There are a lot of reasons why this will not happen in the United States. One of the biggest reason is the overall economic impact that can affect the actual strength of the U.S. dollar as the world’s reserve currency.
The strength of the U.S. dollar is based on the (relative) security of our government and that the Gross Domestic Product (GDP), the measure of all goods and services produced within a country. According to The World Bank 2016 data (the latest available), the United States has the largest economy with a GDP of over $18.6 trillion. Sweden, the world’s 22nd largest economy, has a GDP of over $514 billion. Their economy is 2.76-percent the size of the United States’s economy.
It is the difference between dumping a bucket of water versus draining an Olympic-sized pool.
But wait, you exclaim, the United States already has an economy that is already electronic and should be able to follow suit. According to the Federal Reserve Bank of San Francisco, based on 2016 data, 31-percent of all transactions are made in cash. Most of the cash usage, 60-percent, are for transactions of $10 or less with lower income people preferring cash over middle and higher income consumers.
“Since 2009, the compound annual growth rate (CAGR) for the number of notes in circulation has been 5.6 percent, with the value of currency in circulation growing at a 7.4 percent annual growth rate,” reports the San Francisco Fed.
When we are not using cash, we are using cash equivalences such as debit cards and pre-paid debit and credit cards. Credit-related purchases account for approximately 20-percent of all transaction.
At a public toilet in a shopping centre in Gothenburg, a struggle is taking place between old and new Sweden. Last year, the the shopping centre installed cash-free toilets, forcing customers to pay with their mobile phones – a process new to most. → Read more at theguardian.com
South African Reserve Bank subsidiary, the South African Mint, has announced new collectables product ranges that will appear in the global coin market this year, including the ‘Celebrating South Africa’ series, which will commemorate the life of former President, distinguished Statesman and global icon Nelson Mandela. → Read more at m.engineeringnews.co.za
The coin, dubbed the Jewelled Phoenix, was crafted from 99.9 per cent pure gold and inset with 1.22 carats of rare, natural fancy pink diamonds from Rio Tinto’s Argyle diamond mine in Western Australia. → Read more at jewellermagazine.com
FOR 60 years, generations of children have grown up with the lovable, marmalade-eating bear, created by the late Michael Bond. But now, it has been announced the Queen has ordered a batch of specia… → Read more at thesun.co.uk
CHANDIGARH: When the collection of original Sikh coins is available at half the price in the open market, the Punjab Government has paid lakhs of rupees to a private firm just for minting duplicate coins. → Read more at tribuneindia.com
JIM THORPE — Jim Thorpe Neighborhood Bank on Broadway was very busy with customers looking to get the latest Native American $1 coin. Take a closer look and you’ll see why. The coin has the face of the borough’s namesake etched into it — Jim Thorpe. "We actually heard about it at another store that they were getting coins issued for Jim Thorpe. It was very enjoyable to find out so we decided to walk down and come over here to the bank," said David Knarr, Hellertown. → Read more at wnep.com
Kitco News' Weekly Gold Outlook recaps how the week's events affected the gold market, and where expert analysts think the metal is headed next. Every Friday, get an in-depth look into the metals space and see how experts see the fundamentals set up gold in the week ahead. → Read more at kitco.com
It is difficult to turn on the television, read the news, or visit social media without the tragedies of the day smacking us in the face. Although crime statistics are the lowest it has been in generations, there are some crimes that have seen a rise. Those are the crimes that are given the headlines and the most airtime on the news.
Unfortunately, the news extends beyond the mainstream but extends to Main Street.
Numismatics has not been a stranger to the criminal element. If it is not embezzlers using coins to defraud people and governments, there are the counterfeits primarily coming from China. Now there are two new scams that the industry has to watch.
Counterfeiting currency is definitely not a new issue. Counterfeiting the currency that is supposed to be the most secure is something that is now hitting the mainstream, especially in countries that have adopted the use of polymer notes, is important news.
