Apr 22, 2009 | fun, gold, RCM, video
Not long ago, a Canadian friend passed along a funny video of a tour of the Royal Canadian Mint. Today, someone else sent the link to the video so I decided to share. The video is by Rick Mercer. Mercer is the host of the popular Rick Mercer Report on Canadian Broadcast Company network. He is a popular political satirist in Canada whose show is described as a cross between something he has done in the past and The Daily Show with Jon Stewart.
In this video, Mercer and his crew visit the RCM’s Ottawa facility to take a tour of the gold storage areas and coin production. Mercer is very irreverent in the video giving his tour guides and nearby guards proverbial heartburn over his antics. See for yourself and enjoy!
Apr 11, 2009 | Britain, fun, gold
Even in a down market, there is always someone ready to capitalize on those who still have the money to afford extravagance. In Great Britain, the high-end retailer Selvridges is selling Melt’s Recession Proof Egg. Melt, the Selfidges house brand, is offering a hand-made to order chocolate egg made with a one-ounce gold bullion Britannia coin and decorated with 18-karat gold leaf.
Gold is currently $880.80 per ounce (£600.31 at the current exchange rate).
If you have a spare £1,000 ($1,467.25) and happen to be in the area of Selfridges’ Oxford Street store in London, you might want to pick up a unique easter gift.
Image courtesy of Selfridges.
Mar 26, 2009 | gold
With the price of gold rising and the economy falling, there is a new gold rush. Reports from California said that panning for gold is becoming popular for people looking to make money.
The story from KTLA in Los Angeles says geologist estimates that only 20-percent of the gold was found during the 1849 gold rush. Today, the new gold rush is occurring within an hour of downtown Los Angeles. This is the story from KTLA:
Could there be gold in other places? Before the 1849 California Gold rush, the news of the Carolina Gold Rush followed the 1799 discovery of gold by Conrad Reed outside of Charlotte in Cabarrus County, North Carolina. In 1829, gold was discovered in Lumpkin County, Georgia near Dahlonaga. By 1837, Congress authorized the building of the Charlotte and Dahlonaga Branch Mints for the minting of gold coins.
But these areas are not open to general exploration. The Reed Gold Mine is a State Historic Site with restrictions on where visitors can explore. In Dahlonega, Consolidated Gold Mines, Inc. own the area of the Georgia gold discovery. Panning and searching for gold in those areas are limited to their pre-determined “experience.”
During my teen years growing up in Charlotte, there were rumors of gold under the buildings of downtown Charlotte. It was said that the small amount of gold under the streets and the effort it would take to get to it through the hard clay soil made it economically infeasible. Could the economics have changed enough to try to mine under the streets of Charlotte?
Are there other areas where gold may be found? Gold was found in southeast Alaska in 1872, near Juneau in 1880, and the Klondike Gold Rush in 1898. Could Alaska be another place for modern day gold prospectors?
Could there be an undiscovered area prime for a modern day gold rush?
Mar 13, 2009 | coins, gold, US Mint
At our coin club meeting, our speaker brought in a 2009 Ultra High Relief gold coin. In hand, the coin is more impressive than pictures can show.
I tried to take pictures with the camera on my iPhone, but the room light was too low for a good picture.
The coin is presented in a capsul that should have been made better. Capsuls from the US Mint have “seams” on the top and bottom of the rim. Since the rim of this coin is an important design element, I would have thought that the Mint would have looked to use a cleaner design. But the edge lettering is readable through the capsul and a nice element to the coin.
Augustus Saint-Gauden’s Liberty design seems to almost come to life on the coin. It is almost as if Miss Liberty is walking off the coin. The brightness of the coin leaves a great impression.
The eagle on the revese appears as if it is flying swiftly over the coin with a rising Sun in the background. The yellow of the gold is so appropriate for the image that I could not imagine this image being struck in any other metal. Whomever engraved the coin did a good job preventing the motto from detracting from the coin’s look.
The coin is presented in a felt-lined wood box that screems there is something special inside. That box was placed inside a protective box. Both the protective box and Certificate of Authenticity was placed in an outer box. It gives the coin a regal treatment that is well deserved.
Regardless of what you think of the Mint’s recent performance issues, they did a wonderful job with this coin and packaging!
