Buzz with Dave Harper - Thursday, July 19, 2007

Proof sets went on sale yesterday. I wonder if this is considered a rite of passage as it was when I ordered my first proof set at the age of 13.

There are similarities and differences. I ordered the 1969 proof set by mail just before the Nov. 1, 1968, opening of sales. Nowadays online and telephone orders are quicker and more convenient.

The 1969 set was still a novelty. Proof sets had been abolished for 1965-1967 and only in 1968 did they make a comeback. They took a new form. They were in a rigid plastic holder rather than the polyester film packet. The coins had mintmarks. This was only the second year where that was true. They also had a high price: $5. Collectors have long memories and they were still comparing them to the $2.10 issue price of 1964.

There was also a speculative component. The 1968 proof set was doing rather well on the secondary market at the time, so would-be buyers sensed potential profits.

There are new elements to this year’s set, too. It is the first to include the four Presidential dollars. It also includes the Sacagawea dollar, five state quarters, a half dollar, dime, nickel and cent, making 14 coins in all. That’s a big set. It takes three plastic holders to contain them all. The 1969 set was just one.

The price is also pretty big, though I have not heard anyone complain yet: $26.95.

Put in perspective, that price is almost identical to the 1969 set in inflation-adjusted terms. You have to divide current prices by roughly 5 to get an approximation.

With the 1969 set, the issue price was 5.49 times the 91 cents face value. The 2007 set is 3.90 times the $6.91 face value. By this measure, the current proof set is actually cheaper than the 1969 set.

All of these thoughts and more can go through the heads of potential buyers. The new coins add novelty. The fact the Presidential dollars are in the first year of issue add the speculative component. I wonder, though, if that same sense of anticipation grips the buyer as he places his order? I hope so. That is a part of what has kept me in coins for the almost 39 years since my first proof order was mailed.

7/20/2007 9:03:23 AM (Eastern Daylight Time, UTC-04:00)

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Thursday, July 19, 2007

No snooze alarm for us
Posted by Dave

Wake up. Summer is about to end. The seasonal slowdown where dealers can take month-long vacations and not miss much business is winding up.

At 1 p.m. the July 31 issue of Numismatic News goes off to the printer in Shawano (electronically, of course) and my attention turns to the Aug. 7 issue, which is the special issue for the American Numismatic Association summer convention called the World’s Fair of Money.

This issue of Numismatic News and this convention, which will be held Aug. 8-12 in Milwaukee, Wis., traditionally signal the beginning of the seasonal autumn pickup in business.

Adding to the fun, today is the deadline for the receipt of ballots by the accounting firm in the ANA election. BiggsKofford of Colorado Springs, Colo., then has until July 24 to communicate the results to the ANA president and executive director. They in turn inform the current board and all of the candidates.

If the plan holds, I will find out the results no later than Wednesday morning, July 25. That is in time for the front page of the ANA issue, which is where I will put the story. The results will also be posted here on my blog.

It has been an interesting electoral contest. If you want to know the ANA election results, let’s get together Wednesday afternoon right here. It could be sooner, but remember Colorado time is an hour earlier than Wisconsin time.

7/19/2007 9:00:22 AM (Eastern Daylight Time, UTC-04:00)

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Wednesday, July 18, 2007

We can all escape
Posted by Dave

I had a letter on Monday from a fellow who wrote that he had just checked himself into a nursing home. He is 72. He began reading Numismatic News and he found it both interesting and an escape from his daily concerns.

I am both sad and happy to get such a letter. I am sad because the writer is in a physical situation that I cannot help with. I am happy that he finds Numismatic News to be a pathway to escape from his daily situation and to offer a constructive diversion.

The diversion part is something I can help with. We collectors find the hobby so intellectually stimulating and the search for coins so challenging that it does indeed help us escape for a while from our daily cares.

People with hobbies benefit in all aspects of their lives from this effect. The benefits can take many forms. If it gets the collector’s mind off worries, or stress, it probably lowers his or her blood pressure and improves his or her heath and disposition.

If a collector makes astute purchases, it can aid him financially.

