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.

We hobbyists are used to the shortages that have manifested themselves in the gold bullion American Eagle market on an off for the past 18 months, but how will we react to mandatory purchases?

It sounds strange, I know.

However a possibility exists that not all 2009-dated gold American Eagles will be sold by the time the 2010 coins go on sale to the authorized purchaser network on Jan. 19. As of Jan. 13, the Mint had 51,000 of the 2009 gold American Eagles on hand, which represents roughly a half month’s supply.

The Mint has a plan to get rid of them if buyers don’t step up to the plate between now and Jan. 19.

Force them to buy.

Any buyer who wants 2010 gold American Eagles will have to also buy 2009 coins until the supply is deleted.

For every three 2010 coins they purchase, they will also have to take one 2009 coin.

Will the market absorb these without fuss, or will this turn into another grievance against the Mint?

The date should make no difference to investors. Gold is gold, but collectors or other buyers who are focused on the new date might not care for the older coins and resent yet another unexpected turn in the secondary market for these coins.

On the other hand, perhaps the premium for the 2009 gold will fall enough on the secondary market to induce investors to take the supply, thereby achieving more bang for their investment buck.

Let’s watch and see.

One more thing, because the Mint ran out of 2009 silver American Eagles Jan. 12, possible mandatory purchases apply only to gold American Eagles.

By Dave:

Dollar Up, Dollar Down – End of Pattern?
January 14, 2010

Winston Churchill once joked that democracy is the worst form of government – until you consider the alternatives.

That statement might easily apply to the U.S. dollar. To read many online posts it is the worst of currencies. But what are the alternatives?

Anyone who owned Venezuelan bolivars got a 50 percent haircut overnight this week. Its exchange rate versus the dollar has been fixed for years. Surprise.

Argentina’s peso has been in slow decline versus the dollar even as the dollar was declining against other stronger currencies.

The British pound dropped by 20 percent against the dollar as the financial crisis unfolded and has stayed down.

Even the Chinese currency was absolutely fixed to the dollar all through 2009. For a strong country that is supposedly concerned about the mistakes of the United States, that is curious behavior.

My point isn’t that all is hunky-dory. It isn’t. Readers can point to the euro, which rose a tad against the dollar in 2009, or to the Australian and Canadian dollars which rose much more on the back of rising commodity prices.

Is the dollar weakness permanent or just a temporary illness? That diagnosis will inform market decisions all year long.

The dollar has come back before. It was under attack in the late 1960s and then again in the late 1970s. In the middle 1980s it was considered so strong that it had to be deliberately weakened to save U.S. export industries. This occurred again in the early 2000s.

Will the pendulum swing again?

By Dave:

Last 2009 Cents the Scarce Ones

January 13, 2010

The 2009 Lincoln cents just got scarcer. The mintage numbers for the fourth design, which marks the Lincoln presidency, have come in far below the totals for the first three.

Only 129.6 million of the Philadelphia Presidency coins were struck. Denver had a higher total at 198 million, but because it did not crack the 200 million mark, it will be perceived as scarcer than it perhaps really is.

In calendar year 2009 only 1.106 billion Philadelphia cents were produced. For Denver, the total was a larger 1.248 billion.

Breakdown of the other totals are:

Birth P: 284.4 million

Formative Years P: 376 million

Professional Life P 316 million

Birth D: 350.4 million

Formative Years D: 363.6 million

Professional Life D: 336 million

What do these numbers mean? Well, they might suggest that anyone who wants to get examples of all the coins should acquire them through the 2009 mint set just to be on the safe side.

It would appear from these numbers that there are not enough to go around for the banking system in normal times.

Since these are not normal times, the likelihood is all of these coins will be scarfed up by promotion houses and hobbyists who encounter them and few will be left to circulate

Sellouts and Year-End Deadlines

By Dave

December 23, 2009

Unless a large purchaser steps forward in the next few days, it would appear that sales of the 2009 Ultra High Relief Saint-Gaudens $20 gold piece will end with a whimper rather than a bang.

In the week ending Dec. 20, buyers took an additional 1,887 pieces to bring the cumulative sales total to 110,681. That’s not bad for an average week, but if there were potential buyers made anxious by the Dec. 31 sales cutoff, they are not showing it.