Recently, it has been reported that several of these coins were graded MS-70 by the top two grading services. This does not surprise me given the information as part of the exhibit that was at last year’s Worlds Fair of Money in Baltimore. One thing that was said was the presses were run manually and struck twice with 65 metric tons of force. It was also said that they were going to limit the number of coins struck per die set. Thus, unless the dies are worn, this coin should never grade below MS-69.
I find it interesting that people are removing the coin from the wonderful presentation to have it placed in a cold-looking slab. Compared with the design of the packaging, the slab cannot do this coin justice, regardless of its grade. I think it will detract from the coin’s beauty and the impact the packaging is designed to provide. If I can afford one of these coins (and I am going to try), it will stay in its orginal US Mint packaging.
Feb 22, 2009 | commentary, economy, gold
The big news of the week is that the gold spot price spiked over $1,000 this week before profit takers caused the price to back off to a close of $993.20. Gold has been on a steady rise since the week of January 12, when the markets were worried during the last week of the Bush administration with nothing concrete being offered by the incoming Obama administration. Markets continue to be skittish about the economy.
Recently, we have learned that the new openness of the Obama administration has a price. The administration and congress have pulled back the covers of the Emergency Economic Stabilization Act (TARP) revealing that the banks and brokerages were not using the money to open capital markets and were practicing “business as usual.” Recently, we learned that the nation’s two largest banks are not as healthy as initially reported. This is making everyone uneasy about the economy.
With the financial markets in turmoil, investors are running to the gold markets. Gold has been the traditional safe haven for the equity markets. Pundits have been reminding us how gold was used as the standard currency at the beginning of the Great Depression. With the markets failing, foreign trade partners were demanding payment in gold causing much of the United State’s wealth to be shipped overseas. This did not not leave enough gold to back circulating currency causing money to be a scarce resource. As Franklin D. Roosevelt began his presidency, he ordered a 4-day bank holiday and an embargo on the use of gold in overseas transaction. A month later, Roosevelt ordered a nationwide gold recall (Executive Order 6102).
The Gold Reserve Act of 1933 made Executive Order 6102 the law. Gold ownership and the restriction on the use of gold contracts started to ease in 1965 with full ownership granted in 1977. Under 31 U.S.C. §5118, gold contracts with the government are not permitted as well as issuing gold or silver as circulating currency. The United States was officially off the gold standard.
For us collectors, the economy may help keep the coin markets active. But which part of the coin market? Reports from the recent Long Beach Expo noted that there was strong business, especially in with gold coins. It was also pointed out that the auction at the Long Beach show held by Heritage Auction Galleries realized $13 million for a catalog that had a significant number of gold coins. I can understand why the people who manage the Long Beach Expo and Heritage Auction Galleries would want to show the bright side of the weekend, but I suspect that the reports are misleading to the overall state of numismatics.
There were no reports on silver or “common” and less expensive collectibles.
Silver, which is more abundant than gold and has significant industrial uses, is up 25-percent in 2009 while gold is only up 13-percent. It seems to be effecting the industrial market more than the coin market.
While gold may be the investment of choice for those leaving of other equity markets, other coins do not seem to be selling as well. The PCGS3000 Market Summary Index has been falling since last October. Other PCGS indices have moved lower with the exception of the Proof Gold Coin Index, which has remained flat.
Downward pressure on the coin market observed by PCGS can be traced to the news of bad economics event. With the flow of money and seizing of capital markets, buyers have less discretionary funds to purchase coins. As a result, there maybe a higher supply from people wanting to sell in order to convert their coins into spendable currency. The basics of the Law of Supply and Demand dictates that when the supply is high but the demand is low, the downward pressure caused by the lower demand will force the prices down. For those still in the market, the elasticity of demand in the overall market, which takes into consideration lowered incomes, may continue to put downward pressure on prices creating bargains for some formerly higher priced coins.
Since numismatics is an industry that relies on its customers to have discretionary income to purchase its products and since economic indicators say that people now have less discretionary income, I wonder if the positive press from Long Beach may be the result of investors entering the market looking for safe havens. The markets have seen this before in 1980 and in 1990 where the 1980 market was because of manipulation and 1990 increases was because of economic factors.
Before you run out and buy gold or gold-based investments, understand that following the two biggest gold spikes in history, gold had dipped to the lowest levels of the year within a few months months. After reaching $850.00 on January 21, 1980, ($2,178.05 adjusted for inflation), gold dropped to $481.50 on February 18, a 43-percent decline. Following the February 7, 1990 closing price of $423.75 ($684.56 adjust for inflation), gold closed 20-percent lower at $345.85 on June 14, 1980. The PCGS3000 also notes similar drops in their index during the same period.