If he happens to learn something from history, his mind is improved and he becomes a better all-around person.

Coin collecting is not a cure all, but it does have the power to make life better. It offers goals that each collector alone sets for himself. Success is defined as each collector defines it. Satisfaction comes from having control of something and constructively utilizing the responsibility.

I wrote a note to the letter writer thanking him for his kind words and answering his question. Oh yes, he did have a question. If that doesn’t make him a typical collector, I don’t know what does.

7/18/2007 9:00:04 AM (Eastern Daylight Time, UTC-04:00)

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Tuesday, July 17, 2007

No basis for suspicions
Posted by Dave

It shouldn’t surprise me but it does that some readers think that the recent spate of Presidential dollar errors was created on purpose by the Mint.

Any manufacturing process has a rate of error. Striking coins is a manufacturing process. For a process that has been around a while, the rate of error is fairly low. That is true of the Mint, but because the Mint strikes 15 billion coins or so a year, even a tiny error rate translates into rather large numbers of errors, though most are minor.

When a new manufacturing process is introduced, the error rate is much higher. Adding edge lettering to the Presidential dollar coins is a new manufacturing process. It is no surprise that there are a number of errors generated by it.

When the creation of a coin like the Presidential dollar involves two manufacturing processes to reach the final struck state, the number of errors rises by the combined error rates of the two manufacturing processes. Even if the Mint has the best quality control in the world, stuff just happens.

Once Presidential dollars are struck and are ready to be sent out to the banking system, if a few have no edge lettering, or twice-applied edge lettering, it is virtually impossible to catch with a visual inspection.

It makes me feel old just to look at a Presidential dollar’s edge. The lettering is tiny and rather shallow. Imagine trying to find mistakes amid hundreds of thousands of coins moving by at once.

This is not an easy task.

I know the suspicions will not go away. I can’t change that. What I can do though is write that there doesn’t yet seem to be any Presidential dollar errors that seem to have been “helped” along as was the case with the Sacagawea dollar when its production began.

It also pays to remember that it was the error hobby itself that pointed out to the Mint that some of those Sac errors, the mules specifically, would be impossible without some kind of inside help.

The error hobby proved to be right and the Mint had to scramble to prosecute the employees involved.

I will watch those who are active in the study of errors and my actions will be guided by theirs.

So far, things look clean. Let’s enjoy the publicity we get as a hobby from the errors.

7/17/2007 8:52:14 AM (Eastern Daylight Time, UTC-04:00)

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Monday, July 16, 2007

Sales start tomorrow
Posted by Dave

Ready, set, go! The Mint begins sales of the proof platinum American Eagle coins and the “W” mintmarked uncirculated American Eagle coins tomorrow at noon Eastern Daylight Time.

I was given 25 hours notice.

The proofs have limited mintages and the “W” uncirculated coins do not.

This year’s reverse design honors the Executive Branch of government.

Price of the proof one-ounce coin is $1,599.95 each. Mintage limit is 6,000 individual pieces and another possible 10,000 will be sold in the proof four-coin platinum American Eagle set.

The half-ounce proof is $809.95 and has a mintage limit of 5,000 plus another 10,000 in the set.

The quarter ounce is $439.95 and has a mintage limit of 5,000 individual coins plus another 10,000 in the set.

For the tenth-ounce, the price is $229.95. Mintage is 10,000 plus another 10,000 in the four-coin proof set.

The full four-coin proof set is $2,949.95.

Prices for the “W” uncirculated coins are a bit less expensive. The one-ounce coin is $1,489.95.

For the half ounce, the price is $759.95, the quarter ounce is $399.95 and the tenth ounce is $189.95.

The full four-coin “W” uncirculated set is $2,769.95.

There are no maximum mintages for the “W” platinum American Eagles.

Visit the Mint Web site at www.usmint.gov. By phone, the order number is (800) USA-MINT.

7/16/2007 2:32:37 PM (Eastern Daylight Time, UTC-04:00)

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Detectives they're not
Posted by Dave

Spain has committed an act of war against Panama. Did you miss it on the news?

