What’s the most important coin in your life? No, I am not asking what is the most expensive coin that you own, although I suppose your answer to the first question could be the second.

I have been working on a holiday gift guide insert for Numismatic News and quite naturally I hope that some readers will plan on giving coins for Christmas.

Gifts of this kind can awaken an interest in the hobby, but the giver probably doesn’t know what specific coin might do the trick.

For me, the coin that got it all started was a 1909 Lincoln cent. There is nothing special about it. It had no collector value when I found it in 1963, but it was the spark that set the blaze of my numismatic interest.

I probably would not have even looked at the date on the cent except I was going through every cent in the house as the result of a comic book ad that I had read that promised to pay good money for certain cents dated before 1940.

I wanted in on that action.

I might have been 8, but even then I knew money made the world go around and I wanted to go along for the ride.

Well, I found that cent. My mother noticed my sudden interest in coins and before you know it I was in a hobby shop buying a Lincoln cent album. She didn’t even wait for Christmas. That was fortunate for me. It was the perfect gift at the perfect time.

I still have that cent and I consider it to be the most important coin I own, though it has no significance for anyone but me.

How do you define the most important coin that you own?

The Mint issued a memo announcing availability of fractional platinum American Eagles and the tenth-ounce gold American Eagle. See below:


October 24, 2008
 
MEMORANDUM TO ALL AMERICAN EAGLE BULLION COIN AUTHORIZED PURCHASERS
 
SUBJECT:       2008–Dated Bullion Coin Products
 
On Monday, October 27, 2008, the United States Mint will resume taking orders for 2008-dated American Eagle One-Tenth Ounce Gold Bullion Coins and all sizes of American Eagle Platinum Bullion Coins.
 
Final inventory for these bullion coins is based on current in-house blank supplies and some supplies are very limited.  The United States Mint will allocate these remaining coins among the Authorized Purchasers (APs).
 
The United States Mint will use a slight modification of its standard allocation process, which is as follows:
 
Monday morning, the inventory available for sale that week will be divided into two equal pools for each bullion coin product.
 
The first pool for each bullion coin product will be allocated equally to all active American Eagle Gold One-Tenth Ounce and American Eagle Platinum APs respectively (active APs are those which have purchased American Eagle Gold One-Tenth Ounce or American Eagle Platinum Bullion Coins in the past three fiscal years).

The second pool will be allocated based on each AP’s sales performance for each bullion coin product in the last three fiscal years (e.g., an AP who purchased 30% of all American Eagle Gold One-Tenth Ounce Coins during this time will be allocated 30% of this second pool). 

Each AP will be advised via fax Monday morning (or if a government holiday, Tuesday morning) of its allocation, and will have until 3 p.m. on the following Friday to place an order for its allocated coins.

Any unordered coins remaining after 3 p.m. Friday will be put back into the pool for allocation the following Monday only until coin inventory for each product is depleted.

Included in the communication with each AP’s initial allocation on October 27 will be its allocation percentage based on sales performance.
 
Please note: The inventory for the American Eagle Platinum One-Tenth Ounce Bullion Coins is very limited and will be allocated to the Authorized Purchasers with the highest sales performances for the past three fiscal years for this product.
 
Available inventory will remain on allocation each week for the American Eagle Gold One Ounce and American Eagle Silver Bullion Coins.  
 
We will keep you informed when more information becomes available for the American Buffalo Bullion Coins.
 
Thank you for your patience and your continued support of the United States Mint Bullion Coin Program.
 
If you have any questions regarding this process, please contact me at (202) 354-7519.
 

Are you a hands-on coin collector? Do you get the urge from time to time to get your hands dirty looking at coins – actually holding them, even smelling them?

There are fewer and fewer opportunities to do that today. So much value is embedded in third-party opinions that the very idea of looking at a coin in a raw state now often seems like a blow to good numismatic order.

However, for collectors to be truly collectors, you need to get in there and get your hands dirty. How many people who are collectors actually know the difference between genuine surfaces and coins that have been altered in some fashion? The only way to learn the difference is to make the physical comparisons.

Even bullion coin buyers seem to be subject to the same condition mania. They don’t want to touch the pieces. It should make no difference to the value of a coin bought strictly as bullion as to what condition of uncirculated it might grade,  or whether it has toned a little or whether it is not the current year.

None of that should make a difference, but it does. Ten ounces of gold are still 10 ounces of gold even when they aren’t quite as nice looking as brand new pieces. Buyers seem to want it current or pretty. They pay through the nose for the privilege of obtaining just-off-the-coining-press issues like they would for the latest convertible or iPod.

Those who like to get their hands dirty will benefit if they trade the nice looking stuff that they might have that commands a high premium for the less pristine. In other words, if you have nice 2008 American Eagles, trade them for lesser pieces. You will get more ounces of gold or silver for your long-term holding and you will be doing a good deed by giving someone else who wants the very best in the current market the opportunity to pay through the nose to get it.

Gold’s run up to record prices earlier this year invited many comparisons to its prior record run in 1980. For me it was a chance to walk down memory lane as much as it was a chance to witness another chapter of numismatic and economic history being written day by day.

