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 Wednesday, June 11, 2008
Green with envy?
Posted by Dave
Back about 10 years ago I remember stories in the Wall Street Journal about stock market veterans shaking their heads about the tech stock boom and getting out. Some classic mutual fund managers even closed their funds because the market had gone against their style of investing for so long. The eager and smart money of the time scoffed. Then tech stocks collapsed after they peaked in March 2000 and investors lost a great deal of money that they have yet to make up. Now financial writers are writing about 10 lost years. Anyone with a 401(k) understands. Look at the coin and paper money markets. They are hot. The sky seems to be the limit, but is it? Worse, I notice professionals in the business getting out, or at least lightening up, as the veteran stock market veterans were doing 10 years ago. Col. Steve Ellsworth sold his coppers in May. Sergio Sanchez Jr. has consigned his paper money to Lyn Knight at the end of the month. These are respected names in the business. Is it their time of life or is it their experience tells them something? I am not advocating stop-and-go collecting, but it would seem prudent not to get caught up in the current market fads. Stick to your long-terrm plan. Collect what you know. Don’t overcommit. The grass may look greener somewhere else, but it just might be that your own pasture is the best place to be in the present numismatic market.
6/11/2008 9:01:03 AM (Eastern Daylight Time, UTC-04:00) 
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Tuesday, June 10, 2008
Iola not too soggy
Posted by Dave
I received an e-mail of concern this morning from a reader asking how we were doing in light of the news he was hearing about floods in Wisconsin. I appreciate the concern, though I could not resist answering humorously. I responded that we here in Iola are so far north that the rain couldn’t find us. It is no joking matter for the people in the southern part of the state. Areas from La Crosse on the west to Milwaukee on the east were affected, including major damage to the tourist area known as the Wisconsin Dells. With gas around $4 a gallon, there is concern about the summer tourist season. Now with the flooding, further misery has been added. Speaking of tourists, I have written about Iola’s annual Old Car Show before. It is coming up July 10-13. This topic arises again because in the weekly Numismatic News poll question, it was asked if high gasoline prices are causing readers to reduce show attendance. I received one response from a reader in Arkansas who said it would mean he couldn’t come to the car show. While that wasn’t the question asked, it certainly is a relevant topic. Arkansas is a long drive from here. I have done it myself when driving to the Memphis paper money show. I still hope he can scrape up the time and money to come visit. There is still a month to figure out how.
6/10/2008 8:56:41 AM (Eastern Daylight Time, UTC-04:00)
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Monday, June 09, 2008
What kind of summer for hobby?
Posted by Dave
Though the calendar does not officially declare it summer, the weather certainly does and in a way so does the numismatic calendar. The Baltimore show concluded over the weekend and now the show schedule thins out. The question that I ask annually as routinely as a doctor’s office takes blood pressure is will commercial activity maintain an active pace or will it recede to a slow and easy pace as hobbyists take up their summer activities? My next scheduled show is the International Paper Money Show in Memphis the last weekend in June. The second summer Florida United Numismatists convention will also be held the same weekend. Both shows are looking to find a home on the calendar. Memphis used to be anchored to Father’s Day weekend until the convention center and hotels got better paying guests. Summer FUN in West Palm Beach is in its second year and is still looking to establish itself in the hobby routine. Last year’s show was held in July and it was a good start. This year’s show is expected to build on the prior one. Would-be hobby vacationers know it is easier to skip coin shows than it is paper money shows because there are so few of the latter. Memphis is the big paper money show on the calendar, so the paper money segment of the hobby will not yield to the temptation to slack off until after it has concluded. The large fluctuations in the bullion market argue for coin collectors to pay more than the usual summer attention to coins. This goes double for dealers. So what is my conclusion? Perhaps the old-fashioned notion of combining business and pleasure will prevail. FUN has a beach. Memphis has Graceland and nearby gambling, so show goers could find a reason to stay in both areas longer.
