Ask An Expert

Ask An Expert

Precious Metals And Rare Coins - Real Answers To Investment Questions

Welcome to one of the great places on the net to find an honest answer to questions about precious metals or rare coins. As you scroll down you can see my most recent observations and I add to them from time to time in an effort to answer the more frequent Email questions.

Ask an Expert about Precious Metals or Rare Coins is written to help you figure out the sometimes confusing world of physical precious metals and certified rare coins. Ask an Expert with Richard SchwaryAnd Ask an Expert about Precious Metals or Rare Coins will provide answers to questions like: “What is my stuff worth?” or “What should I pay for this coin?” or “What is best for me a coin or a bar?” or “I purchased gold and silver coins long ago and now wonder what they are worth”. 

This blog is also handy if you are looking for more information about an industry terminology: terms like matte proof, or high relief, questions about tokens or paper money, mint mark location, relative rarity, or grading definitions.

Ask an Expert will offer an opinion on everything coin and metal related from the best certification services to saving money at auction: and the price of admission is free. Any of your most important questions can be sent to me at Ask an Expert and you will receive a confidential reply within one business day.

There is no obligation, just learning – so ask away – you would be surprised at how many people already use this service. I am a member of The Professional Numismatists Guild (#365), a none-profit organization founded in 1955 and dedicated to knowledge, integrity and responsibility in the rare coin business.

So let me hear from you on any matter large or small. At the bottom of this page are 28 short articles I have written answering specific reader questions. Many of these have been published within the trade so you might find them helpful. Thanks for reading about Ask an Expert and your interest in rare coins and the precious metals is appreciated. You can also read my daily Gold Newsletter for an insider’s view of the precious metal markets without the usual nonsense.

Your First Name (required)

Your Email (required)

Subject

Your Message

SIgn Me Up For Your

(1) August 2, 2014 – This comes from ZeroHedge.com a must read resource and Tyler Durden is one of my favorite commentators. What makes this entire commentary work is the “cowbell” – an old Saturday Night Live reference which is just hilarious. 

Elliott’s Paul Singer On Gold, Inflation, And The Global Monetary Delusion

Submitted by Tyler Durden on 07/31/2014 22:57 -0400

Authored by Paul Singer, excerpted from Elliott Management’s latest letter to investors,

GLOBAL MONETARY DELUSION – MORE COWBELL

Central bankers think they are the masters of the universe because the world is looking to them (and only them) to deliver continuous stability and prosperity. There is no reason to suppose that they understand the modern financial system and economy to any greater extent than they did in 2007 (that is to say, not at all). Nevertheless, they plow ahead, expressing total confidence that what they are saying and doing is wise and not dangerous drivel. These master chefs have but one vat next to them on the policy table, and it is labeled “QE.”

They seem to think that all they need to do is dip into this vat, ladle on some QE, and asset prices will rise, the economy can be supported, jobs can be created and growth can be achieved. With no side effects, no indigestion, and no other factor would make them put the vat away and demand other ingredients. The new Chairwoman of the Fed, moreover, has made clear that as far as she is concerned, ZIRP is perfectly fine despite the stock market and high-end real estate booms, and that it will last, maybe not forever, but for a long period of time. The U.S. economy is growing, unemployment (at least the way they report it) is 6.1%, but the right interest rate for Chairwoman Yellen remains zero.

The central bankers of the developed world (with the possible exception of Germany’s) have failed to tell their political leaders that QE and ZIRP are creating great risks and uncertainties for the future. None of them has actually called a halt to monetary extremism in combination with demanding policies, or set out any policy recommendations that their governments should pursue in order to create real sustainable economic growth. Even the exquisitely named and effectuated “tapering” in the U.S. is months away from actually suspending the printing of money, and the Fed promises to preserve interest rates near zero for an extended period. In Europe, short-term interest rates are currently declining (to below zero in some cases) because of a new promise to keep interest rates lower for longer, and a new scheme for the central bank to purchase all kinds of securities.

All of the major central bankers profess a dread and imminent fear of deflation. In reality, the only places where such concerns are legitimate are in the lower-performing countries of the euro bloc that are prevented from devaluing their currency and are being forced to lower wages in order to correct imbalances. Everywhere else, the present and future prospects for deflation are virtually nonexistent, given the authorities’ misguided determination to boost inflation to levels higher than are currently purported to exist.

We can state with a great deal of confidence (although it is a minority view) that neither we nor the central bankers who are orchestrating these policies on the world have any idea how this situation is going to end, despite their assurances to the contrary. We believe that global monetary policy is currently extremely dangerous, that the financial system continues to be opaque and overleveraged, that major financial institutions are still essentially dependent on government guarantees to protect them if there is a renewed financial crisis, and that an abrupt shake-up could occur at any time.

Since confidence in paper money, central bankers and political leaders is unjustifiable and out of line with reality, the loss of such confidence could conceivably occur at any time, leading to the next “run” on the global financial system. We believe that those great sages who think that countries in the developed world have decades to get their financial systems and entitlement programs in order are delusional. In reality, only the markets can determine when time has expired – not the politicians or pundits and certainly not the central bankers.

Signals between QE, consumer prices, asset prices, bond prices, stock prices and growth are completely awry because governments are pulling the strings to a degree never before seen in free enterprise systems. It is unlikely that these unprecedented and experimental government policies of such gargantuan scope will actually create the desired result and allow themselves to be able to be unwound without great shock and disruption to the global financial system.

We recently perused the annual report of the BIS (Bank for International Settlements). We were impressed by its cool-headed assessment of the risks of current governmental policy in the developed world. In the introduction to the report, the BIS said:

To return to sustainable and balanced growth, policies need to go beyond their traditional focus on the business cycle and take a longer-term perspective – one in which the financial cycle takes centre stage…They need to address head-on the structural deficiencies and resource misallocations masked by strong financial booms and revealed only in the subsequent busts. The only source of lasting prosperity is a stronger supply side. It is essential to move away from debt as the main engine of growth.

The report noted that an intense quest for yield is driving down volatility and interest rates regardless of credit quality. The BIS said that the report is a “call to action,” and that governments should do more to improve the safety and performance of their economies, labor practices, and banks, which should raise more capital as a cushion against losses. The report also said that rising debt levels in many countries increase the potential for trouble, but the report said that the risk of deflation is less than many think. The overall message is that the world is hooked on easy money and has forgotten the lessons of the financial crisis. The report said that “[T]he temptation to postpone adjustment can prove irresistible, especially when times are good and financial booms sprinkle the fairy dust of illusory riches. The consequence is a growth model that relies too much on debt, both private and public, and which over time sows the seeds of its own demise.”

We have been saying as much for some time now, but here is a prestigious international institution that is “telling it like it is” in a compelling and persuasive way. Naturally, we became curious about this institution and its members. Who are these insightful people? We were astounded to learn that the board of the BIS is comprised of none other than… the heads of the major central banks of the developed world! Yes – Yellen, Draghi, et al! So, these central bankers are simultaneously failing to tell their respective governments that (1) monetary policy has done enough; (2) monetary policy is causing massive risks and distortions; and (3) political leaders must grab the reins and make structural changes, these same central bankers are authorizing BIS reports that will enable them to say, after the coming multifactor crisis, that they told us about the risks. We wonder who from the Fed authorized the report, and why they haven’t shared these harsh views of Fed policy in the FOMC meeting minutes or the endless public speeches by Fed officials. It is duplicitous for the Fed to authorize the views in the BIS report yet keep quiet about them elsewhere. But then, the Fed has never accepted much responsibility for the 2008 crisis, despite its decisions to keep interest rates artificially low for an extended period of time, to do a poor job of regulating the banking system and to abet Fannie and Freddie in their utter irresponsibility. History rhymes. The Fed has created the fuel for another crisis, seems to know it judging by the BIS report, and yet is covering itself with an “I told you so” report from the BIS rather than changing course.

“More cowbell” is a reference to a Saturday Night Live comedy skit in which a celebrity music producer (played by Chris Walken) keeps telling the cowbell player (Will Ferrell) in a secondrate band to play louder in the hopes of creating a better sound. It did not work, but it was funny. “More QE cowbell” as the cure-all to what troubles the global economy is also not going to work. And it is not really funny.

*  *  *

We continue watching with amazement the Fed’s magic act as it attempts to use quantitative easing and zero interest rate policy (QE and ZIRP) to create seemingly robust economic growth in the face of very poorly designed political, economic and fiscal policies, while keeping inflation within a narrow band. Substantial inflation is occurring in many asset classes and service sectors of the global economy, but is not presently recognized or captured by the traditional metrics upon which the Fed relies. This inflation is spreading in both scope and intensity. If and when it breaks out in an inescapably broad way, there will be a crowd of seriously confused policymakers making excuses and claiming that inflation does not in fact exist; it is not their fault; it was completely unpredictable; and/or it will actually be good for people.

We believe that if and when inflation goes from being something that affects only a particular list of assets (a growing list, presently a combination of things owned by the well-off plus a number of things that are basic necessities) to a widespread “in-your-face” phenomenon affecting the cost of living of almost the entire population, then the normal yardsticks of risk, return and profit may be thrown into the garbage can. These measures may be replaced by a scramble by citizens and investors to preserve value on a foundation of shifting sand, together with societal unrest that may make the current politically-useful “inequality” riffs, blaming the “1%” and attacking those “millionaires and billionaires” who refuse to “pay their fair share,” look like mere warm-ups for real class warfare.

(2) January 28, 2014 – The following was originally published in Coin World, all rights are reserved. Finding a good attorney in the coin business can be problem because most attorneys, even good ones don’t collect or understand rare coins. One of the best on the planet has been a good friend of mine for years. His name is Armen Vartian (www.vartianlaw.com) and besides being legal council for the Professional Numismatists Guild he also represents PCGS so his credentials are impeccable. Besides being a friend Armen also writes for Coin World and his commentary is some of the best in the business which brings me to his latest article published January 20, 2014. He not only makes a important point about describing the merits of a product being sold (sometimes called puffing) he draws an important distinction between selling the sizzle and the consumer’s own good sense. So read away and enjoy the story in the always changing world of precious metal and rare coin investing.  

 The Art of “puffing” – Indiana High Court Upholds Rule by Armen Vartian

I often come across the issue of whether a dealer or auction house can be liable for fraud for bragging about its own goods – the legal term for which is “puffing”.  Think of a dealer saying that an ancient coin is “flawless”.  Obviously not literally true, but expressing a sort of opinion concerning the coin’s unusual state of preservation.  A famous New York judge named Learned Hand called such boasts the “kind[ ] of talk which no sensible man takes seriously,” and for the most part courts have been able to distinguish with common sense analyses whether or not statements by sellers are the sort that a buyer should reasonably rely upon when buying goods. 

Recently, the Indiana Supreme Court recently reaffirmed this longstanding rule in a case involving the classic “puffing” opportunity – the used car. At issue was a dealer’s advertisement describing a car as a “Sporty Car at a Great Value Price.” After purchase, the buyer discovered that the car had extensive mechanical problems rendering it unusable. The buyer sued, alleging that the advertisement was actionable deception and fraud.

The trial court ruled in favor of the dealer, but the court of appeals reversed, concluding that calling the car a “Sporty Car at a Great Value Price” could implicitly represent that “it is a good car for the price and that, at a minimum, it is safe to operate”.  However, the Supreme Court restored the original ruling, holding that the statement was an opinion, “not a representation of fact, and thus cannot be the basis of deception or fraud claims.”  The Supreme Court also recognized that a contrary holding would significantly impede legitimate advertising and force sellers to list nothing but a product’s “name, rank, and serial number” in order avoid civil or criminal liability.

I sympathize with the Indiana Supreme Court, and with a federal judge’s decision earlier this year that a seller referring to its diet soda as “premium” did not have to prove that the soda contained “premium” ingredients because “The term ‘premium’ … has no concrete, discernable [sic] meaning in the diet soda context.” 

However, there has to be a limit to puffing.  Moody’s, the credit rating company, was sued by investors in some highly-rated companies that turned out to have been insolvent at the time Moody’s rated them.  The plaintiffs showed the court that Moody’s had, over many years, touted itself as an independent company publishing accurate and impartial opinions, regardless of the fact that it often was paid by the very companies it was analyzing.  For example, its 2005 annual report stated “The market’s trust in and reliance upon Moody’s” are part of the “raw materials that support our business,” and that “Independence. Performance. Transparency … are the watchwords by which stakeholders judge Moody’s.” Moody’s also was fond of citing its code of professional conduct which “protect[s] the quality, integrity and independence of the rating process.”

Meaningless puffing?  That’s what Moody’s attorneys told the judge:  “Generalizations regarding integrity, independence and risk management amount to no more than puffery.”  The judge didn’t buy it.

One caveat:  when a term has an established meaning in an industry, a dealer using it must be careful.  I’m thinking of “finest known”, which probably constitutes puffery when referring to a Picasso, but not a coin.  

Previous commentary you might find helpful. Your questions are welcomed and thanks for reading:

1. Reportable Bullion & Cash Transactions: Revision 3
Ask An Expert (July 9, 2013) The question of what is reportable when buying or selling precious metals is the most popular of all investor questions today at California Numismatic Investments (www.golddealer.com). And as you can tell by the title this commentary is our third revision at understanding what the government had in mind when “reporting” came up on the radar screen more than 30 years ago.

This subject has to be one of the most misunderstood and misrepresented in the trade today so I can’t figure out why you don’t see more about these rules? The reason might be that these mystical directions while holding sway over dealers are a poorly written mess which should have been avoided or at least provided with updating options. But instead this bureaucratic process produces mountains of paper work which may have been relevant years ago but today does not include America’s most popular bullion choices. So over time these rules were asked to do more than intended without further oversight or revision. What we have today is a bottom up application of government thinking without the required rule maker and so disputes might become a nightmare.

And with mistrust of government reaching new highs these famous reporting rules become more important for two new reasons:

First, the majority of Americans are looking for simple privacy and not trying to skirt the currency reporting laws. Gold has always been the most private investment and the use of “no-name” invoices and cash in smaller amounts is popular and legal. The quest for privacy is responsible for books like How to Be Invisible: A Step-By-Step Guide To Protecting Your Assets, Your Identity, And Your Life by J.J. Luna.

Second, the notion of independent storage of precious metals is getting publicity because of banking failures and zealous government oversight. Outside of bank storage was talked about in the early gold movement and even included ideas about out of country storage by pioneers like Harry Brown. Personally I think this is an overreaction because US banking oversight protects assets but some investors are not convinced. A brochure from www.usprivatevaults.com: Are Your Assets Really Secure In A Bank Safe Deposit Box? I have no idea who these folks are but use their advertisement to point out that independent storage would not be built if there was not a market.