Last Thursday a Spanish patrol ship intercepted the vessel, the Ocean Alert owned by Odyssey Marine Exploration, in international waters after it had left the port of Gibraltar. The ship is registered in Panama and by marine law is the affronted party.

Coin collectors are interested because this is the latest salvo in a fight about sunken treasure.

On May 17 Odyssey Marine announced that it had found the treasure, but did not identify the lost ship.

Spanish authorities are seething because they figure a plot is afoot to grab treasure from an old Spanish warship to which it has rights under international law.

It uses as its evidence photos of coins that seem to show Spanish or Spanish colonial 8 reales coins.

As collectors know, that is pretty flimsy, but greed knows no bounds. Spanish coins were the international currency of the world in the 17th and 18th centuries. Through its colonies its mines produced vast silver supplies that colonial mints poured forth as coins and sent back to Spain. The coins were so common, that they were the currency of choice for the 13 colonies that declared their independence from England in 1776. Colonial paper currency promised to pay Spanish milled dollars and the basis of the U.S. dollar was the Spanish milled dollar, which is the 8 reales.

The United States melted and assayed the 8 reales to determine what the U.S. dollar should be. Because they were off slightly, the U.S. dollar was just a tad lighter than the Spanish version.

Collectors know just because Spanish coinage is present on a ship doesn’t make the ship Spanish.

Is it surprising that Odyssey Marine would want to keep its find’s location secret? Well, if you find something of great value in international waters and you cannot anchor a security force there 24 hours a day, what would you do?

Spanish authorities have already sued the company over the matter, but apparently the legal process is not fast enough.

Perhaps the U.S. government can start seizing hoards of U.S. currency wherever they are found in the world under the supposition that they must be originally stolen from us somewhere.

Oh, these notes circulate freely around the world?

Tell that to the Spanish government about its historic coins.

7/16/2007 9:06:49 AM (Eastern Daylight Time, UTC-04:00)

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Friday, July 13, 2007

Rain not complete washout
Posted by Dave

You know what? You can run into coin collectors even in a downpour at the Iola Old Car Show. And I don’t mean fellow Krause Publications staff members.

I was about an hour into my volunteer shift yesterday afternoon selling Old Cars subscriptions and CD’s when the heavens decided to open up on us. The nearby Duesenberg had already been driven to cover, heading for the Krause garage in the early sprinkle stage of the inclement weather because hail was possible and with a $1 million car, you don’t want hail damage. The car’s normal location was an open-sided tent near an outside table at which I was working.

When the rain hit, there were seven or eight of us taking shelter in the Ultimate Garage Giveaway garage when we were joined by a another drenched passerby.

He was a recent high school grad down with his father, uncle and brother from the nearby city of Wausau. They had a car in the Car Corral.

The grad, it turns out, was a coin collector. He had collected Wheat cents, Canadian coins, state quarters, some euro coinage and a number of pieces from Guatemala. It was the kind of material that many a hobbyist has started out with. Alas, the state quarters were no more. He, like many young collectors, ended up spending them when he needed money. But the collecting bug has bitten him and it likely will be back more virulent than ever someday as is the pattern with many a collector who started in childhood.

He also has an interest in stamps, postcards and some items that I will lump under the heading of bric-a-brac.

With his interests in history and graphic arts, perhaps he has a future in numismatic publishing.

In 10 minutes or so the rain let up and he was on his way. Unfortunately, I didn’t sign him up for the Ultimate Garage Giveaway.

7/13/2007 8:57:58 AM (Eastern Daylight Time, UTC-04:00)

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Thursday, July 12, 2007

Thank you, Chet Krause
Posted by Dave

I put on an orange arm band this morning. No, it is not some weird pre-pre-Orange Bowl ritual that I have or a tribute to William of Orange of the Netherlands who became King William of England, who is either revered or hated in Northern Ireland every July, depending on which side is being considered.

It is, rather, Old Cars orange and I have been drafted into the Old Car Show helpers brigade to sell subscriptions to a sister publication to Numismatic News, Old Cars Weekly.