6/9/2008 9:02:37 AM (Eastern Daylight Time, UTC-04:00)
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Friday, June 06, 2008
Eagle rationing gets tighter
Posted by Dave
I just received a copy of a letter being sent to the Mint's authorized purchasers of silver American Eagles. The tight supply situation continues and will get even tighter next week. Text of the letter follows: June 6, 2008 MEMORANDUM TO ALL AMERICAN EAGLE AUTHORIZED PURCHASERS FROM: Cathy Laperle Team Lead, Bullion Program United States Mint SUBJECT: American Eagle Silver Bullion Coin Update The United States Mint has been informed by its silver blank vendors that the volume of blanks they will be shipping to us in the coming weeks will be significantly reduced. Specifically, the quantities they will ship to us during the week of June 9 are expected to be less than half the quantities they shipped to us during the week of June 2. Our vendors, however, expect to be able to make incremental increases in supplies each week thereafter. In the mean time, the significant reduction in the number of blanks they supply to us will, of course, directly affect the quantity of coins we can make available for allocation to our Authorized Purchasers. Accordingly, the United States Mint will continue allocating American Eagle Silver Bullion Coins per the process initiated on April 21, 2008. As you know, in the first six months of 2008 production, the United States Mint produced more American Eagle Silver Bullion Coins (10.07 million) than we did during the entire 12-month period of 2007 (9.03 million). The United States Mint stands ready to continue this high level of production as additional blanks become available from our suppliers. The United States Mint is making every effort to increase its acquisition of silver bullion blanks that meet the specifications and requirements of the law. In our efforts to meet unprecedented demand, the United States Mint is again preparing a request for proposals (RFP) for additional silver blank suppliers. Additionally, we are not using incoming supplies of silver blanks to produce numismatic versions of these coins (American Eagle Silver Proof and Uncirculated Coins); all incoming inventory is being used solely for silver bullion coins during this reduced supply period. Thank you for your patience and your continued support of the United States Mint American Eagle Silver Bullion Coin Program.
6/6/2008 12:44:04 PM (Eastern Daylight Time, UTC-04:00)
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Novel theory
Posted by Dave
What do you think? I read the following about the Mint's rationing of silver American Eagles and I have to give the guy points for guts, but it seems to be an allegation that anything less than an effort by the government to make silver holdings worth more is somehow illegal. http://news.silverseek.com/SilverSeek/1212595279.phpThere has been a speculative streak in collectors regarding silver for over 40 years, since the great coin shortage of the middle 1960s and the Coinage Act of 1965 that by and large drove silver coins out of circulation by the end of 1968. We’ve had up markets and down markets, but this is the most novel approach I have ever seen in any market in the last four decades. It comes in language that we might have heard in the backrooms of Washington, D.C., just prior to the Bland-Allison Act of 1878 or any other silver-propping legislation of the following years. If this is the intent, it would seem to me to indicate market weakness rather than a sound economic position and a strange appeal for government intervention to cause prices to rise couched in language that implies the opposite.
6/6/2008 8:59:18 AM (Eastern Daylight Time, UTC-04:00)
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Thursday, June 05, 2008
Look, we're stress free
Posted by Dave
Most days of the week I check the Web site http://www.coinflation.com/ to see what the metallic values of the zinc cent and the nickel are. It is a handy site if you want to know those numbers because it sure beats making the calculations myself or setting up something on my computer to calculate it for me. Though it is illegal to melt cents and nickels, the concept of melt value is a handy one. It is an indicator of the level of stress on the supplies of these and other coins in the U.S. banking system. If the melt value rises, you can be sure that the risk of hoarding rises. If the melt value falls, the risk of hoarding falls. What are the current numbers? Well, when I checked this morning, the copper-coated zinc cent was valued at slightly more than one-half cent as metal. To be precise, as the Coinflation.com site is, the number is .0052711. Nobody in his right mind would be tempted to melt anything that would reduce its value by half. There would appear to be no stress on the cent supply from a threat of hoarding. A previous blog where I mentioned the significant decline of Mint output of cents would confirm this. Any incipient hoarding would show up as increasing demand for the coins from the Mint and that would make production totals rise. What about the nickel? Numismatic News ran several pieces by Russ Rulau last year about hoarding and what is currently found in circulation. This seemed a reasonable topic when the price of the metal in the coin very nearly reached 10 cents, or double the face value. The current value, though still over face value, is .0577402. That means that on a $1,000 face value, if you could melt everything without cost to you, you would have copper and nickel worth roughly $1,154. Since accumulating the coins, shipping the coins and melting the coins cannot occur without cost, there doesn’t seem to be any hoarding stress on this denomation either. Current mintage figures confirm this. They are down, too. The Web site also provides melt values for other coins that are useful. These run from the 90 percent silver coins to the current clad compositions. Thanks Coinflation.com.
