Buzz with Dave Harper

Final campaign lap starts

2008-09-05T09:00:45.4400000-04:00

Both major political parties have selected their standard bearers. Barack Obama and Joe Biden represent the Democrats. John McCain and Sarah Palin represent the Republicans.

Today we are sending out a newsletter where we ask the recipients if it will make any difference to the hobby which presidential candidate wins in November.

Columnist David Ganz reports that though both candidates have supported numismatic legislation from time to time, neither one seems to have any significant record one way or the other on hobby-related matters.

Naturally collectors pay attention to who will become the Treasury secretary because it is his facsimile signature on American Federal Reserve Notes. There will be a new Treasurer of the United States as well, who signs to the left of the Treasury secretary.

Both will change no matter who wins and that virtually guarantees a new Series date of 2009 for notes.

A new Mint director is in the cards. The position is one of the political plums that are handed out to a supporter of whoever is President rather than a party loyalist, so even if the political party does not change at the head of government in November, the person in the chair likely will.

All of these changes are interesting to those of us down at the collecting level, but there are other more important questions. Will we get more new coins or fewer? Will the value of the dollar go up or down on foreign exchange markets? How will that affect gold and other precious metals? I am sure you can think of others and will be paying attention to the campaign over the next two months.

Dollar mintages not encouraging

2008-09-04T09:02:34.4320000-04:00

I am in a statistical frame of mind this week. Yesterday it was state quarters. Today I have the mintage figures for the Presidential dollars before me.

Collectors believe you need to abolish the paper $1 bill to get anybody to use dollar coins. Until then, old habits and loyalties dominate usage patterns.

These old habits dictate a death spiral for the Presidential dollar, though the Mint has just launched a four-city effort to avert this. Will it be enough?

Well on the one hand, the statistics do not yet show that rigor mortis has set in for the Presidential dollar. Mintage numbers are still significant but they do point straight down. Each succeeding design has a lower mintage than the one before it.

Washington sits with a 340,360,000 combined total from Denver and Philadelphia.

Adams follows with 224,560,000. Thomas Jefferson sits at 203,610,000 and Madison is at 172,340,000.

That makes the 2007 first-year total approximately 941 million.

This year the Monroe dollar total is 124,490,000 while the John Quincy Adams is 115,260,000.

If the pattern holds, Andrew Jackson will be lower still. That decline will suit American Indian tribes who are complaining that Jackson should not even be honored at all because of his policies toward Native Americans. There will be a few more Presidents against which this issue can be raised as a reason not to use the coins.

Other than the paid optimism of those executing Mint strategy, it is hard to see success at the end of this effort.

Quarter flashes economic signal

2008-09-03T09:03:38.6580000-04:00

Everybody is worrying about the economy. It is so pervasive that it has become as ubiquitous as the weather.

What if the economy doesn’t slow down anymore from where it currently is?

Looking at some state quarter mintages might give us a clue.

Mintages have actually begun to rise again. The bottom seems to have been reached with the first state quarter design early this year. The Oklahoma quarter had a combined Philadelphia and Denver mintage of 416,600,000.

The next design of 2008, the New Mexico piece, rose to 488,600,000 pieces. The third design, the Arizona quarter, rose more, to 509,600,000. This total inched just ahead of the Utah mintage at the end of 2007.

Coin demand follows the economy. The Mint strikes coins to fill that demand. The mintage of quarters has gone up.

Does this mean the economy has reached a turning point this year? Could be.

The quarter is the workhorse denomination of the economy. It actually serves a purpose beyond simply making change from a larger sum. People pump them into vending machines and there are other uses for them, but the vending machine is something I am confronted with every time I pass through the company’s main break room to get my mail.

If the economy is indeed in the process of turning around, it will have ramifications for the value of the dollar, precious metals and collector coins. Let’s keep watching.

Rest in peace, hobby friend

2008-09-02T09:02:55.1620000-04:00

There was sad news in my e-mail when I got back to the office after a long Labor Day weekend. Radford Stearns died on Sunday.

He was a member of the board of governors of the American Numismatic Association elected in 2007 to clean house.