This product was acquired and renamed by Chet Krause in 1972 for two compelling reasons.

The first reason was that Chet happened to like old cars and had a great interest in the field.

The second reason was more important. In the coin market downturn that followed the roll and bag boom after its 1964 peak, Chet nearly lost his business. The revenue at Numismatic News and Coins Magazine were in a relentless downward spiral and employees used to be a part of the Friday pink slip lottery, which you did not want to win because it meant you were laid off.

To save his business, Chet stopped drawing a salary and was using the proceeds of sales of his personal coin collection to stay afloat personally and the business professionally.

As you know, Krause Publications survived and went on to thrive. The key was hobby diversification. Chet vowed to move into other fields. His interests were so wide ranging that he was good at picking winners. When his own experience was lacking, his trusted staff guided him to big winners, such as Bob Lemke and Doug Watson suggesting the sports card field.

Old Cars was the breakthrough, though. Chet hitched his star professionally to the field and Iola, Wis., came along for the ride.

The Iola Lions Club had an annual chicken fry. Chet invited a few car friends to bring their cars in 1972 and soon the car portion took over. The Lions still sell chickens, but there are more than 50 other civic organizations serving an expected 140,000 people over four days. I will spend two days cooking hamburgers for the Lions this weekend.

The profits all go to charity. It has benefited Iola enormously.

Thanks, Chet.

7/12/2007 9:10:15 AM (Eastern Daylight Time, UTC-04:00)

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Wednesday, July 11, 2007

New book, new twist
Posted by Dave

I had a phone call from Scott Travers late yesterday afternoon. I have known Scott for many years and we have worked together on Numismatic Literary Guild matters together. There was NLG business associated with the call, but the major news was he has written a new book. It is called Scott Travers’ Top 88 Coins to Buy and Sell. It was released yesterday.

It is a clever book. What makes it different from the usual books with lists is that it divides the field equally between good coins to buy and coins that should be avoided.

There are 44 good coins and 44 bad coins.

The usual lists are the top 10 coins to buy now, or the greatest 100 coins ever struck and things of that nature.

Well, Scott has taken a different path.

I have seen a sample of one of the bad coins. It is the 1933 Saint-Gaudens gold $20. Only one is legal to own and that was purchased by an anonymous buyer for $7.59 million.

Since that transaction, 10 more have been confiscated by the U.S. Mint from the family of Israel Switt, a Philadelphia jeweler, who is no longer living.

The government says these coins are illegal to own because they were never officially released. Quite naturally, at least in the eyes of collectors, the family is taking the opposite position and a lawsuit is proceeding to adjudicate the matter.

Neither Scott nor I know what the court will eventually decide, but he quite correctly points out that the mere existence of the 10 seized coins gives great credibility to the hobby rumors that more exist and they could be outside the country beyond the power of the U.S. Secret Service to grab them.

These rumored coins will tend to depress any future price that a buyer would be willing to pay for the only legal 1933 should it ever come up for sale again.

There is sound reasoning there. Would you want to buy something at a great price if you thought a large new supply was just waiting in the wings? I sure wouldn’t.

Scott got my attention. I bet he can get yours, too. I can’t wait to read about the other 87 coins in the book.

The book is a House of Collectibles paperback. It is priced at $13.95.

7/11/2007 9:02:57 AM (Eastern Daylight Time, UTC-04:00)

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Tuesday, July 10, 2007

This meeting was planned
Posted by Dave

One of the great pleasures of travel on the numismatic circuit is the opportunity to meet people.

Most encounters are of a serendipitous nature. I don’t know who I will run into and that makes things interesting and exciting. It is a little like a lottery of life.

My recent trip to the Memphis paper money show featured such encounters, but there was also a planned one. I was looking forward to meeting Mart Delger’s wife of 52 years. He has been the chairman of exhibits at Memphis since the very first one in 1977, but in all that time, he has never been joined there by his wife.

This year it was different. He mentioned to me beforehand that she would be there to see what all the fuss was about. She has been the behind-the-scenes helper to make sure the exhibit process moved smoothly. She has typed many lists of participants. I have been the beneficiary of that effort as I publish them in Bank Note Reporter.

