Monthly Archives: February 2011

Heads up! Fake Morgans coming from China!

A special report has been published with a warning that thousands of counterfeit coins are coming in from China. Buyers, be sure to read the description below so you know how to identify fake coins. Use caution when investing in precious metals, and always buy from a trusted, professional source!

PORT ANGELES, Wash. – Counterfeit coins by the thousands are turning up in Washington state, and authorities are warning coin collectors to be on the lookout for them.

All or most of the counterfeits appear to be from China.

“Stacks of ingots, bars, all kinds of stuff – they make everything from pennies all the way up to silver dollars,” says Port Angeles police officer Duane Benedict. “China is making these things by the thousands.”

Several of the fake coins were recently sold to a Port Angeles business, EZ Pawn, for $400. They would have been worth more than $1,500 had they been real, Benedict said.

Officer Benedict got a call from EZ Pawn.

“They brought me in there to look at something they thought was fake. So I was pre-warned. But I picked it up and said, ‘What’s fake about it?’”

The 20 counterfeit U.S. Morgan silver dollars were supposedly from a century ago. Brian Winters of EZ Pawn has bought coins for years – and even he was fooled.

Unlike most counterfeits, the coins did not all have the same dates. One was a super rare 1893S, worth thousands and thousands.

It was at that time Brian pulled out a loupe and looked at a real coin and a suspect one. He found the “T” and the “I” too thick. All the coins were fake.

The real coin weighed in at 26.7 grams. The fake was two grams lighter.

For those of us without a gram scale – there are other tests for detecting the counterfeit coins.

The real ones have a high-pitched ring when they’re dropped. The counterfeits land with a thud.

Also – a strong magnet will detect small amounts of iron in counterfeit U.S. coins. If a supposedly “silver” coin has even a little bit of attraction to the magnet, then it is a fake, Benedict says.

The counterfeits aren’t just limited to silver dollars. Other coins – including Indian head pennies – also have turned out to be fakes.

And EZ Pawn says they’re continuing to see fake coins brought in by other customers.

And Benedict warns businesses to be suspicious if someone uses only coins to pay for merchandise.

“Use caution if someone brings in a lot of coins to buy something, and look them over carefully,” Benedict said.

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The Peninsula Daily News, KOMO News partner, contributed to this report.

Gold’s Bull Market

Have a look at the article we’ve posted below: it comes from Kitco, and is written by a duo called ‘The Aden Sisters.’ In this post, the two women analyze the bull market as it pertains to gold, and offer up a few predictions for the precious metal’s future performance in 2011.

It’s interesting to note that, while this article was only published last week, gold has already changed dramatically since then, experiencing a strong upward trend in the market against the backdrop of increasing unrest in the Middle East.

What do you make of this commentary?

Gold’s Bull Market

Feb 16 2011 9:55AM

If we had to pinpoint a time during the last 10 years when the gold price broke out into a full on bull market, it was in 2005 when the $500 level was clearly broken. That was a key level at the time and this break out coincided with the launching of gold’s ETF, GLD.

It was also clearly a break away from the dollar as gold began jumping up in all currencies. This is when the bull market started heating up and gold never looked back until it surpassed the 1980 record high in 2008.

The financial crisis pushed the gold price down in the sharpest correction in the bull market, yet gold closed 2008 up on the year, which was only bettered by bonds at the time. Most impressive, it didn’t take gold but a few months to reach a new high once again.

Most important and the reason why we are going over the bull market is because the gold price has been on a tear with not even a 14% decline since the crisis low in Nov 2008. Gold entered a stronger phase of the bull market along the way in September 2009, and once again it never looked back.

Interestingly, the Nov 2008 crisis low was near the recurring 8 year lows that gold has followed since the 1970s. That is, gold tends to reach a low every 8 years (see Chart 1). If this pattern continues, this means that gold has several more years ahead for an exciting bull rise to develop. In many ways it feels like 1976 again… only this time around the world is more complex and involved. The emerging world is carrying the load, while the developed world strangles on debt.