Police in Saskatoon, Saskatchewan has reported the confiscation of 72 bogus Canadian banknotes. Counterfeiters are using a combination of printed plastic sheets and physical cut-and-paste of lower denomination notes to mimic higher denomination notes.
Image released by the Saskatoon Police showing the counterfeit currency (Image courtesy of the Saskatoon Police via the Saskatoon StarPhoenix)
Within the same news feed, the Bank of England issued warnings and additional guidance after counterfeit notes were used for purchases at pubs in Lincolnshire. Many stories from the U.K. suggest that the people do not seem to like the new polymer notes, but this does not seem to help.
Bank of England wants people to watch for the color shifting ink in the quill (Bank of England image)
The Reserve Bank of Australia (RBA), Australia’s central bank and the primary developer of the polymer substrate used around the world, has found that their currency is under attack by industrious forgers. One particular forger found a plastic substrate similar to the polymer developed by the RBA. The forger bought one high-quality commercial printer from the used market and rented two others to print Australian $50 notes.
According to the reports, the $50 note was picked because it provides is common enough to be used in daily transactions (AU$50 is equivalent to US$39.06 as this is being written) and high enough of a denomination to be cost-effective for the forger. Remember, forgery may be a crime but it is a business.
A counterfeit Australian $50 note has the wrong security stripes and the star field on the right is supposed to be clear (Image courtesy of The Sydney Morning Herald)
Although these issues have not directly affected the collectible currency market, it has had an effect on the dealers when their customers pay in cash. Even with the rise of electronic transactions, many European dealers continue to do over-the-counter sales using cash. In some countries, like Germany, cash is still king even when purchasing rare coins.
While discussing these issues with a dealer based in Germany, it was reported that he will not accept large sums of cash from customers he has not done business with in the past. This dealer does not accept credit card payments over 200€ or for any bullion-based transactions. His regular customers can directly wire the funds to a special account the dealer set up. Others must use certified bank checks.
This is not to suggest wire transfers are safe. In a blog post on Kovels.com, they have been contacted by antique dealers that reported money stolen by wire transfers. According to the blog post:
The fraudsters hack your emails and insert their own email, cloned to look like an email from a trusted person, into your email stream. They then request a wire transfer — providing all needed wire instructions — for something that looks legitimate. Once a bank wire is sent, it is extremely difficult, if not impossible, to get the money back. If you need to send a wire, be sure to use “old” technology and confirm on the telephone with someone that you know!
Even though I am no longer in the information security business, it is still my obligation to remind you that EMAIL IS NOT A SECURE FORM OF COMMUNICATION! Email is the electronic equivalent of a postcard. Any message you send, unless it is encrypted, can be read, scanned, snooped, and even altered by anyone, anywhere, at any time.
“Oh, it cannot happen to me!”
I used to hear that line when I taught a senior-level college class on information security. Using a laptop connected to an overhead projector, I was able to show the class how easy it was not only to create spam but to make it look like an email was sent by someone else. I was also able to demonstrate how to read the email traffic on the local network with a few keystrokes. Are you using wireless connections? You just made stealing your information easier for the hacker.
Counterfeiting and wire fraud are not just problems for dealers. When dealers are defrauded by these criminals, they have to recover the money in some way. Insurance does not cover all losses or the extra security that will be required to protect their transactions. Prices will have to go up to cover the losses and the future costs of doing business.
The cost of doing business in this environment is not a trivial subject. While dealers of all types of collectibles want you business, fraudsters are making it difficult for dealers trust the off-the-street buyer. This makes counterfeiting and fraud a problem for everyone.
This past week, I was looking into a box I purchased from an estate and I found a plastic bag of old foreign currency. When I removed the notes, I found common notes that can usually be purchased from estate especially since he was a career military officer. There was everything from German Notgeld to several European and Asian countries.
During my search, I found three notes that were intriguing. All three notes were from El Estado de Chihuahua, the State of Chihuahua. They were beautifully preserved (albeit with a fold down the center) one-, five-, and ten-peso notes with the same design but in different colors.
