The hoard of dollar coins in the Baltimore Coin Storage
This was an interesting week. Aside from trying to understand the impact of the new tax bill (H.R. 1) on the numismatic industry, I was hired by a widow to help liquidate an accumulation of coins her late husband collected.
I took the job thinking that it could not be that difficult. She said that her late husband was a lifelong collector and had an affinity for half-dollars. It did not sound like a daunting task, so I agreed to meet with her and look at his collection.
Nowadays, when someone calls me for assistance, I usually ask that they take a few pictures with their smartphone and email them so that I can be prepared. In this case that was not possible since my new client did not own a smartphone and expressed displeasure with her “old-fashioned” flip-phone. I was taking a chance.
Rose (not her real name) reminded me of the grandmother-next-door type. Her house was well manicured and the entry reminded me more of the 1950s than any other time. She was neatly dressed as if she was meeting someone of stature. Thankfully, I thought to wear something nicer than my normal jeans and a polo shirt.
We spoke and then she brought me to her late husband’s office. It was quite a contrast from the rest of the house. This was clearly a man’s room whose interest were cars, horses, and coins. Rose said he owned three cars including a 1972 Oldsmobile 4-4-2 (muscle car fans will understand the significance of this car) and had invested in a few racehorses. The cars and the shares in the racehorses were sold but nobody could help her with the coins. Then I found out why.
I was expecting albums, folders, and rolls. When she opened the cabinet, there were five shelves with old cigar boxes, coffee cans, and other containers with loose coins. And while I thought he was a half-dollar collector, he had coins of all types including foreign coins. There were a lot of half-dollars, mostly Walking Liberty halves from the later years and Franklin halves. There was an old metal 35mm film canister with 1964 Kennedy half dollars.
There were several envelopes of foreign currency and Military Payment Certificates he kept from when he was an Army medic in the Korean War.
I have been working with a dealer who specializes in purchasing bulk estates. To help her get the best price, I have been doing a lot of sorting, searching, and ordering of the coins in a manner that would take some of the burdens away from the dealer so he could pay more.
As a bonus, some of the vessels used for storage are also collectibles. The old wooden cigar boxes from Cuba that can be traced to a time before the rise of the Castro regime are highly collectible. So are a few of the coffee cans from brands that have not been heard from in over 50 years including regional brands I had never seen before. That does not include the metal 35mm film canisters. When I asked a dealer, who specializes in old photographic equipment, she made an offer that Rose will probably not refuse.
Considering the size of the accumulation, it will take at least two more days to finish, pack everything, and ship it to the dealer. Although this work is preventing me from writing, I am having a good time. Rose is a nice person and a diehard University of Virginia Cavaliers fan since that was her late husband’s alma mater. Since she decided she likes me, Rose is going to cheer for my Georgia Bulldogs in the upcoming Rose Bowl—which is why I am calling her Rose!
PARIS — Over his 40-year career, the fashion designer Jean Paul Gaultier has had his share of odd requests but until last year, he had never been asked to dress a coin. His imagination has produced outrageous concepts like fitting Madonna into a pointy conical bra, slipping the bearded transgender Eurovision winner Conchita Wurst into a couture dress and sending models down a runway lined with menorahs for his fall 1993 Chic Rabbis collection. → Read more at nytimes.com
Washington – At the U.S. Mint in Philadelphia, U.S. Sen. Roy Blunt participated in the ceremonial strike of the 2018 World War I Centennial Silver Dollar honoring the 100th anniversary → Read more at dailystarjournal.com
Sales of U.S. Mint American Eagle gold and silver coins fell sharply year-over-year in November, keeping their tally for the first 11 months of 2017 on track for the weakest year since 2007, the latest data showed on Thursday. → Read more at reuters.com
Cape Town – The South African Mint, a wholly owned subsidiary of the South African Reserve Bank (SARB), has created a commemorative silver coin in honour of the world’s first successful human-to-human heart transplant 50 years ago. → Read more at fin24.com
Although this blog is about numismatics, there are times when the news of the day reminds us that we not perfect beings and there are lessons learned that should apply to the hobby.
For the last few months, there have been reports about how sexual harassment has been pervasive in industries where men hold a great deal of power. Most people are not surprised when politicians are caught up in these types of activities because we do not hold these people in high regard.
