the way back to when Ike was President) – if you believe all of this, why would you believe that the government would let you keep your gold if the worst does indeed happen to the economy?

If the American government would default on its debt after not doing so for 221 years through the Civil War, Depression and World War II, would not political pressure in Washington be so intense as not to allow profits to be taken by those owning gold?

In a dollar collapse, would not the authorities be rooting out gold owners with the same zeal as the IRS presently is chasing tax dodgers with Swiss bank accounts?

Would coin collectors get a pass as they did in 1933 because the Treasury secretary was a coin collector and the President was a stamp collector?

In their darkest thoughts, perhaps gold owners are not thinking darkly enough.

Hop Away from “Bargains”
March 18, 2010

 By Dave

I started my day in the dentist’s chair, so I am a little late getting started in the office this morning.

As is the custom, I was visiting with the dental technician/hygienist who was cleaning my teeth between periods of simply keeping my mouth open as she picked, scratched and polished.

Her daughter has reached the point in her life where she has figured out that the Tooth Fairy doesn’t exist. The story of how she figured it out was interesting as every kid is different.

The technician figured that Santa Claus and the Easter Bunny would soon be toast as well.

That got me thinking about the numismatic equivalent of Santa Claus and the Easter Bunny.

What I came up with was the strong tendency among collectors to equate a low price with a good deal. Buying coins for 50 or 60 percent of the usual retail price has been the goal of some hobbyists.

While it is by no means impossible to score a deal from time to time, the appearance of being able to consistently buy coins for significantly below the prices printed in retail price guides should cause the would-be purchasers to have a flashing red light in his mind.

These coins might just be not what they are represented to be. They might be tampered with or overgraded.

Coin offers significantly below retail should be approached with caution. Have the coins checked out by a grading service, or make sure there is a return privilege in case it becomes necessary to return the coins.

Bargains are nice. They can happen. But when you see nothing but bargains think that it might be a case of the Easter Bunny – a delusion or fable, but without the happy ending

Just What are Those KM Numbers?
March 02, 2010

by Dave

I had a phone call. It was one I had been expecting for several years, but in that time it has hardly happened.

The question had to do with the Coin Market Price guide section.

What are those KM numbers and what do the letters stand for, I was asked?

Ever since my firm started applying the world coin numbering system to U.S. coinage I have been expecting questions.

KM stands for Chet Krause and Cliff Mishler who invented the numbering system that is used as a shorthand by the world’s collectors. Instead of giving long descriptions, all you need do is give country, date, denomination and the KM number and any collector with the Standard Catalog of World Coins can tell you what it is.

This shorthand is necessary for making concise price lists.

This kind of numbering system never caught on with U.S. collectors because there is much less to keep track of.

However, our computer system is such that it is easier to apply numbers to all coins than to try to go on listing U.S. coins without numbers.

The change made collectors of U.S. coins who live outside the United States very happy.

For American collectors, it was hardly noticed.

As I said, I was expecting this call for a very long time.

Quarter not a gold strike February 22, 2010 By Dave: Remember the gold-plated state quarters that were being sold on cable television? Not everybody does. I had an e-mail inquiry about one that turned up in circulation. “I recently found in my pocket change a 1999-D Georgia state quarter that is gold in color rather than silver. It resembles the color seen in a Sacagawea dollar, or the new Presidential dollar coins. Is this a common finding or a fake or … ?” This is a logical question, especially since it could be a wrong metal error. I was able to tell the writer what it is he had. The surprise to me, I guess, is not so much that one of these coins made it into circulation, because I have had inquiries of this kind a few times before. What is surprising to me is that so few of these gold-plated quarters have been spent and then found by collectors and others. As people scramble to find money to pay bills, more of these novelty coins are likely to find their way into circulation. Will the trickle become a flood? Let me know if you have seen any.

Butler Created 1864 Medal for Black Troops

By R.W. Julain, Numismatic News February 10, 2010

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Although the United States military has awarded special medals for bravery, notably the Medal of Honor, in the 19th century there was only one medal struck as an award to a body of troops for a particular battle.

This was the highly sought-after 1864 “Colored Troops before Richmond” medal, which is an extraordinary reminder of the Civil War and the bravery of black troops in the Union Army.

The election of Abraham Lincoln to the presidency in November 1860 set off alarm bells throughout the South. The President-elect was seen as an abolitionist wanting to free the slaves, which was not quite true. He did not believe in slavery but felt that it had to be gradually abolished to avoid bloodshed between North and South.