Unfortunately, he had two struggles. The first was the political one. The second was his health. He was suffering from leukemia and he struggled hard against it.

Stearns was a collector’s collector. He not only collected things like Georgia Colonial paper money, but he also shared what he knew by giving talks and building award-winning exhibits.

He served as chairman of the 1987 ANA convention in Atlanta.

His understanding of the hobby was built from the ground up. He had a sense of humor that I enjoyed.

I was especially grateful for his willingness last year to be photographed by a room sign at the Milwaukee ANA convention. After election results showed that three members of the new board would be from Iola, Wis., I thought it was funny that the board was meeting in Room 101A, which looked suspiciously like Iola. He got the joke immediately when I showed it to him and I had a wonderful photograph for Numismatic News.

I am sure he would be the first to say that his work at ANA was not yet finished, but when you consider his entire hobby career, he has done more than most and he has earned his eternal rest.

How many Eagles are enough?

2008-08-29T08:59:59.0310000-04:00

With demand for the one-ounce silver and gold American Eagles running so heavy, it is probably a good idea to pause and look at the numbers sold so far in 2008 as supplied by the U.S. Mint.

The silver American Eagle has passed through the 12-million mark at 12,125,000 here near the end of August. The Mint is ramping up to produce nearly two million a month more. That would put total sales over 20 million pieces, which would be nearly double any top total from prior years. Will the Mint hit that total? It all depends on its privately produced supply of blanks.

Naturally, because gold is more valuable, the totals for one-ounce gold American Eagles is lower. It is currently 307,500, but here too production is being ramped up. So far in August, the total produced is 80,000 pieces.

Even maintaining that pace would still bring the annual total to hardly more than 600,000 pieces. Here, too, the supply of blanks is a critical factor.

That would be a reasonably high number compared to most past years, but in 1986, 1987, 1998 and 1999 the annual total was well over 1 million, with the 1999 holding the top production spot of 1.5 million. Remember Y2K demand?

Production for gold fractional Eagles is much lower, but then so is demand. The Mint says it has a supply on hand, unlike the situation for the one-ounce coin.

Half-ounce total is 20,000, quarter ounce is 24,000 and tenth ounce is 95,000.

Buffalo one-ounce coin production stands at 109,500 pieces so far this year. Supply here has so far been adequate.

With platinum, numbers are really tiny, but that has been true in past years as well.

The one-ounce Eagle stands at 1,200, the half ounce at 2,200, the quarter ounce at 4,400 and the tenth ounce at 5,000.

Now let’s see what happens over the next four months.

Legit coins or simply fads?

2008-08-28T09:00:28.1980000-04:00

What a difference a year makes. Today the First Spouse gold coins for Andrew Jackson will become available to collectors.

I imagine the commencement of sales at noon Eastern time today on the Mint Web site will cause very little fuss or bother. How unlike the case when the Thomas Jefferson was offered a year ago.

Jefferson happened to be the third and last First Spouse gold coins to sellout quickly. In fact, they were the last First Spouse coins to sell out at all.

Once the novelty wears off, so does buyer interest apparently. Does this mean the Mint is offering the numismatic equivalent of the hoola hoop? Hot one minute and then forever on the margin, fondly recalled by those who remember the fad?

Could be.

Legislation for the National Parks quarter series includes provisions to make versions of the designs in five-ounce sizes three inches in diameter. Colin Bruce of the Standard Catalog of World Coins staff called these large “coins” hockey pucks many years ago.

Another piece of legislation calling for civil rights quarters has exactly the same provision for a three-inch, five-ounce silver version. How much further can the U.S. Mint take novelty in numismatics?

I am sure we will eventually find out, but we collectors may not like the answer.

Perhaps there will even be a U.S. coin for the hoola hoop. How about that?

They can't mean that, can they?

2008-08-27T09:01:09.3330000-04:00

When you ask a stupid question, you know what happens.

When Numismatic News went to press with the Aug. 26 issue, it featured a story on Page 4 about protesters in Denver hoping to levitate the Denver Mint during the last week of August.

I thought it was funny. I thought it a good idea to ask in our weekly poll question whether the protesters would levitate the mint.

Well, 36 percent said yes.