For comparison, look at the proof 2009 one-ounce gold Buffalo coin. Buyers took 922 of those coins during the same week to bring the cumulative total to 41,553.

Fractional gold American Eagles have sold out. The 2009 half-ounce number is 110,000 coins, the quarter-ounce total is 110,000 coins (yes, the same) and the tenth-ounce number is 270,000.

Buyers who are waiting for 2010 bullion coins can take not that the Mint expects to begin accepting orders for the 2010 silver American Eagle Jan. 19, some three week’s later than what has been customary for each new date.

However, market demand in 2009 was anything but customary. Some 27,843,000 is the current running total for sales of the popular silver coin.

It also appears that the four-coin 2009 Lincoln proof set has sold out at 201,107.

The Mint has a list of products that go off sale Dec. 31. On this list are the Jefferson and Madison Presidential dollar rolls and bags. Any interested buyers have had almost three years to get them, so nobody can claim a lack of opportunity

We Can Borrow; What’s it Mean?
December 17, 2009
By Dave

Many dealers have to borrow money to finance their inventories. It is standard business practice. It has been so to some degree for as long as I have been a collector. Some dealers over the years have made nice profits for themselves lending money to other dealers.

This is not unusual.

What brings the topic to mind this morning is that the most recent issue of Numismatic News had three full-page ads in it offering money-lending service.

What does this signify?

Does it mean the numismatic community has arrived so to speak and is becoming much more attuned to standard business practices? Are we simply catching up to the world of home equity loans, auto loans or home improvement loans?

Could it signify a growing need among hobbyists for cash? That certainly wouldn’t be good. Borrowers paying back loans might not have the money to go on buying coins at the same space as before.

Might it simply mean that Ben Bernanke’s cheap cash has finally dribbled down to the level of numismatics?

We certainly are not high on the financial food chain. It would take some time to reach our level. We hobbyists are often viewed as mild eccentrics rather than profitable financial clients.

This is a lot to ponder. It seems that by looking at it one way, it could be a negative signal for future business. By looking at it another, it might be a positive signal.

Am I on the fence on this one?

You bet I am. I will keep watching.

By Dave

Over Here. No, Over There

December 07, 2009

If you have ever played with a small dog that loves to race around from spot to spot depending on where you are looking or going, you have a good sense of what the Mint looks like day to day as it tries to cope with serial bullion coin shortages.

What’s being offered today?

A new allocation of one-ounce bullion American Eagle coins.

Will there be enough?

Are you kidding?

And so it goes.

Bullion coin buyers and coin collectors who are following the spectacle like to tsk tsk this these ongoing shortages.

But there is another small dog racing around here. It is the bullion coin buyer who is also racing from spot to spot bidding up prices of the bullion coins on the secondary market to ridiculous percentages.

Forgotten by these buyers is that the unusual premiums that occur from time to time get zeroed out. Sometimes bullion coins even trade for a discount to bullion value.

To use round figures, imagine paying a 10 percent premium for a half ounce gold coin. At today’s gold price of $1,144, that works out to a gold price of $572 plus $57.20 to equal $629.20.

Gold has to reach $1,258.40 to give the coin a bullion value equal to what was paid with the 10 percent premium. That is quite a swing and quite a nut to have to cover before profits can begin.

Does it matter?

Well, just try telling a small dog how silly it looks and you will get the same result.

Silver Ready to Get With it?

November 18, 2009

Silver is trading at $18.66 a troy ounce as the work day begins. The question on many minds is can it go much higher?

Unlike gold, silver is nowhere near the old $50 record high set back in 1980. Nor is it near the $24 area that it traded in during the spring of 2008.

I did a story for Numismatic News last week where a couple of market makers in precious metals told me that their was upward resistance at the $18 because so many bought in in 2008 at that level after it had traded as high as the $24 area.

These buyers were apparently thinking at the time that they were getting a deal during a correction.

This year, according to the dealers, they are relieved to be getting out even after holding for a year and a half through a correction that had halved silver’s price from the 2008 peak.

It is also expected that once these nervous sellers clear out, then silver will be ready to pop even higher because of increasing demand for industrial uses and a hardier group of owners who expect silver will do some catching up relative to gold.

I will be keenly watching market action to see if we are reaching that breakthrough moment

Buyers Not Reckless Even at Gold Record

By David C. Harper, Numismatic News November 13, 2009

If market tops are characterized by frenzied buyers paying any price to get in on the action, then activity in the coin business indicates we are still not near one in the current gold market.

