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The Krugerrand 1 once

Monday, December 9th, 2013

The Krugerrand is probably the original Gold bullion coin. It was introduced in 1967 as a vehicle for private ownership of Gold whilst also being circulated as currency, hence being minted in a durable alloy. From 1980, further sizes were introduced. See specification table overleaf.

Details

pict krugerrand 1 ONCE The history of the Krugerrand begins with the South African Chamber of Mines which had the inspired idea to market South African Gold by producing a one Troy ounce bullion coin to be sold at a very low premium over the intrinsic Gold value. It was intended to be circulated as currency, hence it was minted in a more durable alloy and contained 2.826g copper to resist scratching and thus giving the coin its golden hue. At the time of launch, the Krugerrand was the only accessible Gold investment opportunity for the everyday buyer and this thought came through from the inception. It was the fi rst coin to contain exactly 1 Troy ounce of Gold.
Despite the coin’s legal tender status, economic sanctions against South Africa made the
Krugerrand an illegal import in many Western countries during the 1970s and 1980s. These sanctions ended when South Africa abandoned apartheid in 1994 and the Krugerrand once again regained its status as one of the worlds’ leading bullion coins.
In 1967, only the one ounce coin was available. From 1980, the fractions were available, namely, one half ounce, one quarter ounce and one tenth ounce. The name is derived from a combination of Paul Kruger, a well-known Boer leader and later President of the Republic and the Rand, the monetary unit of South Africa. The obverse side features the Otto Schultz image of Kruger along with the name of the country “South Africa” in the two languages, English and Afrikaans. The reverse side, designed by Coert Steynberg features the image of a Springbok Antelope, one of the national symbols of South Africa.
By 1980, the
Krugerrand accounted for 90% of the Gold investment coin market. For example, it is estimated that between 1974 and 1985, some 22 million coins were imported into the United States alone. Although it is not a beautiful coin, many millions have been sold since its introduction due to the policy of selling with a very low premium. The success of the Krugerrand led to many other Gold-producing nations minting their own bullion coins, such as the Canadian Maple Leaf in 1979, the Australian Nugget in 1981, the Chinese Panda in 1982, the US Eagle in 1987 and the British Britannia in 1987.
The
Krugerrand is interesting in that the government of South Africa has classed the coin as legal tender although it has no face value. It therefore fulfills VAT-free criteria for investment coins.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

investment advice krug
Essentially, the bulk of
Krugerrands are produced in a non-proof form although the South African Mint produces limited edition Proof quality Krugerrands as collector’s items. These coins in particular attract a healthy premium and are priced well above the value of the bullion alone. However, non-Proof coins also have a premium above the value of the bullion.
The Proof and non-Proof coins can be distinguished by the reeding, that is, the number of serration on the edge of the coin. Proof coins have 220, non-Proof have 180.

key facts krugerrand

Krugerrands are made of an alloy of Gold and Copper – this effect also being known as Crown Gold as it has long been used for the British Sovereign coins. Due to the popularity of the Krugerrand, there are also many fakes in existence and the investor should be wary. Copper alloy gives a much more orange appearance than silver alloy. Likewise copper is very durable and coins should be in good condition always.
The best marker of authenticity is the weight and this should be checked carefully using the table below since the Gold weight and total weight are known. Check also the reeding.

Specs

specs krugerrand
All investment coins sold by LinGOLD.com are EF quality or above.

For further information: +44 (0)203 318 5612
info@lingold.com


The Panda 1 ounce

Wednesday, December 4th, 2013

The Chinese Gold Panda is a popular series of Gold bullion coins issued by the People’s Republic
of China in Proof-like, brilliant uncirculated quality. They are issued in a range of sizes between
1/20 Oz and 1 Oz with larger 2 and 5 Oz coins being additionally issued in some years.

Details
panda 1 onceChina issued its first Gold coins bearing the Panda design in 1982. These were limited
to sizes of 1/10 Troy ounce along with 1/4 Toz, 1/2 Toz and 1 Toz. From 1983, the 1/20 Toz size was added and additionally a 2 Toz and 5 Toz coin is sometimes issued.
These strikingly beautiful coins are always issued in Proof-like brilliant uncirculated quality and prove very popular.
A different design was issued each year until the 2000. When the 2001 edition was announced, so too was a freeze of the design and thus the 2002 Panda is identical to the 2001. Collectors spoke up on behalf of the annual change and China responded by reversing their policy so that from 2003 onwards, the designs again change each year.
However, on the reverse side, it always features the endangered Giant Panda. It also features the size, Gold fi newness and monetary value.
The main design on the obverse of the coin has hardly changed, save for minor detail changes in the image. It features Beijing’s famous Temple of Heaven (Tien Tien) in the centre with Chinese characters on the top saying “Zhonghua Renmin Gongheguo” meaning People’s Republic of China and at

the bottom the year of issue. If it is a commerative issue, the theme will also be marked here.
There was an adjustment of the face values of the coins in 2000/2001 – please see
the table overleaf for details.
The Chinese mints usually do not employ mintmarks. In certain years, there have
been minor variations in items like the size of the date, the style of the temple and
so on. These allow the numismatist to identify the originating mint. In some years,
but not all, other marks and Proof marks (signifi ed by a ‘P’) have been added. The
four mints involved in the production of the Panda are Beijing, Shanghai, Shengyang
and Shenzhen.

Investment Advice

INVESTMENT ADVICE

All Panda coins are issued as pure Gold fineness, 999.9‰ and in theory have a low premium just above the value of the Gold.
However, their intrinsic beauty makes them very collectable and they attract good premiums.
As with any coin, the best quality grades will attract the best premiums. The early years in particular will be those with the highest premium. Although the coins were issued in Proof form, many were unpacked and have thus been damaged and are at lower gradings. The mintage figures should be carefully examined – the number originally minted is quoted but it has been found that production continues for various years, hence the total mintage may be quite a bit higher some years after.

SPECS

SPECS

KEY FACTS

All investment coins sold by LinGOLD.com

are EF quality or above.

For further information: +44 (0)203 318 5612
info@lingold.com

The Maple Leaf 1 once

Sunday, December 1st, 2013

The Canadian Gold Maple Leaf is one of the oldest bullion coins alongside the Krugerrand. It is a classically beautiful coin, internationally recognised and provides investors with a secure, quality addition to a portfolio.

Details

The Royal Canadian Mint introduced the Maple Leaf in 1979. Along with the Krugerrand, it has been in continuous production ever since. It came about because of the Krugerrand – at the time, there was an economic boycott of South Africa so Krugerrands were not widely available – and thus the Maple Leaf fi lled a gap in the market. It contains virtually no base metals at all and uses Gold exclusively mined in Canada.