Prior to the Inauguration on March 4, 1861, several Southern states had either seceded from the Union or had signaled their intention of doing so. Lincoln had privately sent assurances of his real views to influential Southerners, but they had been ignored.

Actually the question of slavery was not the only issue troubling the South. In 1830, for example, South Carolina had threatened to secede over the tariff laws, but President Andrew Jackson made it plain that he would personally lead a federal army to end any such plans and the secession movement cooled for the time being, only to regain momentum during the late 1850s.

Had cooler heads prevailed in South Carolina the secession of the Southern states might well have gone peacefully despite Lincoln’s wish to preserve the Union. In early 1861, for example, there were mass meetings by ordinary citizens all over the North asking that the South be allowed to depart in peace.

However, Rebel demands that the North evacuate Fort Sumter in Charleston Harbor proved a sticking point and local troops opened fire on the federal installation April 12, 1861. The small federal force under Major Robert Anderson was soon forced to surrender and the Civil War was a reality. By sheer luck, no one was killed or seriously injured in the bombardment, but that would not be the case for the next four years of brutal conflict.

In the opening weeks of the war both sides thought that an easy victory would soon be theirs and long-term planning was not even considered. For the first major battle, at Bull Run (Manassas), Union sightseers even drove out by carriage to watch the North triumph, but instead the South won an overwhelming victory and the roads to Washington were soon clogged with retreating Union soldiers and civilian families.

Despite the loss at Bull Run, the Lincoln Administration still thought of a short war and the reunification of the Union while the South also believed a limited war was in the cards, with the North letting the South go in peace after it was demonstrated that the South would otherwise fight. Both sides were in for terrible surprises and four long years of carnage was to prove this very well.

Some of the Union victories in 1861 and 1862 resulted in slaves being freed but the Administration was uncertain how to handle this. Some commanders attempted to enroll black soldiers, but were promptly rebuked by Washington. It was not until early 1863 that Lincoln gave the go-ahead to enroll blacks in Union regiments; by war’s end some 179,000 of them had served, with 37,000 losing their lives.

It is little known, but in the death throes of the Confederacy – in early 1865 – Southern military commanders and civilian authorities increasingly used slaves to support the army, some of them even being promised their freedom under special circumstances. The irony of this was not lost on the front lines where the majority of the Southern troops came from families that owned no slaves.

While some black Union regiments served in the West, along the Mississippi line of battle, others were used under Gen. Ulysses S. Grant in the Virginia theatre of operations. It was under these circumstances that the battle of New Market Heights erupted in late September 1864.

The general in charge of the black troops in Virginia during this turbulent period was the flamboyant Benjamin F. Butler, who is better known to historians as “Beast” Butler because of his draconian military rule in New Orleans in 1862. Butler even hanged gambler Lewis Mumford for trying to tear down the United States flag after federal forces had retaken the city. Butler’s rule was perhaps unnecessarily harsh, but citizens were soon able to walk the streets of New Orleans, day or night, without fear of being robbed or killed by local criminals.

At New Orleans Butler had employed ex-slaves as “civil guards,” though they were never enrolled as soldiers in a formal sense. Butler saw their value and suggested that the government raise levies of black troops, but his advice came too early in the war.

During the summer of 1864 Gen.Grant, by now the supreme commander of the Union armies, was slowly driving Gen. Robert E. Lee back towards the Confederate capital at Richmond. It was a bloody fight to the finish and the wily Lee was a master of using his smaller army against the overwhelming Union superiority in men and materiel. Lee’s major advantage was the fact that he was on home ground and defense requires fewer troops than attack.

Grant continually shifted his battle lines in an attempt to force the issue, but Lee was able to move his meager and ill-fed forces in time, inflicting heavy casualties on the North. By the latter part of September, however, a major battle was shaping up a few miles southeast of Richmond, on the New Market Road. Two forts, Harrison and Gilmer, were strongly defended by elite Confederate troops and were important links in Richmond’s slowly crumbling defense perimeter.

Grant ordered that the two forts be taken as soon as possible and Gen. Butler’s black regiments were assigned a critical role in the assault. Skirmishes broke out on Sept. 28, but the real fighting would come the following day.