Under the printed denomination are the words “Conforme al Decreto Militar de Fecha Io de Febrero de 1914” (Pursuant to the Military Decree dated February 1914). I vaguely remember that was the era of Pancho Villa and his romp through the southwest United States. Time to refresh my history.
After the 35-yearlong regime of Porfirio Diaz, he was challenged in the presidential election by Francisco I Madero in 1910. Madero was in favor of reform and social justice. But Diaz fixed the election declaring he won by a landslide.
Before the election Diaz had Madero jailed and when it became obvious the election was fixed, Madero supporter Toribio Ortega formed a militia in Chihuahua to oust Diaz.
While in jail, Madero issued a “letter from jail” that declared the Diaz presidency illegal and called for a revolt against Diaz. The revolt began in November 1910. Diaz was ousted and a new election was held in October 1911 that elected Madero the 33rd President of Mexico.
Mexico was divided into districts managed by different governments and protected by rebel leaders including Pascual Orozco, Pancho Villa, and Emiliano Zapata. Eventually, they turned on Madero and assassinated him on February 13, 1913.
The United States first played a role in 1914 when Pancho Villa plundered parts of New Mexico. In 1916, Gen John J. Pershing was sent to Mexico to capture Villa but could not do so since Villa was hiding in the mountains of northern Mexico. Pershing was able to get some of the fighting to stop and, along with the Catholic Church and several affiliated political parties, forced the negotiation of the Constitution of 1917.
Although the notes were authorized in February 1914, the Chihuahua government did not have the ability to print notes. Eventually, they contracted with the American Banknote Company to produce the notes. They were issued in 1915.
To expedite production, all notes feature the same design engraved with different denominations and printed using different colored inks. Many of the elements used were standard to American Banknote’s catalog, for these notes, the portrait on the left is of Francisco I. Madero and the portrait on the right is Governor Abraham Gonzalez. Each features three signatures of the Tesorero General (General Treasury), Gobernator (Governor), and Interventor (Controller). As with many signatures, it is difficult to interpret their names from the handwriting. Please contact me if you have more information.
Chihuahua Revolutionary 1 Peso Banknote. 1915 Series L (SCWPM #PS530e)
Chihuahua Revolutionary 5 Pesos Banknote. 1915 Series N (SCWPM #PS532e)
Chihuahua Revolutionary 10 Pesos Banknote. 1915 Series N (SCWPM #PS535a)
Reverse if these notes feature a framed picture of the Palacio de Gobierno do Chihuahua (Government Palace of Chihuahua) held by two griffins. When the notes were issued from the banks in Chihuahua, they received a red stamp from Tesorero General del Estado Chihuahua (General Treasury of the State of Chihuahua) along with the stamped initials of the issuing teller. When the notes were issued, the teller was supposed to stamp the date on the reverse but that was not universally practiced.
Chihuahua Revolutionary 1 Peso Banknote. 1915 Series L (SCWPM #PS530e)
Chihuahua Revolutionary 5 Pesos Banknote. 1915 Series N (SCWPM #PS532e)
Chihuahua Revolutionary 10 Pesos Banknote. 1915 Series N (SCWPM #PS535a)
In addition to the one-, five-, and ten-peso notes, the Chihuahua government issued 20- and 50-peso notes as well as a 50-centavos fractional note. Both the 20- and 50-peso notes featured the same design except the 20-peso note was printed using brown ink and the 50-peso was printed with a bright green on the front and a golden yellow on the reverse.
The 50-centavo fractional note used a different design and was smaller than the pesos. It was also printed by the American Banknote Company.
These notes were demonetized in 1917 with the signing of the new constitution.
An Educational Opportunity
Money is history in your hands. Look at what can be learned from finding three banknotes and exploring their past and how they fit into history.
Here is an idea for history teachers: you can go to any coin show and find a dealer with a junk box of foreign currency—find more than one if you can to increase the variety. Pick through the box and try to find as many different pieces of currency you can. Try to find a mix of countries, regions, and dates. You can also consider the same country but from different eras of rulers, who always wanted to see their portrait on their country’s money.