There are quite a few analysts who are predicting that gold prices could surpass $1,500 and $2,000 per ounce. It is conceivable to think that if gold reaches $2,000 per ounce without market manipulation, we would be in a depression that could eventually make the 1930s look like a picnic in comparison.
Please remember that I am not an investment advisor or analyst. I am collector with a background in public policy trying to read the tea leaves to understand if it is time to sell my gold leaf!
In the mean time, I have cut back on my numismatic purchases. This year, I will be looking to fill the holes in the modern sections of my albums before buying higher priced coins. I will probably not purchase any coins for my registry sets and limit the number of coins I send off to be graded. I might purchase a bulk package of cents to fill up the Whitman coin board I purchased last year.
Are you limiting your collecting activities this year? Let me know by posting your comment here.
Gold chart courtesy of Kitco.com.
Image of The New York Times front page from March 6, 1933 courtesy of Charleston Voice.
Feb 7, 2009 | coins, gold, video
As an avid collector and purveyor of the “neat” things in numismatics, I find it difficult to pass up a “how it’s done” video. A friend who knows this, saw the video I posted about Rae Biester, Superintendent of the Philadelphia Mint, appearing on the game show What’s My Line, and sent along a link to another interesting video.
This video is from the Mayer Mint, a private mint in Germany, and sponsored by the Gold Refining Forum. It shows the making of a 2002 non-circulating legal tender gold coin honoring the Year of the Horse. It is part of the Bhutan Lunar Series. The coins struck in the video are 5 ounces of 999.9 gold proofs with the denomination of 20,000 Ngultrum issued by the Royal Monetary Authority of Bhutan.
I love videos like this!
Coin specification image courtesy of the Mayer Mint GmbH
Jan 28, 2009 | gold, US Mint
Following up on my post about the pricing policy at the US Mint for Ultra High Relief Saint Gaudens Double Eagle gold coins, Susan Headly is reporting that the Mint guarantees that the purchaser will pay the price of the coin as of when it was ordered. This means that if the price of gold rises before your order is fulfilled, your price will stay the same as when you ordered.
It also means that if the price of gold falls, your price will stay the same as when you ordered.
The Mint has a very liberal, 30-day return policy for all of its product. Purchasers can return any item in its original packaging within 30-days of purchase. If the prices go down after your coin is shipped, you can return the coin and re-order it at the lower price. Also, if the price drops before your order is shipped, you can cancel your order and re-order the coin at the lower price.
Although there is a potential for abuse, it is comforting for collectors that the US Mint follows market practices on price rises. However, it is up to you to lock in a lower price when the price falls.
While the US Mint has gone out of its way to explain its precious metals pricing policy, the Mint should make it clear what its policy is when purchasing backordered products.
Jan 26, 2009 | gold, policy, US Mint
Throughout the second half of 2008, the US Mint has had problems with the supply of gold coins for the collector and investor market. Gold American Eagle and Buffalo coins were is short supply causing the US Mint to suspend and limit gold sales before changing the pricing policy of all precious metal products. Could the US Mint be trying to discourage gold ownership?
Michael Zielinski, author of Coin Update and Mint News Blog, writes about this on the Seeking Alpha blog. Zielinski tracks the actions taken by the US Mint and their explanation for the actions noting that “the consequence of each action has been to limit or discourage gold ownership.”
Zielinski notes that the US Mint will be lowering the number of gold options by eliminating fractional issues and suspending the American Buffalo issue altogether.
“Whether or not it was the US Mint’s intention, every significant action they have taken since August has either limited gold availability, eliminated gold product options, or increased the cost of acquiring gold,” Zielinski writes. “Has it all just been a consequence of surging global demand for gold, supply chain mismanagement, and bad timing for policy decisions? Or is there something else going on here?”
Please read Zielinski’s full article at Seeking Alpha.
Jan 25, 2009 | gold, policy, US Mint
If you have been watching the US Mint this week, you may have noticed that the 2009 Ultra High Relief Saint Gaudens Double Eagle started to sell on January 22, 2009.
With a limit of one coin per household, the catalog page advises “Orders will be processed on a first-in, first-out basis, and could potentially take up to six to nine months to complete based on gold blank availability.” (emphasis added) They further explain that the Mint will not charge your credit card until your order ships. This means that the coin could cost more than the current $1,189.00 price. With the changing price of gold and that the first coins will not be available until February 6, 2009.