MAPLE LEAF 1 ONCE GOLD COIN

The earliest years between 1979 and 1981 had a Gold fineness of 999.0‰ but 1982 onwards is 999.9‰. For those same fi rst years, only a 1 Toz coin was produced. Between 1982 and 1985, the 1/4 Toz and 1/10 Toz sizes were added. Then in 1986 the 1/2 Toz was added and in 1993 a 1/20 Toz coin joined the group. It has remained thus to date except 1994 when a 1/15 Toz coin was produced for that year only. That year, a Platinum 1/15 Toz coin was also produced, possibly for jewellery, but both the Gold and Platinum 1/15 Toz coins were not a success and were dropped. The Maple Leaf is also available in Silver and Palladium.

Each coin features the image of Queen Elizabeth II by Ian Rank-Broadley on the obverse side. It also has the denomination and year of issue. On the reverse is an image of Canada’s national symbol, the maple leaf along with the word CANADA and the Gold fi neness in both English and French. Every coin is guaranteed to contain the stated amount in Troy ounces of fi ne Gold. The coins are identical in design except for the obvious items such as weight.

All Maple Leaf coins are legal tender in Canada although are categorised as “non-circulating bullion coins”. Their Gold fi neness easily puts them into the general category of being VAT-exempt.

On 3rd May 2007, the Royal Canadian Mint unveiled a 100 Kg Gold Maple Leaf with a face value of C$ 1 million although the Gold content makes it worth much more. The coin was produced as a promotional product to give the mint a higher international profi le. However, several interested buyers came forward so the mint announced it would manufacture to order. There are believed to be five confirmed orders and/or deliveries. It held the record for the largest coin until 2011 when an Australian coin superseded it.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

INVEST ADVICE

All Maple Leaf coins are issued as pure Gold finewness, 999.9‰ and in theory have a low premium just above the value of the Gold.

KEY FACTS 1

However, the reality is that a 5% premium should be achieved for a quantity of coins

with higher values for individual coins. As always, the smaller value coins will have higher premiums.
The coins were never really designed to be handled due to the softness of 24 carat Gold, the milled edge and clear fi eld around the image of the Queen. With some coins supplied in tubes, this makes them susceptible to handling marks and other damage. So careful examination of coins is highly recommended.

Specs

SPECS 2

Your savings in a safe place

Tuesday, November 26th, 2013

Traditional investments are at risk because they are inextricably linked to the world wide web of paper debt that exists in futures, bonds, hedges and spread bets.

Pension funds, banks, stock markets and even countries are using your investments to pay off their own debts rather than to seek a profit for you.

These paper investments are all at the mercy of the debt cycle and could be lost completely or become worthless at any time. What happens when these massive debts are called in and can’t be repaid ?  This will happen but nobody knows when. How bad will it be ? How long will it last ? Politicians publicly pretend it can’t happen because they couldn’t handle the panic and their main preoccupation is preserving power or surviving their ‘shift’.

Did you know?

- You can still buy a new car today with the same weight of gold as you needed to buy a new car 90 years ago.

- 300 years ago 2 oz of Gold could buy a cow, the same amount as you need today!

- Current devaluations are decreasing your ‘paper’ savings, investments and pension funds

- Since  2000 stock markets have slumped while the price of gold has increased more than 5 times

LinGOLD.com’s commitment to doing things differently is exemplified through its ‘Vera Valor’ gold coin.  The ‘Vera Valor’ is the first ethically produced coin made from “clean extraction” gold, which is 100% traceable from mine-to-mint.

LinGOLD.com’s vault storage facility is based in the highly secured facility of Geneva Freeport and is independently audited to ensure total propriety and counterparty.

investment in lingold

investment in lingold

Britannia 1 ounce Gold Coin

Saturday, November 23rd, 2013

The Gold Britannia is a 1 Troy ounce investment coin. Whilst the figure of Britannia has graced coins since Roman times, it is only since 1987 that the modern Gold Britannia coin has been produced. The Gold Britannia is also available in fractions and the Silver Britannia is 1 Troy ounce of pure Silver.

It is probably Athena, the Greek goddess of wisdom and war who set the pattern for powerful maidens, like Britannia, to personify the characteristics of the nation they represent. It was the Romans who first portrayed Britannia on their coins. However, in the mists of time, it seems Britannia was depicted as resisting the invasion of the Roman Empire paying tribute to the fighting spirit of the island’s inhabitants, the Ancient Britons. In modern times, Britannia remains the universally recognised personification of Britain.

BRITANNIA 1 OUNCE

BRITANNIA 1 OUNCE

The coin history can be traced through Roman coins, those of Charles II and Elizabeth I through to today. Queen Elizabeth II came to the throne in 1952 and by that time, Britannia had been on coinage continuously for the previous 300 years. These coins were made from copper, and later bronze. In 1971, Britain adopted decimal currency and Britannia was chosen for the 50p copper/nickel alloy coin. In 1987, Britannia was finaly “promoted” to grace the Gold bullion coin which is known today as the modern Britannia. Ten years later in 1997, a Silver bullion Britannia was also issued.

In modern times, different aspects of Britannia’s history and character have been interpreted by different artists. The portrait by David Mach is the ninth to appear on both the 2011 Silver and Gold coins of Elizabeth II’s reign. The 2012 and 2013 coins were designed by Philip Nathan with the obverse continuing to show the acclaimed monarch effigy by Ian Rank-Broadley FRBS.The first Gold Britannia coins were produced in 22 carat form.

The 2013 edition is pure Gold, 24 carat. See full specifications below :

Although it is 1 Troy ounce of pure Gold, the Britannia is in fact the highest denomination coin in Britain. So as well as being free from VAT as it is investment-quality Gold, it is also free from Capital Gains Tax on any sale or transfer which is advantageous over other bullion coins and bars as an investment instrument.

There are various grading systems in use around the world. However, the British system is as follows:

BRIT 2

The Gold Britannia is issued in weights of 1 Troy ounce, half-ounce, quarter-ounce and tenth-ounce. The Silver Britannia is produced in a weight of 1 Troy ounce only and has a face value of £2.00. The large coins are those which attract the best premium. The reason for this is the costs of manufacture are approximately the same regardless of size and therefore Gold content.

The premium of Britannia coins is determined by the quality of the coin, design features, mintage and Gold content. From 1987to 1989, the coin was alloyed with Copper. From 1990 to 2012 it was alloyed with Silver. From 2013, it is pure Gold.

BRIT 3

The British Royal Mint has issued Proof editions every year and these should be sought where possible. Generally, the Britannia is not a high mintage coin. The years with the lowest numbers minted are 1990 to 2000. Coins minted in the years 1990, 1991 and 1997 are particularly sought after as their proof mintage was 262, 143 and 164 respectively. There are several design variations of the reverse, notably the year 2003 which featured Britannia’s head only as opposed to the usual full figure.

Silver Britannia tends to be sold in bulk because of the much lower value of Silver. Beware that Silver prices are much more volatile than Gold.

BRIT 4

GOLD SOVEREIGN: THE WORLD’S MOST SOUGHT AFTER GOLD COIN

Thursday, May 30th, 2013

By Mark Rogers

The Gold Sovereign is a highly collectable investment coin and the oldest coin struck by the Royal Mint. It is perhaps the World’s most famous gold coin and is the most widely traded semi–numismatic gold coin. The Sovereign is 22 Carat and is a highly collectable investment coin.