When gold was once again made available to Americans in 1975 the modern bullion dealer was reborn. Rare coin dealers at the time did not have much to do with bullion transactions except to facilitate trades for good customers. There were cash reporting requirements already on the books but mostly no one cared about such things even the banks. If you were given cash it was deposited into your business account but most of the time payments were made by check.

But when the Treasury began to get interested in what Middle America was doing with precious metals the “reporting” idea got more attention. Since that time both dealers and the public have come to believe these reporting requirements are an attempt by Uncle Sam to monitor the precious metals because the government saw them as a kind of unregistered security which is easy to buy and sell privately. I believe the truth is more mundane and the government based their first decisions about “reporting” more on what was traded on the nation’s commodity exchanges and less on what was happening in coin stores because they had little interest in the individual investor.

To understand how this thing unfolded and why I believe much of the “reporting” requirement jargon is a red herring let’s look at the two of the most talked about areas:

1. Cash Reporting: If you bring in more than $10,000.00 in cash or cash equivalents to your dealer he will present you with a Federal Form 8300 which will require things like your name, address, and social security number. Form 8300 is the real deal and presents serious legal consequences for both the buyer and the dealer. So please no winking or playing around here as this has been on the government radar screen since the cash trade in drugs entered America’s living room and more recently as terror became a reality in the US. To make sure professionals were listening Uncle Sam prosecuted a few famous coin dealers and sent them to jail. They then published the results in Coin World which scared most national dealers because prior to these prosecutions cash was not a big deal. Today fines for violating Form 8300 rules could amount to $25,000.00.

When the government talks about cash it is referring to the real green kind. I get regular questions about paying with wires or checks in reference to the $10,000.00 rule which shows the public is going through the learning curve when it comes to “reporting”. You can purchase anything you want for any amount – $10,000.00 or $10 million – and there are no dealer reporting requirements as long as you pay with a check or wire.

Let’s also consider what the government calls cash equivalents. If a consumer makes one purchase and pays with a number of smaller money orders and the sum exceeds $10,000.00 it is a reportable transaction. If on the other hand he makes a purchase and pays with a cashier’s check in excess of $10,000.00 it is not because if the consumer used cash to purchase the cashier’s check the bank has already filled out the form. And what about the customer who purchases $14,000.00 worth of bullion and provides the dealer with $8,000.00 in cash and a cashier’s check for the remaining $6,000.00? The dealer is required to fill out the form or be in violation of the $10,000.00 cash rule. So you can see how tracking down all these rules can be confusing.

The SAR (Suspicious Activity Report): I added these comments because well-known coin dealer Pat Heller rightly pointed out this area of government reporting is worth a close look. The SAR is still virtually unknown to the consumer but is the proverbial black hole of reporting. It raised its ugly head following the 9/11 attacks when the US rewrote many federal regulations and introduced the USA Patriot Act. Under the SAR provision the government requires financial institutions to report transactions that are or appear to be suspicious. Reporting suspicious behavior without judicial oversight is not a slippery slope but a vertical cliff used by the world’s most oppressive regimes and always presented as “necessary” because of extraordinary circumstances.

Without guidelines an honest customer who simply wants clarification about using cash over an extended period of time might qualify for a SAR. Many honest folks also want to use cash because it facilitates the transaction (no waiting for check clearance or bank verification). In this day and age some people don’t trust banks or dealers and who can blame them? They want the combination of privacy and immediate delivery because it can give them the added benefit of anonymity.

Now consider Raymond Gregson, Jr. most recent thoughts about the Suspicious Activity Report: Even though coin dealers are defined as non-bank financial institutions, they are not “required” to file SARs, it is only recommended. Coin dealers may want to use this form if something happens which is not technically reportable but want to show reasonable compliance should the government ask questions about a particular cash transaction. Also, the SAR has been challenged in the courts, the first case was “Whitney National Bank vs. Karam, 306 F. Supp. 2d 678 (S.D. Tex. 2004).

Let’s also look at the way Form 8300 is structured: A customer brings in $8,000.00 in cash and walks away with product. This fellow may own a cash business or simply goes to the bank to withdraw cash on a regular basis because he wants complete privacy. This is entirely reasonable because owning gold bullion does present challenges when guarding against theft. He then shows up a month later and wants to do the same transaction. Is this reportable or not? In the old days some dealers used a Cash Transaction Log because they thought it was necessary to aggregate or keep track of cash transactions over a 12 month period.

Today this is not necessary and may pose privacy problems and so is not recommended. Form 8300 clearly states that the period of time between cash transactions is 24 hours so in the above $8,000.00 case the answer is simple: he could return with less than $10,000.00 and as long as the period of time between transactions exceeded 24 hours technically there is no reporting requirement. But if a dealer has one person coming in every 48 hours to buy bullion with $9,000.00 in cash or sell reportable bullion under the specified numbers the Suspicious Activity Report can be helpful in keeping his books transparent.

Here are a few of Gregson’s thoughts about related cash transactions: (1) Husband and wife are automatically related so if you are married and show up with more than $10,000.00 in cash claiming individual exception you will be handed a Form 8300. But if two people are just friends and the money does not come out of one pocket each person is allowed up to $10,000.00 without a form.

2. Bullion Products Reporting: I will get into specifics further down but for now understand that there are a limited number of bullion products which are reportable when sold in certain quantities. So the buying dealer will file Federal Form 1099B when key numbers are reached and like Federal Form 8300 the defined time period is also 24 hours. Now pay attention because the public usually misses this point: This 1099B rule only applies to what you as a consumer are selling and has nothing to do with what you purchase or how you pay for that purchase. Also note that the fine for a dealer failing to file Federal Form 1099B is $50.00 but fines involving Federal Form 8300 could be $25,000.00 so clearly the government sees cash reporting rules as more serious.

Because these rules are arbitrary the public now confuses state and federal tax issues, cash reporting requirements, federal and state capital gain rules and the use of both Federal Forms 1099B and 8300. They actually pick and choose through this dog and pony show and so the question of “reporting” is further obscured. And to make matters worse some honest coin dealers do not have it right and hard sell telemarketers use “reporting requirements” as a blunt club to “steer” investors into the worst choices while lining their pockets with ridiculous commissions.

Not long ago I received an email from a person who was told by a so called “IRA Specialist” that he should put proof gold Eagles into his IRA account and avoid regular issue gold Eagles because the latter was reportable and the former was not according to government rules. Well of course this is fiction and a wonderful case of “steering for profit” by a sleazy telemarketer but how many people do you think check those “expert” facts? I guarantee that most do not and so are led down the garden path by unscrupulous dealers who exploit these obscure rules.

And even if you are new to investing and do your own research there are questions which remain unanswered. Study these rules carefully and the first thing you will notice is that many are simply arbitrary. The US Gold Eagle is one of America’s favorite bullion coins and yet it is not reportable because it did not exist when the rules were written. But similar bullion coins like the Canadian Maple Leaf or the South African Krugerrand were commonly traded in the 1970’s when the CFTC made up the physical rules and so are included today.

So let me state what might seem like heresy about government commodity reporting. I believe they do not give a fig about what you do in any specific sense and this reporting discussion has turned into is an urban myth misread by the public and misused by some dealers to sell product.

What happens to all the reporting information we collect and submit to the government each year? I cannot cite a single example of Uncle Sam coming back and asking questions except in the case of a wrong address or incorrect social security number. So no one is home in Washington and Uncle does not care when it comes to statistics on the physical metals because they are small potatoes when compared to commodities like wheat or corn.

Further study of the reportable list below will reveal its obvious lack of conscious intent. Some bullion product is listed but much of what is commonly accepted as bullion precious metal is missing and there is not a provision in these old rules to add new products as they come to the marketplace. I guarantee the government could have done a better job if its intent was invasion of your privacy and a “big brother” attempt at controlling the precious metals.

The only reason we are bothered with this little sister today is because it was on a list of other big commodities and the statistical Washington wizards threw it in because they were following orders. My bet is that in the end your reporting information becomes a very small part of a large government information stream studied by academics and burned out commodity traders.

The people who make a big deal out of this convoluted scheme are the conspiracy buffs who believe the grassy knoll theory. This is where the real paranoia began because they believe the government is looking in their window. And some respected dealers agree conceding that reporting requirements today are no big deal, but suppose the public really decided to get involved with gold? It is a small market and gold bullion coins or bars can be untraceable much like the old bearer bonds which were eliminated in the United States in the early 1980’s. If gold became really popular could the government use existing rules to create another “bearer bond” witch hunt?

To help sort out the situation and make more sense of a confused marketplace a few definitions will be helpful because the word “reportable” has a number of interpretations when buying or selling bullion products. Believe it or not I regularly receive email which asks for the list of bullion coins or bars which have no reporting requirements in the sense of capital gain reporting. So some readers mistakenly think that choosing a particular product will avoid “reportable” income from the buying and selling of precious metals. There is no such list because there is no such product. Your Uncle Sam is interested in all your capital gains and losses because the resultant tax flow is important in supporting his spending habits.

But it might surprise you to find that the majority of bullion transactions are not reportable to Uncle Sam via Federal Form 1099B. For those bullion products which are reportable the rules can still be confusing because there are minimum size requirements. The good news here is that if the few reporting requirements bother you, it is easy to do your homework and avoid products which fall into the reporting area. There are many low premium bullion bars and coins that have no reporting requirements upon resale and move directly with the spot market.

The following is what the Industry Council for Tangible Assets (ICTA) has to offer about what the Internal Revenue Service wants in the way of paper work. They are describing the paperwork provided by bullion dealers which relate to what you purchase or sell. These basic rules are taken from the ICTA newsletter Washington Wire dated December of 2004 which is the only source material I can find and you will just have to put up with my added comments.

First: You can place any size order and pay with a check or wire. No one cares, not even the government. The only time they want to hear from a dealer is if you invest more than $10,000.00 in green cash or cash equivalent (a group of money orders purchased in smaller denominations). Then you must fill out I.R.S. Form 8300.

There is nothing wrong with large cash transactions and like I said they are sometimes used because folks don’t want to wait for their product. But when you provide a large cash payment to a precious metal dealer the government wants to be notified.

Second: There are rules which apply only to bullion and only come into play when you sell. As long as you don’t use cash you can purchase all the gold Kilo bars you want and no one cares but the first one you sell produces a dealer “reporting” requirement. All Kilo bars are 32.15 troy ounces of gold and are subject to reporting by the purchasing dealer. Dealers are also required to report any one gold bar they purchase from the public which totals 32.15 ounces or more.

And what about those popular 1 ounce gold bullion coins everyone likes? If you sell 25 coins or more of the Krugerrand, Maple Leaf or Mexican Gold Onza dealers are required to report the sale on Form 1099B. But here is where these rules go off the track if they are interpreted within the “conspiracy” framework instead of the more believable commodity flow or academic model.

What happens if a customer who purchased 30 Krugerrands decides to sell his dealer 10 coins in January, 10 coins in February, and 10 coins in March? Is this a reportable transaction? Actually it is not reportable because Federal Form 1099B cites a specific 24 hour time frame.

In fact there is an extensive list of low premium gold bullion coins you can sell any time and in any quantity and the buying dealer is not required to report the sale: These stellar choices include the U.S. Gold Eagle, the Australian Kangaroo, the Austrian Philharmonic, the Chinese Panda, the British Britannia Series, and the Australian Lunar Series. If any dealer claims these gold bullion coins are reportable when you sell make sure you have your hand on your wallet.

There is also no reporting on any small gold bullion coins or the popular fractional gold bullion coins which are available in 1/10, 1/4, and 1/2 ounce sizes. If you find by now that your head is spinning do not be alarmed and just read slower.

Third: Dealers are required to report $1000 face 90% silver bags and 1000 ounce silver bar transactions only when you are selling. We are not asked to report your sale of 40% bags or less than $1000 face in 90% silver coin but let me play the devil’s advocate: What happens if a customer purchases a $1000 face bag and decides to sell back $500 face in January and $500 face in February. Has he skirted the letter of the law? And even if he has not is there some kind of dealer obligation? Again not according to the Federal Form 1099B 24 hour rule.

My friend and numismatic legal wizard Armen Vartian once claimed in a Coin World article that while $1000 face 90% silver bags are reportable the CFTC only named dimes, half dollars, and silver dollars but did not mention quarters!

The 1 ounce, 10 ounce and 100 oz silver bars are exempt when you sell as long as your total sale does not exceed 1000 ounces.

So a customer who accumulates fifteen 100 oz silver bars over time and sells them all at once will be handed Form 1099B. But if he sells nine 100 ounce bars in January and six in February there is no reporting according to the 24 hour rule.

All COMEX 1000 oz bars are reportable when you sell them to a precious metals dealer.

Fourth: When you sell platinum or palladium bars in quantities of 25 ounces or more the transaction is reportable.

Platinum bullion coins like the Canadian Maple Leaf, the U.S. platinum Eagle, the Australian Platypus and the Australian Koala are exempt. Finally, palladium bullion coins like the Canadian Palladium Maple Leaf and the Russian Ballerina are exempt.

Dealer Payment Structuring – And by the way the consumer is not the only one subject to oversight rules: This from the Coin Dealer Newsletter (June 24, 2011): “ICTA is advising dealers, when making purchases from customers, not to accommodate or agree to pay any customer with more than one check per transaction. Repeatedly paying with more than one check could result in your bank closing your account, and you being accused of “illegal structuring”. In other words, this could be considered conspiracy to commit money laundering. When dealers are asked by customers to split up payments, it is sometimes to reduce the amount of each check to less than $10,000.00, which the customer then deposits or cashes on different days. An innocent accommodation to serve a customer now could create a big problem in the future for a coin dealer.”

I thought the size of the dealer’s check made no difference because it was deposited and so the money was easily traced through the customer’s bank. The idea that a seller could cash a smaller check or deposit these checks on different days to avoid tax considerations is now on the table. This warning from ICTA illustrates how far our Uncle Sam will go to make sure folks who still have jobs are paying so he can redistribute the national wealth in an equitable manner.

Gregson further elaborates about giving the customer several business checks under $10,000.00 when the purchase is over $10,000.00. This was put in a Washington Wire by ICTA because I had them do it. I ran across this same situation in Florida in a 2 week period. This has nothing to do with taxes and it is not a problem if the person deposits the checks. The problem comes in when you for example buy $18,000.00 in scrap and give the customer two $9,000.00 checks and they take both to your bank or their bank and cash one today and the other tomorrow or both at the same time. The bank is required to file a SAR on that situation because it appears that you are assisting your customer in structuring the transaction to avoid the reporting requirement at the bank. If they were to cash one $18,000.00 check, the bank files a Currency Transaction Report (CTR), but if they bring in two checks each for $9,000.00, issued as the same time, it appears that you are conspiring with the customer to avoid the CTR requirements. If the total transaction was $8,000.00 and you gave them two $4,000.00 checks, that’s not really a problem because even if they cash them, it does not avoid any reporting requirement.