According to the new precious metals pricing policy, the price of gold products will be adjusted based on the Thursday AM London Fix price. Since the price of gold on Thursday, January 22 was $847.75 per ounce, the current price of the coins will not change on Monday. However, the Friday AM Fix was $873.00 per ounce and the PM close was $875.75. If the price does not come down, the coin’s price could rise to $1,239.00 before one coin is delivered.
As a consumer, when I purchase a product, even if it is backordered, I am locked into the price at the time of the order. Even if the backordered item takes three months to fulfill, my price is guaranteed. In fact, if the price goes down many vendors will adjust the price to the new lower price. This is the definition of customer service.
The US Mint, being run by a bureaucrat, opens sales at one price that has the potential (based on current market conditions) to rise before the first coin is delivered two week later.
An opposing argument will be the fluctuating price of gold and market conditions. However, the Ultra High Relief coin is being sold as a collectible item, not as bullion. It is understandable if bullion changes based on market conditions, not for collectibles. Further, as the price of silver fluctuates, the Mint does not adjust the price of American Silver Eagle Proof or the annual silver sets when the spot price of silver changes. Did the Mint lower the price of silver products after the price plummeted from $20 per ounce?
Another reason that the Mint should not be adjusting the prices of collectible coins once ordered by the consumer is that the Mint has variability built in to the price. At the bottom of the new pricing tables is a note that says “cost of metal 71%-74%, cost to manufacture (including overhead) 11% – 14%, and margin 15%.” How does the cost of manufacture change so variably as the price changes?
After writing computer programs for many types of business, I had taken business courses to understand how business works. In the basic business courses I learned that when analyzing the overhead, most of the costs are fixed. Variable costs do not vary greatly with maybe the exception of the costs of energy. However, most of the variable costs are not based on a percentage of the costs. Overhead usually comes from fixed costs, such as facilities, machinery, labor, etc. Variable costs are based on the cost to produce a unit of the item. These variable costs include energy and material costs. However, the Mint is already saying that 71-74 percent of the price is based on the cost of the metal. So what are the variable costs in coin manufacture?
Let’s look at the numbers. Assuming an 11-percent cost of overhead at the low-end of the the Mint’s price range, the Mint is saying that when the price of gold is $800 per ounce, the cost to manufacture is $122. But when the price of gold rises to $900 per ounce, the cost to manufacture is $133. Considering that the variable cost of the metal is calculated separately, why does it cost the Mint $11 more to make this coins when the price of gold rises by $100?
Does it make sense that the US Mint can fix the cost of the manufacture of billions of Lincoln cents and complain that it they cost more than face value to manufacture but they cannot nail down the cost of a coin that will have significantly less population?
The formal notice of the price change was published in the Federal Register Volume 74, Number 3, pages 493-496 (GPO Access: [text] [PDF]). The notice does not explain the rationale for the percentages used nor does it fully explain the cost of manufacture.
I will be asking my representatives in congress to ask the Mint to justify their pricing. I may also submit a Freedom Of Information Act (FOIA) request as well. I will report what information I gather. In the mean time, maybe President Obama’s administration should review my suggestion as to how to pick a new Mint director.
Dec 23, 2008 | ancient, coins, gold
Archaeologists excavating an area at the Jerusalem National Park in Israel uncovered 264 gold coins from the Byzantine period, early in the seventh century.
The Israel Antiquities Authority reported that the coins were found under a large rock in an area where a car park was being excavated. In Israel, it is required that construction sites must undergo an archaeological investigation to ensure antiquities are recovered. This was one such dig.
All of the coins bear the likeness of the emperor Heraclius who was emperor of the Byzantine empire 610-641. Archaeologist believe the coins were minted and hidden at the site prior to the Persian capture of Jerusalem in 614. Heraclius is depicted on the obverse wearing his military uniform and holding a cross in his right hand. A cross is shown on the reverse. The coins were found in near mint condition.
Daily Mail (UK) credits the discovery to Nadine Ross, a British volunteer working in the fourth and last week of the excavation.
Dr. Doron Ben-Ami and Yana Tchekhanovets, directors of the excavation, said that the coins had likely been hidden in a niche in one of the building’s walls because the of the lack of other items found in the area. Archaeologists hope that more can be found as they continue to explore.
First image courtesy of the Israel Antiquities Authority
Second image courtesy of the Daily Mail
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