It was first minted at the order of King Henry VII in 1489; the modern version first appeared in 1817 with the now famous image of St George slaying the dragon engraved on the reverse. Today’s sovereign contains 0.235421 ounces (7.315 grams) of gold and is highly sought after throughout the world.

Henry VII

On October 28th 1489, Henry VII issued instructions to the Royal Mint to strike “a new money of gold”. Gold coins had been in circulation for the previous 150 years, this was the largest yet both in size and volume. It had yet two other intriguing features: while being large, it was also very thin, with a diameter of one and a half inches.

“The king is seated on a throne of elaborate design which fills the field of the obverse; the reverse type is the same which he adopted for the ryal, but usually the work is more crowded, a fleured tressure being added around the rose, and lions and fleurs inserted in the small intervening spaces. The coin, in spite of the somewhat restless effect produced by the massing of detailed ornamentation on the reverse, is a wonderful creation of Tudor art; the compositions of the throned figure, adapted most skillfully to the circular field, and the powerful handling of perspective to defeat the limitations of the shallow relief which was necessary in the engraving of the dies for striking so thin a flan, show a complete mastery of technique combined with the highest artistic inspiration.” (Coinage, by R.H. Dolley, Assistant Keeper of Coins and Medals, British Museum, in Lane Poole, Austin: Medieval England, Volume I, Clarendon Press, Oxford, 1958).

The coin weighed 240 grains and had a current value of twenty shillings. The king is in full coronation regalia on the obverse, and the reverse shows the royal arms against a double rose symbolizing the union under Henry VII of the Yorkists and the Lancastrians after the turmoil of the Wars of the Roses.

It was named a Sovereign and it is interesting to speculate why, the Wars of the Roses being an indication. England had been long troubled by the conflicts between the nobles and their contending champions for the crown. A weak Henry VI who could not rule France and barely controlled England was usurped by Richard III, who in turn was beaten at Bosworth Field by Henry VII, who was duly crowned king as victor in battle. However, Henry did have legitimate claim: he was Earl of Richmond in his own right, and claimed descent from the Lancastrian side, while politically he was a Yorkist. He was a powerful ruler, aided in this by his subjects who craved a quiet life and the dissipation of the nobility, many of whose lines died out on the battlefield as male heirs perished, often enough upon capture and execution.

While it is true that plots and subterfuges continued behind the scenes of Henry’s rule, the country at large was at peace and united for the first time under his reign. This imposing gold coin, emblazoned with the image of the victorious sovereign was perhaps intended as a symbol of how he had and was to continue to rule, hence the name. It set a seal on this the reign of the first Tudor, which was to be consolidated in the reign of his son, Henry VIII.

“Large and handsome, it was clearly intended to augment the dignity of the king and to propagate a political message of stability and prestige rather than to fulfill any commercial or domestic need. As such, it was struck in turn by each of the Tudor monarchs, its issue coming to an end early in the reign of James I. A Sovereign was not to appear again for 200 years.” (The Royal Mint) (Clicking on this link will not only give readers the Royal Mint’s perspective on its oldest and most famous coin, but a view of the obverse and the reverse of Henry’s Sovereign: a coin that richly merits the fulsome description given above by Assistant Keeper Dolley.)

The first modern Sovereign

Gold sovereigns were re-introduced as legal tender in 1817 as part of a major coin reform conducted by the Master of the Royal Mint, William Wellesley Pole.  A young Italian engraver, Benedetto Pistrucci, was appointed to create the reverse design of the new sovereign; he realized the beautiful image of St George slaying the dragon.  This design has been varied over the years but is essentially the same.  As a testament to its greatness, it still appears on sovereigns today.  Other designs for the reverse designs have appeared at times, during the reigns of William IV, Victoria, George IV and Elizabeth II.  A royal shield, as used on the 1489 sovereign, has often been used in various different formats.  The obverse of the sovereign followed the trend established for the original sovereigns and portrayed an image of the reigning monarch which remains the case up until today.

Gold sovereigns were withdrawn from circulation at the start of World War I in 1914, although production continued at the Royal Mint until 1917.  They continued to be struck in other mints of the British Empire but in lower quantities than before.  Sovereigns not produced at the Royal Mint in London carry a mintmark to show which mint produced them.  Production of sovereigns at other mints stopped in 1932.

In 1957 the Royal Mint began producing gold sovereigns once more, in part to meet world demand and  in part to prevent counterfeit production – which became rife after the Royal Mint stopped production in 1917.  They were not however reintroduced into everyday circulation.  Prior to 1979 only gold bullion coins had been issued and it was in this year that the first gold proof sovereigns were issued.  Between the years 1983 and 1999 the Royal mint ceased producing gold bullion sovereigns and only minted gold proof sovereigns.  Gold bullion sovereigns were re-introduced in 2000.

1989

To celebrate the 500th anniversary  a special 500 commemorative design was produced, showing Queen Elizabeth II seated facing on a throne. This was only issued as a proof and demand  has grown steadily over the past few years, because as a single-date type coin, it is in demand by both date collectors and type collectors.

2005 – New Modernistic design

In 2005, the Royal Mint issued another new sovereign designed by Timothy Noad a herald painter at the Royal College of Arms actually a modernistic version of Saint George slaying the dragon with the shield as a focal point. This coin was issued in both normal circulation (bullion) and proof versions for 2005 only

2007 – 2010

The Royal Mint have used re-cut dies to take the design  back almost two centuries to portray Pistrucci’s St. George and the dragon in its neo-Classical glory

Types of Sovereign

Aside from the full sovereign, the Royal Mint today produces the following sovereigns in gold proof and gold bullion versions for general sale: quintuple (£5) sovereign, double (£2) sovereign, half sovereign and for the first time ever, 2009 saw the general release of a quarter sovereign.

Sovereign designs and dates

Monarch Obverse design Reverse design Dates
George III Laureate head St George and the dragon 1817-1820
George IV Laureate head St George and the dragon 1821-1825
George IV Bare head Shield 1825-1830
William IV Bare head Shield 1831-1833, 1835-1837
Victoria Young Head Shield 1838-1839, 1841-1866, 1868-1887
Victoria Young Head St George and the dragon 1871-1887
Victoria Jubilee Head St George and the dragon 1887-1893
Victoria Old Head St George and the dragon 1893-1901
Edward VII Bare head St George and the dragon 1902-1910
George V First Type (large head) St George and the dragon 1911-1928
George V Second Type (small head) St George and the dragon 1929-1932
George VI Bare head St George and the dragon 1937 coronation proof set only
Elizabeth II First portrait St George and the dragon 1957-1959, 1962-1968
Elizabeth II Second portrait St George and the dragon 1974, 1976, 1978-1984
Elizabeth II Third portrait St George and the dragon 1985-1988, 1990-1997
Elizabeth II Sovereign portrait Shield and Tudor rose 1989
Elizabeth II Fourth portrait St George and the dragon 1998-2001, 2003, 2004, 2006-2009
Elizabeth II Fourth portrait Shield 2002 Jubilee
Elizabeth II Fourth portrait Modern St George and the dragon 2005

Technical specifications of modern sovereigns (post 1817)

  Quintuple sovereign Double sovereign Sovereign Half Sovereign Quarter sovereign
Purity 22 carat gold 22 carat gold 22 carat gold 22 carat gold 22 carat gold
Weight (grams) 39.94 15.98 7.99 3.99 1.997
Diameter (mm) 36.02 28.40 22.05 19.30 13.50
Actual gold content (troy ounces) 1.1771 0.4708 0.2354 0.1177 0.0588

Gold sovereigns: to invest or not to invest?