Stories out of the entertainment industry should not be surprising either. It is a system where the “talent,” the faces you see on the television or movie screen, are treated better (or worse) than spoiled children. When I worked for NBC in the early 1990s, I saw first-hand how the talent could do no wrong while their behinds were kissed by the production staff. This created an air of omnipotence that also lead to people being treated badly, something I witnessed regularly.
While there are bad actors in every industry, there seems to be a pattern in male-dominated industries. This is why there is an emphasis on teaching science, technology, engineering, and math (STEM) to girls in order to break the stereotypes. In fact, go to the website of almost any small tech company and look at the list of employees. Not only are most of the employees male, most are white, and what they call diversity includes a male from India or Taiwan. The women listed are in support roles and have no technical responsibility. There are also very few people over 40 years old in most of those companies.
Numismatics is no better. Although the current executive director of the American Numismatic Association is a woman and there quite a few women helping to support the ANA in Colorado Springs, it is not often you see a woman serve on the ANA Board of Governors. The last one was Laura Sperber. While I have disagreed with Sperber, I respect the fact that not only she is a successful business person and had the wherewithal to run for the Board of Governors.
The last time a woman ran for ANA President was in 2009 when Patti Finner, whom I endorsed, lost to Cliff Mishler.
Go to any coin show and count the number of women and minorities behind the tables. A few small shows I have attended were only represented by older white men. At the recent Baltimore Expo although there were a few women, the only one I encountered is one I regularly see who carries foreign currency who is not a native of the United States.
Having the ablity for business to diversify reminds me of the lessons learned in Built to Last, a book I was required to read in graduate school. The book is a study of companies that were able to adapt and diversify to allow their companies rise above their issues to be successful. They were compared with companies who did not or could not adapt to find their influence reduced or that led to their failure.
These attitudes are not sustainable for the hobby and society.
Look at the backlash that came when it was announced that the Department of the Treasury wanted to change the portrait on the $20 note to a woman. She would replace Andrew Jackson who ignored treaties and supported the Indian Removal Act that led to the Trail of Tears, an action that is a stain on the nation’s history. There was opposition to these policies during that time. But as Senator William L. Marcy (D-NY) said in defense of Jackson, “To the victor belong the spoils.” One of those spoils is that they get to write the history books and chose figures like Jackson to (dis)honor currency.
But how many people in the numismatic industry stood up for the decision? There were some defenders, but overall there was a deafening silence.
I have complained that the hobby is too white, male, and over the age of 50. I do not think this is sustainable in a changing world, says your blogger who is white, male and over the age of 50. And that can be evident by walking the bourse floor of any coin show.
The old boys club should stop being old and a club of boys. Embracing diversity will only help the hobby because it will bring in new people and new ideas.
Young Numismatist programs help but they should not be the only focus. There is a lack of programs to keep the YN interested and engaged after no longer being YNs. Both male and female YNs become disengaged as they reach young adulthood. I know it is a problem and I keep bringing this up as an issue, it is another time where the silence as to what can be done is defening!
Just because that is the way it has been does not mean it will be the same in the future.
The hobby needs diversity of all types. We need to not only find a way to attract more hobbyists under 50 years old, women, and non-caucasions.
As society grapples with the news about the dozens of men that have been accused of being general pigs and the far too many more that are not associated with the media and are not reported, this hobby has to look at itself and wonder why the bourse floor looks like an old boys club and is that sustainable.
Maybe it is time for the numismatic-related industries to be a leader and show how we can set the stereotypes aside and encourage diversity. Or as the business adage suggests: Diversify or Die!
These introductions to the weekly news are supposed to be my thoughts and opinions on some of the things I have read while looking for numismatic-related news. For this week, I cannot think of a thing to say.
That is not exactly true. I have a lot to say but it is not numismatic-related!
Honestly, my mind is elsewhere. It is about 600 miles to the southwest from suburban Washington, D.C. in Athens, Georgia. Not only is Athens where I attended college as an undergraduate but it is the home of the 2017 Southeastern Conference Champion University of Georgia Bulldogs!
After beating Auburn last night to win the SEC Championship and learning today that Georgia will be playing Oklahoma in the Rose Bowl for the College Football Playoff Semi-Finals, I have been just euphoric!
So that I can include some numismatic-related content, I know that the Highland Mint strikes most of the medals that are used for the coin toss around college and professional football. In 2015, the Franklin Mint was commissioned to strike the medals for the CFP games. Regardless of who gets the contract, a copy of that medal will likely end up in my collection.