Bull: Time for a rest

For now, however, gold is in a downward correction that began with the new year and it’s been moderate, only declining 7% so far. Is that all there is or will gold decline further? That’s the big question… Will it be a decline similar to the one last February when gold fell 13.30%, or will it be milder, like in the summer when gold lost about 8%? We’ll soon find out, but a correction at this point is not at all unusual. In fact, gold’s strong rise was overdue for a normal correction.

GOLD TIMING

The key now is to watch the guidelines to measure gold’s weakness. Our best guideline is shown on Chart 2. This indicator is our favorite in helping to time intermediate moves in the gold price.

The best rise in gold’s bull market is a rise we call “C”. The latest one had been in process since April 2009. This rise peaked on January 3rd. This means gold rose almost 64% in this 21 month time period… a super rise indeed and the strongest C rise of the last 10 years.

Our focus now is on the current decline, we call D and to measure its likely depth. A  10% – 15% decline would be a healthy one and it would still show overall bull market strength. This means a decline to the $1280-$1200 level would be a normal decline within gold’s strong bull market. This level also coincides with the 65-week moving average, the major support level, now at $1230. D declines tend to fall to this average, but the exception was the 2008 extreme during the financial meltdown.  Whether this decline ends up being mild or more severe, it’s providing a good buying opportunity. Use upcoming weakness to buy with both hands.

by Mary Anne & Pamela Aden,
February 14, 2011
Courtesy of www.adenforecast.com

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Mary Anne & Pamela Aden are well known analysts and editors of The Aden Forecast, a market newsletter named 2010 Letter of the year provides specific forecasts and recommendations on gold, stocks, interest rates and the other major markets. For more information, go to www.adenforecast.com

Chinese Ramp Up Gold Buying at Start of 2011

Here’s an interesting fact: Chinese consumers purchased as much gold in January alone as it took them six months to acquire in 2010.

Business Insider explains the reasons behind this surge in buying, and looks ahead to the future of the precious metal in the year to come.

Chinese Buy as Much Gold in January As They Did in Half of 2010.

Mamta Badkar | Business Insider | Feb. 16, 2011, 10:17 AM |

Demand for physical and non-physical gold in China is soaring. The Industrial and Commercial Bank of China (ICBC) reportedly sold nearly 7 tons of physical gold in January alone, almost half of what they sold in all of 2010, according to Reuters.

The bank expects to sell 5 billion yuan worth of gold linked deposits this year, after having sold 1 billion yuan worth of the deposits in 2010, according to Zhou Ming, the deputy head of the ICBC’s precious metals department.

With Chinese CPI at 4.9% it comes as no surprise consumer are rushing to buy the precious metal to hedge against inflation. Gold prices in Asia steadied in overnight trading while gold futures rose on the Comex in New York. The metal has been trading lower on the market today.

The ICBC teamed with the World Gold Council to launch China’s first gold gift investment bar on Tuesday. The Only Gold Gift Bar comes in 10, 20, 50, 100 and 1000 gram denominations and the word “fu” (joy) engraved on the bar. Ming said in a statement on Tuesday:

“We are working closely with the World Gold Council to provide a variety of physical or physical backed gold solutions for our customers. Last year we sold more than 15 tonnes of bars and coins and we have a strong start in January with almost 5 tonnes of sales.”

With 1,161.9 tons, China has the world’s sixth largest gold reserve valued at $50.19 billion. The country is the world’s largest gold producer, yet it imported 209 tons of gold last year.

2011 Army Commemorative Coins Debut

Gainesville Coins’ Friday Pick: A great article about the new 2011 Army Commemorative Coins Debut. Read on for details about these great coins, their sales stats, and total income they have generated. Plus, check out the chart underneath to see the entire US Mint numismatic product sales report. Have you purchased any of these coins for yourself? Leave a comment with your impressions and opinions; we’d love to hear your thoughts.