6/5/2008 9:00:36 AM (Eastern Daylight Time, UTC-04:00)
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Wednesday, June 04, 2008
On the trail of gold
Posted by Dave
As I drove the mile to work this morning, I noticed that the price of gasoline at the two stations I pass at the center of town were posting a price for regular unleaded of $3.949. That is down three cents from the peak price. We did not reach $4 a gallon here. Is this just a pause on the way to more painful heights, or is the fact that Americans are driving less and buying smaller cars at last starting to have an impact? I don’t know. It would be nice to think so. But what I do know is to continue to keep an eagle eye on the price of gold. I have been reading recently that gold is following oil. I don’t think so. I think it is the reverse. Oil follows gold. This certainly was the case in 1980. Gold peaked a year ahead of oil and its decline was followed by oil to a remarkably similar degree. If, hypothetically, there is something in this observation, we won’t really know for sure for quite a while yet. Gold’s current peak of about $1,033 occurred in the middle of March, some two and a half months ago. Is that it? Certainly gold’s fall off the 1980 peak was far sharper than the current decline. It went from $850 Jan. 21 to $463 on March 27. So far the smart money is simply calling gold’s present decline a correction in a larger uptrend. I will watch the experts argue it out for sure, but my undivided attention will be on the actual price of the precious metal. It can foretell a lot.
6/4/2008 8:53:49 AM (Eastern Daylight Time, UTC-04:00)
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Tuesday, June 03, 2008
Quiet isn't peaceful
Posted by Dave
I had phone call yesterday. The topic isn’t memorable. My thoughts are somewhat more so. It was another one of those calls where the caller identified himself and then began to speak. I listened. After five or six seconds he asked if I was still on the line. This has been happening to me more and more. Is the quality of our phones so bad now and callers so frequently cut off that they routinely interrupt to inquire if I am still there? I get the joke of the cellphone commercials, “Can you here me now?” But I thought we had finally cleared the hurdle of going in and out of dead zones in recent years. Another part of me wondered if we have become so unused to silence that when it occurs, it is startling and unexpected. People run around with their iPods and give their whole life a sound track like a TV show. There is no background music on my phone when I am on the line. If I am asked to listen, I do and it is absolutely quiet. So are all these inquiries as to whether I am still there the result of erratic technology or the startling and apparently unexpected absence of sound as I listen?
6/3/2008 8:49:36 AM (Eastern Daylight Time, UTC-04:00)
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Monday, June 02, 2008
How did we get there?
Posted by Dave
Thursday afternoon was a big day for the numismatic staff at Krause Publications. At 3 p.m. the camera rolled for the pilot of Coin Chat TV. A 15-minute segment was done. Editorial director Debbie Bradley introduced me and Colin Bruce, who for many years was in charge of the catalog department that puts out the many volumes of the Standard Catalog series for coins and paper money. I had to put a suit on. For Colin, the overalls look disappeared an he put on his Snoopy tie. My tie had a Chinese coin theme as I had obtained it at the World Money Fair in Berlin. It seemed a good opportunity to wear the tie for the first time. Did it bring me luck? I think so. It was fun to do. I learned that saying copper-coated zinc cents was harder to do than I ever would have thought beforehand. Facts that you have known for years can sound twisted with the slip of the tongue. We picked the future of the cent and the $1 bill as the discussion topics precisely because we figured it would ease us into more difficult topics. We don’t yet have a studio, so we were using a round conference room that was popularly dubbed “the silo” when it was built in 1982. There was a nice skyline scene behind us. I asked, “Is this New York? I don’t recognize any of the buildings.” “No,” I was told, “It’s Vancouver.” Hey, we love ya, Canada. We prove once again that the country has a major influence in our neck of the woods. Historically, many of our place names came from the French trappers and much of our trade heads north through the Great Lakes as it always has. I saw the video Friday. When will you get to see it? I don’t know yet, but Coin Chat TV is close. Watch wwwcoinchatradio.com for more information.
6/2/2008 8:59:33 AM (Eastern Daylight Time, UTC-04:00)
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Friday, May 30, 2008
Look at the production gap
Posted by Dave
Every once in a while I like to go back to basics and check mintages figures for the regular circulating denominations. Most of the time these numbers don’t show much of note. Mintages are enormous and the coins have little chance of attaining much in the way of long-term collector value, but the collector impulse in me keeps me interested. I’ve commented previously on the falling production numbers in this recession year as regarding the cent, but there is another curious phenomenon going on. What’s going on in Philadelphia? For the cent through the dime denominations, there is a widening gap between Denver output and Philadelphia output. For the cent, Denver is producing nearly 50 percent more through April with figures of 923,600,000 as compared to Philadelphia’s 612,400,000. For the nickel, the gap is wider. Denver has produced almost 2.5 times more coins than Philly. The numbers are 143,040,000 as compared to 58,800,000. And what’s up with 58,000,000? That number looks more like a figure from the early 1960s. The gap in dime production is similarly large. Denver has come in during the first four months at 243,500,000 million and Philadelphia at 82,000,000. Quarter production is more routine with each mint contributing roughly half of the total at 433,400,000 and 437,600,000, respectively. Is the eastern economy that much weaker than points West? Is Denver that much more productive? Do collectors even give a darn?
