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 Wednesday, March 26, 2008
Cooper's parachute enhances note values
Posted by Dave
Coincidences make news a fascinating business. In the March Bank Note Reporter and elsewhere we reported that PCGS Currrency had certified two dozen $20 Federal Reserve Notes that had been part of the $200,000 ransom money given to D.B. Cooper in 1971. Cooper was a plane hijacker who parachuted out of 727 in the Pacific Northwest and was never heard from again. Did he get away? Did he die from trying to parachute from such a high altitude? These questions have been festering for nearly 40 years. Now look at the news this morning. The Cooper parachute may have been found in Washington State. It is a coincidence, but what an extraordinary one it is. Slab ransom money. Discover parachute a few short weeks later. The two events make a fascinating coincidence. The coincidence undoubtedly enhances the value of the notes. By how much, I will be curious to discover. I also expect we will learn more as time goes on about the hijacking itself and whether the parachute really was Cooper's, but PCGS Currency certainly was very lucky in its timing. Congratulations on a PR coup.
3/26/2008 9:01:10 AM (Eastern Daylight Time, UTC-04:00)
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 Tuesday, March 25, 2008
That promise was golden
Posted by Dave
Election years bring out politicians and campaign promises. Normally, these do not touch upon numismatics, but 28 years ago this week, candidate Ronald Reagan made an appearance 13 miles to the south of Iola in Courthouse Square in Waupaca. I was there. I listened to his speech. Incorporated into it was a promise to make the U.S. dollar as good as gold again. That is not exactly an overt pledge to restore the gold standard that was abandoned in 1933 or the gold exchange standard that was abandoned in 1971, but it was as close to the subject as any American leader who had a strong chance of winning the presidency has ever gone since President Nixon closed the gold window. He was as good as his word. He appointed the U.S. Gold Commission. Its report in 1982 did not bring back the gold standard, but it did make the topic a respectable one in government circles again, something that had not been the case for the prior decade. The door was opened to striking gold coins again. The Olympic coin legislation had a $10 gold coin component and it was not laughed out of Congress or condemned. It passed and the Olympic $10 of 1984 was the first American gold coin struck since 1933. It sold reasonably well to collectors. It was followed by the 1986 Statue of Liberty $5, which sold out in just a few weeks. It was a first hint of pent-up gold coin demand. This was then followed by the creation of the American Eagle program in 1986 and we were off to the races. The gold standard did not come back but Americans were given an American option to invest in if they wanted gold to be a part of their investments. Perhaps someday a candidate who has more electoral pull than Ron Paul will say something positive about gold or some other numismatic subject.
3/25/2008 9:01:51 AM (Eastern Daylight Time, UTC-04:00)
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 Monday, March 24, 2008
Let's play hot potato
Posted by Dave
Tom Snyder in Waukesha, Wis., gets the credit for being the first person to report to me his receipt of one of the new $5 Federal Reserve Notes. As he reports by e-mail, “It was spent by the customer ahead of me at McDonalds and the clerk was having a problem accepting it when the guy told her it was a new one. I, the next customer, agreed and so she accepted the note, but quickly paid it back out to me in my change.” This raises the usual questions about the lack of awareness of many of Americans of their money. Fortunately for the clerk’s peace of mind, she could treat the new bill like a hot potato and quickly pass it to Tom, who could report it to me and the rest of the collecting community. That got me thinking along historical channels about the economy. During the Depression of the 1930s there were many unorthodox thoughts about how to get the economy moving again. One method was to spend into circulation pieces of paper that weren’t money but passed as money. The technical term is scrip. The kicker, though, was this scrip expired, so the point was to spend it as quickly as possible. It was thought that these quick expenditures would help jump start demand much like the recently enacted stimulus package that will be paid out in May. This was before John Maynard Keynes formalized the Keynesian economic theory of demand management through public expenditure to keep economies going. Perhaps we can get the rest of the public to treat the new notes like hot potatoes and spend them more quickly. No? Well, that’s the best I can do on a Monday morning this week.