Before going to class, place each note in an envelope and place the envelope in a bag. Either pass the bag around the room or have each student come up and pick one envelope. After they pick their currency note, have them write an essay about the note and what the note represents. Have the students look up the history and put it in context of when the note was issued.
Rather than picking a topic, it is a fun way to have the students select a topic and make history come to life. The decisions as to whether the students get to keep the currency are up to you. Maybe you can talk to a local shop or club to see if they would be willing to donate the currency and come in to talk about currency collecting.
While thinking about modernizing the hobby it came to me that there is one aspect of the hobby that may still be stuck in the 20th century and that is price guides.
Price guides are supposed to be the guide that tells buyers and sellers the value of a coin. But over the years price guides went from being an art form to a statistical business with many different players vying for your attention.
Some of these guides have a good reputation while others may not be considered the best sources for prices. In either case, collectors have been known to use both the good and not so good to determine the price of their collectible because ultimately, the price is what you are willing to negotiate with the dealer to pay for the item regardless of what the guide says.
I started thinking, what do collectors use as their guide for pricing? Do they use more than one guide? If they buy a hardcopy (“dead tree edition”) do they buy new copies every year?
Today’s poll wants to know what you use to determine the price of your collectible or the acceptable price to buy or sell that special item.
Could the recent cyber attacks and growing severity of cybersecurity issues become the motivation for Congress to vote to reform United States currency?
According to Philip Diehl and Edmund Moy, former Directors of the U.S. Mint, the discussion as to remove the cent and paper dollar from circulation should be part of the current budget and tax overhaul debates.
Philip N. Diehl 35th Director of the U.S. Mint June 1994 — March 2000
Edmund C. Moy 38th Director of the U.S. Mint September 2006 — January 2011
The discussion is the same as it has been. The cost of zinc has risen causing the manufacturing costs of the Lincoln cent to climb above its face value. Even with operating efficiencies that have brought down the cost of manufacturing to its lowest levels in many years, the price of zinc keeps makes the materials cost more than the coin is worth.
As for the paper dollar, the Government Accountability Office has published several reports over the years that demonstrate the cost savings between using the paper dollar versus a coin dollar. The last GAO report (GAO-13-164T) concluded that using a dollar coin instead of the paper note “could potentially provide $4.4 billion in net benefits to the federal government over 30 years.”
This is not a new discussion. The only change is that this is being suggested by former Directors of the U.S. Mint from both sides of the aisle. Diehl was appointed by Bill Clinton and served from June 1994 through March 2000. Moy was appointed by George W. Bush and served from September 2006 through January 2011.
Earlier this year, Sen. John McCain (R-AZ) introduced the Currency Optimization, Innovation, and National Savings Act of 2017 (COINS Act) (S. 759). McCain’s bill would require:
Suspending the production of the one-cent coin for 10 years except for collectibles. After three years, the GAO would doe a study to determine whether production should remain suspended or should be reinstated. This would not demonetize the cent.
Change the composition of the nickel to 80-percent copper and 20-percent nickel. This should bring down the cost of materials used in striking the five-cent coin to be on par with its value. Efficiencies in manufacturing could lower costs further.
If the bill becomes law, two years after it is enacted, the Federal Reserve will begin removing $1 Federal Reserve Notes from circulation. This will probably be done by the banks who will take the notes on deposit and send them back to the Federal Reserve where they will be destroyed. Coins would take their place. The $1 FRN could still be produced for the collector market.
Sources report that the chances of McCain’s bill getting a hearing are minuscule. While having lunch with on congressional staffer, I was given three reasons why Congress will not address this issue:
States with a large rural population primarily west of the Mississippi River represented by Republicans are unlikely to support the removal of the one-cent coin. Removal of the coin is viewed as a hidden tax against the people with fear mongering that suggest the government is keeping the extra money that would become on the rounding of prices.