US Mint Sales: 2011 Army Commemorative Coins Debut

By Michael Zielinski on February 8th, 2011
Categories: Featured Articles, US Coins, US Mint Sales Reports, United States Mint

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This week’s US Mint numismatic product sales report includes the debut numbers for the 2011 United States Army Commemorative Coins. This program includes three different designs offered in proof and uncirculated versions.

The Army Commemorative Coins went on sale January 31, 2011. The US Mint offered each coin for sale individually, with no multi-coin sets or other packaged collector products available. There were no household ordering limits imposed, and coins carried discounted introductory pricing, which will remain in effect until March 2, 2011.

Through the sales reporting date February 6, 2011, the US Mint had received orders for a total of 10,906 of the $5 gold coins, comprised of 7,861 proofs and 3,045 uncirculated coins; 67,593 of the silver dollars, comprised of 46,895 proofs and 20,698 uncirculated coins; and 49,690 of the half dollars, comprised of 30,162 proofs and 19,528 uncirculated coins.

Last year, the US Mint had offered two commemorative coin programs, which included only silver dollars. The 2010 American Veterans Disabled for Life Silver Dollars had debuted with combined sales of 98,358. The 2010 Boy Scouts of America Centennial Silver Dollars had recorded initial sales of 214,673. In total, the US Mint would sell 267,740 and 350,000 for each of the programs, respectively.

The complete US Mint numismatic product sales report follows. Figures are compiled through February 6, 2011. The first number column represents total sales through the reporting date, and the second number column represents the change in sales since the last report. Lines which appear in bold represent products which have debuted on this report. Figures which are followed by an asterisk (*) are no longer available for sale from the United States Mint. Currently available US Mint products can be found online at http://catalog.usmint.gov/