For coin dealers the required government paperwork is not complicated if you understand the rules. But extra work is required and to move the conversation forward precious metal dealers should support ICTA (www.ictaonline.org). Both Eloise Ullman (Email: eloise.ullman@ictaonline.org) and Diane Piret (Email: dapiret@ictaonline.org) have years of experience and provide important professional answers at the drop of hat. So the pittance for dealer membership is well worth the money and ICTA email updates offer state and federal information on a regular basis. The ICTA website notes that Eloise Ullman is retiring after 23 years of service. She will be missed by many and has done a fine job over years shining a light into the darkness always with a smile.

I also recommend dealers contact Raymond “Ray” Gregson, Jr. (AML/BSA Expert and Specialist – aml-nacs.com). Ray was the first to present this information in a class format and is wonderful at explaining why dealers and their employees must understand The Patriot Act before Uncle Sam examines the books. His fees are also cheap and many dealers already use his services. His office number is (504) 737-1375 and his business cell is (504) 782-5092.

And Ray always offers good advice: “No dealer should be answering cash reporting questions for their customers. My clients have a document that I put together for them that they keep in their shop on the counter and give to the customer to read when they have questions. By the way, reporting is not the dealer’s real problem. Their problem is not being compliant with the AML regulations when the IRS or their bank calls and wants a copy of their last audit report and training records. That’s when they start scrambling and call me, but it is usually too late for me to do anything for them. Hopefully they get a nice IRS agent and get a slap on the wrist, but they could face a $25,000 penalty for not having an adequate AML Program.”

The entire idea of reporting within the coin business represents a virtual minefield of business and accounting problems which require professional guidance so this missive is provided for informational purposes only. Do not use this information without first asking your CPA or attorney because each situation is unique and there could be variables which have not been considered.

Finally I would like to thank Ray Gregson for much of this update and for correcting mistakes in the original commentary. Anyone with additional comments please contact me (RSchwary@aol.com) and perhaps there will be a Revision 4 of Reportable Bullion and Cash Transactions. Thanks for reading.

2. Could Government Gold Seizure Become A Problem?
Ask An Expert (August 6, 2010) I have talked about government gold seizure before and personally think the whole idea is nonsense. The gold telemarketers however stoke this fire on a regular basis because it spooks the public and lays out a scenario which allows the unethical to charge ridiculous prices. I received this Email today from Numismaster.com (powered by Krause Publications) and it is very interesting. Krause is the biggest publisher of rare coin news, prices, and general coin information in the world. David Ganz is one of the most knowledgeable legal experts and writers in the coin business. David is also a good friend of mine and an attorney so both sources (Ganz and Krause) are impeccable.

Gold Seizure Mechanism in Place

By David L. Ganz, Numismatic News

August 05, 2010

This article was originally printed in Numismatic News.

It’s not the dog days of summer, but rather the economy that’s causing a number of people to query my law office about gold seizure scenarios that they believe might take place, what they can do to prevent it, and what they might be able to do about it.

These inquiries come from sincere believers not in conspiracy theories, but rather in the staying power of gold in both the short term and the long run. Their inquiries are genuine, the concerns expressed real – these are hard money strategists, not people who go off with half-baked ideas.

I have no great insight to offer as to whether or not gold seizure is in the offing, but there are some interesting reasons cited by many as to why the government of the United States – and maybe the world as well – needs to nationalize gold, if only for the purpose of making sure that governments, not citizens, remain in control of the economy.

In talking with many of the people, they question how the government could possibly enforce a gold seizure and go on to tell me that no power on earth could make them give up their gold. My rejoinder is that some of the best literature has been written by authors from prison, to which they often sublimely respond that the government lacked the resources to prosecute people – and that even in the old days, that wasn’t something that the government did (prosecute people for declining to turn in their gold.

Let’s clear up some misconceptions as to what happened in 1933-1934; what legal authority the President has to order the seizure of gold (or other precious metal); what evidence of compulsion was used before (and what could be used now), and just what is so magical about this metal that makes some individuals covet it, and makes governments fear it.

Let’s start with the premise that there is no element of compulsion that can be employed to make a citizen turn in gold coin or bullion, especially if the coin is legal tender. The premise is absolutely wrong.

In 1933, President Franklin D. Roosevelt (using the “Trading with the Enemy Act of 1917”) issued an executive order on April 5 requiring that less than a month later on or before May 1, 1933, all persons in possession or control of gold coin, gold bullion, and Gold Certificates (i.e., paper currency redeemable in gold coin of the United States) to turn them in to any Federal Reserve bank or any “member bank” of the Federal Reserve system.

(The “Trading with the Enemy Act” is still around; it was last amended by Congress a couple of years ago and the general consensus in the legal community is that it could happen again. Want proof? Try Professor Hank Holzer’s article in the 1973 Brooklyn Law Review: “How Americans lost their right to own gold and became criminals in the process”).

Can the government grab all of the gold? Probably not, at least not without paying just compensation – which is a small solace. But what happened in 1933 is that gold (valued at $20.67 an ounce) was turned in and paid at face value – a double eagle or $20 gold piece received 20 bucks from Uncle Sam in paper, or coin – but not gold.

When all of the gold that was going to be got was turned in, FDR devalued the dollar 59 percent – from $20.67 an ounce to $35 an ounce. (In 1971, Nixon raised it to $38 an ounce, and in 1973 it was raised to $42.22 an ounce. The entire American gold reserve of $11 billion is figured on that artificially low figure (i.e., if Fort Knox were emptied with other storage sites, the government would really have about 30 times the figures quoted today as being part of the reserve.

That means over $400 billion in gold is presently in government hands. Billions of dollars more in gold now in the hands of the people would move to the government. Once in hand, the gold’s official dollar price could be revalued or left on its own. Either way, though, the average citizen now, as then, would lose out.

There were exceptions then. Treasury Secretary William Woodin, himself a coin collector (and originator of Adams-Woodin pattern coinage citators, allowed everyday people to keep $100 in gold coin (it was the Depression, after all) and also allowed retention of “rare and unusual coins” having a “recognized special value to collectors.”

Those who did not want to turn it in (the current argument is that the government lacks the resources to make it mandatory): the executive order provided for Draconian criminal penalties for non-compliance: a $10,000 fine or 10 years imprisonment, or both. You have to be really unafraid or believe that the government would not prosecute.

Some said that the government only tried to capture a single 1933 $20 gold piece. Not true. They went after all 1933 double eagles – they sued or were sued by collectors who sought to retain the rarity. James A. Stack was involved in lawsuits in federal and state court; Barnard, in Tennessee, was, too. Both lost, even though they had paid a lot for the coin which was both rare and unusual.

But there were other cases, too. A sampling going back to the Civil War, when the Act of July 13th, 1861, allowed Treasury Regulation, No. 22, forbidding all transportation of coin or bullion to any State or section declared by the President’s proclamation to be in insurrection (a Supreme Court case affirmed that right); in 1969, an airman was sentenced to seven years at hard labor for possession and hoarding of gold coin and bullion (U.S. v. Whitfield, 1969 WL 6253 AFCMR, 1969).

In another case, “An indictment against Gus Farber, a diamond and jewelry merchant of San Francisco, charged … that on or about Feb. 21, 1939, he willfully, unlawfully, and knowingly acquired 13 genuine $20 gold coins of the United States without a license in accordance with the President’s Order No. 6260, as amended, 12 U.S.C.A. 95 note”, (Farber v. U.S., 114 F.2d 5 , C.A.9, 1940). He was convicted.

In another instance, a 206-troy-ounce gold rooster was forfeited to the United States “Richard L. Graves … was the owner of certain properties in Sparks, Nev. Included in these properties was the ‘Dick Graves Nugget Casino’. As part of the operation of that establishment, Graves ran a dining room in which the specialty was fried chicken. This room was known as the ‘Golden Rooster Room’. For various reasons, including, among others, the advancement of the interests of his business establishment, Graves developed the idea of acquiring, and showing, a solid gold rooster as a main object of attraction in this room.” (U.S. v. One Solid Gold Object in Form of a Rooster, 208 F.Supp. 99, D.C.Nev. 1962.)

In sum, there’s ample authority – and many cases – allowing for seizure of gold coins and bullion. What of the exemptions? I’ll take that up next column.

3. Learn To Sell Gold Scrap And Not Get Robbed In The Process
Ask An Expert  (June 10, 2010) Every time the gold market heats up I get a dozen Emails about where to sell gold scrap. We at CNI do not buy scrap gold, silver, or platinum but I can provide a few valuable tips which will insure you get all the money. (1) Forget about anything you hear on TV or radio, especially with names like Cash4Gold. These are the folks that offer a free shipping kit to uninformed customers. Also avoid those small operations in strip malls operating out of stores which used to sell shoes or hotel buyers that place full page ads in local papers. Places like these pay about half of what your gold is really worth, tell you what great prices they pay and laugh at you when you walk out with your “cash”. (2) Even coin dealers are not a great place to start because this is not their primary business and therefore are sometimes cheap bidders. (3) Figure the actual gold content of your old jewelry yourself. If you don’t know how learn by asking questions regarding carat content and pure weight. (4) Figure an honest refiner will pay you somewhere between 95% and 98% of the actual melt value, minus a small processing fee of around $50. (5) It is a good idea to find a firm which specializes in melting and refining scrap precious metals like Dillon Gage in Addisen, Texas (800) 375-4653 Dillon Gage’s Assay and Refining Services but there are others so do a little homework.

4. The Confiscation Myth And The Slime Gold Company
Ask An Expert (June 21, 2010) Every time the gold market heats up the gold hustlers of telemarketer fame try the same old dodge and it goes like this: The newbie customer sees gold in the headlines, goes on the net and picks a few companies that offer “a free investor’s kit”, gets to hear how this wonderful company has been around since Moses and offers an A+ rating with the BBB. By the way, it is not like the old days, the A+ rating can be purchased and means nothing as long as you are “informed” before the purchase. So this well meaning mark believes his friendly representative and listens carefully as he is told that buying gold is a great idea but you must avoid the common bullion coins because our Uncle Sam is just waiting to confiscate your holdings. But the large and well known A Slime Gold Company has the secret solution: “Invest in non-confiscatable gold like Swiss or French 20 Francs and you will be safe.” There are a number of holes in this all too common story: The Confiscation Myth is just that in my opinion and used extensively to “steer” the new buyer away from what he wants (bullion which produces little profit to honest dealers) into higher priced gold coin substitutes which produce the big commissions necessary to run high overhead national firms. But let me play Devil’s Advocate for a minute and suggest that even if there is a slight possibility the government is thinking about confiscation there are very legitimate and reasonable ways to protect your gold bullion investment without paying an arm and leg in trumped up broker commissions. In other words the same typically touted small gold coins are available elsewhere for significantly less money. But keep in mind that just because our government confiscated gold in the 1930’s does not mean it will today. Why? America is quite different now and much more pessimistic about its leaders. A typical response today would be to bury the stuff in the backyard and declare their gold was stolen years ago by crazy Uncle Joe. Now let’s say you are really paranoid and while you may not believe the story you want to do something to protect against this wild idea. There are a few alternatives which are not in any way proven but at least you have a story for Uncle Sam. The alternatives like pre-1933 Swiss or French 20 Francs are sold by most large bullion companies at prices similar to other small bullion coins. But the unfortunate new buyer does not do his pricing homework and believes A Slime Gold Company is quoting “fair” because they are so reliable looking. The truth is he is giving away about a 1/3 of his investment because he failed to “shop around”. Or look at it this way: The money he spent on the 100 coin lot of Swiss 20 Francs from his “friends in the gold business” would have produced 130 of the same coins at any large gold dealership nationwide. The moral here is to heavily discount any firm that leads with the confiscation issue as a selling point. Like I said, I personally don’t buy the logic here but if it is a concern to you there are plenty of ways around the problem without buying your commissioned broker a new car.

5. Sell Dad's Coin Collection And Guarantee You Get The Right Price
Ask An Expert (June 9, 2010) “My Dad had a coin collection and has since passed on giving the collection to the family. How can I be sure to get full value if we decide to sell?” It is amazing how often I get this Email so a general answer might help everyone: Most small family collections are not rare because the coins were either taken out of circulation or purchased from the local coin shops which were common 30 or 40 years ago. Buying quality coins during that period was hit or miss because there was not any independent certification and grading standards were evolving so in some cases the quality of the collection and therefore its value is a matter of good fortune. It is unlikely the collection will contain a true rarity but it is possible and there are a few pointers which allow you to make an informed decision: (1) Do the coins indicate were they were purchased and what was paid? This information could come from original flips (the old coin holders) or receipts and notes. These records are important because if Dad was dealing with Harvey Stack of New York for example, a leading East Coast dealer at the time and recognized numismatic figure, the chances of having a valuable coin in your hand increases tremendously. (2) Regardless of the selling dealer do the coins appear to have been purchased for a premium when Dad was building the collection? This is important because during this time there were few rarities still in circulation. So by inference if he did not pay a big premium he must have just saved what came his way so the chances of having the key dates are smaller. This is not to say the collection is not valuable, it could be but chances are its value comes from its silver and gold content, not its collectable value. (3) Purchase a copy of A Guide Book of United States Coins by R.S. Yeoman; it is available from any bookstore for about $15. Lay out the collection and see if you can match your coins to the examples shown in the book by date and mint mark. There is a lot more to this but this step will give you a sense of what is valuable and what is not. (4) Finally take your treasure to more than one coin dealer and shop around before selling anything. This is important because while I believe there are more honest dealers than not, you could run into the wrong person and get killed (this is trade talk for selling your valuable coins for much less than they are worth). While all of this may sound daunting it can be a lot of fun and if you need help call me for a fast answer (1-800-225-7531) or Email RSchwary@aol.com a list of what you have and the prices offered and I can see if you are being treated fairly. Good luck and let’s hope your old coffee can contains one of the missing 1894 S Barber Dimes. The Mint struck 24 at the time and only about half are accounted for…the price tag for one of these in excellent condition will be over a million dollars!