3/24/2008 9:04:22 AM (Eastern Daylight Time, UTC-04:00)
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 Friday, March 21, 2008
Buyers put money where mouths are
Posted by Dave
Physical buyers of gold and silver coins think the present decline in the precious metals are merely corrections in a long-term uptrend. How do I know? Well, I could read commentary in various online newsgroups, but more importantly, I can look at what is going on in the market itself. I talked to Julian Jarvis yesterday. He told me that, “Everybody’s trying to buy physicals and nobody is trying to sell today.” He makes a market in physical bullion coins from his Indiana office. The net result is a mad scramble to find supplies. Buyers, supposedly, are trying to lock in the present lower prices. Gold dropped from the highs by more than $80 if we use closing prices not intraday levels and silver has fallen by nearly $5. For silver especially, those numbers are large. American Precious Metals Exchange, which operates a Web site that sells precious metals was overloaded and Scott Thomas posted notice that persons who were interested in transactions of more than $2,500 should telephone his Oklahoma office instead. It was an interesting coincidence in timing, because I interviewed Thomas on Coin Chat Radio. Broadcast yesterday online, he warned people to buy into the market in chunks rather than jumping in with everything all at once and he forecast gold at $1,500 an ounce in one year and silver at $35. The interview occurred before the price declines had hit and yesterday’s market action got going. Clearly there are more individuals besides Thomas who believe that prices are going higher or the scramble would have been all on the other side – selling rather than buying. Will these would-be buyers yesterday prove to be right? Well, there are no guarantees, but I put more stock in the opinions of people who are putting up their money to play the investment game rather than those who simply offer a coffee break opinion.
3/21/2008 9:08:35 AM (Eastern Daylight Time, UTC-04:00)
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 Thursday, March 20, 2008
Gold or poetry
Posted by Dave
I can choose gold as my topic this morning or I can mention the phone call I received yesterday from a fellow who wondered if I published poetry. I responded to the inquiry that occasionally I will run something in the letters section if it relates to coins, but I certainly wasn’t interested in buying anything. His reply was it was a love poem that mentions Queen Victoria. Are you ready for gold? Yeah, me too. It would seem that investors have once again had an attack of round-number-itis. The $1,000 level for gold was such a shock, pleasant reality, target point or whatever that the price plunged, down now by more than $80. I expect there will be a great deal of dissection of this event, but it will be helpful to remember that the big innovation for gold buyers in this cycle was the creation of exchange traded funds, or ETF’s, which allow persons unfamiliar with commodity markets or coin dealers to get in on the action. ETF’s are convenient, but when Wall Street gets involved with gold or coins, we in numismatics get involved in Wall Street’s problems. Individuals and firms who have taken a bath with their investments in the banking industry and bank-generated mortgage securities might have been eying their gold holdings as salable to raise funds to shore up their overall financial positions, or to meet margin calls. This kind of activity has nothing to do with underlying fundamentals – at least initially. We will learn if this is a temporary hiccup or the start of a new trend lower, but only over time. The present fall is not anything like as severe as the decline of the first two days from the 1980 peak, so this could very easily be nothing more than a routine price fluctuation. There. Gold or poetry? Perhaps we will find someone who says gold is poetry.
3/20/2008 9:00:00 AM (Eastern Daylight Time, UTC-04:00)
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 Wednesday, March 19, 2008
How many coins in the cupboard?
Posted by Dave
Final mintages of Dolley Madison First spouse gold coins are not available, but pending the usual accounting finalization procedures that can take months, the sales totals stand at 10,400 uncirculateds and 16,268 proofs. The uncirculated coin went off sale within four days of the uncirculated Elizabeth Monroe pieces going on sale for $90 more and the proofs hung on for nearly two weeks more with the same cost differential. During the parallel sales period fewer than 400 more uncirculated Madison coins were sold and about 1,000 proofs were purchased. What does this tell us? Well, perhaps it is just a matter of repricing. Or it could give us an idea that the Mint is not striking coins significantly ahead of demand. Theoretically, before 2007 ended the Mint could have struck right up to the 40,000 total limit and kept them on sale until they were sold or until they got tired of holding them in inventory. It is clear the Mint does not want large inventories. That is certainly a good business practice. In the event perhaps final mintages will total right around 26,668. This would explain why more and more Mint coin offers start with a sales period and a message that the coins are available for delivery days or weeks later. The 2008-W uncirculated silver Eagle went on sale March 17 with a message that they will not be available until April 9. Waiting a few extra days is a good thing for collectors, too, because it means there is less chance that the secondary market will be perpetually distorted by unwanted Mint inventories. In contrast to current sales of 2001 Kennedy half dollars, there won’t be 2007 Madison First Spouse coins being offered by the Mint in 2014.