Another name just jumped out of 1980. Yesterday’s Wall Street Journal reported that Paul Volcker is a key economic advisor to the Barack Obama presidential campaign. It proclaimed this on the front page. This is one bit of nostalgia owners of gold might just want to pay close attention to.

Volcker as chairman of the board of governors of the Federal Reserve played what was probably the greatest role in bringing down the price of gold from its $850 high in January 1980 and setting it on a downward path that knocked two-thirds off its price by the bottom of the market in 2001.

There is still an election to be held and official appointments to be made, but the return of Volcker to the economic stage even in a diminished capacity because of his advanced age might be grounds for gold prognosticators to take the “1” off their $1,500 price targets.

Skeptical? Gold owners laughed at him once. They thought gold’s upward ascent was unbreakable and the dollar’s weakness assured. Then they had to wait 28 years for a new market high to be reached.

The coin market laughed at him too for a time. We lived in our version of a fool’s paradise for approximately three months after bullion’s peak until the Central States convention in Lincoln, Neb., in the spring of 1980. That’s when numismatic prices decided they were indeed influenced by gold and other elements in the real economy and buckled. I’ve never been back there, neither has another major regional show.

Some dealers never recovered their former prosperity. They were stuck with overpriced inventory. Some collectors were so disillusioned they left their hobby and never came back.

Such is the power of a single name in my memory. To me it is sufficient grounds to very carefully monitor this new development.

It is still too early to know the final results of our online poll question, “Did you collect state quarters for the full 10 years?” Those who have done so outnumber those who say they have not, but that seems to me to be less the point than many comments that have arrived here in my e-mail that have referred to family members involved and the fun that has been experienced by collecting the coins together.

Coin collecting most often is a solitary pursuit. The image of a middle-aged man alone in an office/study/den has been well earned by the hobby over the years. State quarters have helped push that aside a bit, kind of like the grandkids having pushed the door open together and rushed in.

That does not mean there haven’t always been parents and children involved in coin collecting, but it seems to me that family connections have had a far greater role in the context of collecting state quarters than in just about any other aspect of numismatics.

I appreciate readers sharing their memories with me. They are great memories. I hope the writers continue to make many more.

When the numismatic history of state quarters is ultimately written, it should be pointed out what a great success it was in terms to getting family members to undertake collecting them together. State quarters have broadened the collecting base and added an element of togetherness to an often atomistic undertaking.

Most importantly, the collecting of state quarters by families together have planted seeds that will sprout 20, 30 or 40 years from now when the youngsters come back into the field that was so enjoyable to them when they were young.

We already seem to be succumbing to the seasonal bugs here in Iola. I was flat on my back most of Wednesday. I worked most of Thursday and on Friday further rest seemed to be the wisest course, so I spent less than two hours in the office and then went home

I know I am not the only one to have been hit early. There are the sounds of coughs and sniffles around the office.

I assume what I have is the flu though it involved my digestion very little. No symptom seemed odd, out of sequence or unusual. It just seemed to be the same illness I have had before with all of its stages a bit stronger and harder to endure.

Illness has a useful purpose. It puts things in perspective. It emphasizes the little things in life that you take for granted and then realize just how important they are in making the rest of it possible.

Sure, I followed gold as it declined, but I didn’t care quite as much as I might have. The next bowl of soup or nap seemed to take priority.

One thing though, the recent price gyrations seem to call for traffic speed limit signs between $800 a troy ounce and $900 for gold because the metal seems to go through those levels at reckless speeds in both directions.

I hope now that I have endured the illness that I can stay healthy for the rest of the lengthy winter to come and that I will care about gold and coins and all related subjects as much as I usually do.

I wish a speedy recovery to everyone else who will be hit with this and other seasonal illnesses. I hope my experience is unsual rather than an indicator that worse is set to come for everybody.

Name two currencies that exist today that also existed in the 1790s. If you named the British pound and the U.S. dollar, you would be right.

Name a third? I can’t.

What makes the two currencies so resilient?

The first Treasury secretary Alexander Hamilton modeled the dollar on the financial institutions of the British pound. He was reviled in certain quarters as a monarchist and his personal arrogance certainly didn’t help dispel the sense of unease that he caused.

George Washington trusted Hamilton completely. As a result, the durable qualities of our financial system, which are being sorely tested, were built into it from the beginning.

What made the pound the model? Well, it was successful at the time the dollar was born. Founders of any institution like the U.S. Treasury do not look for failures to copy.

Hamilton picked the dollar as the unit based on the Spanish Empire’s 8-reales silver coin. The silver dollar size coin was in circulation worldwide and most American merchants used it.

From there he wanted a national bank, the Bank of the United States. This was based on the Bank of England, which was founded in 1694 and it made Britain a huge financial power.

How did it do so? Well, it borrowed money and unlike many dynasties in Europe, it actually paid the money back. So confident were people in it that Bank of England securities, debts in other words, were used by the holders as collateral for other loans. Modern banking was born.

Even today we see many financial institutions buying up U.S. Treasury bills, notes and bonds and fleeing other securities. Why? They know they will get their money back, a trust that goes back to Hamilton who learned it from studying the Bank of England.