Product Sales Change
2010 AMERICAN BUFFALO GOLD PROOF COIN 45,238 302
2011 ARMY COMMEMORATIVE COINS
$5 Gold Proof 7,861 7,861
$5 Gold Uncirculated 3,045 3,045
$1 Silver Proof 46,895 46,895
$1 Silver Uncirculated 20,698 20,698
50 Cent Clad Proof 30,162 30,162
50 Cent Clad Uncirculated 19,528 19,528
FIRST SPOUSE GOLD COINS
Abigail Fillmore Proof (2010) 5,582 32
Abigail Fillmore Uncirculated (2010) 3,335 22
Jane Pierce Proof (2010) 4,655 33
Jane Pierce Uncirculated (2010) 2,864 17
Buchanan’s Liberty Proof (2010) 7,317 226
Buchanan’s Liberty Uncirculated (2010) 4,461 35
Mary Todd Lincoln Proof (2010) 5,194 124
Mary Todd Lincoln Uncirculated (2010) 2,532 69
2011 PROOF SETS
2011 U.S. Mint Proof Set 321,280 20,473
2011 SILVER PROOF SETS
2011 U.S. Mint Silver Proof Set 232,518 23,151
2010 PROOF SETS
2010 U.S. Mint Proof Set 1,060,329 2,752
2010 Presidential $1 Coin Proof Set 518,097 812
2010 America the Beautiful Quarters Proof Set 259,045 558
2010 SILVER PROOF SETS
2010 U.S. Mint Silver Proof Set 532,306 3,213
2010 America the Beautiful Quarters Silver Proof Set 235,521 1,559
2010 UNCIRCULATED MINT SETS
2010 U.S. Mint Uncirculated Set 559,174 1,291
2010 Presidential $1 Coin Unc Set 92,782 329
2010 America the Beautiful Quarters 22,201 434
2010 CIRCULATING COIN SETS
2010 America the Beautiful Quarters 14,082 298
2010 NATIVE AMERICAN $1 COIN ROLLS
25-Coin Roll (P) 38,176 128
25-Coin Roll (D) 37,965 132
2010 ABRAHAM LINCOLN $1 COIN ROLLS
25-coin roll (P) 46,255 393
25-coin roll (D) 46,099 354
2010 JAMES BUCHANAN $1 COIN ROLLS
25-coin roll (P) 33,178 74
25-coin roll (D) 32,695 65
2010 FRANKLIN PIERCE $1 COIN ROLLS
25-coin roll (P) 35,087 44
25-coin roll (D) 34,421 45
2010 MILLARD FILLMORE $1 COIN ROLLS
25-coin roll (P) 38,310 40
25-coin roll (D) 36,537 38
2009 ZACHARY TAYLOR $1 COIN ROLLS
25-coin roll (P) 39,765 26
25-coin roll (D) 37,905 30
2009 JAMES K. POLK $1 COIN ROLLS
25-coin roll (P) 42,252 29
25-coin roll (D) 40,544 31
2010 KENNEDY HALF DOLLAR BAGS & ROLLS
200-Coin Bag 8,846* 0
Two-roll set 35,338 209
2011 GETTYSBURG QUARTER BAGS & ROLLS
100-coin bag (P) 3,634 359
100-coin bag (D) 3,557 327
Two-Roll Set (80 coin) (P&D) 23,173 2,302
2010 MOUNT HOOD QUARTER BAGS & ROLLS
100-coin bag (P) 5,714 33
100-coin bag (D) 5,470 40
Two-Roll Set (80 coin) (P&D) 31,101 211
2010 GRAND CANYON QUARTER BAGS & ROLLS
100-coin bag (P) 6,275 26
100-coin bag (D) 6,618 35
Two-Roll Set (80 coin) (P&D) 33,247 145
2010 YOSEMITE QUARTER BAGS & ROLLS
100-coin bag (P) 6,891 19
100-coin bag (D) 6,929 22
Two-Roll Set (80 coin) (P&D) 35,937 107
2010 YELLOWSTONE QUARTER BAGS & ROLLS
100-coin bag (P) 8,057 28
100-coin bag (D) 8,550 33
Two-Roll Set (80 coin) (P&D) 41,087 114
2010 HOT SPRINGS QUARTER BAGS & ROLLS
100-coin bag (P) 9,532 25
100-coin bag (D) 8,859 27
Two-Roll Set (80 coin) (P&D) 46,192 84
2010 LINCOLN TWO-ROLL SETS
Preservation of the Union 171,824 379
PRESIDENTIAL DOLLAR COIN COVERS
William Henry Harrison 29,156 19
John Tyler 25,945 13
James K. Polk 24,165 18
Zachary Taylor 23,093 18
Millard Fillmore 22,007 24
Franklin Pierce 20,299 36
James Buchanan 18,719 69
Abraham Lincoln 28,493 502
PRES $1 COIN & FIRST SPOUSE MEDAL SETS
Abigail Fillmore 9,204 20
Jane Pierce 7,050 27
James Buchanan’s Liberty 6,301 48
Mary Todd Lincoln 10,371 465
AMERICA THE BEAUTIFUL QUARTER 3 COIN SETS
Hot Springs National Park 15,816 232
Yellowstone National Park 14,791 749

Gold Is Money: J.P. Morgan Accepts Bullion as Money

We came across this interesting article and want to share it with our readers:

J.P. Morgan Chase & Co. will be accepting physical gold as collateral for investors. As the author of this article puts it, “in other words, gold is money.” Read on to learn more, and leave us your own comments at the bottom of the page.

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Gold Game Changer: J.P. Morgan Accepts Bullion as Money

Janet Tavakoli
President, Tavakoli Structured Finance
Posted: February 7, 2011 09:36 PM

J.P. Morgan Chase & Co. announced on February 7, 2011 that it will accept physical gold as collateral for investors that want to make short-term borrowings of cash or securities.

Presenting gold to satisfy demands for performance bond collateral has been allowed on the London CME in a limited way since October 2009. As of November 22, 2010, the Intercontinental Exchange Inc. (ICE) has accepted gold bullion as collateral on all credit default swaps and energy transactions.