States with large poor populations, primarily in the south, and their advocates who believe that taking away the pennies are a way to separate more money from poor people who can least afford to lose the ability to pay in cents.
Surveys show that most of the people older than Millenials are against removing the paper dollar. Since this population constitutes the majority of the voters and donors, the politicians are not about to make those people upset.
Another issue is that McCain is not popular amongst his fellow Republicans. If the issue is addressed, it is likely to be discussed as part of a bill that does not bear McCain’s sponsorship.
Given the partisan nature of politics and the perceptions of the members of Congress, there is a very little chance of the Coins Act or any similar legislation being enacted during this session of Congress.
Victoria Cleland, Chief Cashier at the Bank of England, presenting the Churchill War Rooms with their New Fiver
Last year, vegan activists in the United Kingdom became apoplectic when they discovered that the manufacture of the pellets used to make the substrate for the polymer banknotes contained trace amounts of tallow.
Tallow is made from suet, the fatty deposits around the organs of cows and sheep. It is a byproduct of the process of butchering a cow for its meat and hides. In its natural form, suet is only used for cooking and some preservation. When it is rendered (by boiling) into tallow, it is used to manufacture soap, candles, and lubricants. The use of tallow in even the most synthetic lubricant is ubiquitous. Machines used to harvest crops or grease moving parts in automobiles have tallow in them.
Since the uproar from vegan activists, the Bank of England spent a lot of time and a lot of money to research the environmental and social impact of tallow in the notes.
The amount of paperwork that was generated for this issue is astounding. They looked at everything from the use of alternative lubricants, like palm oil, to the religious and social impacts to Her Majesty’s loyal subjects. In the final report, the Bank of England even summarized the response when they reached out to “representative groups,” both religious and activists organizations.
All that time and money led to the decision to “ not change the composition of the polymer used for future notes.” Why? Because the costs and environmental impact to using alternatives like palm oil would be more expensive, the notes have such low amounts of tallow, typically less than 0.05-percent (five-one-hundredths of a percent) of derived animal products, and the rest of the community just does not see this as a problem!
It is like I said in my original post, they are probably breathing more dander in a single day than they are touching tallow in all of the polymer banknotes that cross their paths. Tallow is used in all sorts of lubrication products, especially those used in transportation. It is everywhere.
I hope the vegans can either learn to live within society’s decisions or find another way to pay for goods and services, like using credit cards.
When you are a picker sometimes a find can be worth more than originally expected.
This past week I was offered a small library of military books from the estate of a former career military officer. Normally, I will not invest too much into books since they are not big sellers. However, if I can find certain military books at a good price, I will buy the entire lot for what I know will sell and take my chances on the rest.
As I was thumbing through the books, I found papers with various notes. The former owner did not like writing in the book. Rather, he would write his notes on papers and leave them between the pages. He would also use different objects as bookmarks. I found everything from business cards to old identification cards. And not just his identification card. There were cards from other people along with a lot of black and white pictures.
Since the books were handed down from his father, there were a number of early editions, especially books about Germany and Europe leading up to World War II. His father may have been an analyst since there were papers with insight beyond the written pages. I will be looking to donate some of this to a university or museum for them to study.
But I did find something numismatic between the pages. A 20 Reichsmark Bank Note from January 22, 1929. In trying to learn more about the note, the front has a portrait of Ernst Werner von Siemens, the founder of the electrical and telecommunications company Siemens.
1929 Nazi Germany 20 Reichsmark banknote (front) — Pick #181a
The back of the note has a worker’s medal with angels surrounding the medal. Written in small letters across the bottom of the note is the following:
WER BANKNOTEN NACHMACHT ODER VERFÄLSCHT ODER NACHGEMACHTE ODER VERFÄLSCHTE SICH VERSCHEFT UND IN VERKEHR BRINGT, WIRD MIT ZUCHTHAUS NICHT UNTER ZWEI JAHREN BESTRAFT
Charging Bull by Arturo DiModica is a bronze sculpture that stands in Bowling Green Park just south of the Financial District in lower Manhattan.