That might worry me if I thought the repondents were serious. I am assuming they thought the topic was just as silly as I did and were giving me as much of a silly answer as I was asking a silly question.

The written responses that followed up in the Sept. 2 issue were sparse. Usually we get so many answers we cannot run them all in the space we have. That was not the case with this poll question.

Just in case you missed the news, the protesters did not succeed in levitating the mint.

If my theory on this poll question is incorrect, then we are all in trouble.

Why pay high price?

2008-08-26T09:04:58.9020000-04:00

Quick. If you are about to buy some silver as an investment, would you like to pay a premium of 19 percent over metallic value, 7.8 percent over or 2.3 percent over?

Trick question? Possibly.

On the whole, investors would normally seek to buy the metal in the form that gives them the biggest bang for their buck, meaning the lowest possible markup from bullion value.

However, if you judge the activity in the marketplace you will scratch your head. Buyers are chasing the 2008 silver American Eagle coins and other current bullion coins like the Austrian Philharmonic and the Canadian Maple Leaf instead.

Why?

I checked the Kitco Web site this morning, which appears at kitco.com

I see that silver American Eagles, which are temporarily out of stock are priced at $15.73 each, with silver at $13.23 for a nearly 19 percent premium.

Maple Leaf and Philharmonic coins, which are in stock, are priced just a little cheaper at $15.48.

If you want to buy 100-ounce silver bars, (which were all the rage in the late 1970s and early 1980s), the premium over silver value is 7.8 percent at $1,426. They are in stock.

A 1,000-ounce bar is just 2.3 percent above silver value at $13,530. It is also in stock.

Why choose to pay such a high premium for coins when other forms are more reasonably priced? Is their some hoped for numismatic premium?

Markets can be irrational. This may be one of those times. Bullion coin premiums have been much lower than those asked for currently. They will be again. Why pay them?

Let's pinch those pennies

2008-08-25T08:52:22.3300000-04:00

I happened to have a conversation with a gas station owner over the weekend. I had pulled off the highway to fill up.

Immediately ahead of me was a fellow who apparently was complaining that the cost of a pack of cigarettes at the station was 10 cents too high. The owner of the station was still shaking his head when I stepped up to pay for my gas.

We had a conversation about what just happened. The owner said that in the past two years people have become more conscious of prices than he had ever seen in his 11 years in business. The cigarette episode was just the latest example.

He said he was conducting a pricing experiment. He had set his price six cents a gallon below the station up the street. He said his volume was up by 50 percent as a result. He interpreted this as yet another example of price consciousness.

The owner said even his friends stopped coming by if his price was just two cents higher than the other station.

I mostly listened, but I agreed that money was tight and people were watching their expenditures.

As I drove away, I thought about the conversation, but what I mostly thought about was that price consciousness is nothing new to coin collectors. They have been following prices closely for their whole hobby careers. If something seems out of line, they say so online and in letters. Does this habit carry over into their daily budgets? I assume so.

If you watch your numismatic expenditures closely, why would you do anything else in other aspects of life?

Collecting is good financial training in addition to its other aspects. While nobody is going to take up collecting because it will help with managing the family budget, I imagine that the savings from good budgeting might just go into hobby expenditures.

Does that mean that because money spent on coins is offset elsewhere that they are in effect free? Hmm.

Where do they come from?

2008-08-22T08:57:58.3140000-04:00

I had another one of those communications this past week. I received a fax from a guy who in all seriousness inquired where we at Numismatic News were coming up with what passed as letters to the editor.

He cited what he thought was a most ludicrous example of a letter he thought shouldn’t be published.

Ah, he asked me such an easy question. Whatever you might think about any given letter to the editor, or its writer, there are two facts that are paramount for me. The first is that the letter does indeed come from a reader. The second is my firm belief that a reader has every right to express himself.

Of course, personal expression is limited by libel laws, but what I have found in over 30 years as a newspaper editor is that the bounds of law seldom must be invoked. Readers are a pretty level headed bunch who offer opinions on all sorts of topics. Some topics are lofty. Some are silly. Nearly all readers know the difference and learn from them or laugh with them as the occasion warrants.