As one of the oldest coins in the world the British gold sovereign is highly sought after by both investors and numismatists alike.  As with all gold coins, the price of sovereigns fluctuates with the price of gold because of the gold content of the coin.  However the price of sovereigns is not entirely based on its gold content.  Gold sovereigns generally fetch a higher premium than the price of gold for the same gold content.  For example the 2009 gold proof sovereign retails at about £299 for 0.23 ounces of gold.  The current price of an ounce of gold is around £680 therefore the price for 0.235 ounces is around the £160 mark.  Therefore the 2009 sovereign is worth almost twice as much as the price of gold.

The premium of a sovereign obviously depends on its quality and whether it is easily available or not.  Some sovereigns fetch a much higher premium than others.

While there is no official grading system in existence, sovereigns are generally graded in the following manner in the UK:

FDC/proof  – perfect quality

UNC – uncirculated

EF – extra fine

VF – very fine

F – fine

(see article on quality of gold coins)

Whilst older sovereigns were produced in much larger quantities than those produced today it is much more difficult to source a good quality sovereign from these times.  Sovereigns from the reigns of George III, George IV and William IV are extremely rare in good quality.  EF quality coins can be found but are quite rare and as such would fetch a high premium.  FDC and UNC coins are extremely rare for these periods and when sold fetch very high premiums.  A George IV sovereign from 1825 made £14950 in a sale in March 2004.  Early Victorian shield sovereigns are also highly sought after and therefore an EF quality coin would fetch a high premium whilst extremely rare FDC and UNC coins would fetch incredibly high premiums.  Later Victorian sovereigns are less rare than the earlier coins in good condition, however they are again fairly rare in top condition therefore sovereigns of UNC and FDC grade would fetch a high premium.

Edward VII and George V sovereigns are also fairly easy to obtain in EF condition and were produced in very large numbers so do not fetch such a high premium.  As with later Victorian sovereigns, it is more difficult to find UNC and FDC grade coins and these would therefore fetch a higher premium.  No sovereigns were issued for Edward VIII, however a few official pattern coins were produced.  If any of these were ever to be sold they would fetch an incredibly high price due to their extreme rarity.  During the reign of George VI no sovereigns were issued apart from a very limited amount of collectors sets to commemorate his coronation.  This was a gold proof set and as such can be found today in FDC condition.  This set would today fetch around double the price of a 2009 4 piece gold proof set.  When gold sovereigns were reintroduced during the reign of Elizabeth II they were produced at much lower quantities than for other monarchs as they were no longer in everyday circulation.  However despite the fact that much fewer coins were produced they were all of FDC or UNC quality.

The majority of coins were released during Queen Elizabeth II’s reign and are not difficult to find in prime condition.  For this reason they fetch a lower premium than UNC or FDC coins from earlier periods, although they are still worth investing in as they do fetch a higher premium than the price of gold and are likely to become more sought after in the future.

Certain sovereigns are much rarer than others; some that are worth looking out for include:  1817 sovereign – the first modern sovereign and any other UNC or FDC coins from the reigns of George II, George IV and William IV (or even EF graded sovereigns from these periods), 1838 the first Queen Victoria sovereign, 1841 the rarest Queen Victoria sovereign, 1917 London minted sovereign (very few in existence as it was the year London stopped producing sovereigns) and out of Elizabeth II sovereigns the 1989 special commemorative 500th anniversary sovereign.   British sovereigns are an excellent investment choice and will continue to be so. For as long as Britain keeps its currency, it seems inevitable that the Royal Mint will continue issuing sovereigns every year for collectors, investors and enthusiasts.  However, if the UK joined the Euro would this signal the end for this iconic coin? If that were the case gold sovereigns would surely become more sought after than ever and consequently represent an even greater investment opportunity.

How to spot a fake

Many fake sovereigns have been produced over the years.  To avoid buying a fake you should always buy from a reputable source such as LinGold.com.  We have however, created a list of key things to look out for to avoid buying a sovereign forgery:

  • The feel of the coin: fakes are often very smooth or can have sharp edges
  • Be wary of coins that are too shiny with blurred details. It’s a sign that they have been cleaned and, therefore, some gold has been worn away
  • Dates: check for missing dates or check that sovereigns were actually produced in the year stated in the design shown
  • Mintmarks: if there is no mintmark check that the London mint produced sovereigns in that year, if there is a mintmark check that the mint in question produced sovereigns in that year
  • Weight, size and depth: check these correspond with official figure

SIR ISAAC NEWTON AND THE END OF MUTILATED MONEY, 4TH MAY 1969

Thursday, May 16th, 2013

By Mark Rogers

In the Seventeenth Century, “[t]he financial system of England had staggered through the disturbances of the Civil War and had grown worse during the inefficiency and corruption of the Stuarts … the current money had deteriorated to a state of confusion.” (Louis Trenchard More, Isaac Newton: A Biography (first published 1934), Dover Publications, Inc., New York, 1962)

This state of confusion resulted from the mutilation of money, rendering its recoinage a matter of urgent necessity. In the 17th century counterfeiting and adulterating the coin of the realm was so common that a coin worth its original face value was extremely rare. Both crimes were capital offences.

Louis Trenchard More describes the debauched currency and its consequences:

“The standard currency of the country was silver; and till the reign of Charles the Second the minting of the coin had been carried on by the process introduced by Edward the First in the thirteenth century. The metal was cut with shears and then shaped and stamped by the hammer. Coins made thus by hand were not exactly round nor true in weight and, as they were neither milled nor inscribed on their rims, they were easy to clip, or file, without detection. Clipping thus became one of the most profitable kinds of fraud. The custom had become so detrimental that, in the reign of Elizabeth, it was treated as high treason [hence the death penalty M.R.]. At the time of the Restoration, a large proportion of the coins had been more or less mutilated. To remedy this condition, a mill worked by horses was set up in the Tower which stamped the coins accurately and inscribed their edges with a legend; as, however, the old money was kept in circulation, the remedy was useless. The new coins were either hoarded, or melted down and shipped abroad; the old coins persisted as the medium of business, and they continued to shrink in weight and value. In the autumn of 1695, it was found by actual and careful test that the average value of a shilling had been reduced to six pence. Every transaction was accompanied by a bitter altercation between the buyer and the seller; the former insisting on estimating the coins by tale, and the latter by weight. Every Saturday night, all over the country, was a period of riot and bad feeling between employer and employee. The labourer and the clerk might receive the stipulated number of shillings, but for their purchases they acted like sixpences or less. We have, as a startling witness of these troubles, the complaints of Dryden that his publisher, Tonson, on one occasion included forty brass shillings in a payment of clipped money, and at another time the money was so bad that all of it was returned. If the foremost writer of the day was so treated, we can easily imagine the distress of the common people. … During even a most disturbed and evil rule, the common people manage to pursue their personal affairs, but such a state of the money as then existed affected every moment and every transaction in their lives.”