In my nearly 12 years of writing this blog and occasionally delving into the reasons for the fluctuating prices of precious metals and their impact on the numismatic market, there have been some fundamentals that have driven that market.
As I was reminded in one of the articles in today’s list, “Is Now The Time To Buy Gold?” predicting the price of gold is as easy as tracking the U.S. dollar and the stock markets. If the dollar weakens or the markets show insecurity, then the price of gold rises. What makes this tricky is that this is an either/or proposition that makes the theory sound easier than it is.
Simply, gold investing is used as a hedge against weakening currencies. If the currency loses its purchasing power, the price of gold rises. When stocks lose their asset values and are not providing returns to investors, currency may be strong but its buying power is not what it used to be, also known as inflation, then gold becomes a safe bet.
Silver is sometimes referred to as the “poor man’s investment” because of its lower price.
The tricky part is trying to predict what the markets are going to do. This is why when something happens that creates uncertainty, the markets react like a scared dog in a thunderstorm (one of my dogs becomes a basket case during thunderstorms).
The biggest problem is that uncertainty can come as quickly as a Tweet. It is amazing how one statement in 140-characters or less could move all of these markets. It is the business version of being scared of their own shadow.
For now, I am just going to stick to collecting coins. Aside from the satisfaction of the chase and accomplishment, my collection is worth more than what I paid. It is more fun and I know that when it is time to sell, I will make a profit.
As examples of hubris go, that of Hannibal (the Carthaginian general, not the fictional serial killer) takes some matching. And now German geochemists have added solid science to the evidence of historians and archeologists. → Read more at cosmosmagazine.com
Interesting money can you bring from journey. Disney dollars are traded one-to-one to the American, the Cuban peso is only for local residents, the coin 25 Euro in almost every country you can find unusual currency. Yes, and the usual money that we pay in the supermarkets, are often a pleasant and even beautiful reminder … → Read more at micetimes.asia
Bob Harwell has turned his childhood pastime of collecting coins into a profession, and now coins he collected are on display at a University of Georgia library. The display includes a complete set… → Read more at reporternewspapers.net
You need a quick amount of cash. After all, not every transaction can be made with a credit card. You hop in the car and drive to the bank to use the ATM. Within seconds, the machine spits out money and you drive away.
Early the next morning you look at the bills and notice that not only are they crisp new $20 Federal Reserve Notes but they are in sequence. A closer look and you think that you might have a good Liar’s Poker hand.
An ATM find: A Sequence of $20 Federal Reserve Notes
Then you take a closer look at the serial number and think you might have stumbled on something. That is when you realize that you might need to take that prescription from the ophthalmologist to a store and get your glasses changed!
Eight notes sooner and I would have picked up a $20 Federal Reserve Note with a cool serial Number!
Although a decent Liar’s Poker hand (a full-house), I almost had a repeater. Had I made to the ATM sooner, I could have found the note with a 4-digit serial repeater. Then, if the rest of the notes were in sequence, I would have sacrificed to go back for more money. After all, there would be someone who would be interested in buying serial number “92009200” and maybe the succeeding notes!
Now I am stuck hoping to win the $535 million after spending number “92009212” on Powerball tickets.
Did you know that someone made a movie about the $2 bill?
I was looking for information about early $2 notes and an Internet search discovered the page for The Two Dollar Bill Documentary.
Basically, it is a 1 hour 43 minute documentary about the $2 bill. Written and directed by John Bennardo, who has one other film to his credits, writes on the website that he wanted to learn more about the stack of $2 bills he kept in his desk draw. A year and several interviews later, Bennardo had a documentary.
It does not appear that the documentary had a wide distribution since I did not find anything about its showing. But for the low sales price of $9.99 you can by a DVD through their online store. It might be worth spending the $10 just to check out the documentary.
The Two Dollar Bill Documentary teaser trailer
All images courtesy of “The Two Dollar Bill Documentary.”