My mission on Friday after the ribbon cutting that opened the show was to find Mart and meet his wife.

It was a great pleasure to meet Chris. Her full name is Christal, but she is called by the more informal nickname.

I asked her why after all these years did she decide to come to Memphis.

“I decided I ought to,” she said with a smile. “I’ve never been to this one.” She has been to other shows, though.

She looked at Mart and said, “I’d better stand by this man.”

I thanked Chris for having made it possible for me to work with Mart for so many years. She was going to have a busy day. I wasn’t the only one who wanted to meet her.

“I hear all the names,” she said. She spent the convention connecting them to a set of faces, mine among them.

I hope to see her again in Memphis next year. I don’t think I’m alone in that wish.

7/10/2007 9:06:55 AM (Eastern Daylight Time, UTC-04:00)

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Monday, July 09, 2007

Slab premium rules marketplace
Posted by Dave

I am just back from the annual paper money show in Memphis. It is the premier paper money event each year and experiences there tend to inform my editorial decisions in the following months.

If you are a veteran of the coin market from the mid 1980s, what is currently going on in the paper money field will be familiar to you.

Slabbing is affecting the business in a big way. Third-party authenticators and graders are slugging it out for market share. The reluctance of the hobby to embrace slabbing is now almost entirely gone. There is too much money to be made by feeding the trend and participating in it rather than opposing it.

Notes in slabs are tending to bring more money than identical notes not yet in slabs. Call it the slab premium. Why? It is a simple concept.

The owner of the very first note in a slab can truthfully tell one and all that there is no other one like it. Some buyers attach great importance – too much importance – to this statement. However, it takes a while for the grading services to saturate the market, so slabs can seem scarce. Scarcity might be real because a note is truly rare, or it might simply be that the grading services have not yet turned out a sufficient supply to satisfy market demand.

The lesson of the coin market is that it can take years to fully satisfy the demand for slabs. However, once this process is done, the slab premium will disappear. Any current paper money buyers who are paying premium prices for slabs might find themselves less pleased with their purchases when more slabbed notes become available.

How much longer can this present slab scarcity last? Good question. It will last as long as new buyers can be found to keep prices rising and to maintain the perception of scarcity. How long will that be? If I knew that, I would be out there trading like mad, now wouldn’t I?

Let’s just say that the summer slump has not been particularly evident in the paper money field. That should mean a strong start to the autumn.

I write the word “autumn” here because in a conversation at the convention hotel with a market participant yesterday I said it looked like we will have a “strong fall” and his startled reaction indicated that his first thought wasn’t about the season.

7/9/2007 9:04:32 AM (Eastern Daylight Time, UTC-04:00)

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Friday, July 06, 2007

Grab the camera
Posted by dave

I am attending the Memphis paper money show. To come here is like visiting an old friend, many old friends in fact.

It is a tradition. Ribs on Thursday night. Steak on Friday. But that is only if you aren’t bidding in the auction, which is being called by Smythe this year. Bank Note Reporter staff tends to eat early and come back to watch the sale action.

One of my missions this trip is to take a photograph of Mart Delger and his wife. To my knowledge, I have never met his wife. She is attending the show for the first time ever.

Mart has been exhibit chairman at Memphis since the show was founded in 1977. He has done wonders in attracting quality exhibits in large numbers. It is a wonder to see what he achieves year after year.

This year there is a seven-case display of Serial Number 1 large-size notes by Jess Lipka. Amazing. I wouldn’t want to pay the insurance bill.

However, amazing notes aside, my mission is to get that photograph of Mrs. Delger. I have to say thank you for the hand-typed lists of exhibitors that she has given Mart to give me. I have to let her know how highly we think of Mart and how appreciative we are that he has been such a key volunteer all these years.

It is not an easy job. There are always last minute changes. In fact, there are enough of those to drive even Mart a little crazy. I hope he can still take it. I don’t know what the Memphis show would do without him.

7/6/2007 9:04:33 AM (Eastern Daylight Time, UTC-04:00)

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