JACKSONVILLE, Fla. — Rare coins that can be potentially worth thousands of dollars may end up being worthless if a buyer doesn't do the proper vetting. Billy Ward told First Coast News he learned that lesson the hard way. → Read more at firstcoastnews.com
MANILA, Philippines — Bangko Sentral ng Pilipinas on Wednesday revealed the new design for P5 coin which would be released in December. The P5 New Generation Currency Coin Series features Gat Andres Bonifacio on the obverse. → Read more at philstar.com
MANILA, Nov. 30 — The Bangko Sentral ng Pilipinas (BSP) announced that of the New Generation Currency (NGC) Coin Series, it will release in advance of the other denominations, the 5-piso NGC legal tender coin for circulation, starting December 2017. → Read more at pia.gov.ph
Once, in a busy market, at a time when government policies had made change scarce and thus very precious, a shopkeeper refused to give a customer change in lieu of a high denomination currency note. In those days tempers were high, inconveniences great. → Read more at dailyo.in
Precious metals such as gold, silver, platinum, and palladium are used by several countries like the United States to mint coins that would satisfy investor demand who want to buy these metals in a more recognizable weight and form. → Read more at born2invest.com
Dubai: You have them in your pockets and take them wherever you go. But do you know what they’re worth apart from their face value? The dirhams in your wallet tell more than how much purchasing power you have now. → Read more at gulfnews.com
The Re 1 note has officially completed a century in its existence. The last hundred years – the first note was introduced on November 30, 1917, with the photo of King George V – have been all but tumultuous. → Read more at moneycontrol.com
NEW YORK (Reuters) – Sales of U.S. Mint American Eagle gold and silver coins fell sharply year-over-year in November, keeping their tally for the first 11 months of 2017 on track for the weakest year since 2007, the latest data showed on Thursday. → Read more at reuters.com
Most of the work in Congress has been on the tax bill (H.R. 1) and non-controversial legislation. The Senate has worked on reducing the number of presidential nominees on the Executive Calendar. Currently, there are 100 nominations waiting to be acted on and David J. Ryder, nominated to be the Director of the U.S. Mint, is 70th on the calendar, up from 126th last month.
PN1082: David J. Ryder — Department of the Treasury
Date Received from President: October 5, 2017
Summary: David J. Ryder, of New Jersey, to be Director of the Mint for a term of five years, vice Edmund C. Moy, resigned.
Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. — Oct 5, 2017
Committee on Banking, Housing, and Urban Affairs. Hearings held. — Oct 24, 2017
Committee on Banking, Housing, and Urban Affairs. Ordered to be reported favorably. — Nov 1, 2017
Reported by Senator Crapo, Committee on Banking, Housing, and Urban Affairs, without printed report. — Nov 1, 2017
Placed on Senate Executive Calendar. Calendar No. 458. Subject to nominee’s commitment to respond to requests to appear and testify before any duly constituted committee of the Senate. — Nov 1, 2017
Today is Cyber Monday. Cyber Monday is a modern invention created back when most people only had access to the Internet through a dial-up modem and would use their company’s faster connection to do online shopping following Black Friday.
In the modern world, Black Friday does not have the same meaning. It used to be when retailers would become profitable with the beginning of the holiday season sales. The name was derived from written ledgers when negative numbers were written in red and positive numbers were written in black. After Black Friday, the numbers would be written in black! But that is not how modern economics works. Company profits are measured on a quarterly basis and should be in the black all year. But why destroy a tradition!
With the proliferation of broadband access from the home, Cyber Monday has also lost its meaning. In fact, there are reports that suggest that there will be more online shopping than shopping in brick-and-mortar outlets. But that is not going to stop Cyber Monday sales!
It is the holiday season and regardless of your beliefs there will be presents exchanged. Or you may purchase your own present. Do you have numismatic presents on your wish list? What about for others? Do tell!
The reason why I search for news about topics related to numismatics from outside the industry allows me to get an understanding of how others see numismatics. I find even the most innocuous story about a country considering redesigning their currency, a find of a coin thousands of years old, and how pocket change finds can lead to high bids on online auctions to be interesting.
I share these with you to inspire your collection and help promote the hobby.
But as I shared a few weeks ago, searching the news also comes with its distractions. The latest happens this time every year when the stories about a gold coin being dropped in those ubiquitous red kettles become prominent.
