The "Buzz" Coin Blog with Dave Harper

Brass or bronze? Got me again
Posted by Dave

I see on the U.S. Mint’s list of products that are coming soon that the annual uncirculated coin set now has an Oct. 1 sales date. This contains an uncirculated example of every denomination and design struck at both the Denver and Philadelphia mints.

Sales of the uncirculated coin set were postponed when the Mint had a problem with toning on the new copper-alloy cents, or I should write the old copper alloy cents.

The law authorizing the four designs for the 2009 Lincoln cents also requires that they be minted for collector sets in the alloy that was used in 1909, which was 95 percent copper, three percent zinc and two percent tin.

It is perhaps not surprising that a problem of this kind would have occurred. The Mint is out of practice with such an alloy. Collectors know how prone to toning and spotting cents are. That is why they are usually the first coins looked at in sets to see how well preserved the overall uncirculated or proof set is.

In this blog I did not call the alloy bronze as I did in August. Alan Herbert, the Answerman, e-mailed me about that.

He wrote, “95 percent copper and both tin and zinc can go either way. If the majority is tin, then it’s bronze, but if the zinc makes up more than 2.5 percent, then it’s brass.”

By that definition, the cents will be brass. This is a good example of why Alan is the Answerman who writes the weekly Coin Clinic question and answer column in Numismatic News.

So, will you be a buyer of the uncirculated coin set containing brass cents?

Tuesday, September 15, 2009 2:02:34 PM (GMT Daylight Time, UTC+01:00)

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Monday, September 14, 2009

Wow, I got a Guam
Posted by Dave

I might have said something like that when I was 10 years old, but the kid collector in me still bursts forth now and then. It did so again on Saturday.

I received a Philadelphia Guam quarter in my change at a Wal-Mart in Appleton.

This part of the country is the tail end of the coin distribution network. When something reaches me, it usually means it is pretty well distributed across the country.

Whether this is true this time is questionable, but it is interesting to be able to report that even with the reduced mintages totaling just 87,600,000, a Guam quarter has made it to me in Wisconsin. The Philly mintage total is 45,000,000. That is just 1/20th the Philadelphia total for the Virginia state quarter struck in 2000, a year of record Mint production.

Let’s assume for a moment that my obtaining the coin does indeed mean supplies are pretty well spread across the country. What would that indicate?

This design is just one behind the current one, which is the American Samoa quarter that was released at the end of August.

If distribution is occurring, even at lower quantity levels, the reports of the economy bottoming out might just prove to be true.

For many years I have taken a reading on the economy in January by how soon I get a cent and other denominations with a new year on it. When the economy is really humming, cents are usually out in the major metropolitan areas within a day or two of New Year’s and they make it to me by the second or third week of the month.

Of course, this year was different. Very different. We had the worst financial crisis in the United States since the Great Depression. This depressed the usual commercial demand for coins and banks trying to survive weren’t ordering.

Time goes on. Conditions change. Perhaps the Professional Life Lincoln cent will be showing up in my change real soon.

Monday, September 14, 2009 2:17:04 PM (GMT Daylight Time, UTC+01:00)

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Friday, September 11, 2009

Go off the beaten path
Posted by Dave

I was editing a story yesterday about Seated Liberty half dollars. This is a series that many collectors tend to overlook. It is the hole in the historical doughnut.

Early federal coinage is avidly collected. Seated Liberty halves came after this period, starting n 1839. The series that followed the 1891 termination of the Seated half series, the Barber, Walking Liberty, Franklin and Kennedy half dollars are series that most collectors have some personal experience with.

But looking at the prices in the Coin Market price guide and you have to conclude that many collectors are missing an opportunity to put together a set in the circulated grades that would be both a challenge yet doable when the cost is spread out over a period of five or 10 years.

I am suggesting the circulated grades because the Mint State pieces can be terribly pricey, unless a collector needs just the pieces for a type set.

Why don’t more collectors jump into sets like this? Well, its partly our own fault.
Advice to collectors that used to be, “Buy the best you can afford,” has turned into “don’t buy anything less than Mint State.”