6. Avoid 'Hotel Buyers' When You Sell
Ask An Expert (July 6, 2010) The Professional Numismatists Guild (PNG) has taken aim at Hotel Buyers! For the uninformed these are the guys that take out large format print ads in local newspapers and tell readers they pay top dollar for gold coins, jewelry, silver dollars, commemoratives, medals, diamonds, old watches and “you name it” as far as buying collectable things of value. Their name, of course, comes from the fact that they set up for a day or two in local hotels. The fact that they are here today and gone today does not provide much financial reassurance to the seller but in the days of “fast everything” they seem to fit the bill. As far as the PNG is concerned most of these guys are simply the devil in disguise and folks who sell their valuable coins and paper money for next to nothing are either not well informed or just plain stupid. But how do the prices offered by Hotel Buyers match up with say your local coin shop or coin show? Actually many Hotel Buyers are what the coin trade calls “cheap bidders” because all that print ad and travel is expensive and the seller picks up the bill. The problem with some of these folks is that they get greedy and “low ball” the public (which is trade talk for offering virtually nothing in the hope that the uniformed will simply not question the offer). These extremely low offers are actually against the law and actionable if discovered. If you sell your coin collection to the guy across the street for nothing and you later find out it was worth a great deal you have little or no legal recourse because your neighbor is not a professional. If on the other hand you sell too cheap to a Hotel Buyer and for some inexplicable reason find out you have been taken, you have grounds for a law suit because you relied on his professional opinion as to value. But most Hotel Buyers are not related to the community and do not care anyway because they are soon gone. So does this make your local coin shop a better place to sell your treasure? Actually it is a much better place to start but because all is not what is seems in any business involving the exchange of money you should be cautious and test the waters until you establish a trusting relationship with any dealer. More than one professional opinion, especially in the beginning, is probably a good idea and always remember what President Reagan said about the Russians: “Trust but verify”. Also note that I am always around for questions (RSchwary@aol.com) as to whether a price quoted was friendly or someone was just interested in robbing you.

7. Bait & Switch
Ask An Expert (August 24, 2010) “I’m fresh out of nightcrawlers. How about this combination VCR/DVD player?” This is one of my favorite cartoons and reminds me of how dangerous hard sell telemarketing can be in the rare coin business. It should also serve as a warning to new buyers considering the precious metals. A new customer calls up with questions about buying gold bullion and asks the polite telemarketer for his “free investor’s kit”. By the time the conversation ends the investor is “up-sold” to a High Relief in PCGS MS-65 for $60 grand, being told this is a much better investment in “gold”. My point here is not to criticize rare coins or bullion, but simply to point out it is your job to decide if your potential dealer has an agenda. It is prudent to remember that commissioned salespeople are always biased and follow “the company line” if they want the next set of “hot” leads which come from that expensive advertising. So is the customer better off with the High Relief or in generic bullion coins? I have found a combination of both rare coins and bullion is a good strategy but I have a great deal of experience. In my opinion a first time buyer should never be sold an expensive rare coin when inquiring about gold investments because he does not know enough about the rare coin dynamic. So if you are new to investing in precious metals being suspicious is good. Weigh carefully information given by salespeople, especially those on commission and first establish a core position of regular 1 oz gold bullion coins or bars before considering other opportunities.

8. The Value Of Error Coinage
Ask An Expert (Sept 29, 2010) I receive questions about error coinage on a regular basis and thought a few lines might be helpful to those that watch their pocket change carefully. Considering the huge number of coins released into circulation each year it is rare to find a serious mistake in modern coin production so most questions center around minor mistakes which do not have great value but are interesting because they are different. But there are exceptions and some modern mistakes are valuable so having the right reference book can be a great advantage. My friend Fred Weinberg helped write the standard reference book on how error coins are created and what makes the unusual examples valuable. The current (4th) edition is out of print, but you can see a copy of the older edition here: The Error Coin Encyclopedia 2nd Edition and probably find the most up to date version with some help from Fred. So if you have questions about mistakes you have found and want an honest answer as to value and rarity you can contact him at Fred Weinberg & Co. He is a credible guy and a recognized expert so his feedback can be trusted.

9. Should I invest in gold and rare coins?
Ask An Expert (Sept. 14, 2010) Asking a coin dealer if you should invest is like asking a restaurant owner if you should eat out, sometimes the answer is too self serving and the correct reply is, of course, in your details. There is no one size fits all in this business so be prepared to invest time and thought before you get started, the corollary being that if your dealer sounds like a recording you might want to rethink your strategy. There is a series of smaller books that Dave Bowers edited a few years ago and are now out of print but you might find examples on Amazon. The series is part of my reference library and really relates more to numismatics than anything else but there are a few entries that offer great investment insight. A case in point is The Numismatist’s Downtown Companion (Volume Seven) Edited by Q. David Bowers. This small story began on page 111 and was called J.W. Scott: Dealer in Coins and Medals by Thomas S. LaMarre and I quote “Collectors are increasing and the demand for United States cents, half dollars and gold cannot be supplied at advancing prices. The buyers of real fine coins have made enormous profits in the past, but we venture to say that buyers of rare specimens today will realize quadruple the investment inside of 10 years.” Advice from the latest investment newsletter? No, a recommendation from the 1906 edition of J.W. Scott’s Silver Coin Catalogue, the “bible” of early collectors.

So you can easily see the “buy this stuff and you will make a fortune” investment philosophy is not new and has been shamefully used by everyone and their brother since the time of Mosses. The real trick in today’s market is to study and sort out the genuine opportunities from the “come one come all” approach that has been around for quite a while.

10. How much does gold have to move before I make money?
 Ask An Expert (Sept 24, 2010) It is hard to believe but after watching the latest round of congressional hearings over getting ripped off in the gold business it appears that customers simply did not ask this important question. I have written many times about the customary practice of “steering” in this business but for the record let’s talk about this once again. Steering is used in most businesses and does serve a purpose in that it introduces the customer to new opportunities so in a free society it is hard to get around that car salesman that wants you to purchase “extra protection” insurance. And the American consumer seems to properly sense when to say no, but for some reason this common sense is sometimes left at the door when it comes to the precious metals. This is why there are congressional hearings over precious metals pricing which should be pretty straight forward if you remember my opening line. If you call and ask about the price of gold and want to purchase a Krugerrand the large telemarketers with big advertising budgets and fancy addresses don’t want to sell you this or other large bullion coins because they could never pay the bills. The ongoing congressional hearings are about selling proof gold eagles and small bullion coins like the gold Swiss and French 20 Franc at ridiculous prices to first time buyers who did not know they were being robbed but could have easily defended themselves given my special question: How much does gold have to move before I make money? This simple insight will quickly alert the buyer of danger and it will add additional insight and transparency to the entire process. Even rare coin buyers should ask my special question and will benefit because professional dealers will explain that higher gold prices creates “pricing buzz” but may not equal higher coin prices which has been the recent case with most PCGS certified gold coins. So the next time you consider a purchase be sure to ask: How much does gold have to move before I make money? And like I have said before please pay attention to the answer, unless of course you want to testify at the next round of hearings.

11. The Professional Numismatists Guild (PNG)
Ask An Expert (Sept 28, 2010) Doing business with members of the PNG makes sense for a number of reasons and if you look for dealers with this affiliation it could also save you a great deal of aggravation. This guild of professionals has been around since 1955 and its members are a Who’s Who of the coin business. To qualify for membership they must be trade recognized for their professional conduct, knowledge, integrity and financial responsibility. They must also receive a majority of votes from the general membership and pledge to uphold the PNG Code of Ethics, a 17 point statement which assures a smooth business transaction based on years of practical experience. And what PNG dealers offer the public which makes them the number one consumer rights group in the country as far as coins and precious metals is simple binding arbitration. If you feel that you have not been treated fairly by a PNG member you can ask for a simple three way arbitration to discuss your situation which costs the consumer nothing and provides a binding solution to your problem. So before you purchase precious metals or rare coins ask your dealer if he is a member of The Professional Numismatists Guild and insure you are dealing with qualified people who stand behind their products and prices. All members are issued a unique 3 digit membership number and mine is Number 365. I have been a member of the PNG for more than 25 years and can say it is the best this industry has to offer in the way of expertise and professional commitment. So when you check credentials ask for that 3 digit PNG member number and make sure your dealer is accountable for his actions.

12. Should The Government Regulate Gold In Your IRA Account?
Ask An Expert (Oct 13, 2010) With my many years of trying to keep the government out of private business I would never believe that I’m actually considering this government regulation on a limited basis. Why? Because there has been a significant and negative change in the way our government can regulate free enterprise and still present an advantage to American citizens within the physical precious metal market. In the past if a telemarketer robbed a gold buyer by selling grossly overpriced merchandize the Federal Trade Commission (FTC) could step in and shut the offender down after investigating complaints from consumers. Now this was neither a quick fix nor one that would make everyone happy because the “room” could open up across the street using another name and the process of stealing from the uninformed began again. So what has changed in the last 10 years that has also changed my mind? There is a new breed of telemarketer which has been bullet-proofed by expensive attorneys and now may be immune to federal prosecution because of prominent pre-sale disclosures given to new customers. In other words if you tell the mark he is being screwed up front the FTC may not be able to help him after the fact, never mind the new investor who wants to buy “gold” was easily lead into overpriced “hyped” material with scare tactics and outright lies. So you free enterprise American thinkers out there might say “Well, you told the investor up front what he was being charged and the idiot still did business, so why get the government involved? The consumer had more than enough information to make an intelligent decision in the first place.” This is the same and very old wisdom used in the American car business since there was one color of Ford: “You bought the car, get off the lot” and if we were talking about cars there would be no need for significant change. But we are now talking about the vast pool of money available because the government allows the use of Individual Retirement Account money to purchase gold. And notice I said “vast amount of money” because this marketing windfall is being looked at greedily by some of the largest and hardest sell coin telemarketers in America. And believe me this “put gold into your IRA account” could end just as badly as the recent mortgage collapse if the professional coin trade does not step up to the plate and distinguish itself. There is a very large wolf at the door wearing sheep’s clothing and finding Waldo is going to be easy because of the commission prize and legal shielding now in place. Expect trouble folks, right here in River City if the government does not regulate the selling of gold coins now being placed into retirement accounts. Why this type of needed legislation has to be trumpeted from someone who is actually in the bullion business, especially after congressional hearings in which the newbie trusted the “nice gold broker” is an amazement and embarrassment.

13.The Weather And Those Pesky Premiums
Ask An Expert (Nov 9, 2010) I received an Email from a customer asking what we were doing with circulated $20 gold pieces as premiums were all over the place. So let’s talk about premiums, why they are important and why most don’t really understand what they are and how they also plague honest dealers. To begin let’s assume you are dealing with an honest broker because if your dealer is predatory his premiums are contrived and not market driven. In other words what he charges over spot is made up to line his pocket. Under normal pricing circumstances the premium you pay over spot is made up of two important parts. The first is the small dealer commission and the second is the premium the dealer pays to attract product so he has something in his cart for business. The public wrongly believes the premium over spot is the dealer’s commission and this leads to the basic misunderstanding of premiums. In the case of our customer’s question the price Kenny would pay for a circulated $20 gold coin varied over time more than $100 and did not follow exactly the price of the gold. Was Kenny making more money at the expense for the customer or was there something else at work in these transactions? From a profit standpoint Kenny makes about the same commission each time he was asked to quote a market! But depending on when the customer wanted to trade he would have received more or less money depending not only on the price of gold but on those pesky premiums. Why? Because they are defined by changing demand in the marketplace, which is a dynamic beyond the trader’s control. If our customer sold when everyone was crazy about the phony confiscation story he would have received more money because demand pushed the premiums on circulated $20’s higher but if he sold when everyone’s interest was now pointed at standard bullion because of the financial flight to quality he would get less because confiscation fears are less and there is more product on the market so bids move lower. There are many other factors which may cause premiums to shift suddenly but a few examples will help: (1) The congressional hearings which questioned the prices of some large telemarketers concerning US Gold Eagle Proofs sacked their phone sales and premiums dropped $500 in a few days because demand moved dramatically lower. (2) This next example is a bit counterintuitive but will also help you better understand premiums. The large run up in the price of silver caused the traditional premiums on circulated silver dollars to collapse. When silver was cheap, say $10 an ounce, any silver dollar was worth a large premium so a coin which contained $7 in silver would fetch $14. As silver approached today’s levels this large premium has disappeared so most circulated silver dollars will not fetch a great deal of premium and trade close to their actual weight. Why? Because the rise in price has brought a great number of these old dollars into stores all over America and so premiums have decreased. So what is to be learned from this unpredictable premium market? (1) Always figure the premium you pay for any bullion product and if it is high relative to other choices choose the lower premium product. (2) Remember that premiums are a reflection of relative demand and do move up or down depending on what is on the public’s mind. A good dealer’s profit margin is conservative because his business plan is dependant on your happy return but he has no control over premiums. Changes can on occasion be large, move up (in which case you are happy) or down (in which case you are sad) and have a stubborn habit of acting like our weather.

14. Are Shipwreck Coins A Good Investment?
Ask An Expert (Nov 2, 2010) Like so many other things in the rare coin business the answer to this question is not so clear and depends on which ones you are talking about and their cost. If a treasure laden ship went down at sea the results a few hundred years later were not pretty even for gold coins which are almost inert. The sea water begins an electrochemical reaction with the coin’s surface and the results are unpredictable so you could have a damaged mess or a salvageable and potentially valuable coin. In the old days, if the coin was damaged as a result of the salt water or the cleaning was a hack job the surface of the coin is ruined and the legit trade sold these examples cheap at the wholesale level. These are the ones which eventually made it to those awful airline special magazines at stupid prices. Today there have been great innovations in the processing of salvaged sea coins so if these coins were not damaged in the first place and are restored properly the grading services treat them like any other submission. But what about those examples which could not be restored with proper cleaning or were simply damaged by the sea water? Eventually they too went to the grading service which solved its problem of not being able to assign a regular grade (because these coins have serious problems) by inventing a term called the “shipwreck effect” and so the numismatic lexicon continues to grow. This catch all terminology then allows them to move forward with a grade and description of sorts. So is this good or bad? Actually it is much better than in the old days in which the coin was simply described as damaged. With this more scientific approach the grading service is allowed to use a standard gradient on the coins so within the “shipwreck effect” group the novice can tell which are better. This also solves the question of authenticity and establishes a baseline for reasonable trading in lower end sea salvaged goods. But there is something else at work here that the newcomer to shipwrecks must watch carefully. When a shipwreck is discovered and its contents brought to the surface it can considerably change the known populations of sometimes very rare coins or produce a great number of inferior examples which are historically interesting but not particularly valuable. This then is a very loose end which requires additional study before deciding if a shipwreck coin is a good money play. If developing a shipwreck find is done in an orderly manner and the coins being processed were somehow preserved and not damaged by all that time underwater then collectors and the trade benefit. In such cases specialized books are written, scholars are given an unprecedented look into the past and regular grades are assigned (the SS Brother Jonathan and SS Central America are examples). The results can be quite amazing and prices have been surprisingly steady for years. If on the other hand you are considering a “shipwreck effect” coin (in other words one which was not assigned a regular grade) don’t think that just because a legitimate grading service has offered an opinion you are on solid pricing ground. Just because my two examples both fit under the loose umbrella of shipwreck coins they are in fact completely different in their desirability, pricing structure, and likely historical impact in the coin business. So what to do when considering a shipwreck coin? A safer approach would be to ask for a real buy and sell price on anything you have in mind. In the case of the Brother Jonathan or Central America $20 gold pieces any good dealer would offer a fair spread between their buy and sell. I’m not sure that would be the case for the “shipwreck effect” coins especially if they are being sold for a large premium. The bottom line is when considering a shipwreck coin take the time to carefully answer this question: Are you buying a true numismatic treasure or just some junk which was dug up from a watery grave?

