APMEX misbehavin? Price Gouging and America the Beautiful Silver Bullion Coins

Bullion wars have heated up this past weekend as the United States Mint attempted to launch its America the Beautiful Silver Bullion program.  The five-ounce monsters were expected to become available through the mint's authorized distributors.  Since the mintages were low (33,000 per coin design), the mint became concerned about the potential for price gouging.  The mint marked up each coin by a mere $9.75.  The following warning letter was sent to the distributors:

Because the United States Mint was only able to produce and make available a limited quantity of each these silver bullion coins in the relatively short period since the authorizing legislation was approved, we anticipate that demand for these coins will be significant. Accordingly, as Authorized Purchasers of the United States Mint, we want to remind you of your commitment, under your Authorized Purchaser Agreement, “to maintain buy/sell premiums for the United States gold and silver bullion coins with as narrow a spread between buy and sell prices as prudent business judgment permits. These premiums are to be competitive with those charged for other bullion coins, considering prevailing market conditions."

This was wishful thinking on the part of the mint.  American Precious Metals Exchange (APMEX) sold sets of five America the Beautiful bullion coins at  $1395 per set.  This represents a markup of approximately $130 per coin.  After receiving numerous complaints, the mint put the kabash on APMEX's order.  The coins are now on hold.

Since the mint had to buy a German press for the minting of the coins, they (and, therefore, the taxpayers) are probably losing money with each coin sold.  Meanwhile, APMEX and the other distributors stand to make a fortune. The mint states its goal of "ensuring that the coins will be available, accessible, and affordable to members of the public."  By selling all of the coins to a small handful of corporations, they have guaranteed that this will not happen.  The best hope is that the mint will sell bullion directly to the public, or at least to Peter Planchet.

Low Ball Coin Collecting

One of the newest fads is "low ball" coin collecting.  The objective here is to collect coins in the worst possible grades. This fad is sure to make the coin grading services happy. While many coins in high grades are sent to the grading services, the lower grade coins generally are not.  I am now seeing ads for low-ball coins on such places as ebay. Before you laugh too hard, the Bicentennial dollar pictured (graded as AG3 by PCGS) is on sale at APMEX for $99.  If you had the same coin in about uncirculated, you would have a difficult time fetching $1.50. APMEX brags that only three coins have been certified in this grade with only two lower.  Yes, the race to won the worst is on!

If you really want a low ball coin, simply take a coin and rub it continuously against your oriental rug.  In about a week, both the coin and the rug will be in fair condition.

Why the artificial desire to have coins in low grades?  Dr. Planchet does not know the answer to this one.

75th Anniversary of the Old Spanish Trail Commemorative Half

This year marks the 75th anniversary of one of the most bizarre coin designs in US history.  I speak, of course, about the 1935 Old Spanish Trail Commemorative half dollar.  

The coin celebrates the 400th anniversary of Alvar Nunez Cabeza de Vaca leading an expedition to explore the gulf coast.    In Spanish, “Cabeza de Vaca” means “head of a cow.”  Instead of a portrait of Mr. De Vaca, the mint put a portrait of a cow's head.  For more information about this coins, please go to peterplanchet.com/commemoratives/old_spanish_trail.html 

The fundamental flaw in the new shield cent

The new reverse design of the Lincoln cent contains the same fundamental flaw as the 1913 buffalo nickel .  The words "One Cent" are the highest point on the coin.  This means they will wear off the fastest, making the coin's denomination unknown.  The original buffalo nickel had the words"five cents" as the highest point on the reverse of the coin.  The problem was corrected during the first year of mintage.

I don't expect the Shield cent's problem to be corrected.  Wear on the words "One cent" will be prevented by the fact that cents see little circulation.  When people get them in change, they throw them in drawers and forget about them.  If they circulated as much as quarters, the denomination would quickly wear off.

Perhaps the nature of "One Cent" is an admission by the mint that the cent is a coin that has outlived its usefulness.

Pondering a bicentennial half dollar from change at a fair

This weekend I traveled to the town of Bloomsburg Pennsylvania to visit their annual fair.  Eschewing the customary bloomin’ onions and gastronomical disasters such as deep fried Pop tarts, I indulged in Thai foods including coconut lemongrass soup, squid in hot, sweet sauce, and Pad Thai.  For change, I received a bicentennial half dollar, which appeared to my well-trained eye to be still in the mint state (probable grade: MS60). 