I don’t recall the G-20 declaring gold a new currency. Yet JPMorgan Chase and a couple of financial market exchanges have effectively declared that gold is an alternative currency.

In other words, gold is money.

Abolish Credit Default Swaps on Sovereign Debt

In an earlier post, I wrote that Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Credit defaults swaps on the United States currently settle in euros, but there is talk of creating new contracts calling for settlement in gold. Congress should immediately ban all credit derivatives on the United States, since the opportunities for mischief making outweigh the hedging value.

Most traders in U.S. credit default swaps don’t think the U.S. will default as long as we have money printing presses, so they are speculating on price movements in U.S. Treasury bonds due to potential increases in interest rates. If speculators manage to get contracts to settle in gold, speculators on the winning side of a price move will demand collateral paid in gold.

Destruction of the Volcker Bubble Deflator

In 1979/1980 the Hunt brothers tried to corner the silver market. In March 1980, Paul Volcker (who was then Chairman of the Federal Reserve) went to DEFCON 5 and directed banks to cut off funding to precious metals speculators. That directive included billionaires like the Hunt brothers. The Hunts couldn’t borrow money against their long silver positions to meet their margin calls. Volcker popped the silver bubble and the Hunt brothers were bankrupted.

Since gold is now accepted collateral, there will always be a way to borrow against one’s gold position, so speculators that create leveraged long gold positions can always find a way to fund margin calls. The Volcker bubble deflator is no longer relevant.

Trifecta of Absent Financial Regulation: CDS, Currencies, Commodities

How much mayhem could “creative” minds generate in the credit default swap markets, the currency markets, and the gold market? Quite a bit, since customized credit default swaps can be embedded in all manner of financial investments, and they can be written to offload unexpected risks on naïve investors.

The Dodd-Frank “financial reform” bill doesn’t address customized over-the-counter credit default swaps, and the bill doesn’t do anything at all to reign in speculation in the currency markets or the commodities markets.

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See also:

“How to Corner the Gold Market”, TSF, March 30, 2010

“Washington Must Bank U.S. Credit Derivatives as Traders Demand Gold, Part 1,HuffPo, March 8, 2010

Washington Must Bank U.S. Credit Derivatives as Traders Demand Gold, Part 2,HuffPo, March 12, 2010

Disclosure: I currently own some long positions in precious metals including gold. This is not an offer or solicitation for purchase or sale of any security and is not an investment recommendation of any kind and should not be construed as such. These comments reflect my views as of February 7, 2011, and are subject to change at any time based on market and other conditions.

Heritage’s Largest World & Ancient Coins Auction Tops $9.28M

We found this great review of the Heritage World & Ancient Coins Auction and wanted to share it with our readers.

The auction was the largest to date, and brought in over $9.2 million. Read on to learn about some of the highlights…

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Heritage’s Largest World & Ancient Coins Auction Tops $9.28M

by Heritage Auctions on January 31, 2011

Collectors from all over the world descended on New York City on January 2 and 3 to take part in Heritage Auctions’ Signature® World & Ancient Coins Auction at the Waldorf-Astoria, coinciding with the New York International Numismatic Convention (NYINC), where a deep lineup of stunning and rare coins realized more than $9.28 million in total, including 15% Buyer’s Premium.

This 22 pound Chinese gold coin took top honors with a $575,000 final price realized in the $9.28+ million NYINC World & Ancient Coins event at Heritage Auctions.

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“What the overall results of this auction show is the continued steady strength in the World and Ancient Coin market,” said Cristiano Bierrenbach, Vice President of International Numismatics at Heritage. “Chinese coins continue to perform phenomenally at auction with South American rarities bringing strong prices as well. We also saw a definite uptick in interest in ancient coins in this auction, likely due to Heritage’s redoubled focus on this area.”

The top lot in the auction was the massive 10kg (22 pounds) Beijing Olympics gold 100000 Yuan 2008, Gem Proof. The coin, struck to commemorate the first Olympic Games in China, the XXIX Olympiad in Beijing, brought $575,000 from a savvy advanced collector.