The situation was worse than impossible, and in 1695 King William III, addressing Parliament, recommended that the coinage be reformed. Thus, Charles Montague, the Chancellor of the Exchequer, prepared a Bill to this effect.

Charles Montague

Montague was the fourth son of a younger son of the first Earl of Manchester; he was later ennobled as Lord Halifax. Although Isaac Newton’s junior by nineteen years, Montague struck up a deep and lasting friendship with the great philosopher, then Lucasian Professor of Mathematics at the University of Cambridge, when he, Montague, matriculated at Trinity College as a Fellow-Commoner.

Montague was a man of superlative ability and quickly impressed himself upon the political life of the nation. His highest achievement, the great recoining, came about after his appointment as Chancellor of the Exchequer in 1694. He also instituted the Bank of England, as a private body. As a result of his friendship with Newton, he secured the latter the position of Warden of the Mint in 1696. It was this partnership that was to carry out the new minting. According to Montague, the success of this project was due to the administrative work of Newton.

The Great Recoinage

The first remarkable aspect to note of the proposed recoinage, was that this was to be done at a time of war: this was the war between France and the League of Augsburg (known as the Nine Years’ War 1688-1697, or the War of the Grand Alliance), which King William III joined soon after becoming King of England with his wife Mary as Queen, on the occasion of the Glorious Revolution of 1688. The North American theatre of this war, known as King William’s War, finally settled the issue of the American colonies between France and England in the latter’s favour.

To embark on the wholesale refashioning of the national coinage, and to complete it in a short time, at a time like this was a remarkable feat and owed everything to Charles Montague’s fortitude and eloquence. Although the Jacobites tried to discredit the government and the Whigs advised half-hearted measures, Montague managed the House of Commons so adroitly that the Bill was passed into law on the King’s signature on 1st January, 1696.

It provided for the recoining to be to the old standard of weight and fineness, and for all new coins to be milled. The public exchequer was to bear the loss on the clipped coins. Most expeditiously, the time at which no mutilated money could pass ever again was set at 4th May 1696: this great task, therefore, was to be carried out in a mere four months. We must assume that such was the pressing need to address this huge task as Montague and Isaac Newton, the new Master of the Mint, understood it, that no time was to be lost.

This new coin was the cause of the window tax, which was not as unpopular as legend has suggested. It came about like this: the loss to the exchequer referred to above was not easy to estimate, but Montague obtained a loan from the Bank of England which was secured by the new tax levied on the number of windows of the houses; however, inhabitants of cottages were to be exempt from the new tax in compensation for the cruel harassment they had undergone at the hands of the assessors of the now defunct hearth tax.

A month after the bill became law, the recoining had begun. Furnaces were erected in the gardens behind the Treasury and vast quantities of mutilated money were melted in them and cast into ingots which were at once conveyed to the Tower for minting. Although there had at first been widespread panic at the thought of money, however bad, being withdrawn from circulation, its relative scarcity did not become a serious factor and the panic soon subsided.

Isaac Newton assumed responsibility for the work in March, and under his direction branches of the mint were set up in several towns, thus easing the passing of the old money in exchange for the new throughout the country.

4th May

Loius Trenchard More describes the result:

“The real agony began in May when the clipped coins were no longer received by the government in payment of taxes. There was little of the old money which would pass the test and the new money was just beginning to trickle from the Mint; but, by means of barter, of promissory notes given by merchants, and of negotiable paper issued by the Exchequer, the summer slowly wore away. It was not till August that the first faint signs of returning ease in the money situation appeared, and there is no doubt that the able administration and indefatigable industry of Newton shortened this period of distress. He wrote peremptorily to Flamsteed that he would not be teased about mathematical things nor trifle away his time while he was about the King’s business. The Wardens of the Mint had previously been fine gentlemen who drew their salaries and rarely condescended to do any work.”

But work Newton certainly did: “It had been considered a great feat to coin silver to the amount of fifteen thousand pounds weight a week; but under the energetic management of Montague and Newton, the weekly coinage soon rose to sixty thousand pounds, and finally to a hundred and twenty thousand pounds. But even this rate was inadequate, and normal conditions were not restored till the following spring.”

Thus on 4th May 1696, mutilated money was finally abandoned for true coins, which were far harder to counterfeit, and a proper system of milling and guaranteeing the standardised value of the coinage came into being, overseen by one of the greatest scientific minds of all time, Sir Isaac Newton. We shall see what he thought of debasers of currency below.

“When was the last time you read your money?”

The question is posed by the analysts Daniel Brebner and Xiao Fu in their report for Deutsche Bank, London, Gold: Adjusting for Zero (discussed here). They go on:

“It is useful to do so as it will call attention to its subtle warnings. A £20 note reads: I promise to pay the bearer on demand the sum of twenty pounds. Two immediate questions arise: 1) 20 pounds of what? 2) Who is I, and can he/she be trusted? The US dollar bill is more prosaic, its nebulous message being: This note is legal tender for all debts, public and private. Our only comment would be that since fiat money is inherently a form of obligation (liability) that it is simply a tool for exchanging debts of different riskiness and thus underscores that there is an inherent risk in such an instrument.”

That risk is well brought out in a passage I have quoted in an earlier article. It is by C.H.V. Sutherland (then Keeper of Coins at the Ashmolean Museum, Oxford, in “Gold: Its Beauty, Power and Allure”)

“Collapse of the gold standard was followed by the era of credit currency. We accept a bank-note for the payment of £1, but in accepting it we receive in fact only the bank’s promise to pay £1. We accept a cheque, similarly; but a cheque again is no more than its drawer’s promise that his bank will pay us another bank’s promises. The growth of ‘money’ in this sense – and of course it is not money at all, in any true sense, but an extension of credit – is one of the most remarkable features of economic life since 1914 [emphasis added].”

The risk is presently underscored by quantitative easing and low interest rates: capital/worth is fiercely undervalued, with millions of pounds being wiped off pensions and savings.

In other words the promise on a modern English banknote is meaningless, and as such is a breach of trust with the general public. At one time the note was no more than a convenient substitute for gold and silver coins, and the strength of the currency depended on knowing that should anyone wish to hold the “I” to account, the promise on it would be redeemed in actual gold/silver coin or bullion. Knowing this was sufficient to keep the notes rather than coins in circulation; the trust was reciprocal in that the Bank of England did not dare print more of them than could be practically redeemed, thus keeping faith with the general public that the value stated on the note was a real value.