Since over half a billion bicentennial halves were produced, getting one in change should be nothing unusual.  It was however, the first half dollar I have received in years.  (I still haven’t received a presidential dollar in change other than from a vending machine -- but that’s a ramble for another day).  Kennedy half dollars are no longer made for circulation -- but instead, only appear in uncirculated and proof sets .  The value of the US dollar has deflated since the 1970’s.  Therefore, we might expect that there would be more need for higher denomination coins such as the half dollar and dollar.     Instead, the largest denomination that seems to circulate is the quarter.  I pondered this while I ate my soup.  To me, this is counterintuitive.  I welcome your possible explanations and hypotheses.

A story to go with the 1856 O Double Eagle

Often rarity is not enough to drive a coin’s value. The most valuable coins are all associated with great stories. For example, the 1913 liberty head nickel was associated with mint employee, Samuel Brown secretly minting the coin and then placing an ad to buy the nickels he already owned. There’s the story of Hallie Daggett, who was given a rare 1894 S dime and promptly spent it on ice cream. In both cases, the story adds to the mystique of the coin.

The latest coin to be promoted with a story is an 1856 O double eagle, which is currently being auctioned by Heritage Auctions. At the time of this writing, the high bid is $280,000. According to the story, a Kentucky farmer found the coin in circulation. When he died in 1923, it passed to his heirs who had no knowledge of the coin’s rarity. It was only in 2010, that the coin was further examined and found to be the key to the Liberty Head double Eagle series. Only 2,250 double eagles were minted in New Orleans in 1856, and only 24 are known to survive today. The Liberty Head series has never drawn the attention of modern collectors the way the St. Gaudens series has. Therefore, the coins need some hype. The Kentucky farmer story may not be the best story in numismatics, but it is enough to add to its value.

Mike Castle, State quarter sponsor, defeated in Delaware primary

Mike Castle, the primary sponsor of the bills that produced the fifty state quarters  and the America the beautiful quarters has lost the Republican primary for US senate in Delaware.  He also sponsored the 2009 Lincoln cent coins and the presidential dollar  coins.

What were the Delaware voters trying to say? Castle was defeated by Christine O’Donnell, a darling of the modern tea party movement.  Some Republicans had described Castle as a “Republican in name only (RINO) and “too liberal.”  Although coins were never explicitly mentioned in the campaign, my guess is that they were on the Delaware voters’ minds (after all, I always keep coin policy in mind when I vote).  Do conservative voters wish to go back to the eagle-back quarter and the wheat cent ?  Are they resistant to coin designs that change five times a year?  The State quarters series raised 6.2 billion dollars for the US government. Perhaps this is seen as some kind of tax.

We have begun the process of getting 56 new reverse designs to our Washington quarter as part of the America The Beautiful quarter series.  Perhaps the voters have seen enough.

New platinum coins on sale August 12

It’s August, and that means it’s time for harvesting the corn and buying our platinum.  On August 12 at high noon (Eastern Daylight time), The one ounce proof platinum coins will go on sale (online at usmint.gov).  The 2010 platinum coin is the second in the preamble series and has the theme “to establish justice.”  The price of the coin is based on the price of platinum.  At the time of this composition, platinum is at $1555 an ounce.  Based on the mint’s sliding price scale, the proof platinum coin would sell for $1892, representing a $337 premium over the price of the metal. Because of the mint’s binning method, this price will hold if platinum is between $1550 and $1649.99.  Should platinum go down a mere $6 to $1549, the $100 proof coin would sell for $1792.

It could be worthwhile to wait, except that the coin could sell out.  The 2009 coin was limited to 8,000 and sold out within days.  They currently trade on ebay for about $2500.    The 2010 coin will have a mintage of 10,000, essentially guaranteeing that’s its value will be somewhat under that of its 2009 counterpart. 

Tony Weiner, Glenn Beck, and gold

Gold has the center of a dispute between radio talk show host Glenn Beck and New York Representative Anthony Weiner.  Weiner complained that Beck uses his radio show to promote fear of the imminent collapse of the US dollar due to future inflation.  Beck himself claims to have a good percentage of his assets in gold bullion.  where should Beck's listeners go to convert their assets into gold? coincidently, Beck’s radio show is sponsored by Goldline.

Weiner has complained about Goldline for its “astronomical markups” on gold coins. 

Goldline is now responding with information on their website stating that they have very few complaints from customers (fewer than 1/10 of 1%).  Goldline features many bullion and numismatic coins ranging from the classic St. Gaudens double eagles to the modern American Eagle and American buffalo gold coins.  As I reviewed Goldline’s website, I found one thing missing: the prices for their products. Mexican 50 peso gold coins or a modern gold buffalos are fairly standard products available from a multitude of sources.  The prices are expected to vary day to day as the price of gold fluctuates. Instead of listing prices, potential customers are asked to call a number.  Other gold businesses such as Blanchard (BlanchardOnline.com) post prices for their products.  For those electing to invest in gold, comparison shopping is critical.