“The Beijing Olympic 100000 Yuan is one of the world’s largest issued gold coins with 10 kilograms of pure 24K gold,” said Bierrenbach, “that’s 321.17 ounces. Out of the only 29 pieces minted, seven were for export out of China and this piece, number 21, was the only one officially allocated to the US market in 2008.”

Two important South American coins competed for collector attention on their way to realizing the same price of $103,500. The first, an extremely rare early Brazilian gold coin, a Pedro Regent Prince 4400 Reis c/s over Portuguese 4 Cruzados AU50 NGC, is a truly amazing early “counterstamped” issue that is just one of a handful know, and the first of its kind to come up for auction in the United States.

This Pedro Regent Prince 4400 Reis c/s over Portuguese 4 Cruzados realized $103,500

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The second was a splendid gold “Sunface” Provincias de Rio de la Plata 8 Escudos 1813J, one of the greatest South American rarities, Argentina’s first independent gold issue and certainly one of the most beautiful coins ever minted.

Provincias de Rio de la Plata 8 Escudos 1813J, KM9, Fr-1. One of the greatest South American rarities, Argentina’s first independent gold issue, the 1813 ‘Sunface’ 8 Escudos is arguably one of the most beautiful designs of the early 19th century South America. This rare coin also sold for $103,500.

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High quality Russian coins are always highly sought-after and a Choice Uncirculated Peter I Rouble 1720, MS64 NGC did not disappoint as it rose amidst steady budding to finish the auction at $57,500.

Peter I Rouble 1720, KM-157.4 Bust right/Crowned Imperial eagle, nails on sleeve in one line, Diakov 16, PETR 4, UZD 0588. MS64 NGC. Fully struck with mottled obverse toning, light reverse toning, and full underlying mint luster.

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A Vittorio Emanuele III gold 100 Lire 1937R, MS65 NGC, one of only 249 such coins minted following the Italian conquest of Ethiopia, depicting a Roman carrying the fasces symbolic of the Italian government, realized $48,875. With the issue of this coin, Vittorio Emanule III added the title of Emperor to his stature as King.

A trio of ancient coins captured serious collector attention as they all seriously exceeded pre-auction estimates: a Gela. Ca. 415-405 BC. AR tetradrachm (17.22 gm), among the finest known examples of this unique reverse type ancient coin, represented by only a single die, a Ptolemy VI-Ptolemy VIII (145-116 BC). AV mnaieion or oktadrachm (27.75 gm), a virtually perfect specimen, and a Carthage, Time of Hannibal Barca (ca. 221-201 BC). AR shekel (6.07 gm), Second Punic War issue, Carthage or uncertain mint in Sicily, ca. 213-210 BC, one of perhaps five or fewer in existence, all realized $46,000.

Adding credence to the ever-strengthening Chinese coin market was the very interesting sale of a 1914 Chinese Republic Silver Dollar, KM-Y322, L&M-858, MS66 PCGS, a coin that came in with an estimate of $4,000+ and ended up selling to a determined bidder for $23,500.

“This is a coin that, five years ago, was selling for $1,500 and up,” said Bierrenbach. “The fact that it went for almost six times pre-auction estimates sends a very clear signal that Chinese coins are very strong in the market right now.”

Rounding out the top offerings of the auction were an Empress Zauditu silver Pattern Birr EE1917 (1925), the last Ethiopian emperor or empress before the controversial and famous Ras Tafari, who later became Emperor Haile Selassie, brought $43,125, while an exceedingly rare Peru cob gold 8 Escudos 1714, of Jamaican origin, realized $40,250. This coin is one of only two known.

About Heritage Auctions

Heritage Auctions, headed by Steve Ivy, Jim Halperin and Greg Rohan, is the world’s third largest auction house, with annual sales more than $600 million, and 500,000+ registered online bidder members. For more information about Heritage Auctions, and to join and gain access to a complete record of prices realized, along with full-color, enlargeable photos of each lot, please visit HA.com.