I am not against giving to charity. On the contrary, I think more people should be charitable with whatever they could give. If time is money then give your time. In fact, I am one of those people who believe that when someone reaches 18 years old they should be required to do two-years of public service. It does not have to be in the military but something to serve the public good.
However, dropping a gold coin into a red kettle may look good as news headlines but can really be more problems than they are worth.
As we know, selling a coin is not the easiest thing to do and when you do, you do not receive its full value. A dealer may raise the bid price of a coin from a charity to provide some charitable assistance, but most dealers are not going to buy the coin at full value—unless they are charitable. And this does not take into consideration the fluctuating price of the metals. Maybe, by the time the charity sells the coin, the market price drops and the coin is not worth as much as the day it was dropped into the kettle.
Rare coins may be more problematic. For the best value, those have to go to auction and as anyone who has sold merchandise in an auction, you never know what the hammer price will be. Selling anything at an auction is risky. While a quality rare coin may bring in more than the coin is worth, it can also do far worse.
Since gold is currently $1288 per ounce and considering that modern bullion coins have about a 15-percent numismatic premium, rather than buy a bullion coin and drop it into a kettle, take the $1481 in cash and drop that instead. You can do what an acquaintance does and wrap a few $100 notes around a $1 note so it looks like you are giving a few dollars. When they open the kettle and see hundreds of dollars in cash, they will be happy and will be able to use it for their work immediately without having to worry about selling the coin.
If you want to donate the proceeds from the sale of a coin to charity, that is wonderful. But sell the coin yourself. You are more qualified than these charities in obtaining value from the sale. Then donate the cash. It should not be about the ego boost from being written about in the newspapers. It should be about helping the charity. Which is more important?
JAKARTA – Coin rubbing is a form of folk medication practised in Indonesia and other Southeast Asian and East Asian countries, such as Laos, Thailand, Cambodia, Vietnam, South Korea and southern China. → Read more at enca.com
Russian artist Roman Booteen is a modern master in the art of the hobo nickel—a term used to describe the 18th century sculptural art form of hand-engraving coins. His latest extraordinary piece—titled Gold Bug—was inspired by Edgar Allan Poe's short story, The Gold Bug. → Read more at mymodernmet.com
(1) View gallery The Queen and Prince Phillip’s platinum wedding anniversary is being commemorated with a new coin, minted in Banstead. The coin is 130mm in diameter, weighs nearly 2kg and is encrusted with 70 diamonds, and the limited run of 70 coins will be hand-finished by the master craftsman at Pobjoy Mint. → Read more at epsomguardian.co.uk
One of my favourite things is my Dad’s old horseshoe wallet where he kept his spare change and a rolled pipe cleaner or two. I used it for years after he died, packing it with British bronze 12-sided threepenny bits and shillings until I arrived in Australia and stuffed it with dollar coins and 50¢ dustbin lids. → Read more at sheppnews.com.au
A treasure hunter has unearthed a haul of ancient gold coins, thought to have been buried with an Anglo-Saxon King nearly 1,500 years ago. Chris Kutler, 54, stumbled upon the coins after spending four days searching a 1,600 sq metre field in Chelmsford, Essex. → Read more at dailymail.co.uk
The Apiary Fund Commemorative coin is a tribute to the traders who put in time, energy, and faith in their efforts to become funded traders. OREM, Utah November 24, 2017 In the spirit of those Amer… → Read more at nbherard.com
What would it take to put together a modern type set?
How would you define a modern type set?
This is the summary of the email conversation I have been having with someone looking for an interesting challenge to work on with his children.
For new readers and those new to numismatics, a type set is one coin of every type regardless of date or mintmark. Although some coins have one-year types, like the 50 State Quarters, there are others where one coin will represent an entire series, like the Roosevelt Dime.
While there are a lot of interesting coins types we focused on modern coins. Modern coins are those struck since 1965 when coins went from silver to copper-nickel except for the Kennedy half-dollar that was made of 40-percent silver through 1970. To budding young numismatists, modern coins are all they know.
In fact, all they know is that the quarter has a constantly changing reverse and they have seen differences in the Lincoln cent and the Jefferson nickel. They did not go through the fiasco of the Susan B. Anthony dollar or marvel at the first circulating commemoratives of the modern era: the dual-dated bicentennial coins. They were not around to search boxes of Cheerios for the new Sacagawea dollar coin or the millennial cent.