15. How Much Gold Will Fit Into My Safe Deposit Box?
Ask An Expert (Oct 20, 2010) At first blush this might sound like an odd question but I get this one on occasion, so I did some homework you might find interesting: Most everyone is focused on the price of gold, which is fine but I think there are a number of benefits to the yellow metal that are overlooked if your focus it too narrow. For me, one of the giant advantages gold has to offer, and something which always trumps price, is privacy. Think about this for a moment and name one other thing in your economic life that is as private as gold. In the old days you could purchase bearer bonds but I don’t think these have been issued for many years and to my knowledge there is no paper substitute for gold in your hand. I guess you could just put cash into your safe deposit box but that is so uncreative and if inflation springs forward this could turn into a nightmare. And other things like rare coins or antiques or other collectables have their place but what can compare to a stack of bullion coins when you want to raise cash? Just grab a hand full and walk into your local coin dealer and ask for a cash payment. Most will be happy to do so if they have the cash and larger dealers always provide for this possibility but be careful to follow the cash reporting rules or your Uncle is drawn into the frame. So back to my all important privacy issue as far as a major benefit in owning gold: Any other investment or savings requires your personal information to transact and so at least a limited number of people are involved besides yourself. Not that this is bad but what if you just wanted to be completely by yourself in a financial situation? No bank, no brokerage, no government, no personal links to the transaction and at the same time you wanted financial parity meaning you wanted a cash substitute that would hold up no matter where in world you landed? Why there is nothing that compares to gold bullion when it comes to this extra advantage. And to my way of thinking this giant plus must be coveted by many investors when they think about the developing Big Brother approach to the increasingly socialized Western thinking. So back to my homework: We called Wells Fargo Bank and got the measurements of their two smallest Safe Deposit Boxes and did the math. Now keep in mind that Safe Deposit boxes are not uniform in size and this much gold would present a big weight problem, but you get the idea. The size of their smallest box in inches is 24 by 5 by 3 and that will hold 51 tubes of 1 ounce US Gold Eagles. Using our buy price today (Oct 20, 2010) of $1359.00 that would be worth $1,386,180.00! Wow! A medium size box in inches is 24 by 10 by 5 and it would hold 180 tubes which would be 180 times 20 (the number of coins in a tube) times $1359.00 (Today’s Buy Price) or $4,892,400.00! Now I’m not trying to sell US Gold Eagles but I use this example to illustrate that even a small Safe Deposit box could easily hold more than a million dollars in product and a medium size box could hold almost 5 million dollars! You can scale this notion up or down but the point is that creating a currency equivalent using gold bullion is not as crazy as it might have once seemed.

16. World Coins & Currency - Ancient Coins - A Secret Among Coin Dealers
Ask An Expert (Nov 19, 2010) The Internet is a funny place in that you don’t always get what you expect. I have written and posted what I believe are very important insights into this trade and never received one response and then there are other “interesting but not a big deal pieces” which create a firestorm. This one turns out to be in the latter category as it has been updated twice with excellent resource information and great public response. All good coin dealers have general areas in which they are expert but in those areas which they are not expert they know who to call when questions arise. In other words if you have a question on better US material like Seated Dollars in Mint State or Proof or territorial gold or patterns I would love to help you but if your question was on say a 1950’s British King George Crown (a term generally used for larger dollar size foreign coins) I could land you in the right ball park but you should really be looking for a specialist in foreign coins. So the secret is that while many dealers like to pretend they really know all areas, they in fact do not. Your job then is to be a little careful about accepting advice du jour from the corner store. So if you have foreign coins you believe to be valuable let me suggest a long time member The Professional Numismatists Guild who is honest and knowledgeable in matters regarding rarity and price: Robert Van Bebber is his name and his company is Rare Coins of Glendale. Bob is a very low key, regular guy whom I have known for years. He can be reached by calling 818-243-2900 or 818-243-1169 and is a great foreign coin resource. I also received this note from a regular reader who believes these areas offer a great deal more than US material and has been happily doing World Coins with Karl Stephens (760-731-6138) for years and PCGS uses Karl as a consultant so his credentials are also excellent. This reader also recommends the following dealers for ancient coins Pegasi Numismatics of Ann Arbor, Michigan, 734-995-5743. The principals are Eldert Bontekoe and Nick Economopoulos. And for world currency consider either Jeremy Steinberg in San Anselmo, CA. 415-897-1654 or Tony Pisciotta in Olney, MD., 301-774-7791.

17. Rare Coin Supplies And The Small Coin Store
Ask An Expert (Nov 23, 2010) Within 10 miles of the CNI Building there used to be 10 smaller coin stores which carried a wide range of coin supplies but they began disappearing in the early 1980’s as rare coin prices collapsed. So I often get an email about the availability of Whitman Albums, or coin flips, or coin tubes, or special boxes which hold 2 by 2’s, or Jewel Luster, or magnifying glasses. And what about the ubiquitous Capital Plastic Holder which used to be a staple before independent (PCGS & NGC) grading and sonic sealing of coins destroyed their once permanent position in coin preservation? In the old days every coin store carried a large selection of supplies and there are a few that still do but I’m afraid most are no longer with us as the coin business faced the reality of fewer younger collectors and the rising cost of small business in America. They have been replaced with well funded larger corporations which watch the bottom line carefully and screen product lines with the eye of a trained accountant. Of course this takes a great deal of fun out of the collecting equation, especially at the entry level but all is not lost! We at CNI do not carry the usual array of coin supplies but there are a few well placed net/retail operations which specialize in this area so their inventory and prices are unbelievable:CoinSupplyPlanet.comCoin Supply StoreWizard Coin Supply.

18. Now is the time to consider early US gold & silver Commemorative Coins
Ask An Expert (Oct. 29, 2010) “Are there any areas of rare coin investing that are still cheap?” from a recent reader. Actually there are a few but let’s talk about one that has wonderful potential and since I have been in this business has gone through periods of intense popularity and virtual seclusion. Today classic commemorative coins trade in relative seclusion and cry out for participation because pricing is so attractive. I guess you should ask why these classic coins are not as popular as they have been in the past. One reason may relate to the grading and promotion of all the modern stuff being produced at the US Mint today. There is a virtual hailstorm of modern issues and each one is promoted and sold as a modern rarity. Time will show, just as it did during the 1960’s proof set rage that prices for today’s miracles will trend lower because there are not enough collectors to support the number produced. But in the meantime this new promotion and certification has pushed many early classic commemorative coins into the background. I’m talking about traditional gold and silver commemoratives struck from 1892 through 1954, which include some of the most interesting coins in numismatics, most of which, even in high grade are relatively inexpensive today. Classic silver coins like the1918 Illinois Centennial or the 1922 Grant Memorial (No Star) or the 1926-1939 Oregon Trail Memorial or the classic 1934-1938 Daniel Boone Bicentennial to name just a few of the many silver half dollar denominations. When I was growing up the early gold and silver commemoratives were a traditional and popular area of rare coin collecting and investing. They are interesting not only for the stories behind their designs (some of which make sense and some which missed the mark) but the “inside” stores about how and why they were conceived and distributed and abused in the process. Collectors either loved or hated them as a group and dealers at the time were accused of slamming the public with price fixing and inside deals with Mint officials. If the public thought issue prices were too high they did not buy and it was common practice to melt what was not sold which in turn produced undervalued coins in the series if you know where to look. Commemorative silver coins are primarily half dollars with the exception of the 1893 World’s Columbian Exposition Isabella Quarter (affordable and not easily found in original high grades) and the 1900 Lafayette Dollar (a great collectable coin which is expensive is PCGS MS 65 but cheap in PCGS MS 63 or MS 64). There are 9 very collectable $1 gold pieces and two $2 ½ gold pieces, one of which (the 1926 $2 ½ Sesquicentennial of American Independence) in PCGS MS 64 which trades for about the same price as any common certified US $2 ½ gold coin in the same grade! This is an example of why the series is interesting because with a little insight and value judgment the new buyer can find complete bargains. There are also two magnificent fifty dollar gold pieces: the 1915 S Panama-Pacific Round and the 1915 S Panama-Pacific Octagonal both of which are very expensive but none the less have stood at the pinnacle of beauty and desirability all of my numismatic career. So why recommend this series if most of it has been quite in price? Because now is a great time for bargains and there are some real sleepers especially in higher grades. Here are a few rules to follow: (1) Stick with PCGS MS 65 examples when possible because they are today’s value play. (2) Be a “type” buyer until you learn more about the series, meaning don’t pay for better dates until you become more experienced. (3) Look at as many examples as you can and choose those which relate to something you deem worthwhile. For example a Civil War buff might find the 1936 Battle of Gettysburg Anniversary or the 1937 Battle of Antietam Anniversary interesting. I have owned a 1936 Bridgeport, Connecticut, Centennial in various grades all my life, and in fact carried one around when I was younger because the obverse (front) of the coin has a wonderful picture of B.T. Barnum (if I have to explain this you might be in the wrong place). (4) Purchase a copy of Yeoman’s A Guide Book of United States Coins and study the section called Classic Commemorative Silver And Gold Coins as it is concise and will give you a good “first look”. Then consider a more advanced book like this one by Q. David Bowers: A Guide Book of United States Commemorative Coins: (The Official Red Book).

19. What's In Your Wallet Or Can Your Dealer Actually Grade A Coin?
Ask An Expert (Dec 28, 2010) This commentary is going to get me into a bit of trouble but it is worth the angst if you learn this fundamental fact: A great many of today’s coin dealers cannot grade a coin properly and this is a disadvantage to you the buyer even with the advent of reliable third party grading. I started buying and selling rare coins when I was a kid and got serious in the late 1960’s or more than 20 years before the inception of PCGS (1986). Back in the day, without the help of modern grading services a dealer had little support when it came to grading and two way pricing was subject to his own bankroll and nerve. The good part of this equation was that if the dealer was willing to go though the pain and expense of the learning curve he could develop grading skills given he had the talent to retain the knowledge. During this early development I asked every dealer that would put up with me the same questions about grading and got a different answer from each after I got through the basics of a Very Fine Buffalo Nickel must have a full horn. I spent an amazing number of hours examining auction lots without the money to purchase the coins simply because I wanted to compare the cataloger’s grade and description with the actual coin. It was not long before I realized that one dealer’s grand example was another dealer’s Frankenstein. I would not be deterred however and simply plunged ahead buying and selling and mostly losing money until I was broke. It finally dawned on me that there had to be some higher source and so I discovered the coin show; surely these traveling dealers had the secret answer to the grading question. Some show dealers exhibited more skill and were more recognized within the trade than anything I had seen up to that point simply because they examined more coins in various grades and so became better at grading. And it finally clicked that grading was a complicated process of book learning and practical experience but the most important part was the ability to look at thousands of examples in a comparative way. There was no substitute for “looking” and questioning dealers which were more skilled than you about grading coins. By putting my ego aside I realized this cumulative process continues for a lifetime if you are serious about this business because each coin series is unique and offers different challenges. This is why you are likely to see advanced dealers and numismatists specialize in an effort to gain trade recognition. So why is this important to you as a buyer of certified coin today? Because grading skill is an essential part of what it means to be a rare coin dealer whether the coin is certified or not if you want to be taken seriously. A dealer without grading skills cannot offer a solid opinion as to where your coin lands in the wide variance within the same certified grade. In other words is this particular 1799 Heraldic Eagle dollar in PCGS XF-40 nice for the grade and worth the money or a scrubbed up example that just managed to be graded but has problems and should be avoided until something better comes along. This informed dealer’s opinion becomes more important as the rarity of the series increases because he can sense if the holdered coin has hard and original surfaces or has been “played with” in today’s coin parlance. I have seen the same crusty territorial gold coin move through two grading services and receive three different grades because these early private issues are plagued with so many planchet, die and manufacturing problems that mint state examples can sometimes exhibit only poorly defined Extra Fine details. And if your coin dealer has enough experience he will readily admit, even if he learned to grade in the old days that the grading process is to some degree an art form. An art form which has become much more sophisticated with the advent of independent certification but one which in fact may still be developing as new technology is applied to the process.

20. Rare Coin Prices And Being A Red Book Price Contributor
Ask An Expert (Nov 29, 2010) I have often recommended A Guide Book of United States Coins by Richard Yeoman as an answer to rare coin questions including pricing. But where does the Red Book obtain its prices and is even this legendary tomb always right? If you look at the first few pages of any Red Book you will see a title like this: Contributors To The Sixty-Third Edition and under it approximately 100 well known dealers who are asked this time each year to review prices and make changes. My name has been on the contributor list for years but I’m getting older so it may be time to make some changes of my own. The reason I bring this up is to illustrate that even dealers with good intent my read a particular situation wrong because of the many variables involved in pricing. So the point is that pricing is an art and should be appreciated because the numbers are a moving target. I was a small vest-pocket dealer in the 1970’s with a full time job at Hughes Aircraft when the Laverne Redfield silver dollar hoard was discovered. Redfield was ahead of his time about trusting banks so when it was possible to trade $1000 in paper currency for a bag of real silver dollars Lavern was at the head of the line. When he died the IRS auctioned the collection and it was eventually sold to Bowers & Ruddy but the sale was stopped by court order and Steve Markoff walked out with the prize. Markoff is one of the smartest coin men you probably never heard of but his behind the scenes money involvement has been a game changer in this business for decades so it’s too bad he moved on and now is a famous movie producer. So what does all this have to do with coin prices? Well at the time everyone (including me) thought the price of silver dollars would collapse because Steve paid too much. The idea of seeing 400,000 Redfield silver dollars on the market was a nightmare. The same thinking prevailed, also during the 1970’s when the GSA (Government Services Administration) announced it would sell millions of long stored silver dollars directly to the public. This amazing hoard included more than a million Carson City dollars 500,000 of which were 1880 CC, 1881 CC, 1882 CC, 1883 CC, 1884 CC and 1885 CC. Everyone in the trade said the price of CC dollars would collapse overnight. A final but more recent example was seen when Dwight Manley sorted out the SS Central America find by stepping in between the insurance companies and the salvage people and everyone else with a claim on this numismatic prize to solve everyone’s money problems with a large check and an orderly plan to resell the gold find. What all of these stories have in common is that the expert’s thinking as far as pricing is usually reliable but at times even knowledgeable folks are off base. In every one of my three examples the experts at the time thought that prices for these rare coins would collapse, but happily they did not and the subsequent widespread distribution indicates the public saw opportunity. This is often the case when large numbers of interesting coins come on the market. Publicity stirs renewed interest and there is a good chance the collector decides to place an example in his collection that would have otherwise not been available at an attractive price. This dynamic can push prices higher over time and old timers like me shake their heads about how things are changing.