This perhaps was not done by conscious design, but we have gotten there anyway.
Novices with money come in and demand top grade pieces even when no such coins exist.

What to do? Well, Numismatic News published a piece by professional grader F. Michael Fazzari pointing out that About Uncirculated coins of a generation or so ago are now Mint State.

There is no profit to be made by telling would-be clients that what they want does not exist. So grading gets bent.

This has also occurred in the circulated grades for coins like the Buffalo nickel. The demand outruns supply and corners get cut over time.

So why not jump into an area where this trend matters less? Seated Liberty halves are scarce enough that if VF today becomes XF tomorrow, the coins will still be scarce and they still will have value.

Friday, September 11, 2009 2:10:25 PM (GMT Daylight Time, UTC+01:00)

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Thursday, September 10, 2009

New U.S. bullion coins; who cares?
Posted by Dave

When next year’s quarter program honoring national parks and other sites in 50 states and six other territorial jurisdictions of the United States begins, a parallel issue will also kick in. It is a series of coins you won’t be able to acquire at the local bank.

As each new quarter is released, the program also authorizes the striking of another version of the design on .999 fine silver blanks with diameters double the size of the old Morgan silver dollar.

The even troy weight of the new issue will be five ounces. At the present $16.28 price, the bullion value alone will be $81.40.

When issued by the U.S. Mint, even as a bullion coin there will be a mark-up. That will bring the cost up, but to what? $90, $100, $110?

I think the whole thing makes a joke of American coinage, but then the solons in Congress thought otherwise and tucked the provision into the quarter bill.

Will bullion investors flock to it?

Why would they do so? The American Eagle is so much more widely traded and recognizable.

There is a value to being familiar. Five new five-ounce coins a year runs roughshod over the concept.

It seems to me that the design changes are intended to try to make collectors think they need to buy them.

How many will be willing to spend $500 a year or more on such an item that can only be described as little better than a novelty?

It also pays to remember that silver could rise in price between now and the conclusion of the program in 2021.

On the other hand, if high cost daunts enough collectors, the next generation of hobbyists might have a very low mintage series to look at when the program concludes more than 11 years from now.

Thursday, September 10, 2009 2:17:59 PM (GMT Daylight Time, UTC+01:00)

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Wednesday, September 09, 2009

Chomping at the bit
Posted by Dave

This has been a year where many in the hobby have wanted something or expected something to happen only to have to wait far longer to see it fulfilled.

In the Internet Age, patience is no longer a virtue or even acceptable. Rapid fulfillment is the expectation and anything less grates.

So, we have been waiting for gold to touch the inevitable $1,000, but have been teased relentlessly but not seen much fulfillment. We haven’t had a close above $1,000 since February and yesterday disappointed yet again.

Then there are coin deliveries from the Mint. When the Ultra High Relief $20 went on sale in January, stated delivery times ballooned and then contracted. Some buyers were livid.

Many hobbyists waited for the release of the new Lincoln cent designs only to find that the banking system was broken and the usual pipeline from Mint to customer was going into reverse as people and businesses desperate for cash took fewer coins or even sent coins back to the Federal Reserve System. Only in the last few days have collectors in some parts of the country reported all three 2009 designs in their change.

The run on bullion American Eagle coins has kept the Mint to the production of just the one-ounce gold and silver version. The proof collector versions have been long awaited and are still expected in the fourth quarter.

I could cite other examples, but the pattern of 2009 has been clear. Waiting has been the name of the game. It does no good to report that collectors in the past waited far longer and the old hobby self-help efforts that used to kick in nowadays are viewed as either terrible impositions or part of some sinister plot to enrich dealers at the expense of the little guy.

Will collector patience ever return?

I guess we’ll have to wait for that too.

Wednesday, September 09, 2009 2:04:02 PM (GMT Daylight Time, UTC+01:00)

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Tuesday, September 08, 2009

Of gold and unbacked notes of the past
Posted by Dave

Look at gold. It has broken through $1,000 a troy ounce for the third time. This will bear watching going forward, but having just finished a holiday weekend, my mind has been looking backward rather than forward.