Early on the 29th the Union 10th and 18th Corps (Army of the Potomac) were first sent against Fort Harrison after a tremendous cannonade that shook the earth for miles around. Harrison was in fact carried by storm, black troops leading the way, while a second charge targeted Gilmer. The latter fort was hotly contested, with even a few feet of advance being thought of as good progress.

In the end even the bravery of Butler’s regiments could not overcome the extraordinary Confederate resistance at Fort Gilmer and the Union forces were slowly forced to fall back. Butler himself blamed faulty planning at the Union headquarters though the Southern military commanders knew that they had to retain Gilmer at all costs in order to maintain the Richmond line of defense.

The Union failure to seize Fort Gilmer proved critical because Lee had the time to stabilize his line. Even so, the victory at Harrison was one of those signal events that was to doom the Confederacy within a few months.

Butler was so impressed with the exceptional bravery of his black regiments that he determined to have a medal struck in honor of those individuals whose performance went well beyond the call of duty. He contacted Mint Director James Pollock in Philadelphia and explained what he wanted done. Pollock agreed to have the medals struck at the Mint using the designs created by Gen. Butler and also to be entirely at the general’s expense.

Pollock engaged a former assistant Mint engraver, Anthony C. Paquet, to prepare the dies. Paquet then dealt directly with Butler, sending him samples of the work as it progressed.

The dies were cut directly into steel, requiring a special and demanding skill, but Paquet used a device not often seen in the 19th century. He hired a skilled artist to model the Butler design in plaster, as a guide when preparing the dies. It slowed down the process a little, but made for a very fine medal in the end.

The dies for the 40mm medal were completed in the spring of 1865 and Butler notified Pollock of how many medals were to be struck. He wanted 197 silver and 11 copper medals, though it is likely that Paquet had a small number made for himself, also in copper, to show prospective clients the quality of his work. Another was presumably laid aside for the Mint cabinet.

As soon as they were struck, the finished medals were sent to the Boston jewelry firm of Bigelow and Kennard, where a ribbon and hanger were attached to each of the silver specimens (The copper pieces were retained by Butler for special purposes, perhaps including presentation to key military or political leaders.) Some of the silver had the recipient’s name engraved on the edge, but most apparently did not. The majority of the silver medals had a red, white and blue ribbon attached but not all did and perhaps there was some symbolism attached to this difference.

Butler not only paid for the medals, he made it a point to award them in person when feasible at specially called formations of the troops. One can only imagine the pride of a soldier receiving such an important reminder of his heroism in front of his comrades in arms.

The obverse of the medal shows two black soldiers charging a bastion with the Latin legend FERRO IIS LIBERTAS PERVENIET, or “Freedom will come to them by the sword.” In the exergue we find Butler named as the designer and Paquet as the engraver.

The reverse has the simple, yet eloquent, inscription DISTINGUISHED FOR COURAGE, CAMPAIGN BEFORE RICHMOND 1864 with a wreath separating parts of the wording.

In 1892 Butler published his autobiography (Butler’s Book) and had the following to say about these special medals: “I had the fullest reports made to me of the acts of individual bravery of colored men on that occasion, and I had done for the negro soldiers, by my own order, what the government has never done for its white soldiers – I had a medal struck of like size, weight, quality, fabrication, and intrinsic value with those which Queen Victoria gave to her distinguished private soldiers of the Crimea … These I gave by my own hand, save where the recipient was in a distant hospital wounded, and by the commander of the colored corps after it was removed from my command, and I record with pride that in that single action there were so many deserving that it called for a presentation of nearly two hundred. Since the war I have been fully rewarded by seeing the beaming eye of many a colored comrade as he drew his medal from the innermost recesses of its concealment to show me.”

These medals are rarely seen and named silver pieces are of the greatest rarity as there is little doubt that such medals, for obvious reasons, have been handed down in families for generations. Some of the copper pieces, which were meant for private distribution by Butler, were not awarded and eventually wound up in numismatic circles.

In the Stack’s Americana sale of January 2009 there was an original silver medal – though the ribbon was perhaps a replacement – which brought a strong hammer price of $34,500. Two additional copper medals in high grade, from among the few such specimens ordered by Gen.Butler, brought strong prices, at $6,900 and $4,900. It may well be a long wait before another such assemblage of this magnitude appears at public auction.

There is an odd postscript to this rather special medal. About 1980 the famed Tiffany firm, for whatever reason, struck a small number of silver replicas. These are also seen on rare occasion and, in fact, one was in the 2009 Americana sale.

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