3/19/2008 9:05:51 AM (Eastern Daylight Time, UTC-04:00)
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 Tuesday, March 18, 2008
Get a new $5 yet?
Posted by Dave
Have you gotten a new $5 Federal Reserve Note in your change yet? The new bill was introduced last week on March 13. It has not made it to Iola yet. Debbie Bradley inquired about it after the official introduction when she did some routine banking. Lack of the new $5s in Iola is no real surprise. We are at the tail end of the distribution system and I sometimes think that old $1 bills come here to die because they can be so ratty. Nobody wins any prizes for being the first to get one in change, but there is a certain psychological satisfaction in being the first to report one to fellow collectors and passing a personal judgment on how it looks and whether the anti-counterfeiting devices are easy to use. Americans are not easily educated about money. That is peculiar considering how important money is to everyday life. The iodine pens increasingly shorten the useful life of many bills. There is far less thinking involved with a pen than checking a security strip or a watermark. The need for fairly crisp examples in ATM machines adds further strain. Then there is the simple fact of the new designs themselves. It used to be said that $100 bills had a life of 18 years. Well, that isn’t true anymore. The new design arrived in 1996 and the old designs disappeared very rapidly, led by an almost complete rejection of the old designs in places like Russia as soon as the new ones appeared. When the next new one comes out, I expect a similar departure schedule for the current notes. How long will the current $5 last in the face of the arrival of the new? Not long, I imagine. Next year I will probably ask whether anyone is seeing any old notes in their change.
3/18/2008 8:53:56 AM (Eastern Daylight Time, UTC-04:00)
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 Monday, March 17, 2008
What's the demand for numismatic art?
Posted by Dave
I owe thanks to the individuals who posted comments with my blog on Friday. It is great to receive helpful information and commentary from readers. Gold at $1,000 an ounce is an important milestone and it is important that people generally be aware of it. One thing where gold at $1,000 an ounce will not be helpful is in the realm of a new Mint project to recreate the ultra-high-relief Saint-Gaudens gold $20 produced in 1907 at the U.S. Mint from dies bearing the famous design of Augustus Saint-Gaudens. The coin proved so difficult to strike at the time that it was quickly abandoned for the high relief versions and mere commerce caused that design to be abandoned because bankers said they would not stack properly. Assuming the Mint succeeds in the production challenges and the fact that the coins will never see commerce, that leaves the problem of projected price. What will it cost the Mint to create the numismatic masterpiece? The base gold value if struck today would be $1,000 plus whatever the markup would be to cover the Mint’s cost and add a little profit. Basic American Eagle proofs are $1,200 from the Mint using a round number. How much more would this special coin be? $1,300, $1,400, or $1,500? In that rarefied pricing area, there are not too many collector buyers, unless of course, they can turn them around and sell them on eBay before the credit card is debited and the coin is shipped. If it can be sold on eBay, great, it is a profit. If it can’t be, it gets shipped back to the Mint within the 30-day return privilege. Back to the basic question: what is the rock bottom collector demand for such a piece? I know that it is more than the 19 ulta-high-reliefs that the Mint press release notes exist from 1907. It is probably in the thousands of pieces, because a first-time issue frequently inspires more buyers than a second. But, using the $1,500 price for easy figuring, a mintage of 10,000 would generate the Mint $15 million in sales. Could it go higher than that? What do you think?
3/17/2008 9:01:31 AM (Eastern Daylight Time, UTC-04:00)
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 Friday, March 14, 2008
What's that about $1,000 gold?