Obverse of the Susan B. Anthony Dollar
The 2000 Cheerios Dollar
Modern coins do not get the same love as some of the classics. Aside from not containing silver, there have been controversies over designs (see the “spaghetti hair” that George Washington was sporting on the 50 State Quarters) and how the relief on coins has been lowered by the U.S. Mint in an attempt to extend die life.
Some not-so-great designs
Obverse of the 50 State Quarters with Washington’s spaghetti hair
2002 Ohio Quarter with the hanging astronaut
2004 Florida Quarter with a jumble of stuff
Although people love the classic designs two of my favorite designs of the modern era is the Drummer Boy reverse on the Bicentennial quarter and the Thomas Jefferson portrait on the obverse of the 2005 Westward Journey nickels. And even though I have not written much about them, there are some fantastic designs in the America the Beautiful Quarters series. A few that you may want to take a second look at include 2017 Ellis Island, 2017 George Rogers Clark National Historic Park, 2016 Shawnee National Forest, and the 2015 Blue Ridge Parkway quarters just to name a few.
A few of the great America the Beautiful Quaters designs
2015 Blue Ridge Parkway – North Carolina
2016 Shawnee National Forest – Illinois
2017 Ellis Island – New Jersey
2017 George Rogers Clark National Park – Indiana
Sitting with a Red Book, I started to list the coin types that would make up a modern type set. If we limited the set to circulating coins (e.g., not including half-dollars and one-dollar coins) that can be found in pocket change, there would be 128 coins with a face value of $28.97.
No. in Series
Lincoln Memorial Cents
Lincoln Bicentennial Cents
Lincoln Shield Censt
pre-2004 Jefferson Nickels
Westward Journey Nickels
Return to Monticello Nickels
50 State Quarters
D.C. and U.S. Territories Quarters
America the Beautiful Quarters
The above table does take into consideration the entire 56 Amercia the Beautiful Quarters series including future issues. The kids have to understand the concept of future issues and maintain space for these coins in their album.
Starting the set with pocket change allows the kids to get used to the concept of looking at the coins to understand what they are looking for. To help with their search each child was given a Red Book and two apps on their iPads: PCGS CoinFacts and PCGS Photograde. They can use the Red Book as a handy off-line reference but use PCGS CoinFacts to learn more when they have access. Photograde is very useful to help them assess the condition of the coins.
While collectors have a basic understanding of coin grading, getting it right can be difficult. These kids were given a basic lesson on things to look for when trying to assess the condition of the coins they find. It will be interesting to see how they interpret this information.
Once we covered coins that can readily be found in circulation, we then discussed the other business strikes that are usually not found in ordinary pocket change.
After an interesting discussion, it was decided to make those a separate collection.
As a separate collection, this will give the kids an opportunity to go to dealers and coin shows to allow the kids to learn about buying coins in this environment. They will learn how to talk with a dealer, gain experience negotiating, and do some comparison shopping. It will let them get the experience and see different coins but maintain a collection discipline that will allow them to learn to collect on a budget.
What are the modern type coins that do not see a lot of circulation? Once again, I sat with the Red Book and came up with the following list:
No. in Series
Kennedy Half Dollars
Bicentennial Kennedy Half Dollar
Bicentennial Eisenhower Dollars
Susan B. Anthony Dollars
Native American Dollars
To complete the task, I came up with a checklist for all of the modern coins in two formats. One is a printed version that they could keep in their pocket as they go about their day. The other is a spreadsheet that can act as an official record. The paper version is a very basic PDF file that can be used to write notes. The spreadsheet offers more information. It also allows them to come up with their own catalogue.
American Abundance designed by Albert Laessle and issued in 1934
Thanksgiving was first celebrated in 1621 by the Dutch settlers at Plymouth, Massachusetts to celebrate a successful harvest. It was a tradition that the Pilgrims brought with them from Europe. After the birth of the United States, President George Washington issued a proclamation honoring the Thanksgiving harvest during his presidency. The only other president to issue a Thanksgiving proclamation was President James Madison.
As part of his attempt to maintain the union, President Abraham Lincoln issued a proclamation that made Thanksgiving Day a national holiday in 1863.
After Lincoln’s proclamation, it was traditional to celebrate Thanksgiving on the last Thursday of November. In a move to increase the holiday shopping period to promote more spending, President Franklin D. Roosevelt pushed to have congress pass a law to move Thanksgiving earlier in the month. In December 1941, Roosevelt signed a bill that set Thanksgiving as the fourth Thursday in November.