A family gathering took me to St. Paul, Minn. It was a great time to catch up.
I took a look at Prosperity Heights grade school that I started kindergarten at 49 years ago this month. It looks remarkably unchanged except for what appears to be a gymnasium addition.

I have many memories from the place that I left in the middle of second grade. I remember the whole school watching the liftoff of John Glenn, who then became the first American to orbit the earth in 1962. A number of televisions had been placed at various spots in the halls.

Hobby wise, I date my coin collecting days as starting after I left the Twin Cities, though I do have one numismatic item from that time.

My father thought $2 bills were a curiosity that I should be aware of. He gave me one. I thought it was so neat that I have kept it all these years, though once or twice I used it in my young years as collateral for a loan from my father in anticipation of future allowance income.

My father was an accountant who wanted me to be aware of how the world of finance worked.

The note is a Series 1953 Red Seal, which is another name for a United States Note. This series was a legacy of the Civil War when the Union was forced to issue paper money that had no backing of gold or silver.

The U.S. Note issuance came to be frozen at $346 million and was not finally abolished until the 1990s. By that time, it was irrelevant to the economy and its issuance was a fiction. $100 U.S. Notes were moved around from an unissued vault at Treasury to a vault that had the designation as “Issued.”

But in my childhood, you could find $2 and $5 U.S. Notes in change if you watched closely. I obtained a $5 years later when I was a paperboy.

It is perhaps appropriate to discuss unbacked paper money from former times as a counterpoint to the present unbacked notes and gold’s price reaching four digits.

Tuesday, September 08, 2009 2:01:41 PM (GMT Daylight Time, UTC+01:00)

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Friday, September 04, 2009

Will you win the Mint lottery?
Posted by Dave

Though specific release date and price are not yet known, the pending sale of the Lincoln Coin and Chronicles set in the middle of October looks like a certain sellout.

The set is limited to just 50,000 because that is the number of proof Lincoln
commemorative silver dollars that were set aside for inclusion. The commemorative dollar sold out rapidly early this year.

A proof set comprised of just the four Lincoln cents sold more than 66,000 in the first five days of sales. That seems to indicate a huge and ready reservoir of collector demand for the Lincoln Coin and Chronicles proof set.

The key difference will be price.

The four-cent proof set is just $7.95. The set with the silver commemorative will be priced somewhere in the neighborhood of $50.

Will the much higher price deter many buyers?

Ordinarily it might, but offsetting that is the likelihood that many buyers will view the set as a sure winner on the secondary market. The proof dollar is currently trading on the secondary wholesale market over $50.

Of course, the Mint could slow things down a bit by putting a shockingly high price on the set. I would expect this not to be the case, though.

A sellout will bring excitement to the hobby. It will also bring complaints. Some collectors, even those who know the situation ahead of time, will gripe about not being able to buy a set if there is a crush of demand that outnumbers the 50,000 maximum sales number.

It makes me wonder why there aren’t more complaints from the public every time someone buys a lottery ticket that fails to win.

Friday, September 04, 2009 2:02:15 PM (GMT Daylight Time, UTC+01:00)

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Thursday, September 03, 2009

When hot market premium disappears
Posted by Dave

Gold coin prices only go up, right?

This is a good day for a timely reminder that they can and do go down.

I had an exchange of e-mails from a longtime reader of Numismatic News yesterday.

He wrote: “What is happening w/the price of gold at the coin shows? It shows that the price is up but the dealers don’t want to pay those prices. I took a $1,200 loss on a double eagle I recently sold at the Florence show here in Oregon over the price I was offered last year at this time when gold was down.

I responded: “Supplies of gold coins were so tight last year because of investor demand that premiums on common date collector gold coins were bid up. You did not tell me the date, but I surmise by the price action that it must be a common date.”

The reader was philosophical about it, which shows a long-term outlook on things.