21. Is Cleaning A Coin Ever A Good Idea?
Ask An Expert (Dec 7, 2010) For some reason this question comes up every other week and the usual admonition…never clean coins…it is a bad idea is never quite enough for most people. The public has always had a penchant for cleaning rare coins especially in the old days and the long term results as studied by today’s more informed numismatists have generally been a disaster. Before the price tag of rare coins began increasing it was sometimes considered fair game to improve a coin’s details, especially in early copper by going over the outline of details long gone in an effort to either improve the look or fool someone else into paying for a higher grade. The advent of independent grading has of course been a game changer in that folks now have real protection against such things but every time I see a PCGS Genuine holder (meaning a regular grade could not be assigned) I wonder if someone tried to “help” the coin along the way and in the process did something wrong. It is difficult to guess but there have been hundreds of millions of dollars in lost value because some genius decided that a “bright” example was worth more than one which was left with original coloration. The color or patina a coin acquires only after many years is the result of a chemical reaction to the outside environment and in most cases actually protects the coin. This patina has nothing to do with the price a dealer will pay and in fact dealers love that “old” look and will pay more for the example. So why does this notion keep popping up about cleaning coins? You will find with only a cursory look that it is always about the money. Some folks mistakenly believe that when they sell coins to a dealer he simply makes them look better and sells them for more money. The truth is he hopes to sell them for more money (never a guarantee these days) but that is how he makes a living and the process does not have much to do with the way a coin looks. You see the secret is that looks may not equate to grade in the coin business. In other words a silver dollar could be white; meaning no toning, or heavily toned meaning you can’t readily see the original surface and still be assigned the same PCGS grade. So which of these silver dollars is worth the most money? Well, it depends on what is available and what the new buyer wants. Sorry, no easy answer here either but you will learn something important if you stick with this commentary. I prefer and will pay more for the original coin but the public seems to like the white coin more, at least for now. There is just something about “bright” that creates a sense of well being in the new buyer and even people with experience are sometimes sucked into this thinking as they build their holdings. Why this is true is a puzzle but keep in mind I’m the buyer who prizes “original” and like all things relating to investments, what is hot today does not mean hot tomorrow. I can tell you from personal observation that more than a few national treasures have been ruined in an attempt to improve their look and to add insult to injury the final decision is sometimes made by a professional. Now before I get hit with a nasty email let me say that I do appreciate that some silver coins which have developed a problem over the years (PVC contamination for example) should be “dipped” in an attempt to stop the chemical process. But these situations represent a minority so the decision to improve the coin’s appearance using either a solvent or the common “acid” based solutions can be delayed until a professional can offer an opinion. This is true because some coins should never be cleaned because there is always a downside to the process. If you are one of these types that is still not convinced and wants to follow the instructions on the cleaning product let me provide some insight and also mind you that this stuff is not good for humans: E-Z-Est is a coin cleaner which has replaced the old Jewel Luster because of environmental problems. It is an aqueous solution using thiourea to remove tarnish just like in the old Tarnex commercials. The label clearly says use on all gold, silver, and copper coins. The fact is that you can’t clean copper under any circumstance because the process destroys the very nature of the metal. It is a trade secret that some copper specialists can retone a cleaned copper coin but this artificial process does not replace the natural patina it simply masks the raw surface with a visual substitute and most understand the coin has simply been recolored not restored. The label also does not explain that thiourea is acidic and your gold or silver coins must be neutralized using a solution which contains a small amount of baking soda before being thoroughly rinsed and properly dried. I am not trying to be glum but more than half the established dealers in the country don’t understand the chemical processes involved and the possible long term damage. So in the end my best advice is to keep your coins in their original condition and in doing so maintain their value through changing times. This update concerns my reference to PVC which, over time can produce a florescent greenish tinge on the surface of some coins. The chemical PVC is still used in many plastic coin products (cheap flips are a good example) and makes the plastic softer and easier to handle. There is nothing wrong with using these supplies as long as their use is not long term. If your coins are stored for longer periods (more than a year) consider using a holder which is free from this chemical. Non-PVC holders tend to be harder and cost more but if your rare coins are valuable it is worth the money. If you have doubts any good dealer will examine your treasure and tell you if PVC coin contamination is a problem (most of the time it is not). I would not lose any sleep over this but it is something an informed numismatist should address for valuable rare coins. PVC contamination is not a worry if your coins are graded by PCGS or NGC as their holders are inert.

22. Observations: The Government Reporting Rules and Said Fiasco
Ask An Expert (Dec 24, 2010) – When I was in high school the required book for those who cared about reading was 1984 by George Orwell. In the 1960′s the Cold War posed the real threat of nuclear holocaust and such books were as close as you could get to underground reality in my blue collar neighborhood. Both Orwell’s envisioned world of government control and collecting coins out of circulation cost very little and provided a tangible link to the popular James Bond movies. But it was in this environment that the fear of government intervention began to creep into the Vox Populi. As the rhetoric continued to grow in the small underground book stores of the time the Vietnam Conflict and a crooked president reaffirmed that all was not right in Washington. Perhaps our smiling Uncle did have hidden plans under those stripped pants? In the ensuing years this paranoia continued to grow and certainly fed everyone’s imagination as our government announced confusing and inconsistent rules for selling bullion products. But even with these arbitrary rules in place selling should be a non-event because there are a large number of non-reportable low premium bullion products. In other words if you want complete privacy there are dozens of bullion choices which the buying dealer does not have to report because the government did not include them in their infamous list. What is curious however is that the number of reporting forms filled out by CNI year over year remains about the same so the public either does not know or does not care to take advantage of this very large loophole. My bet is that they do not know and it is in the perverse rehashing of these rules by a few national dealers that the public is made the proverbial goat. So it will not take Agatha Christie’s famous Belgian detective Hercule Poirot to see there is something amiss in this wider plan. It is the distorted dealer use of reporting requirements to sell so-called special bullion products for ridiculous prices or rare coins which have nothing to do with bullion which is at the heart of the matter. So let’s take a closer look at this dealer red herring and see what happens to all that feared government paperwork. CNI has been a good boy and followed Uncle’s reporting rules for 28 years. And in each of those years we have diligently filled out government forms, first about cash transactions and then about what investors are selling when not slaving to pay taxes. Now don’t get me wrong as this topic does deserve some attention because many folks do not know that our Constitution reserves no express right to privacy so let’s not be too trusting of a Congress with political symbols like an Elephant or Donkey. These reporting forms which were initially done by hand require hours of time and even with computer help simply create more red tape which eventually becomes a hidden tax for the honest consumer. So in 28 years of filing this paper blizzard how many times to do you think we have been contacted by our government friends with questions about these individual transactions? This is the primary question many readers have on their mind because I hear it across the counter everyday. How many? Well these are the latest government request numbers…zero, zilch, zip, nada…that is how many times. Not once in 28 years have we had a serious inquiry over this government reporting paperwork. The “why” of this seemingly no interest position after the fact is difficult to understand but we might have some fun with a surmise that is one of my favorites: Perhaps one day when wondering what our government does with this expensive paperwork we will read that a closeted Washington Post Blogger made an interesting discovery. He found a virtual room in the Pentagon where all this information was stored and forgotten because no one knew what to do with these reports and was too embarrassed to ask. And using the Freedom of Information Act he found that in the late 20th Century the government actually ran out of funds to pay for these goofy projects. And further that because there was no money for expenses the filing clerk’s Reporting Taskforce simply left the machines running, turned off the lights and returned their parking passes? Did George Orwell have it wrong with Big Brother and his case concerning government intervention has been turned on its head? Is our fate in the 21st Century not that government is watching everyone but that it can no longer afford to watch anyone?

23. The Token and Medal Society (TAMS)
Ask An Expert (Jan 18, 2011)Well if you have not heard of this group don’t feel too bad because it does a great deal of work in one of the more obscure areas of rare coin interest but one of the most interesting. To set you on the right foot however you should understand the public usually makes a mistake when describing the family treasure that Uncle Joe put away during the Neolithic era. Anything that is round is called a coin, when in fact only a sovereign government can mint a coin and so create legal tender. The rest of the stuff might look like a coin but falls into the broader numismatic area called Exonumia and contains such things as tokens and commemorative medals: (1) The Europeans love to produce commemorative medals for every occasion and developed the technology into an art form over the past 200 years. Any subject is fair game like kings, queens, weddings, assassinations, murder, birth, and conquest. The rarest are usually made from gold, followed by silver and then copper although there are exceptions. There are more copper medals than any other and because there are so many subjects most are inexpensive, falling in the $25 to $300 range for the most part but there are important historical medals which can be quite valuable. Silver and gold medals especially in high grades should be checked thoroughly by a professional because some are quite rare and valuation is better served by a reputable auction company. (2) Private tokens are also an exceptional area and especially suited to the history buff. These mostly copper jewels are the size of both large and small cents depending on the year they were struck and everyone got into the act so they were minted by the millions. Many have something to say and have been used for everything from a small change substitute to political statements ranging from popular or unpopular presidents to civil war battles. Some of the more common types are called Hard Times tokens which include satirical pieces with relevant commentary for their day (1837 – Not One Cent for Tribute), commercial store cards which served as great local advertisements and political tokens which are always worthy especially if you think only today’s politicians are a joke. Also of keen interest are Civil War tokens (my favorite) and other interesting statements of their time like So-Called dollars or Bryan and Lesher dollars. There is even a large collecting fraternity which specializes in Columbian Exposition stuff. In 1837 and 1864 Dr. Lewis Feuchtwanger created 1 cent and 3 cent trial tokens using a German silver combination of copper, zinc, and nickel and tried to sell Congress on the idea that these should be substituted for copper cents. I’m not sure he disclosed his ownership in related mines at the time but the project failed to gain traction because his “combination” could not be duplicated with consistency. Like I said, this is a short list and includes just a few of the famous, infamous, and sometimes overlapping areas the Token and Medal Society spend a great deal of time studying, cataloguing and pricing. What makes the entire token area fascinating is that while our old pocket friends are not legal tender many were used as real money in the United States. These substitutions happened for a number of reasons and are seen most often when our government was not minting enough real coinage or there was a political axe to grind or a private citizen wanted to make a statement about legal tender. And so research opens a window into how exasperating daily commerce might become and how clever Americans are in divining new ways to solve the problem and poke fun at the process. For the most part this history in your hands is inexpensive when compared to high grade rare coins of the same era. Most civil war and store card coppers trade for between $20 and $75 which is cheap considering their historical importance and include examples using the Monitor to remind us of the first battle of the ironclads. So the next time you wonder about that old coin like token or medal which has been around the house since you were a kid consider doing some research and support The Token and Medal Society (TAMS). There is no one book with information and prices because this subject is too large but A Guide Book of United States Coins (Yeoman) will provide a beginning and standard references include anything written by the Russell Rulau (The Standard Catalogue of United States Tokens (1700-1900). So-Called Dollars by Hibler and Kappen was out of print for many years but the excellent 2nd Edition is now available with updated prices and analysis. Also keep in mind that while most of this material is not expensive there are a number of big exceptions which could put thousands in your pocket if you have the right one in good condition. Any questions about your token or medal can also be sent along to Ask An Expert and thanks for reading.

24. Not affiliated with, licensed or endorsed by the US Mint
Ask An Expert (Jan 6, 2011)How many times have you seen this disclaimer on those cheesy TV ads selling something which looks like a 1929 proof $5 Indian gold piece? And don’t laugh I get a call on something like this once a week. For the record there were never any proof $5 Indians struck in 1929 and while this coin looks like it’s made out of gold it is actually a gold plated clad proof fantasy piece. But if you are a beginner and did not read the ad print carefully you might be fooled (limit 5 per household). Especially because these guys have the temerity to show a current gold graph going through the roof even though this metric has nothing to do with the product they are selling. Or run across a similar statement when reading a magazine and find that you are just lucky enough to take advantage of a hundred year old find of real US silver dollars (sure to sell out soon so call now)? If you have a coin background you could just smile at these common offers but believe it or not someone is getting rich by mass marketing this crap to the public. And you might also ask why anyone would go for such an obvious trick. And the answer will teach you something about why mass marketing in coins should be watched carefully and taken seriously. These ads are designed to be deceptive and to target a person who knows little about coins but the telemarketer is betting on the newbie’s interest having been peaked about precious metals because of media attention. These phony coin substitutes sabotage the rare coin trade by looking legitimate and valuable but are designed to trick the buyer into believing they came from the US Mint. And before you say this is just silly nonsense and the cost is small and really hurts no one understand that the reason these ads contain the Not Affiliated with, licensed or endorsed by the US Mint is because someone thought them dangerous enough to sue over this deception. It is a shame this ubiquitous disclaimer is the best the Feds can do to protect the public especially because they make such a big deal over counterfeit currency and coins produced in places like China. So what is to be learned from this fine kettle of fish? At the very least look for these small warnings in the most obscure places and use this red flag to educate yourself and those who may just have a passing interest. I have thrown up this flare before and still get calls from more sophisticated people, including one from a retired business friend wanting to know if the $50 Gold Union clad proof is a good deal and is there really only one in the Smithsonian Institution? I am not kidding and expect this type of deception to get more creative and rob more people as media continues to draw attention to the precious metals.

25. No Multiple Checks, Please
Ask An Expert (June 23, 2011) Now this is interesting and something I was not aware of before reading the current edition of the Grey Sheet (the Coin Dealer Newsletter) dated June 24, 2011: “ICTA is advising dealers, when making purchases from customers, not to accommodate or agree to pay any customers with more than one check per transaction. Repeatedly paying with more than one check could result in your bank closing your account, and you being accused of “illegal structuring”. In other words, this could be considered conspiracy to commit money laundering. When dealers are asked by customers to split up payments, it is sometimes to reduce the amount of each check to less than $10,000, which the customer then deposits or cashes on different days. An innocent accommodation to serve a customer a customer now could create a big problem in the future for a coin dealer.”