Be thankful for your life.
Be thankful for your family.
Be thankful for our hobby.
Be thankful for everything.
Sometimes, I find it difficult to keep an open mind with some of the non-circulating legal tender (NCLT) coins that are on the market.
Some of the themes have started as interesting ideas have turned into blatant commercialism that I am not sure how to interpret its benefits to the hobby.
From superheroes to movie tie-ins to the cartoons, the themes are as varied as the grocery store shelves.
The latest NCLT that has me wondering about the future of the hobby is the 2018 Fiji Coca-Cola Bottle Cap-Shaped Dollar.
Yes, a Coca-Cola bottle cap-shaped coin with a face value of one Fijian dollar. The reverse of the coin is colored the famous Coca-Cola red with the script logo that is familiar to anyone who has passed by a Coca-Cola product. The obverse has the Fijian coat of arms, the date, and the specifications of the coin: 6 grams of .999 fine silver.
Packaging for the 2018 Fiji Coca-Cola Bottle Cap-shaped coin (rendering)
After looking at the specifications, the coin is 32.6 mm (1.283 inches) in diameter and I thought that the coins were going to be very thin.
Comparing the specification of this coin to pre-1965 United States coins that were made of .900 silver, the Washington quarter was made of 6.25 grams of silver and copper but was 24.3 mm (.957 inches) in diameter. The quarter is .25 grams heavier but 8.3 mm smaller. My caliper measured a 1960 uncirculated Washington quarter with a thickness of 1.75 mm.
Something closer is the size of the Kennedy half-dollar with a diameter of 30.6 mm (1.204) or 2 mm smaller than the Coco-Cola bottle cap coin. But the Kennedy half-dollar weighs 12.5 grams, more than double the Fijian coin.
To satisfy my curiosity, the caliper said that the uncirculated 1964 Kennedy half-dollar in my collection was 2.15 mm thick.
Not counting for the flare of the edges to resemble a bottle cap, the coin is probably 1 mm thick, less than the 1.35 mm of a 1955 Roosevelt dime I measured.
The coin is available for pre-order only from one company on eBay for $29.95 with free shipping. Expected shipping is on December 8, 2017.
The last time I checked, the listing reported that 1,481 of these coins were sold.
For the record, 6 grams of silver weighs .1929 troy ounces. With the price of silver currently at $17.31 per troy ounce, the coin contains $3.34 worth of silver.
If someone buys one of these coins, feel free to write a review. I will publish it here on the blog!
BRENTWOOD — When milestones are reached in the armed forces, servicemen and women often receive a challenge coin, creating solidarity with others who share the same accomplishment. → Read more at fosters.com
A hoard of 21 Islamic gold dinars, 2,200 silver coins, and gold artifacts dating to the 12th century CE has been unearthed by archaeologists digging at the Abbey of Cluny, a former Benedictine monastery in Cluny, Saône-et-Loire, France. → Read more at sci-news.com
IF you've got one of these most sought-after 50p coins then you could be sitting on a tidy profit. The Sir Isaac Newton 50p coin was introduced into circulation in September and Brits are slowly starting to find it in their spare change. → Read more at thesun.co.uk
An "exceptional and rare" medieval treasure trove including more than 2,200 gold and silver coins has been found in France in what has been called a "remarkable" discovery by archaeologists. It's the kind of discovery archaeologists dream of. → Read more at thelocal.fr
It was just a strange old penny, a copper-nickel Indian Head minted in 1859, when the government was trying out different metals for one-cent pieces. A grandfather gave it to Eric Pfeiffer Newman in 1918, when he was 7, a little bonus for his nickel-a-week allowance. → Read more at nytimes.com
A metal detectorist has tracked down a rare gold coin from Richard III's reign near to the site of the Battle of Bosworth. The Half Angel is one of just a handful of such coins that have survived from the king's two-year reign. → Read more at leicestermercury.co.uk
Archaeologists with the National Center for Scientific Research and other institutions in France revealed today that they have unearthed 2,200 silver deniers and oboles, 21 Islamic gold dinars, a very expensive gold signet ring and other objects made of gold from the Abbey of Cluny, located in the department of Saône-et-Loire. → Read more at mining.com
Like many legislative actions, the bill was probably not targeted at the numismatic industry but at others where alleged abuses have allowed some to avoid paying taxes or reducing their tax burden. Some suggest that it is aimed at the burgeoning crypto-currency or Bitcoin economy.
