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.
And now the news…
The manager of the Museum of Barnstaple and North Devon has thanked people for their support after raid, as police investigate several lines of enquiry. → Read more at northdevongazette.co.uk
AIM-listed Hummingbird Resources announced that in line with the imminent commencement of production from its Yanfolila gold mine in Mali (Yanfolila), the compa → Read more at miningreview.com
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
The Industry Council for Tangible Assets (ICTA) issued an alert warning that a provision on the House of Representatives’s tax plan has the potential to hurt the numismatic industry and asked its members to contact their representatives to let them know of the issue.
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 1301(a)(1) refers to 26 U.S.C. §1301(a)(1) that currently says:
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 call! Make your voice heard!
The following is the obituary scheduled to appear in the St. Louis Post-Dispatch.
As I peruse the Interwebs for numismatic-related stories from non-numismatic sources, my searches are inundated with stories about Bitcoin, crypto-currencies, and blockchains. Most of the time, the stories are just noise given my objective to find information relevant to collectors including the issuance of circulating currencies and the impact of precious metals on the market.
While there is some use of the technologies as an indicator of a store of something resembling wealth or as a new method of providing electronic transactions, the concept of inventing a currency out of thin air—or electronic bits—is something that may be more dangerous than the stock market.
Bitcoin, which is a type of crypto-currency, is traded using a blockchain, a technology that provides a mechanism for secured transactions between parties. Like the Federal Reserve Note, it is an invented currency whose value is in the eye of the beholder. The only difference between the Federal Reserve Note and crypto-currency is that the worth of the paper currency is backed by the full faith and credit of the United States government. Bitcoin has no backing, very little regulation, and could become as worthless as Enron stock as fast as it became worthless.
Although you may have issues with the way the federal government and the politicians have been conducting themselves, the government provides the backing to make sure that the currency you use has some representative value by law. It is called fiat money.
Crypto-currency not only has no intrinsic value, but it is not backed or supported by the government. It has no regulation and is worth what someone will provide in trade. The assignment of value to crypto-currency may be market driven but those who have seen the silver market of 1980, unregulated markets can cause significant problems.
The blockchains that protect the transactions are software creations. Software is what is used to provide the logic to the computer to do its job—or not do its job in the cases of Equifax, Target, Home Depot, the Office of Personnel Management, and any of the other servers you have heard attacked in the last few years.
Of course the most important thing to numismatists, crypto-currency has no presence in the physical world. You cannot create a collection of bitcoin since it really does not exist. And maybe that should be the question: if it does not have a physical form or a physical representation, is it really money?
And now the news…
The Stellarton Legion is now the proud recipient of a Nova Scotia Highlanders ceremonial unit coin. And Stellarton Legion president Jack Chaisson was on hand to take personal delivery of the coin from Lieutenant-Colonel Colin Todd at Pictou Legion, after attending the county Remembrance Day ceremony in town Sunday. → Read more at ngnews.ca
The Royal Mint has released its official Remembrance Day coin ahead of commemorations on Saturday. Stephen Taylor, a graphic designer at the Royal Mint, said his artwork was inspired by the world-famous war poem 'In Flanders Fields' by John McCrae. → Read more at standard.co.uk
The Perth Mint has released a world-first silver coin in the shape of a figure eight. Likely to be a hit with Chinese coin collectors and buyers, only 8888 of the 2oz, 99.99 per cent silver coins will be released at a recommended retail price of $218. → Read more at thewest.com.au
Bruderer UK, which has nearly 50 years’ experience creating world renown precision high speed presses, has installed a state-of-the-art machine into the Royal Mint’s Llantrisant facility, giving the world famous institution additional speed, capacity and flexibility. → Read more at expressandstar.com
Gold isn’t so shiny anymore. Globally, demand for the precious metal has fallen to its lowest level since late 2009, according to the World Gold Council. In the third quarter of 2017, demand for the haven asset was 915 metric tons, 9% lower than a year earlier. → Read more at qz.com
In January, 1999 Cassinelli Construction Co. was employed by Nevada State Public Works Department to remove a portion of Carolyn Street at the Nevada State Museum to construct a parking lot and build a small park facing Carson Street. → Read more at elkodaily.com
Gold was once a common form of payment around the developed world, but after World War II the precious metal's influence began to wane. In 1971, when the United States finally put an end to the gold standard, the role of the yellow metal changed for good. → Read more at fool.com
The Thank-A-Vet cenotaph memorial coin set, created for local veterans and their families as a keepsake, has been completed with the minting of the final two coins and creation of a pine display box. – Sean Allen/Metroland → Read more at brantnews.com
The thing about money — we all need it. “Money bewitches people. They fret for it, and they sweat for it. → Read more at royalgazette.com
Whitman Expo came to Baltimore this weekend to fill up three large halls in the Baltimore Convention Center. Like every Whitman Expo, dealers come from all over making it a must-attend east coast destination.