5/30/2008 9:01:51 AM (Eastern Daylight Time, UTC-04:00)
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Thursday, May 29, 2008
Silver Eagles get harder look
Posted by Dave
A new shipment of 2008 silver American Eagles arrived in Iola this week. We use them as subscription premiums. They are very popular. I have one on my desk this morning as a reminder to write this blog. The discovery of the 2008-W uncirculated silver American Eagle with the reverse of 2007 reported in the May 6 issue of Numismatic News has added to the general interest in what has been a very popular coin since it was created in 1986. There is still some confusion out there as to just what a 2008-W American Eagle is as compared to a regular 2008 silver American Eagle that is usually just called a one-ounce bullion coin. Let’s start with the bullion coin first. It was created in 1986. The Mint made a decision to sell them only to a small group of authorized dealers, who in turn sell them to a wider numismatic marketplace. The coin has no mintmark on its reverse. Some collectors complained from the first that they didn’t want to buy the coin from a dealer but would prefer to buy directly from the U.S. Mint. In 2006, the Mint changed a policy of almost 20 years standing and decided to offer uncirculated silver American Eagles directly to collectors. Perhaps out of a concern not to undercut sales to the authorized dealers, the Mint put a “W” mintmark on the coins, struck them on burnished blanks and charged more for them. The coins are still technically uncirculated and the Mint calls them that. Shorthand in the hobby often refers to them as burnished. I always add the “W” to the date to help in making the distinction. The Mint sells the 2008-W uncirculated coins struck on the burnished blanks for $25.95. A regular 2008 bullion American Eagle without the mintmark sells for $20 or less at the moment from the nation’s coin dealers. Those who like to order the new coins directly from the Mint were rewarded when some of the 2008-W uncirculated pieces that were delivered to them turned out to have last year’s reverse on them. You can buy one from advertisers in Numismatic News for $395. That’s quite a leap from the issue price. Buyers who got them from the Mint for $25.95 are feeling pretty good. So far, no 2008 bullion American Eagles without the mintmark have turned up with last year’s reverse. They all sport the new letter “U” in UNITED STATES OF AMERICA on the reverse that has the downstroke on it that makes it look like a lower case “u.” The reverses in 2007 and before do not have this downstroke on the letter. These bullion coins are popular simply for another reason. They contain one troy ounce of silver and silver is hot.
5/29/2008 9:02:56 AM (Eastern Daylight Time, UTC-04:00)
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Wednesday, May 28, 2008
Gold at $700. Are you nuts?
Posted by Dave
Would it be a good thing for the coin hobby if gold dropped to $700 a troy ounce and stayed there for a few years? A good case can be made that the rapid upward movement in the price of the precious metal has made gold coins unaffordable to a larger number of collectors. It is the disposable income of collectors that ultimately drives prices in the numismatic market. Sure, trophy coins like 1913 Liberty Head nickels can stay in the stratosphere. Their prices don’t fall. A weakness in the market is usually manifested by the removal of these coins from the market as owners await better times. However, coins with larger populations in both raw and slabbed states see more fluidity in pricing, but even with these, there is enough rigidity to create unsustainable situations. Many readers have pointed out the disappearance of scarcity premiums on gold coins that used to have higher mark-ups when compared to the underlying value of the bullion than they do now. They are right. They have shrunk or disappeared. Stability in gold’s price allows some differentiation to occur that simply does not exist when upward thrusts reduce many coins to bullion value. For example, gold $20s have long had a narrower price differentiation based on mintages than Lincoln cents. It is logical. There are more collectors of Lincolns than double eagles. What collectors there are tend to focus on the very top end. Also, the base price of any double eagle is far higher than a base price for any Lincoln, so there is wider room to make price differentiations. In the VF-20 column in the June Coin Market, the 1892 double eagle with a mintage of 4,523 is priced at $1,350, less than $400 more than the $963 price of an 1898-S, which has a mintage of 2,575,175. In calmer markets, the 1892 was around 2-2.5 times the price of the 1898-S. Sure, in calmer markets we lose the excitement of rapidly moving bullion, but we collectors get to be more true to ourselves by making buying and selling judgments based on scarcity.
5/28/2008 9:04:46 AM (Eastern Daylight Time, UTC-04:00)
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