Over time, the picture that emerges is what a remarkably lively hobby we have and what interesting topics we choose to reflect upon from time to time.

Letters to the editor reflect the lives of the readers. As long as they do, they will keep being read and I will continue to get the occasional fax demanding to know where I find them.

If you have to think, you won’t buy

2008-08-21T09:07:04.2780000-04:00

One week from today the Mint will put the next First Spouse gold coins on the market. Because Andrew Jackson, our seventh President, was a widower at the time, his First Spouse gold coin will feature a Capped Bust design that was used on coinage during his term of office, 1829-1837.

Will this classic design help sales? The Mint needs a boost from somewhere. Each new issue is being purchased by fewer and fewer collectors.

The Louisa Adams total is just about 7,000 coins. This number includes both the proofs and the uncirculateds.

When the first First Spouse coin was offered for Martha Washington, the 40,000 maximum was sold out the same day. The same held true for Abigail Adams and Thomas Jefferson.

Since Dolley Madison went on the market late last year, the pace of sales and the number of coins sold have declined. Dolley is only about three-quarters sold. Elizabeth Monroe is hardly more than Louisa Adams at just over one-quarter sold.

Will we ever have another sellout? That is a good question, but we will have to wait for approximately 33 more issues over the next eight or so years to find out.

Americans like fighting about money

2008-08-20T09:58:08.0861987-04:00

No, the fight isn’t always about how to spend money, but about what the nature of money itself is. That historical idea came to mind when I was at the American Numismatic Association convention. I talked to all sorts of people about all sorts of topics.

One fellow I have known for years wanted to talk about the gold standard. He almost seemed to want to fight about it. He declared paper money was unconstitutional. He cited what he said was the constitutional language that says only gold and silver are legal tender.

I couldn’t resist pointing out to him that the Supreme Court said that paper money was legal in 1870. That court case was a whopper. It was also historically interesting for people who like to know the rest of the story.

The founder of the modern American system of paper money was Salmon P. Chase. He was the Treasury secretary for Abraham Lincoln and the North. He was desperate for money. Like the South, he was forced to issue unbacked paper money called Demand Notes to finance the war.

Chase was nothing if not creative. Not only did he issue Demand Notes, but he figured out a new way of war financing that ran circles around anything ever done by the United States before. He created the National Banking System. Chartered national banks could issue their own paper money, but it had to be backed by federal government bonds. What were these bonds? Why they were debt to finance the war.

The new system worked. The North got the money. The North won the war. But in the meantime, Chase was appointed Chief Justice of the U.S. Supreme Court. During the Grant administration, a imminent court ruling could declare what Chase had done constitutional or unconstitutional.

Perhaps oddly, Chase was on the side of calling it unconstitutional. Grant leaned the other way. A vacancy on the court was filled with a “sound” paper money man and the decision went 5-4 in favor of paper.

We’ve had it ever since and we’ve been fighting about it ever since as the booth visitor demonstrates.

Why not just order?

2008-08-19T09:42:05.3358902-04:00

While certain individuals will be attempting to shake coins out of the Denver Mint on Monday, collectors will have the opportunity to get the new Alaska quarter the regular way. They can order rolls and bags from the U.S. Mint. Granted, it probably isn’t as much fun as levitating a building and shaking it, but getting Alaskan state quarters is still pretty interesting for us collectors.

I like the design. I like the design a lot. The bear grabbing the salmon, or perhaps trout, says it all. Why can’t Wisconsin’s quarter have something that strong on it?

After all, we have bears here. They can be annoying, but they are real. We also have trout.

But we also have cows, cheese and corn here as well, so that is what we got on our coin when it was our turn in 2004.

I have written a number of times that the Wisconsin design was chosen by a vote of the people of the state, so I can’t complain about the design on those grounds.

But then I go and see a really good state quarter design and I am just envious. Nevada was a really good one, too.

Fortunately, I can collect any of the other 49 designs that I want.

But if I want the 49th state, that order period starts Aug. 25. Visit the Mint Web site at www.usmint.gov for details.

If I still had the 49-star flag that I had when I was a kid, I would wave it. It’s Alaska’s turn.