I have written about the misunderstanding of many reporting rules but have never touched on the idea of multiple checks because frankly I thought the size of the dealer’s check made no difference because it was deposited and so the money was easily traced through the customer’s bank. The ideas that a seller could then cash a smaller check and produce green money under the radar or deposit smaller checks on different days to somehow avoid tax considerations are now on the table. This warning from Industry Council for Tangible Assets illustrates how far our Uncle Sam will go to make sure all you folks who still have jobs are paying your share of taxes so he can redistribute the national wealth in a fair and equitable manner. 

26. Coin Doctoring Presents a Moral Imperative to the Coin Industry
Ask An Expert It would be a great deal more fun to consider what R.W. Julian has to say about Gobrecht dollars but at this point in time the consideration in front of us is the rather murky numismatic subject called coin doctoring. I have talked with both David Hall of the Professional Coin Grading Service (PCGS) and Mark Salzburg of Numismatic Grading Corporation (NGC) about this problem and believe these folks along with other industry leaders understand that not taking unilateral action against the growing danger of radical coin doctoring will at some point come back to haunt us all. And in the bargain we will be criticized historically for a simple lack of leadership within the rare coin industry.

Fortunately for all of us there is still time for aggressive action but let’s not put this issue on the back burner because the window of opportunity we now enjoy will shrink as fast as this extreme danger expands. I applaud both PCGS and NGC as well as the Professional Numismatists Guild (PNG) for working toward an understanding as to what criteria should be used when considering coin doctoring. And it is not my intention to solve this Gordian knot in a few paragraphs but I do see a problem if we do not insure progress from this point forward. There must be a tipping point for this industry when we all come together on this definition or forever be condemned as showing great promise but failing to deliver on difficult issues.

A review of Vic Botharth’s well developed statement Coin Doctoring and the PNG Decision (Coinweek.com) will help greatly because it clearly states what I believe is the professionally safe position many dealers have adopted now that the initial smoke has cleared. And at the same time it raises questions which will move the discussion forward, like the notion that the grading services did not equivocate on their expertise and in fact guaranteed the product. So as the stated experts they led the way into this mess and so the problem is theirs to fix and the trade should not be concerned. Fair enough but certainly not comprehensive especially when dealer and consumer organizations like the PNG and ANA place themselves in positions of authority.

Let me also add a general feeling I think every dealer has to some degree but was raised nicely by a friend of mine and old time PNG member at the last Long Beach Show. He admitted the obvious in that we all face this coin doctoring problem but said he did not want to get involved as he did not trade in the stealth damaged goods and his hands were full with regular day to day business. I was not at the PNG General Meeting when the modified definition of coin doctoring was not accepted but I talked with members who were and appreciate the difficulty of trying to parse words when it comes to doctoring. What is and what is not has been a part of the industry dialogue for as long as I can remember and the PNG already includes in its ethics rules an admonition concerning doctored coins.

I have also talked with Laura Sperber on the subject and believe she deserves not only trade recognition but an award from the American Numismatic Association (ANA). ANA President Cliff Mishler and ANA Executive Director Larry Sheperd are great leaders and will not cut and run on this subject so public recognition from the ANA can only serve to move this discussion forward.

In some ways Sperber reminds me of the heroine Calamity Jane played by the beautiful Robin Weigert in the famous HBO Series “Deadwood”. Laura’s fire breathing oratory in the middle of a mostly male audience should be admired. If we were honest with ourselves her “over the top” approach to this danger should be seen as the most important tactic ever used in moving this nightmare out of the closet. Some might believe she is grand standing but when we talked Laura came across as sincere and hardly out of gas on this controversial subject. She also has a wonderful regard for rare coins and continues to warn readers about treasures at risk in the name of raw profit and greed.

Ultimately I choose to believe the PNG will once again address this growing problem and take a stand which better defines coin doctoring if only to state the most obvious cases. I do not want to speak for PNG President Paul Montgomery even though he is a great friend of mine. But as a Past PNG President I can say with certainty that leadership always comes at a premium especially when “no one is happy”. And it seems to me that true leadership, especially in the face of hostile fire is never easily accepted. But great leaders tough it out and understand the mission and are willing historically to be applauded after the fact.

In the meantime let’s appreciate one of the most important gains this industry has made regarding coin doctoring: We all can now talk openly about this problem and so it is forever outside the numismatic shadows. Most of us know that progress is often tedious but because of this discussion we will eventually get a sense of where improvement makes sense.

No coin professional needs to be told that radical doctoring of coins is a pathetic reality so I hope we all applaud PCGS and NGC for constant vigilance. And the PCGS attempt at scientifically killing this monster with new technology like the Shield or the Sniffer is certainly a numismatic milestone. But we should understand the trade is now facing a new and much more virulent twist to an old numismatic problem so creative work and probably a great deal more money will be needed to tame this creature.

Perhaps policing it is not the job of the PNG but taking no action must prove ultimately dangerous. For you academic or religious readers doing nothing would be a violation of what German philosopher Immanuel Kant (1724–1804) called the Categorical Imperative. And so my contention is simply that taking no action is not rational for any group which makes a rightful claim to be good for the rare coin industry.

Let’s make sure the coin industry does not stand in the way or worse tacitly contribute to this abuse while claiming the problem either cannot be defined or is not our business. No industry action or worse vague definitions fail to protect the good people who turn to rare coin professionals for proper advice and an honest deal. Inaction will also cost the industry its moral high ground and we will have no one to blame but ourselves. So in the end let us solve this problem while there was still time to set the record straight. 

27. Protecting Valuables: Commercial Safe or Bank Safe Deposit Box?
Ask An Expert (Aug 1, 2011) Salt Lake City police investigate coin theft from residence / Burglars steal heavy gun safe containing $500,000-plus in coins: This headline along with the sad story was written by Paul Gilkes of Coin World (August 1, 2011). According to the published account the victims were away from their home only a short while and upon returning found their basement ransacked and the valuable treasure missing. Unfortunately this happens more than we would care to admit in the coin business.

So what is the chance this collection will be found and returned to its rightful owners? If they are lucky and the robbers make a few mistakes there is a chance but I’m not hopeful because of the extreme liquidity of rare coins and precious metals.

In the Gilkes story some of the missing material was graded by NGC so this is a beginning and if the thieves were not skilled, or simply stupid, recovery is possible by circulating a detailed list among dealers along with law enforcement information including contact numbers. You would think this is the most obvious first step but until recently making such information available to national law enforcement was not easy. Before the widespread use of the Internet and in my early years as a PNG Board Member I actually mailed a thousand copies of the PNG Dealer Directory to a list of the current Police Chiefs in the US. I also included a cover letter which explained that if numismatic material went missing these dealers might be able to help. I did not get one return answer so in the old days distributing national information about stolen material was limited. Today the Professional Numismatists Guild will post and relay your list to all its dealers and The Numismatic Crime Information Center founded by Doug Davis will also post and distribute stolen coin information.

There are recent and dramatic technical advances by PCGS and NGC which can positively identify your material even out of their original holders but I believe all too often certified coins are simply cracked out of their cases and “put to sleep” in an attempt to create cover. They are then re-submitted to another service and eventually resold into the legitimate trade and go undetected unless the coins are particularly rare.

The PNG (Professional Numismatists Guild) presents The Sol Kaplan Award yearly to an individual for information leading to the arrest and conviction of people involved in numismatic crime so it pays to keep your eyes open because it is the little things that lead to a successful conclusion. The fact is that the coin business is relatively small and most major dealers know each other so distribution of information is not difficult if you know which button to push. Anyone can contact Bob Brueggeman (PNG Executive Director) at (951) 587-8300 and suggest the work of a worthy individual for the Sol Kaplan Award. In my book Doug Davis would be a natural recipient because of his work with The Numismatic Crime Information Center.

It is obvious that some robberies are a case of inside information so let’s be careful about how coins are purchased and the resultant paper trail even within your inner circle. Professionals use a Post Office Box to transact business instead of a home address and also try to keep a low profile in other areas especially in today’s social media world.

A robbery can happen at any time but is particularly dangerous when a dealer or collector travels to or from a coin show. It is always a bad idea to leave a brief case in your trunk while stopping for something to eat and when leaving a show I take my badge off before I’m off the floor. Believe it or not sometimes well-organized professional teams get paid a flat rate to watch coin shows carefully for dealers or collectors who might get careless. The stolen material is then turned over to their handlers for evaluation and in some cases is out of the country in a few days.

The nondescript portion of the collection can then be sold to unaware and out of state dealers so the crime cycle is complete.

At this point in our discussion it is easy to see that it is much better to prevent this possibility than to find the horse after you left the gate open. But it is amazing how many people believe their coins and precious metals are safer at home. This misguided idea stems from the notion that big government is somehow out to interfere with your personal belongings.

The steps taken by folks to hide their stuff are legendary but can be misguided or even dangerous because of the extreme value of their holdings. In the cited case more than half a million dollars of rare coins and precious metals were stored in a gun safe! I appreciate there are rated gun safes but most I have seen are designed to keep guns safe and not protect valuables so the victims may not have considered how easily some gun safes can be opened.

Most professionals use commercial safes which have been UL approved to withstand certain types of assaults for specific periods of time. Underwriters Laboratories Inc. (UL) is an independent product safety certification organization and they test better quality safes on all 6 sides and assign a rating based on predetermined criteria.

In my opinion no home safe is a good idea for long term storage because there are too many variables but if you must consider short term storage at home don’t just look on the Internet or visit Walmart. Choose a commercial safe with an appropriate UL rating provided by a professional with a great deal of experience. This higher end safe should then be equipped with a commercial alarm and appropriate insurance. And don’t even consider this option if you are not willing to pay the few thousand dollars it will cost which is money well spent if your collection is valuable. A cheap safe is the worst option because the novice is lulled into a false sense of security. A good safe man can pop a cheap safe in a matter of minutes so don’t fool yourself or risk your money.

If you attend coin shows you may already be familiar with one good provider of quality safes commonly used in this business: Maximum Security Safes (www.maximumsecurity.comlocated at 1415 E. McFadden Suite J Santa Ana, CA 92705. Shep Bryan (800-538-0600) runs the place and I have done business with him for years. He will provide a straight answer to your questions about quality and his expertise is valuable regardless of where you purchase your safe.

The crazy notion that your home is secure as a permanent storage solution is usually touted by the paranoid or people who don’t know any better or coin dealers with an agenda. The end of the world scenario was born during the cold war and has been abused by many for decades to stoke the fear that America is doomed and the banking system can not be trusted. I believe this unreasonable conclusion is dangerous especially to new buyers who may not be experienced with security.

A much better way to keep your valuables completely safe is the common safe deposit box at your local bank. These boxes come in a variety of sizes, are inexpensive for the protection they offer and are better secured than anything you might consider at home. They also provide another priceless advantage: They are not in your home which can lead to a compromising situation in the wrong circumstance.

Banks are federally insured and inspected so insurance companies quote very low rates if your valuables are mostly kept at the bank. By the way, insurance coverage is never paid on a mysterious disappearance and collection of insurance money is virtually impossible if you cannot produce accurate records with receipts of what you purchased, when it was purchased and for what price. So let’s work on our record keeping skills just in case.

A final tip might prove helpful. Let’s hope a robbery is not in your future but, just in case, a complete list of what was in the safe will prove magical. This list should include as much detail as possible and will go a long way in helping law enforcement recover your treasure.

Consider this lame description usually offered after the fact: “Well, there was a 1924 $20 gold piece, what else do you need to know?” There were more than 9 million twenties minted in that year so to stand any chance of recognizing your example more information is needed.

Was your coin certified? If so by what service and what are its unique numbers? Was your missing coin in an old holder or new holder? Can you point to any obvious marks which might identify your example from others? If your coin was not certified are you able to include a general description and grade? Does this also include distinctive marks, the type of holder, notes on that holder, type of staples, color of ink, storage boxes and virtually anything (even pictures) which will make your example distinctive among other examples?

Make it a habit to update this important list as you make changes in your holdings and always keep the results in a separate location. Also keep in mind that folks who might need to use this list are not as knowledgeable as you so the less arcane the better. Like I have said I hope you never have to travel this road but the key to success here is to prevent the problem from happening in the first place. Thanks for reading and I welcome any comments concerning safety which can be added to this post.

28. Thinking of Trading Certified Rare Coins for Bullion?
Ask An Expert (April 4, 2011) The incredible rise in precious metals prices has given more than a few rare coin investors a reason to pause and question their investment strategy. And while this commentary will not be of much interest if you own the rare coins which have moved substantially higher this past decade there are legitimate sectors of the coin market which have not done as well and some which have performed poorly. It is because of this irregular price performance the following Email is common today: “I want to convert my collectable coins into bullion but would like an education before I proceed.”

In the process of addressing this question of value a collateral issue is often raised: Which is the better choice: collector/investor rare coins or the less complicated bullion products? These two areas are loosely related in that both can be sensitive to inflation and sometimes overlap because older US circulated coins can sometimes act like bullion coins. But there two big differences the buyer should understand before writing a check: (1) The small buy and sell spread associated with bullion products appeals more to a “bottom-line” type of mentality and allows a great deal more opportunity for trading. (2) The higher commission rates associated with rare coins simply means you trade less often but may be able to take advantage of longer term price trends.

For the historical record the question of which sector does better price wise has been hotly debated since the 1970’s and to make matters less easy to understand rare coin prices have been used and abused to sway the uninformed base which for some reason likes to throw money at local dealers during times of financial crises. But like many questions in this business the answer as to which is best is a moving target in that it depends on which sector of the rare coin market is compared to commodities prices at any given time.

But because of the general rise in precious metal prices today some rare coin buyers want to trade for bullion. And while this now looks like a good strategy the opposite could be true if the metals go down because interest rates go up, the world becomes friendlier, or the dollar gets stronger so caveat emptor makes sense. Don’t believe that just because the metals have done well lately that they will outperform sectors of the rare coin market.

For our discussion however let’s assume you are the average guy and bought a combination of certified rare coins and precious metals and further you compared the two stacks after 10 years of patient waiting. If the mathematical results show the precious metals did better price wise it is human nature to consider selling the rare coins and buying more bullion.

And given you assembled the collectable coins with some price discernment the trade of rare coins for bullion is not earth shattering. But there are a few guidelines which should be followed to insure you get good value and a reasonable admonition: It makes little sense to criticize yourself or your dealer because some rare coins did not do as well as gold or silver bullion. This type of backseat driving makes little sense and besides who knew? The question of rare coins or bullion has been debated for 40 years and I can tell you there are clear periods when the precious metals won and other times when quality rare coins easily finished first.