Trading on the world’s commodity markets took the precious metal convincingly through the $1,100 mark, changing hands at $1,115 a troy ounce Nov. 11.

“It’s created some new buyers that have never bought gold before,” said Greencastle, Ind., dealer Julian Jarvis. “There’s been a few sellers because it’s the highest they’ve been able to sell their gold for, and there are a lot of other people just waiting to see what’s going to happen.”

Supplies of the popular gold bullion coins are still adequate.

“They’re still pretty readily available,” Jarvis said. “I have had no problem getting quick delivery of anything.”

Silver is trading around $17.50 a troy ounce, nowhere near a record.

“I think silver supplies are extremely tight,” Jarvis said.

As evidence he cited dealer buying behavior with silver bars. They would not be paying as close to spot as they are for their purchases if supplies were plentiful.

He said at a coin show last week a dealer was paying full spot price and since then one buyer was paying 15 cents over spot for 100-ounce bars.

Dealer Pat Heller of Liberty Coins in Lansing, Mich., said gold coin supplies are still abundant enough that there is no waiting for delivery. Since he believes interest is increasing, he doesn’t know how long this will remain the case.

But, he said, “the easy money has been made,” referring to profits that have rolled in since gold bottomed around $250 in 2001.

He said he thinks gold could be $1,500 six months from now.

He acknowledged that American Eagle gold coins remain popular with gold investors and its Buffalo counterpart also had a strong three weeks after it first went on sale in the middle of October.

Interest in the Buffalo coin is waning a bit now. Buyers who favor it do so because it is made of .9999 fine gold, Heller said. This highly pure bullion is popular in the Far East, as well as among buyers who expect that the coins will be melted at some point, he explained.

For buyers of the .9167 fine American Eagles, the fact that there is copper and silver alloyed to the gold to make it harder helps it stand up much better to any handling it might receive.

At today’s prices, Heller said collectors might want to look at gold coins with somewhat lower premiums over gold value. He cited Austrian 100 coronas and Mexican 50 peso coins and even American Arts gold medallions.

The coins are less popular because they do not contain even troy weights of gold, so value calculations involve lots of decimal points. The low premium for the medallions have something to do with what might be called their strangeness.

Though they are not coins, they are official U.S. Mint products that were last sold in 1984. Heller said there are some in the business who do not know what they are. The medallions depict Americans from the arts like Mark Twain and Helen Hayes.

Heller said he is even more optimistic about silver’s future than gold’s, but presently silver owners tend to sell as soon as it nears the $18 mark. Heller said previous failures by silver to stay over the $18 mark have helped instill this caution.

He likes bags of 90 percent silver pre-1965 dimes, quarters and half dollars. There is still interest in 10-ounce and 100-ounce bullion bars, but this is less than in prior bullion upturns, he said. The 90 percent silver coins have the advantage of being able to be cashed in one coin at a time, where the silver in a bar has to be sold all at once.

Buffalo proof sales taper off

Posted by Dave

The latest weekly sales figures for the 2009 proof one-ounce Buffalo gold coin show that the rate of purchase by collectors has dropped substantially.

Some 8,487 were sold in the first full week of sales following the three-day onslaught that saw collectors scramble to acquire 19,468 pieces as sales began.

The total amount sold so far is 27,955.

By the end of the year will we see 40,000 or 45,000 of these coins sold?

It is probably too early to presume to know what the final sales numbers will be, but it probably isn’t too early to think that whatever the final number is, it will be significantly below the final number for the 2009 Ultra High Relief Saint-Gaudens $20, which is currently at 103,764.

If the Buffalo numbers run roughly half of the UHR numbers, will the coin be valued at a higher price than the UHR coin in future years?

Probably not.

Mintages are not the only factor in determining value.

Collectors forever onward will consider the UHR a desirable type coin and demand as a consequence will likely be forever higher than that for the 2009 proof Buffalo.

After all, if you want the type, you don’t have to buy the 2009 Buffalo, you can buy the proof 2006, 2007 or 2008, but you do have to buy the 2009 UHR.

Wednesday, November 11, 2009 2:12:28 PM (GMT Standard Time, UTC+00:00)

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