Both currencies of his time continue to survive. The world looks to the United States and Great Britain to solve the present crisis.

What happens between now and that point I do not know, but I do know that at the end of the period the pound and the dollar will still exist while certain other currencies will not. It is all a matter of trust established by Alexander Hamilton and not ever lost since.

As I drove home last night, I saw that the local gasoline stations had dropped their price during the day by 10 cents a gallon to $3.399. I felt good.

It is sort of amazing. At a time the world’s financial markets seem so disordered, a little thing can stand out.

The inflationary fever does seem to have broken. It is not just the price of oil that is dropping, but the prices of other things that we collectors pay attention to.

I checked the Coinflation Web site (www.coinflation.com)this morning and I see that the copper and nickel in the American five-cent coin has fallen in value to just under 4 cents. That’s a far cry from its nearly 10 cents peak in 2007. The price of nickel alone has fallen by almost three-quarters.

The copper-coated zinc cent has metallic value of right about four-tenths of one cent. The Mint might even be making a profit on them again.

Losses on cent and nickel production were offset by the profits on the other denominations, especially the Presidential dollars. Perhaps we should ask the Treasury to deliver its bank bailout funds in the form of Presidential dollars.

People who fear bankruptcy might not even complain about getting them.

The Mint has given up trying to maintain supplies of all of its bullion coins. It will focus primarily now on the one-ounce American Eagle gold and silver coins. The memo below outlines what the Mint plans to do.

October 6, 2008
 
MEMORANDUM TO ALL AMERICAN EAGLE AND AMERICAN BUFFALO AUTHORIZED PURCHASERS
 
SUBJECT:     2008-Dated Bullion Products
 
Due to the extreme fluctuating market conditions for 2008, as well as current market conditions, gold and silver demand is unprecedented and the demand for platinum is unusually high.
 
The United States Mint has worked diligently to attempt to meet demand, however, blank supplies are very limited and it is necessary for the United States Mint to focus remaining  bullion production primarily on American Eagle Gold One Ounce and Silver One Ounce Coins.  
 
For the remainder of 2008 bullion inventory, the following will apply:
 
American Eagle Gold Bullion Coins
 
One Ounce Coins will remain on allocation each week.  Allocation amounts are based on available quality blanks each week.
 
One Half Ounce Coins: Inventory was depleted last week. No more coins will be produced for 2008.
 
One Quarter Ounce Coins: Inventory was depleted last week. No more coins will be produced for 2008.
 
One Tenth Ounce Coins: Inventory was depleted last week. More coins will be produced based on current blank supplies, however, once that remaining inventory is depleted, no more coins will be produced for 2008. You will be notified when these are available for sale.
 
 
American Buffalo One Ounce Bullion Coins
 
Inventory was depleted and sales were suspended in late September. More coins will be produced based on current blank supplies, however, once that remaining inventory is depleted, no more coins will be produced for 2008. You will be notified when these are available for sale.
 
American Eagle Silver Once Ounce Bullion Coins
 
American Eagle Silver One Ounce Coins will remain on allocation each week.  Allocation amounts are based on available quality blanks each week.
 
American Eagle Platinum Bullion Coins
 
All denominations were depleted last week. More coins will be produced based on current blank supplies, however, once that remaining inventory is depleted, no more coins will be produced for 2008. You will be notified when these are available for sale.
 
We will keep you updated as more information becomes available.  
 

I checked precious metals prices first thing after I came in this morning. It is a habit acquired in recent months due to the wild fluctuations.

In the present environment thinking about where prices might be in a month is almost like long-term planning. However, I was temporarily brought back to the existence of the real long term by a short note hand written on a sheet from a legal pad.

The writer of the note sent to me by snail mail wanted to know what the price of gold and silver would be in 15 years – not an investment forecast, you understand – just an estimate of what I think.

I laughed after I had read it.

Yes, I know that the 15-year period will pass and gold and silver will be trading at some future price, but there is no way I can know the rest.

I thought of John Kamin, editor of the Forecaster investment newsletter. He was interviewed by colleague Debbie Bradley this week.

He has made a career of forecasting the future, but his methodology is straightforward enough. He extrapolates on trends to the far distant future.

It is one thing to know that inflation is running four percent or five percent a year. It another thing to say this is the price of a house in the year 2050 at that rate of inflation.

It is one thing to say that there are 300 million Americans. It is another to extend the growth trend to 2050 to find that there will be 450 million of us.

Obviously, with more people to chase precious metals and inflation continuing through future years, the bias to prices is always upwards.

However, this bias does not prevent falling into holes now and again. Gold was $835 a troy ounce as I write this. If I use Jan. 21, 1980, as the base, I can truthfully write that gold is lower after almost 29 years. If I move the base to just a couple of months later, I can truthfully write that gold has doubled in that span.

Or, I can look at the bottom in 2001 and truthfully write that gold has more than tripled from the $255 low in just seven years.

Which point do I use to extend this 15 years?

If I am trying to sell you gold, I know which one I would pick. If I am trying to caution against a headstrong investment plunge, I would pick another.

Either way, the facts I use will be true, but what is the true picture?