Mutilated Money Now

While the mutilation of the imperfectly guaranteed silver coinage in the seventeenth century was obvious to all, hence the squabbles in trading and on payday that an English note is itself mutilated money is not so obvious. The comparison can be made with the PAYE system: the vast majority of people in work in this country is on PAYE and as such receives their salary/wages net of tax, it having been deducted by the business they work for before the wages are paid over. In other words, not having to write out a cheque to the Inland Revenue, most people are only aware of the taxes they pay in the abstract – it is not a painful moment of reckoning each time tax is paid as it is for those of us who are business owners or freelance.

In this sense, the promise on a bank note represents mutilated money at one remove: we take it on trust that we can proffer these notes in exchange for goods and services, so we tend to think of the notes themselves as money. But they are not: I have remarked before that QE is the state forging its own currency, but without gold backing, even before QE, the actual “currency” in circulation is fake. And of course the coins we use are made of base metals and not precious ones, and are therefore far easier to forge. Indeed it was estimated earlier this year that three in every £100 pounds worth of pound coins is counterfeit.

This is the denouement of the situation described above by Keeper Sutherland.

Hang Them

As observed in above, counterfeiting and adulterating the coin of the realm were capital offences: death by hanging in these instances. It is interesting that the public did not approve: although the debased coinage was an economic disaster which enveloped everyone, the act of skimming a few shreds of precious metal from a handful of coins seemed, in itself, too insignificant for such a draconian punishment. “The sympathy of the people extended to the malefactors: juries would not sentence except in flagrant and wholesale cases, and judges would not sentence; while the evil effect of the practice spread its poisonous influence throughout the trade and life of the nation.” (Trenchard More)

The gallows did nothing to curb the practice because it was too easy to perform, thus ensuring that many people of course went undetected. While he was Warden of the Mint, Sir Isaac Newton had the fate of a counterfeiter drawn to his attention. He was firmly on the side of upholding the existing law, and the short letter in which he does so is worth quoting in full:

Newton to Lord Townshend

My Lord,

I know nothing of Edmund Metcalf convicted at Derby assizes of counterfeiting the coin; but since he is very evidently convicted, I am humbly of the opinion that it’s better to let him suffer, than to venture his going on to counterfeit the coin and teach others to do so until he can be convicted again, for these people very seldom leave off. And it’s difficult to detect them. I say this with the most humble submission to His Majesty’s pleasure and remain,

My Lord, your Lordship’s most humble and obedient Servant,

Is. Newton, Mint Office Aug. 25, 1724

Of course, the problem is in many ways worse now because whereas the counterfeiters and adulterers of yore were common criminals and ordinary folk on the make, and the problem was the cumulative result of the individual acts of hundreds of people, the debasers of the currency today are government ministers and state officials: debasement is official policy, the inevitable consequence of fiat currencies.

Is hanging too good for our lords and masters today?

A Statue Commemorating Sir Isaac’s Service to his Country as Master of the Mint on the Fourth Plinth at Trafalgar Square:

Among the ideas for a permanent memorial on the plinth at the North West corner of Trafalgar Square, there have been from time to time suggestions that the statue should be of a notable civilian.

In keeping with the other statues – one King, two generals and one Admiral – a life which contained some signal service to the country at large ought to be the guiding principle on which such a civilian should be chosen.

It is suggested here that an eminently suitable candidate for this honour is Sir Isaac Newton. Apart from Sir Isaac being universally known for his astonishing scientific achievements, his claim to notice in the context of a public statue in Trafalgar Square is the heroic effort he put into the Great Recoinage of the debased gold and silver currency which eradicated mutilated money and thus put an end to the argument and riot that habitually took place when pay day drew nigh or payments fell due.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD MONEY: A CURRENCY OF THE PAST… AND THE FUTURE?

Tuesday, May 7th, 2013

By Mark Rogers

When buying numismatic rare gold coins, it is well to remember that many of them were minted for use, as currency. For example, one of the perennially popular collector’s coins, the South African Krugerrand is minted in two kinds. The South African Mint strikes proof Krugers, while bullion Krugers are struck at the Rand Refinery. Proof coins are issued in smaller quantities for the collectors’ market. They are important to collectors who are interested in “a perfect uncirculated” coin; when the Krugerrand was first struck the bullion coins were intended to circulate as currency.

While currency wars and devaluations are very much a thing of today, it is worthwhile taking a look at the origins of one of the first real currencies… and who knows, one that may take its place once more as a trusted, true exchange of value.

Money, a concept born out of necessity

Before money existed, goods were traded in the form of exchange and bartering. There were obvious difficulties because in the long term it is perhaps impossible to equate the value of items in terms of each other, oxen for example in proportion to wheat or potatoes.

A popular and plausible hypothesis by H. Hauser (Gold, Vuibert & Nony, Paris, p.307) is that as gold was also being traded against various goods, its weight was ultimately agreed upon as the unit of exchange. It cannot have been longer before people realised that gold was easily divisible into a variety of weights which equated to multiples of its value and therefore the value of other commodities. This led to the concept that of weights of gold were indeed useful “units of value” and quickly prices for oxen, sacks of wheat etc became equivalent to a certain weight of gold.

Gold is ideal for this purpose because it is easily divisible and impossible to fake and is a store of real value being a precious and rare metal.

The birth of gold coins

In Egypt, gold was exchanged against goods in the form of rings which had fixed weights and therefore different multiples of value could be used for pricing goods. Elsewhere however, gold stayed in the form of ingots for a long time but their weights were often variable, that is, there was no standard size of bar, so bars would naturally be of different weights depending on how much gold was in them. Trading was difficult and tedious because of these discrepancies. Weight variations meant that trades were seldom a direct equivalent to the goods being traded and so much haggling ensued.

In search of something more convenient, reliable and safe, small gold discs of a fixed weight were made and each one had a value struck on it. They were easier to carry around and allowed trade to be more flexible, retail as well as wholesale. Thus the first gold coins were born and indeed the first recognisable currency. This took place around 700 BC according to Erik Chanel.

Whilst gold was not the only metal used for coins – silver has been widely used as well- gold, however, was the ideal metal because of its unique combination of properties such as: it is stainless, rustproof, divisible, malleable, ductile and of course rare, which made it from the outset a symbol of riches.

Is Money as good as Gold?

The Gold Specie Standard was a system that associated units of money to gold coins in circulation or when lesser metal coins drew their reference of monetary value from a circulating gold coin.

The Gold Exchange Standard was when circulating coins made of various metals such as silver and copper drew their reference monetary value from a fixed value of gold independent of their own metal value.

The Gold Bullion Standard did not involve circulating coins. This was when governments had agreed to sell gold bullion at a fixed price in exchange for a quantity of circulating currency. In other words, each unit of currency effectively had a value related to gold. This allowed the mass introduction of paper currency, which was easily transportable and practical for payments.