He wrote back to me: “The double eagle was a 1909-S, MS-63 grade. It was graded by a local dealer whom everyone knows and trusts. Last September I turned down an offer of $1,850 for it as I wanted $2,000. Before this last show I noticed that the price had skyrocketed to $2,200 for that coin and I was certain I would get the $2,000 this time, but to no avail. I guess the adage ‘you snooze, you lose’ is more than true in this case.”

It is important to remember that premiums on gold coins are not fixed. They rise and fall with the market. When buyers can’t get enough of the coins, they rise. When the numbers of sellers increases, premiums fall.

The 1909-S Saint-Gaudens $20 is one of the most common dates out there. Its price except at the ultra high grade end always returns to a smidge above melt value.

Fortunately for the writer, one coin is a lesson. I would hate to think of the outcome had this involved multiple coins representing his retirement funds.

Thursday, September 03, 2009 1:59:19 PM (GMT Daylight Time, UTC+01:00)

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Wednesday, September 02, 2009

Last hurrah or new dawn?
Posted by Dave

In the first eight months of 2009, the Mint has struck 18,764,500 silver American Eagle coins. That doesn’t seem like a large number to a generation of collectors who came to hobby maturity in the period after the Coinage Act of 1965, when mintages in tens of billions became the norm.

It is instructive from time to time to get perspective. I was looking through the mintage figures for the Morgan dollars. There are only seven pieces by date and mintmark that have higher individual mintages.

Of those, only the 44,690,000 1921 Philadelphia Morgan total seems unlikely to be surpassed by the time the final 2009 American Eagles are struck and sold to eager bullion investors.

That is interesting. The Mint’s current output is in the same league as the Morgan dollar from its heyday. Output demand is also for the same reason: Americans are uncertain as to what properly should be considered money and what shouldn’t be.

Prior to 1900 when the United States formally adopted the gold standard, silver was considered a monetary metal, albeit an inferior one to gold.

Farmers and other debtors liked its relative plentifulness and looked to the silver dollar and its paper money cousin, the Silver Certificate, to help ease the burdens of their debts.

The New York monied interests looked in horror on silver because at the time it signified expansion of the currency – another name for inflation.

They wanted their repayment of principal and interest in good, solid, uninflated gold.

The monied interests basically got their way, but not before a huge outpouring of Morgan dollars built up the supply of dollar coins. It was no accident that production basically stopped after 1904. Silver had been demoted officially and demand for silver dollars declined with its change in status.

The large mintages of 1921 did not signify any return of status to the silver dollar but an effort to replace rapidly 270 million that were melted in 1918. But even then, it took until 1928 to meet that total.

The American Eagle, like the Morgan dollar, is a product of a generation that is trying to figure out what it wants from money.

Will American Eagles be considered the last hurrah for coinage of precious metals, or the first step taken in 1986 to return to a precious metal based currency?

Wednesday, September 02, 2009 2:56:56 PM (GMT Daylight Time, UTC+01:00)

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Tuesday, September 01, 2009

Sit up straight or you aren't good as gold
Posted by Dave

Yesterday, the U.S. Mint raised the ceiling on the number of Ultra High Relief Saint-Gaudens $20 gold pieces that can be purchased per household from 10 to 25.

The limit had only just been raised from one coin to 10 on July 27. This first action after six months of sales where the limit was just one coin occurred after the Mint had given every collector who wanted one the chance to buy one.

This policy assured the widest possible distribution and certainly collectors did not complain of lack of fairness in distribution.

But collectors being collectors hit upon something else to complain about: the lack of a requirement to sign for the orders that were shipped January through early March. The Mint changed delivery policy in March.

No coins were ever reported by my readers as being stolen as the result of the earlier delivery method, so the complaints to the Mint probably grated a little.

Mint staff probably felt like a teenager being told by an elderly aunt to not talk with their mouth full and to sit up straight at the table. The advice is good and correct, but not conducive to family bonding.

Tuesday, September 01, 2009 2:05:01 PM (GMT Daylight Time, UTC+01:00)

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