Posted by Dave
Various news organizations seem so anxious to reach the nice round number of $1,000 gold that they seem to have prematurely announced it yesterday. The actual close was $992.30 and as far as I can see, trading in spot gold, that is for immediate delivery, did not hit the magical round number. Market psychology is a strange thing. Traders and investors are often attracted to round numbers. There is no practical difference between $1,000 and $997 or $998 unless your gold holdings are of Fort Knox proportions. The milestone will or won’t be reached. My earliest memories of the stock market come from just after the 1966 attempt to reach 1,000 on the Dow Jones Industrial Average. It was close but no cigar and it wasn’t until 1972 before it actually breached the historical barrier. It was 10 years after that before it made a decisive breakthrough upward. Do I see parallels? There are a few. The market enthusiasm seems awfully high. The disappointment at not achieving a breach of the barrier might give some sellers the courage to sell and hesitant buyers enough worry to discourage them. We will see. I write this knowing that I could be completely wrong as soon as formal morning trading begins. But of course, $1,000 gold has already been proclaimed by many news organizations.
3/14/2008 9:01:54 AM (Eastern Daylight Time, UTC-04:00)
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 Thursday, March 13, 2008
Steel to make coinage comeback
Posted by Dave
Steel cents are in our future. The only thing is, they won’t look like steel cents. This isn’t as strange as it may sound. We already have zinc cents that don’t look like zinc cents. The steel concept is the same. The core will be coated or bonded to an outer layer of copper so the public will not be able to visually detect the difference. At issue is timing. There are two bills in Congress. At a hearing on Tuesday the divisions became clear. One bill gave discretionary authority over coin composition to the Treasury secretary. The other essentially leaves that power in the hands of Congress unless an extensive round of consulting and public input occurs. Which is Congress likely to go for? My money is on the one where it retains the most power. What they agree on though is the necessity of changing the cent’s composition. That brings us back to steel and timing. It will be around two years before the Mint can line up all of its ducks and suppliers. That seems slow, but that is what the Mint director said. We live in an Internet age where we figure if we can conceive of it, it will be done. The Mint operates industrial plants and things don’t move that quickly. The new composition will save taxpayers money. Any changes to the other denominations depend on which of the two pieces of legislation passes. Let’s watch and see.
3/13/2008 9:01:15 AM (Eastern Daylight Time, UTC-04:00)
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 Wednesday, March 12, 2008
Car disrupts morning routine
Posted by Dave
My morning routine was disrupted today. I dashed out the door as usual. I got in the car. I put the key in the ignition – nothing. The mechanism would not unlock. I fooled around with it, jiggling the key and putting it in and taking in out in rapid succession. Still, there was nothing. After trying this several times over the course of a half hour, I called the office. Debbie Bradley came to my rescue and picked me up. That is the advantage of living in a community of 1,300 people. I was not miles away. So here I am, happily at my desk, slightly behind but up and at ’em as the phrase goes. What’s going on in the numismatic world? Well, I haven’t caught up yet. If there is an urgent topic, I will be back again with another posting. If not, I will try again tomorrow to achieve a normal day. Oh. Wish me luck getting my car going.
3/12/2008 9:26:25 AM (Eastern Daylight Time, UTC-04:00)
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 Tuesday, March 11, 2008
CoinChat Radio ready to air
Posted by dave
Preparations for CoinChat Radio are in high gear in the office. The first program will be broadcast online at 11 a.m. Friday morning Central Daylight Time. Mark your calendar. It has been great fun putting it all together. I hope you will be listening to it then or when it repeats at the top of each hour. You can access it at www.CoinChatRadio.com. I do an interview with Texas collector Reed Hawn and talk a little bit about a coin he once owned, an 1804 dollar that will hit the market again at auction in April and the Central States convention. Those who are interested in the precious metals markets will have the opportunity to hear my interview of Pat Heller of Liberty Coin Service. Pat shares his thoughts about gold, platinum and silver. The best part, of course, is if you like what you hear, Pat has agreed to come back. It is a deep subject and in a few minutes in an initial interview, I simply wanted to hear more. I hope you do as well. The program has much more packed into it with contributions by Dave Kranz, Debbie Bradley, Lisa Bellavin and Maggie Pahl and Bob Van Ryzin, who also introduces the rest of us. I don’t want to give it all away. So listen in on Friday. If you do, let me know what you think. Point out the good and the bad. Then all of us can give you more of what you find interesting and useful and less of what you don’t like. My e-mail is david.harper@fwpubs.com.
3/11/2008 8:52:14 AM (Eastern Daylight Time, UTC-04:00)
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