So far so good; but more and more governments after 1914 disassociated themselves from gold standards of any kind, seeing how easy it was, from their point of view, to inflate their “wealth” by simply printing more and more pieces of paper, which led to the credit creation system, fractional reserve banking, loans and mortgages.

Without Gold, Money is Debt

The Gold Bullion Standard ended in 1971 when Nixon decided to deal with the economic strain of expenditure on the Vietnam War and so untied the value of the dollar from gold. This therefore effectively untied all the other currencies which had been part of the Bretton Woods Agreement to form the IMF (International Monetary Fund) in 1944.

Thereafter currencies were and are not covered by a relationship to gold or any other fixed unit of reference so they can become extremely volatile, easily devalued and printed at infinitum. The problem is that today’s money is based on pieces of paper that are printed with a nominal value. What this means is that currency value is nowadays derived from economic confidence. When there is none the currency becomes worthless and it is not because the central bank has printed a number on a piece of paper that it becomes meaningful. While it is true that Human Action is the ultimate source of value, human confidence is a much more precarious matter, easily swayed, easily duped.

As Detlev Schlichter argues in his immensely important book (Paper Money Collapse, John Wiley & Sons, Inc., New Jersey, 2011):

“Large sections of the public today embrace a strong and interventionist state. They consider the government a magic cure-all and the answer to everything. Given […] the consistently devastating historical record of state paper money, it is remarkable that those who advocate commodity money today are either marginalized as slightly eccentric or made to extensively explain their strange and atavistic-sounding proposals while the public readily accepts a system of book entry money in which the state can create money without limit. […] The result has been and will continue to be yet more money printing, more debt, more privileged treatment of banks and more government intervention in the economy. Given the interests of the political establishment, the views of the mainstream media, the vested interests of the financial industry, and the state zeitgeist, a timely return to hard money can almost be ruled out.”

Note that Schlichter says “timely”. Earlier in his book, he had noted that the “Achilles heel of this system may then be seen, more accurately, not in a fickle public but instead a banking sector that issues uncovered claims against itself.” Such a system was bound to cause panics from time to time, or what politicians and bankers saw as panics, but which were rather “attempted shifts by the public out of uncovered fiduciary media issued by the banks and previously accepted by the public, into money proper.”

That is, people looking for ways to protect their wealth outside of paper money.

Gold as a future currency?

Gold as a currency of the future may seem far-fetched but given the state of paper money and the increasing interest in gold who knows, it is already being planned as an alternative stable money in certain places. Even if gold coins do not re-enter circulation they are being used as a more certain tangible investment, thus protecting and covering other forms of wealth.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD: THE BOOK OF THE MOMENT

Monday, April 29th, 2013

livre3DReview by Mark Rogers

Gold, A Different Point of View by Paul McGowan

With a Preface by Bill Bonner

Published by Ferrington in association with LinGold.com

Following the drop in the price of gold a few weeks ago, record sales of gold coins were reported (see here, and here for a rise in its price). The publication of this little book is therefore timely and pertinent.

There may be many people who would like to hold some gold but are dissuaded by the thought of large and expensive ingots. But bullion is not the only way in which to invest in or purchase gold. Yet as the author states: “Gold is not just ingots. The common response to gold is that it is only for the wealthy: those heavy bars, alluring though they may be, are simply unaffordable.”

This book argues that this view of gold is misguided and misinformed: there are affordable routes to investment in gold.

Although short the book contains a wealth of information. There is an introductory chapter giving a brief history of gold’s 6,000 history, which includes its denigration by politicians and academics in the twentieth century; Keynes for example thought it a “barbarian relic”. Proudhon, Marx, Lenin, Hitler all denigrated it, and to this day it troubles the likes of Ben Bernanke and George Soros.

Gold’s function as a stabiliser of value and its use over time as actual currency coin in circulation suggest that gold is today an alternative currency, and this first chapter ends with a comparison of gold with modern economies, noting that the latter are not working, while attempts to remonetize gold are afoot in, for example, Utah.

There is also discussion of the vexed problem of clean extraction with some useful information about the certificating process that reassures investors that their gold has been mined under the highest standards.

Chapter Two, “Gold, the last bastion of individual freedom”, examines the role that gold may play in hedging one’s investment portfolio, as well as its potential as a regulating device, controlling the whims of politicians and central bankers. This chapter contains a concise guide to the problems of paper currency unsecured against tangible value, with the inevitable consequence that savings are eroded and destroyed and more and more paper is required to purchase fewer and fewer goods. In other words, paper currencies are a direct attack on people’s individual control of their lives, rendering it harder and harder for them to provide for themselves, their families and their futures. We have been here so many times in history, with the latest example being the eurocrisis, that it is nothing short of scandalous that the political and academic classes cannot see the lessons to be so plainly learned.

Gold on the other hand “observes a constancy. With one ounce of gold you can almost buy today the same quantity of basic goods as at the time of the Roman Empire or Egyptian civilization. Inder the Pharaoh Tutmosis III, one needed the equivalent of 2 ounces of gold to buy an ox. Today, 2.5 ounces would be needed. Inflation has been rather weak in 4,000 years!”

This is a salutary reminder of gold’s stabilising power, which is just the very thing that the modern politician resents about it.

A strong bullish potential

The importance of gold in the contemporary world is underlined by an examination of those countries which invest heavily in it, both at the national as well as the individual level. Russia, China and India are at the forefront of this investment, with others, such as Vietnam, making significant moves in this direction. There is a useful digest of information about these countries, the role gold has traditionally played in them and how they are managing their portfolios at present. This analysis clearly establishes trends which are not going to vanish: China indeed buys enormous quantities of it, even though she also produces it.

These markets ought to assure the potential gold investor that while prices do indeed fluctuate, bullish potential is always there in gold, and has been for most of human history. Any falls in the market have identifiable causes – for example, the wedding season in India sees a rise in prices. Indeed, this analysis is testimony to the fact that we have had 6,000 years to observe people’s behaviour with gold and make it one of the easiest assets to manage.

An Investment Portfolio

Nevertheless, the author does not argue that gold should be the sole asset in one’s portfolio, far from it. Instead it should be looked on as the preserver of a portfolio’s value, that depending on the scale of one’s other investments a relevant proportion should always be kept in gold to support the rest of the portfolio.

There is a very useful chapter on investments other than gold, such as arable land and forestry, fine art and fine wines. These all have valuable potential (after all, we all need to eat), but each has significant drawbacks which are clearly and carefully spelled out. Gold’s position as being free of such drawbacks means that it is essential to invest in it, as a hedge against the dormant disasters in the rest of one’s investments.

And gold enjoys an enormous potential over any other investment, including in things such as diamonds that might seem to share some of gold’s economic potential. Gold is superbly versatile. Cut a diamond, and much of it is waste; melt an ingot of gold, and you still have the same amount of gold.