In a bill that is supposed to be business-friendly, under Title III, Subtitle D (Reform of Business-Related Exclusions, Deductions, Etc.), Section. 3303 (Like-Kind Exchanges of Real Property) has an innocuous statement that says:
Section 1031(a)(1) is amended by striking “property” each place it appears and inserting “real property”.
No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.
In plain English, this is the basis of the bartering economy. If I trade goods and services for goods and services, they are assumed to be a trade of even value and no taxes are paid on the transaction. The new bill (H.R. 1) will tax the barter economy.
In numismatic terms, a collector walks into to a coin shop with 10 Mercury dimes graded by one of the third-party grading services worth about $475 on the retail market. While talking to a dealer you see a nice 1928 Peace Dollar that he has marked $460 rather than selling the Mercury dimes for cash, you work out a trade with the dealer for the Peace Dollar. You make the trade and everyone is happy.
Under the current tax law, that is a “like kind” trade of items of value and not taxed as income.
If the bill that just passed the House is enacted, the dealer will be required to pay a tax on that that transaction.
The amount of the tax will be based on an interpretation of the law by the IRS which is where this could get very tricky.
If the dealer is taxed on the retail value of the trade, the dealer could be taxed on $15 of income if based on the dealer’s valuation of the transaction.
If the IRS requires the dealer to make a valuation based on prevailing market values, who sets those market values? Can the dealer use any price guide to determine the value of the coins? For example, if a price guide determines the Mercury dimes are worth $475 on the retail market as we assumed earlier, but the Peace dollar is worth $450 on one price guide but $480 on another, which guide does the dealer use? The dealer will either make $25 on the transaction, which is subject to taxation or lose $5 that will lower the dealer’s overall tax liability.
But the dealer does not buy at retail valuation. The cost of the inventory would be based on market values of the coins. Does the IRS allow the dealer to base the transaction on the “buy” cost of the coins? Based on the “buy” valuation the transaction may be closer to break-even.
The result will be more bookkeeping for the dealer and a tougher set of accounting rules when managing inventory. Managing inventory for a coin dealer is not like a regular retail store. Each coin is its only item and may be given its own identification (stock keeping unit, or SKU).
Most coin dealers are small businesses that are either sole proprietors or have a few employees. They either work at coin shows or have a few thousand square feet of retail space. Some are family operated business while others hire from the local community. Dealers make a living but it may not be enough to support the necessary change to their inventory management under the new tax law.
Eventually, this will make you, the collector, the loser.
First, it will eliminate the possibility of a trading because of the accounting problems. The dealer who has the Peace dollar in inventory that is not selling but can trade it for Mercury dimes that will sell quicker will not be able to happen. Of course, the dealer could buy the Mercury dimes for the same price as you buy the Peace dollars. The dealer could also be accused of a tax avoidance scheme which will make matters worse. Even if the accusation is not true, the IRS is notorious for treating these cases as “guilty until proven innocent.”
This can also drive dealers out of business.
If this drives small dealers out of business, then there will be no dealers to participate in local, small coin shows. With no dealers, those shows will end and so will your access to dealers to help you with your collection. With no smaller shows, you will have to travel further to find shows or will have lesser access to quality collectibles. Sure, you can purchase coins and currency online, but who will be there to answer questions? What happens if you are not happy with the purchase and you have to ship the coin back to the seller?
Ironically, the change proposed in H.R. 1 strengthens the trading of real estate and real property as “like kind” transaction.
This change in the tax law is not good for small business or the numismatic industry. Please contact your member of the House and Senators to let them know that the side effects of Title III Section 3303 will hurt the hobby we love!
If you do not know your member of Congress, you can call the Capitol switchboard operator at (202) 224-3121. They can transfer you to the appropriate representative.
If you are not sure what to say to the staffer who answers the phone, try the following:
Please tell the Representative/Senator that in H.R. 1, the new tax bill, Section 3303 of Title III may have the unintended consequences of hurting the barter economy and the numismatic industry. It will place a heavy accounting burden on coin dealers who are mostly small businesses that will damage the industry. I cannot express in any stronger terms how this change in the tax law will hurt this sector of the small business economy. Thank you for passing this message along.