Health Care Bill Gives Gold Dealers High Blood Pressure

Coin dealers are up in arms against a new tax reporting regulation, which will go into effect starting Jan 1, 2012.  The 1099 form, which we get for information on stock and interest earnings will now be used for any purchase of goods and services that exceed $600 per year.  If you want to sell your 1921 Walking liberty half dollar for $700 to the local coin dealer, you will have to identify yourself with name, address, and social security number.  The dealer will have to mail you a 1099 form, with a copy to the IRS.  You will then need to pay your capital gains tax on the coin, which of course you were going to do anyway.  Arguing that income for the sale of coins is underreported, the government expects to collect an additional 17 billion dollars in taxes over ten years.

Most concerned about the bill are the small coin and bullion businesses.  With the sale of a single ounce of gold easily exceeding the reporting threshold, many small businesses which buy gold primarily from individual citizens may be required to submit thousands of 1099 forms each year.

Where does this new regulation come from?

Would you believe that it is in the Patient Protection and Affordable Health Care Act (more commonly known as the “health care bill.” Although the bill is designed to improve the health care of Americans, it is already giving the gold dealers high blood pressure.

America The Beautiful Silver Bullion Coins? Where the heck are they?

The law authorizing the production of the new America the Beautiful quarters also authorizes the min  to strike  .999 fine silver coins that weigh 5 ounces and have a 3 inch diameter.  We are now half way through 2010 and the mint has not yet produced one of these enormous five-ouncers.  This is one of those laws that is easier to write than to implement.  The first problem is that there are no five ounce silver planchets -- they have to be produced.  The second problem is that rolling the silver out to a diameter of three inches leaves the mint with a thin blank to work with.  Congress added to the law that the mint was required to put edge lettering on the coin.  The problem is that the coins are so thin, they crumple.  The mint has ordered a new press from Germany to produce these coins.  I wish the mint the best of luck.  Perhaps in the future,m the Congress should specify the weight, but let the mint come up with a reasonable diameter and production method.

It's a Girl!

The Boy Scouts of America Commemorative silver dollar has been released by the mint.  Many Boy Scouts were surprised to see that the most prominent figure on the obverse is a girl! Girls are allowed on the  Venturer program, but are not permitted in the Boy Scouts themselves.

The law authorizing the production of the Boy Scout commemorative dollar states that the coin design must be emblematic of the 100 year history of the organization. Some web bloggers have complained that the presence of a girl and the absence of Caucasian boys on the coin is inconsistent with the law.

For more on information on the Boy Scout coin, please see my webpage at www.peterplanchet.com/boy_scout_dollar.html

Mint Rolls out the National Park Quarters

The mint unveiled the first five design of the "America the Beautiful" quarter series.  In my opinion, the designs are much better than the "state quarters," The State Quarter series had no coherent design.  Some showed maps of states, others showed unrelated state mementos, while one design featured a hanging  astronaut (sorry Ohio).

The first five quarters in the national park series are all scenic.  Note the consistency in the designs.  They will look good together as a collection.  They feature Hot Springs National Park in Arkansas; Yellowstone National Park in Wyoming; Yosemite National Park in California, Grand Canyon National Park in Arizona; and Mount National Forest in Oregon.

US mint Trying to release more 2001 Sacagewea Dollars

As we begin 2010, I read about the US mint releasing more of its 2001 Sacagewea dollars.  I assumed it was simple dyslexia.  But no, the mint has still not been able to place all of the 2001 coins into circulation.  The coins are being offered under the mint’s "circulating $1 coin direct ship program." I hate to sound like a broken record, but the problem is that Americans do not like dollar coins.  And yet the mint continues to make more.  The 2001’s might be an especially tough sell, since there is likely to be more interest in the presidential dollars or the newer native American series.

Holy Nelly -- 1913 Liberty Head Nickel sells for $3,737,500

Heritage Auctions has sold a 1913 Liberty Head Nickel at an Orlando auction for $3,737,500. The price includes the 15% buyer’s premium, which gives Heritage auctions a $560,625 commission. Holy Nelly! That’s not bad for auctioning a single coin.

Not part of an authorized mint issue, the coin was probably made by a mint employee. The prime suspect was Samuel Brown, who offered five such nickels for sale in 1920. For more information on the liberty head nickel story, please see my web page at www.peterplanchet.com/libertyheadnickels
or read the book, Million Dollar Nickels: Mysteries of the 1913 Liberty Head Nickels Revealed.
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The coin was featured on the Hawaii Five O episode entitled “The $100,000 nickel. It is episode 136 from Hawaii Five-O: Sixth Season
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