I was able to attend on Friday afternoon. It was not for long because I had to work half of the day. But it is always worth the trip.
Travelling to Baltimore on Friday is different than going on Saturday. First, the traffic between the Washington metro area and Baltimore is heavier. The traffic in Baltimore is also heavier especially on I-95 going through the city. And parking is a little more expensive because you compete with the business parking of downtown Baltimore. Someday, I will take the light rail that stops between the Convention Center and Camden Yards.
During a short visit to a show like Baltimore you either have to have a concise strategy or whatever objectives there are will not be fulfilled. This time I had no objectives and spent a lot of time talking with people.
Over the years I have met a lot of dealers and others while walking around I wanted to visit with some of these people. I also got to meet with one of the long-time readers of the blog. Bob is a frequent correspondent who came down from New Jersey on Amtrak to also visit the show. It was good to meet Bob and put a face on the real person behind the emails.
During the short time I spent on the bourse floor I learned a few things about the market:
- Sales are moderate but steady. Dealers are selling more online than in shows but see the shows as a valuable marketing tool. None of the dealers I spoke with are seeing the end of coin shows but can envision a reduction in the number of shows.
- Some dealers are diversifying their inventory from their core interests to other areas. One dealer noted that he was seeing more junk box searching than in the past. Although he thought that his sales were below average, he thought that the low-end sales would pick up on Saturday when younger people will attend.
- I thought there was a lot more silver than gold. One dealer that sells modern bullion coin such as American Eagles, Canadian Maple Leafs, and Chinese Pandas said that silver bullion was selling better than their gold counterparts. With silver trading under $17 per troy ounce, those interested in bullion are buying silver. He also attributed the interest in silver with some of the better silver issues like the Pandas and other non-circulating legal tender (NCLT) coins.
- Speaking of NCLT coins, I did not see a big selection. A dealer whose case included a few older issues said that the current NCLT issues may be too expensive for the market. It is one thing to issue themed coins that may be of interest but selling them has been a problem. Some people find it difficult to justify the selling of a one-ounce silver coin for more than four-times bullion value. This dealer thought that the licensing fees being paid for these images were probably driving up the price and driving their potential market away.
Another interesting aspect of the show is the number of non-numismatic items for sale. There were two dealers whose cases contained only jewelry. Most of the jewelry were quality items and estate pieces but I was surprised there were two dealers whose inventory was exclusively jewelry. A few dealers I have seen in the past also had cases of jewelry. One said that the rings he was selling were an accumulation of many years and found that the market was more receptive to the jewelry.
In addition to the jewelry, a dealer was selling used music compact discs (CD) and another had African artifacts including a beautiful silver necklace. Some of the currency dealers also had historical papers, letters, ledgers, and other ephemera that only has a tangential tie to numismatics.
Last week I asked how dealers would respond to the market. It looks like some dealers have turned to inventory diversity and including non-numismatic collectibles. If it helps bring in more collectors, it might be a good move.
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...read more
The Industry Council for Tangible Assets (ICTA) issued an alert warning that a provision on the House of Representatives’s tax plan has the potential to hurt the numismatic industry and asked its members to contact their representatives to let them know of the issue....read more
It is with great sadness to report that an icon of numismatics, Eric P. Newman, died peacefully at his home on Wednesday at the age of 106. Even if you never met Newman your life in numismatics has been changed for the better by his work. He will be missed by...read more
As I peruse the Interwebs for numismatic-related stories from non-numismatic sources, my searches are inundated with stories about Bitcoin, crypto-currencies, and blockchains. Most of the time, the stories are just noise given my objective to find information relevant...read more