It is my sense however that the key to answering which choice is best for you has less to do with examining relative price spreads and more to do with examining your personality. I own and enjoy both rare coins and precious metals but it helps that I love collecting and remember the days of the Helm’s bakery truck and the milk man. If you also enjoy nostalgic trips into the past and wonder about early gold mining camps then rare coins can be fascinating and their history presents a lifetime of enjoyment. The introspective person turns the rare coin in his hand into a picture of the past and so generally does better as far as “rare coin investment” is concerned because the collector in him forces a greater understanding of the process. And because money is not the driving force his decisions are more balanced and he looks forward to the next purchase which can turn into another adventure. Rare coin price movement is a consideration but there are emotional issues on the table and selling might only be done to raise money which is then used to purchase other rare coins of interest.

But if you study your spread sheet each morning over coffee the precious metals are probably better suited to your way of thinking given you can stand the volatility. This type of person has a more detached way of approaching his pile of stuff and is willing to make changes by simply looking at the ticker tape. The shorter buy and sell spread associated with bullion is also more appealing and the fact that there is no history involved an advantage because after all gold is just a commodity which is dug out of the ground.

So what to do if you are part of the “bullion is better” group but have acquired rare coins and are now having second thoughts? At this point keep in mind you are most likely on the “ask” or retail side of the price spread so making this trade might cost you money. Whether it makes sense to you is a judgment call but if you want liquidity the “bid” or wholesale side can be 10% to 20% less than what you paid given the wholesale market has not moved. This is a common range used by dealers and while the spread is negotiable rare coins are not commodities so get used to the numbers or avoid this asset class.

If you are promised anything else run like a rabbit because you are about to have your pocket picked by what I call the Big Rare Coin Lie (BRCL). No dealer works for nothing so there is always a difference between the buy and sell price on any rare coin. And no amount of dealer expertise can protect you from the normal up or down price movement seen in all rare coins.

There is also a darker side to this commentary as far as pricing is concerned. Allow me some poetic license for one of my favorite Mark Twain quotes: “There are no distinctly American criminal classes…save Congress and the “new-breed” of corporate bullion and rare coin telemarketers”.

We have all seen these jokers on TV which is an advertising medium rarely used by honest dealers because it costs too much. Or perhaps you heard them on conservative radio where some of our most celebrated talk show hosts are shamelessly paid to recommend the worst gold deals on the planet and yet are legally shielded because the listener is warned in advance. If this sounds familiar I’m sorry for your loss in one of these pricing scams but hopefully this is not the end of the world. The first thing to do is check with your CPA to see if you have an offsetting gain or alternatively if you sell the position the loss may be tax deductible. Taking action to put your financial house in order is not easy in this situation but from my experience it is better to solve the problem and move on with your life.

On the brighter side of the price equation don’t forget to look carefully at your rare coins if they are housed in old PCGS or NGC holders. Over the years professional services have relaxed some grading standards so there is a possibility your coin could be reassessed and given a higher grade. This happens more times than you might imagine so it is worth the extra fee because a one grade increase could move the value of your treasure substantially higher. This is cheap insurance compared to the possible outcome but you would be surprised how often this strategy is ignored if the rare coin owner is in a hurry.

When selling or trading your rare coins for bullion always ask the buying dealer for the basis of his price evaluation. Most dealers use the Coin Dealer Newsletter (the Grey Sheet) and CCE (Certified Coin Exchange) as a beginning point. If the material is not particularly rare this may serve all parties well but understand that the Grey Sheet serves up a variety of “price” sheets: The Blue Sheet (considered cheap because prices are based on “sight-unseen” bids) and the Grey Sheet (more exacting but the higher prices are based on “sight-seen” material). For rarely encountered material or extreme rarity the Grey Sheet may not be your best source of information. This type of rare coin is always worth more so add dealer experience to your research which means you may have to knock on a few more doors.

Finally there is this important question of whether the coin under consideration has any “pop” or eye appeal? As you know by now not all coins within the grade range are created equal so if your coin is at the higher end of this range it is worth more money because this “visual extra” is like beach front property.

On the other hand if the coin is a “clunker” (sorry folks but sometimes your certified rarity will fall into this group) it will not fetch a top price regardless of what the holder may offer in the way of pluses or stars or special stickers but this extra information can often play a role in making the coin more valuable.

In this process don’t be afraid to price your own material, after all you bought the coins and know what you need to make the deal work. Be reasonable but if you think your collection is worth say fifty grand don’t be shy in explaining your thoughts behind the figure. Most dealers find this approach refreshing and if you show some respect for the dealer’s work and talent he will reciprocate in the evaluation. Always be friendly as there is no bigger turn off for a busy dealer to figure a collection and get no respect in the process. If you honestly believe his number is too low offer your insights as to why your number is better. This approach has saved more deals than I can tell you because it requires both parties to invest time which often leads to a successful conclusion.

Don’t be afraid to get more than one bid on the collection and understand that it is common for one dealer to pay more than another especially if he has a particular customer in mind or the issue is actually rare. Most dealers today can get you in the ball park with a simple list if the coins are certified by PCGS or NGC but this number will be conservative and higher numbers are usually forthcoming when the dealer examines and likes the material. It is true that in the final pricing stage everyone wants to look but by then you will have had time to check credentials. And remember most transactions have some room (which is coin talk for the final price could still be negotiable) regardless of the claim that you are getting the last dime.

Finally if your collection is very rare or unique in some other way you might want to consider auction. There are great selling points to this solution but there are also distinct disadvantages as opposed to a private sale. When it comes to auction one size does not fit all but selling at auction can be promising if you have the right material and a little extra time and you don’t ask too much of the process.

If you do consider auction there are a number of ways a dealer can get you better terms which puts more money in your pocket. Most auction companies quote fixed commission rates but in fact these rates are negotiable depending on who you are, the value of your consignment, and whether or not the coins are given minimum bids or “reserves”. So the seasoned advice of a good dealer can often help with your decision. If your dealer seems fuzzy when it comes to the positive and negative aspects of auction or cannot recommend specific companies by strength and weakness consider asking a member of The Professional Numismatists Guild.

You may in the end decide not to trade your collectable coins for bullion but I hope the above information will provide insight into the process. And a few professional tips as to how you can rise above the pricing storm and easily make adjustments can only help. If you have further questions my blog (Richard Schwary/Ask an Expert) is only a click away when you Google “rare coin commentary”. Thanks for reading and collecting.

29. How Does Changing Precious Metal Prices Move The Intrinsic Value Of Gold And Silver Coins?
Ask An Expert (February 16, 2012) This question has to be one of the most common in all of the rare coin business. And why not as most people really don’t understand the fineness or weight of coins with intrinsic value (meaning coins made from real gold or silver). That is why they usually get robbed when selling to that friendly Hotel Buyer which sets up on a week-end at the Holiday Inn near you. He proclaims gold is at an all time high and swears he is paying more money than anyone in the civilized world. Of course they all have a great laugh at your expense after you take the “cash” but because you did not to a small amount of homework and trusted that nice coin dealer because he asked to see a picture of the family you paid the price. Actually figuring the “melt” value of real gold and silver coins is easy with a few facts because weights and fineness are uniform but as the price of gold and silver moves higher or lower the calculation becomes more obscure. So when I was thumbing through my latest copy (2012) of the good old Red Book (A Guide Book of United States Coins by R.S. Yeoman) I found a table at the back which should put a smile on everyone’s face (except the Hotal Buyers). This table is the beginning of happiness when it comes to your coin collection not because it provides the very most you can get for your coins but simply because it provides a higher-end range that you should consider for common and circulated examples. This important guideline will stop you from selling the example for substantially less than it is worth. Actually everyone should own a copy of the Red Book ($14.95 at any bookstore) because it provides a great deal more pricing information for virtually nothing. And owning a Red Book is the first step in understanding if that old coin rolling around in your dresser drawer is worth a fortune. But let’s be sure you are not giving away family treasure and so understand what intrinsic value means while you are on the road to fame and fortune. This is the value you would receive (minus a small processing charge) if the coin was sent to a refiner. To complete this picture understand that most early gold and silver coins are not sent to the melting pot because they are worth a premium even if common and in undamaged circulated condition. And their value could be significantly higher if they are rare or they fall into the higher mint state grades. But that is not the purpose of this small missive. My purpose is to insure when selling your treasures you are not getting far less than their metal content and that my reading friends is a good place to begin. The table below is self explanatory in that you only need to find the relative price of the gold or silver and move across the column until you find the corresponding coin denomination. Where these two rows meet you will find the melt value of your coin and the beginning of really understanding what it is worth. Good luck and you can always direct further questions to Ask An Expert (RSchwary@aol.com). Thanks for reading.

Silver Price Per Ounce

Wartime Nickel

0.0562 oz.

Dime

0.0723 oz.

Quarter

0.1808 oz.

Half Dollar

0.3616 oz.

Silver Clad Half Dollar

0.1479 oz.

Silver Dollar

0.7734 oz.

$16

$0.90

$1.16

$2.89

$5.79

$2.37

$12.38

$17

$0.96

$1.23

$3.07

$6.15

$2.51

$13.15

$18

$1.01

$1.30

$3.26

$6.51

$2.66

$13.92

$19

$1.07

$1.37

$3.44

$6.87

$2.81

$14.70

$20

$1.13

$1.45

$3.62

$7.23

$2.96

$15.47

$21

$1.18

$1.52

$3.80

$7.60

$3.11

$16.24

$22

$1.24

$1.59

$3.98

$7.96

$3.25

$17.02

$23

$1.29

$1.66

$4.16

$8.32

$3.40

$17.79

$24

$1.35

$1.74

$4.34

$8.68

$3.55

$18.56

$25

$1.41

$1.81

$4.52

$9.04

$3.70

$19.34

$26

$1.46

$1.88

$4.70

$9.40

$3.85

$20.11

$27

$1.52

$1.95

$4.88

$9.77

$3.99

$20.88

$28

$1.58

$2.03

$5.06

$10.13

$4.14

$21.66

$29

$1.63

$2.10

$5.24

$10.49

$4.29

$22.43

$30

$1.69

$2.17

$5.43

$10.85

$4.44

$23.20

$31

$1.74

$2.24

$5.61

$11.21

$4.59

$23.98

$32

$1.80

$2.31

$5.79

$11.57

$4.73

$24.75

$33

$1.86

$2.39

$5.97

$11.94

$4.88

$25.52

$34

$1.91

$2.46

$6.15

$12.30

$5.03

$26.30

$35

$1.97

$2.53

$6.33

$12.66

$5.18

$27.07

$36

$2.03

$2.60

$6.51

$13.02

$5.33

$27.84

$37

$2.08

$2.68

$6.69

$13.38

$5.47

$28.62

$38

$2.14

$2.75

$6.87

$13.74

$5.62

$29.39

$39

$2.19

$2.82

$7.05

$14.11

$5.77

$30.16

$40

$2.25

$2.89

$7.23

$14.47

$5.92

$30.94

$41

$2.31

$2.97

$7.41

$14.83

$6.06

$31.71

$42

$2.36

$3.04

$7.60

$15.19

$6.21

$32.48

$43

$2.42

$3.11

$7.78

$15.55

$6.36

$33.26

 

Gold Price 

Per Ounce

$2.50

Liberty 1840-1907

Indian 1908-1929

0.12094 oz.

$5.00

Liberty 1839-1908

Indian 1908-1929

0.24187 oz.

$10.00

Liberty 1839-1907

Indian 1907-1933

0.48375 oz.

$20

Liberty 1850-1907

Saints 1907-1933

0.96750 oz.

$800

$96.75

$193.50

$387.00

$774.00

$825

$99.77

$199.54

$399.09

$798.19

$850

$102.79

$205.59

$411.19

$822.38

$875

$105.82

$211.64

$423.28

$846.56

$900

$108.84

$217.68

$435.38

$870.75

$925

$111.86

$223.73

$447.47

$894.94

$950

$114.89

$229.78

$459.56

$919.13

$975

$117.91

$235.82

$471.66

$943.31

$1,000

$120.94

$241.87

$483.75

$967.50

$1,025

$123.96

$247.92

$495.84

$991.69

$1,050

$126.98

$253.96

$507.94

$1,015.88

$1,075

$130.01

$260.01

$520.03

$1,040.06

$1,100

$133.03

$266.06

$532.13

$1,064.25

$1,125

$136.05

$272.10

$544.22

$1,088.44

$1,150

$139.08

$278.15

$556.31

$1,112.63

$1,175

$142.10

$284.20

$568.41

$1,136.81

$1,200

$145.12

$290.24

$580.50

$1,161.00

$1,225

$148.15

$296.29

$592.59

$1,185.19

$1,250

$151.17

$302.34

$604.69

$1,209.38

$1,275

$154.19

$308.38

$616.78

$1,233.56

$1,300

$157.22

$314.43

$628.88

$1,257.75

$1,325

$160.24

$320.48

$640.97

$1,281.94

$1,350

$163.26

$326.52

$653.06

$1,306.13

$1,375

$166.29

$332.57

$665.16

$1,330.31

$1,400

$169.31

$338.62

$677.25

$1,354.50

$1,425

$172.33

$344.66

$689.34

$1,378.69

$1,450

$175.36

$350.71

$701.44

$1,402.88

$1,475

$178.38

$356.76

$713.53

$1,427.06

$1,500

$181.40

$362.81

$725.63

$1,451.25

$1,525

$184.43

$368.85

$737.72

$1,475.44

$1,550

$187.45

$374.90

$749.81

$1,499.63

$1,575

$190.47

$380.95

$761.91

$1,523.81

$1,600

$193.50

$386.99

$774.00

$1,548.00

$1,625

$196.52

$393.04

$786.09

$1,572.19

$1,650

$199.54

$399.09

$798.19

$1,596.38

$1,675

$202.57

$405.13

$810.28

$1,620.56

$1,700

$205.59

$411.18

$822.38

$1,644.75

$1,725

$208.61

$417.23

$834.47

$1,668.94

$1,750

$211.64

$423.27

$846.56

$1,693.13

$1,775

$214.66

$429.32

$858.66

$1,717.31

$1,800

$217.68

$435.37

$870.75

$1,741.50

$1,825

$220.71

$441.41

$882.84

$1,765.69

$1,850

$223.73

$447.46

$894.94

$1,789.88

$1,875

$226.75

$453.51

$907.03

$1,814.06

$1,900

$229.78

$459.55

$919.13

$1,838.25

$1,925

$232.80

$465.60

$931.22

$1,862.44