Halloween in Denver?

2008-08-18T09:02:06.6750000-04:00

The Aug. 26 issue of Numismatic News ran a story by the Associated Press about protesters in Denver who during the final week in August are going to try to levitate the Mint there.

Yes, I did a double take at the word “levitate” just to make sure I had read what I read. I did. I laughed.

It got funnier.

I was only 13 in 1968 so I guess I am seeing now what I missed out on back in the day.

A group called Recreate 68 said it plans to surround the Mint on Aug. 25 in an attempt to levitate the one-square-block building and “shake the money out of it for the people.’’

Gosh, I had better get my wheelbarrow and get over there pronto.

The story also said that the event is meant to commemorate an anti-Vietnam war protest in October 1967, when demonstrators sought to levitate the Pentagon.

You remember that, don’t you? The big flying Pentagon? No? I don’t either, but then I was pretty preoccupied with coins that year. Maybe I missed it.

Keep the comments coming

2008-08-15T08:51:04.4220000-04:00

Fantastic. I am watching the comments multiply on my blog over the last couple of days. Keep them coming. I appreciate it. The benefits of a blog include some real time responses to real questions and I enjoy getting them.

My blog is cross posted between the www.numismaticnews.net site and the Numismaster Web site. It is on the latter site that the Pat Heller weekly commentary on gold appears.

Good, bad or indifferent, the traffic to his comments is high and the feedback on my blog helps to demonstrate why.

All responses are being duly noted and discussed here in Iola.

Don't be bashful about gold

2008-08-14T08:52:41.2020000-04:00

Wasn’t it the old Dragnet TV series that said the names had been changed to protect the innocent?

Well, gold bugs like a little screen between themselves and the rest of the world, too.

Yesterday’s topic elicited an e-mail that I will show in part here.

“After you and I spoke on this after Pat’s column about two months ago, both myself and a top gold, gold futures and gold equities analysis firm that I deal with agree that his opinions are ‘solid gold.’ Are his opinions likely to ruffle some feathers? Sure. But then there are still a lot of people in denial about the strength of U.S. banks, the U.S. stock market and the dollar. This is one more reason I plan to retire in Asia.

“Give us more of Pat! Please feel free to share my thoughts with him.”

Hey, I will share these thoughts with more than just Pat. They can kick off the discussion.

I have to admit I was a little disappointed to see that no comments were posted below my comments yesterday on numismaticnews.net. Perhaps people are thinking about it. Perhaps it is simply a slow summertime period and they will think about that tomorrow, not unlike Scarlett O’Hara in Gone with the Wind.

People who believe in gold don’t want to be reduced to wearing the drapes because they didn’t take precautions against inflation.

What should be in gold column?

2008-08-13T09:16:36.7370000-04:00

I had a nice e-mail yesterday from somebody who considered Pat Heller’s weekly gold comments out of line. He said it was both a political column and it offered investment advice, neither of which, it was stated, belonged on a numismatic Web site.

Because the e-mail was an expression of concern, I thought I would throw the topic out for readers to consider.

Is it appropriate to publish information about the ongoing credit and banking crisis and its potential impact on the U.S. economy generally and the price of gold specifically?

I am by nature an optimist, so I take gloom and doom pronouncements with a grain of salt. However, I don’t think anybody can reasonably dispute that the current credit crisis is the worst financial mess the country has been in at least since the savings and loan crisis of the late 1980s and early 1990s.

The area of uncertainty is how this will impact the price of gold. Bad news doesn’t always make the price of gold go up any more than good news always makes it go down.

As an editor of Numismatic News, I have always advocated buying gold in the form of collecting gold coins. That way, you can have fun, build up a nice collection, and incidentally have a quantity of the precious metal that serves as a hedge against unforeseen calamities.

I know there are people who would rather cut right to the chase and buy pure bullion plays. They buy bullion coins from coin dealers. Is this activity a numismatic one or an investment one?

It seems to me it is a bit of both. It is not possible to draw a fine line between the two. When Russ Rulau was editor of World Coin News in the 1970s, the joke was it was really World Gold News. But the topic was important to readers and the publication thrived.

So this question of suitability recurs over the years. What’s your opinion?

I wouldn't want to price sets either

2008-08-12T09:01:00.2050000-04:00

The bullion markets are moving too fast for the U.S. Mint to keep up with pricing. Platinum has been in almost free-fall and the platinum American Eagles, both proof and uncirculated, have been unavailable for many days.

Law requires that prices be published in the Federal Register and this only slows thing down. Internally we can only guess at how many prices Mint staff members have considered and rejected as the decline continues.

With automobile sales down, it is no surprise that platinum, which is used in catalytic converters, would sooner or later go down with them.

A co-worker, Tom Michael, pointed out a very curious thing about bullion prices the other day. An ounce of platinum was 100 times the value of an ounce of silver. This morning, when I decided to write this, I checked the Kitco Web site and found platinum at $1,478 and silver at $14.78. How long this will continue is anybody’s guess.

There are no historical relationships such as the one enjoyed by gold and silver, so this platinum-silver pricing relationship will simply last until it changes.

Gold at $825 an ounce is down also, but it is not an industrial metal. Its price swings tend to be more constrained than either platinum or silver. That is because so many people own it and view it as a haven. It is also popular in jewelry so that demand helps even out the fluctuations.

Who is doing the buying?

2008-08-11T09:01:35.9860000-04:00

I was on Harry Rinker’s “Whatcha Got” radio program yesterday to talk about the 2009 editions of Coin Digest and North American Coins and Prices.

We talked about gold and silver prices, his mother’s regular purchases of silver proof sets in the early 1960s, which he was pleased to see, had gone up in price, perhaps because the dime, quarter and half dollar on those pre-1965 sets are made of 90 percent silver alloy.

When he wondered what was hot, I couldn’t help but mention Lincoln cents. Next year is the 100th anniversary of the coin and 200th anniversary of the birth of our 16th President. We will see four new collector designs and no matter what the price of gold and silver happen to do, there will be huge attention focused on their issuance.

Time flies by on a radio program and my spot was less than 15 minutes. His final question was about foreign money and whether it was buying U.S. coins. I said that it was, that Russian and Chinese buyers had broadened out into American silver dollars as well as the historical coins of their homelands.

That is worth thinking about. While there have been some active foreign buyers from time to time in the past, there has really never been a large foreign presence in the market for American coins before. It may never get to that stage of significance, but our globalized world may also sweep the American coin market into its scope.

Lucky day, lucky purchase?

2008-08-08T09:01:24.5250000-04:00

Today is a very lucky day according to Cantonese-speaking Chinese. It is 8-8-08 and the word for eight sounds like words for "prosper" or "wealth," according to Mint Director Ed Moy, who was out on a visit to the San Francisco Mint Wednesday to promote sales of the sets.

To mark the occasion, the U.S. Mint began selling a week ago what it calls a Double Prosperity Set that contains a half-ounce American Eagle and a half-ounce gold Buffalo coin. The set is housed in a handsome wooden display case. The price is $1,228.88.

Even with the eights in the price tag, are gold buyers feeling lucky? I noticed this morning that the price is down to $858 a troy ounce, which is a six-month low despite the two eights in the price.

Buyers of the Prosperity set will pay $370.88 over the raw cost of the gold as of today. That is a mark-up of 43 percent.

Perhaps it would be wiser for individuals who want to take advantage of a gold buying opportunity to purchase the two coins individually from their friendly neighbhorhood bullion coin dealer for less money and keep the difference in price, or even buy a more convenient one-ounce coin instead.

Of course, set buyers get a nice box. There is no question about that. There are even occasions in my experience where box prices can get crazy. An example I clearly remember was the wooden box for the six-coin Statue of Liberty Set in 1986. It was trading empty for a time for $100 in the months immediately after issue.

Can collectors count on this box premium lasting over time? That is the dicey part. I wrote about the Constitution boxes in the trash barrel at the Baltimore American Numismatic Association convention yesterday. Those boxes clearly held no premium value.

Persons who want to celebrate an auspicious day on the calendar can buy the set. But celebrating and investing are two different things. Investors who buy the set might not feel as lucky a few days, weeks or months down the road.