Gold Coins

The heart of the book is in its last chapter which really gets down to brass tacks – or gold coins! Coins represent gold at its most versatile, allowing even those who do not have huge fortunes to start saving in gold. While one ingot is beyond the reach of most, a single coin, perhaps purchased at the rate of no more than one a year, is a realistic and feasible option.

The book contains a wealth of information on tax regimes; storage; what to do and what not to do in actually physically handling coins and how to transport them; what to look out for as enhancing a rare numismatic coin’s value and what depletes it – all fascinating information in itself, and eminently practical.

“If we had to state only three reasons to buy: gold is a recognized and accepted safe haven throughout the world, demand from the emerging countries is strong and the total demand over the mid to long term is reliably forecast as being higher than the supply.”

The book is available on Amazon in a Kindle version (price: £5.14). Those readers who would like the printed version, should send a cheque for £12.50 (includes p+p) made out to: Ferrington, and send it to: Ferrington, Bookseller & Publisher, 24 Shipton Street, London E2 7RU. The book is also available as Buy It Now on eBay.

SOME IMPLICATIONS OF THE UTAH SOUND MONEY SCHEME

Thursday, August 23rd, 2012

By Mark Rogers

There is of course a long way to go. A journalist quoted on the Utah Sound Money website pointed to the inexperience of most people in Utah (let alone the whole of the United States) in using gold and silver as money – but there is an obvious explanation for that: namely, gold and silver have not actually been in circulation as legal tender for decades and decades! (Notwithstanding the provisions of the Constitution, Article I, Section 10, quoted here.)

A further point made is that the tendency of this scheme is towards “gold debit cards” – but that is not merely the tendency, that is the intention. We noted here the economist Detlev S. Schlicter’s crucial point about there being a tendency “to confuse innovations in payment technology with the basic construction of a monetary system.” He points out that this confusion of technique and actual monetary value arises because all forms of fiat currency (since the divorce from precious metal backing) have been routinely accepted simply because of their convenience and not because of their intrinsic value. The fallacy lies in assuming that the value arises by adding together the acceptance and the convenience supported as they are by the government (or at least the central bank) as arbiter of last resort, a powerful and destructive fallacy.

The beauty of the Utah scheme is that the “gold debit card” is so clearly linked to the actual gold and silver, the value of which is constantly audited: the card represents the actual gold, which is also personally yours. The technology cannot trump the value or manipulate it. The gold backed debit card is analogous to the old promise printed on, say, Bank of England notes, whereby the possessor of the note was entitled to redeem the face value of the note in gold specie if he produced the note at the bank.

The promise on a contemporary bank note is spurious, not to say fraudulent. If it is accepted that the face value of the note is that and no more, i.e. it is not going to be redeemed in gold (or silver) then what does promising to “pay the bearer on demand the sum of TEN Pounds” mean in practice? That the cashier will simply smile and hand it back? Would the promise be kept by handing over a plastic bag full of coins (5 pence pieces?) to the stated value? That may be even more fraudulent than it might appear: there have been times when in the few minutes that it would take to do that, the note may have lost value as the printing press splashes out more notes…

The questions are of course meaningless, serving only to emphasise the fraudulent nature of a fiat money scheme – which is to say, every monetary scheme in the world at present: since the dollar was decoupled from gold, as Schlicter points out in his book, the world’s currencies, though pegged to the dollar as the residual “strong” currency, have been for the first time in history rendered both theoretically and practically valueless.

The Utah Sound Money scheme is set to change that.

THE FEDERAL RESERVE AND THE CAMPAIGN FOR SOUND MONEY

Wednesday, August 22nd, 2012

By Mark Rogers

We noted here that the Federal Reserve of the United States has always conducted its own audit.

This could be set to change. Mitt Romney has recently on the campaign trail demanded independent auditing of the Fed. And in July 2012, the House of Representatives voted for “A Bill To require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States before the end of 2012.” (H.R. 459)

The support for the bill was decisive, the vote being 327 in favour to 98 against. It is interesting to note how close was the Democrat vote: 89 in favour to 97 against. The extra one making up the 98 against overall was a lone Republican, the Republicans otherwise voting 238 in favour.

The Democrat vote in favour was something of an achievement given that the Democratic leadership in the House tried to whip all members to vote against. Senate majority leader, Democrat Harry Reid has asserted that he will not permit a vote in the Senate, even though he thought it a good idea in 1995. However, he could be out-manoeuvred: Senator Rand Paul (the son of Representative Ron Paul who has been championing this cause since 1983) has sponsored a companion bill in the Senate which has twenty-two cosponsors. The Presidential elections later this year may well provide a momentum that outwits Sen. Reid and forces a Senate vote.

However, there is reason for caution: Constitutional Tender, for one, thinks that there is little likelihood of this getting past the Senate anytime soon.

But all is not lost. The Constitution of the United States of America states, Article I, Section 10: “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.” Which means that Federal Reserve notes are unconstitutional, and States’ laws that have been passed to make them legal tender were passed in defiance of the above Article. This also means that the lifeblood of the Fed’s notes, quantitative easing, is also unconstitutional and therefore illegal. And the individual States have the power to act as Utah has and start remonetizing gold and silver through similar schemes.

This may well be the most revolutionary movement since the separation of the American people from the British Crown. The tendencies towards big government for so long unchecked – and striking at the heart of the Constitution – may at last be confronting a resistance that modern politicians do not expect to happen to them: the end of rule by political elites despising traditional methods of financial sobriety, in favour of ordinary people armed with gold!

We will be keeping a close watch on developments: while gold purchases are down in both India and China, while speculation as to China’s intentions about backing the renminbi with gold in order to become a rival to the dollar are still speculations shrouded in uncertainty, ordinary Americans are returning to the gold standard in a movement that is likely to prove unstoppable.

For a very thorough account of Utah’s sound money policy please go here.

MONETIZATION OF GOLD IN THE U.S.A. – NOW!

Friday, August 17th, 2012

We saw here how the gold standard is likely to make a return, and specifically how it could be managed. We took a look at how Iran and China have been conspiring to revive payment in gold for bulk purchases of Iranian oil, a pseudo-return to gold as a currency, pseudo, that is, if it remains a means of payment for a limited period of time and limited to a single commodity. We have also speculated about the possibility that China may be planning to launch the renminbi as a reserve currency backed by gold.

We also saw here how sensible Greeks are forming credit unions and devising alternative currencies.

In the U.S.A., however, States are going for the real thing: under way is a revival of gold (and silver) as legal tender, and the pioneer is Utah and the Utah Gold and Silver Depository.

The move is in deliberate protest at the Federal Reserve’s monetary policy. Republican state representative Brad Galvez, sponsor of the bill, is quoted as saying: “If you’re mad about government debt, ditch the cash.  Spend your gold and silver!”

The Utah Gold and Silver Depository states:

“On March 25, 2011 history was made when Utah Governor Gary Herbert signed into law Utah HB317 thereby monetizing precious metals in the form of Gold and Silver American Eagles and United States numismatics (rare coins dated 1792 to 1964) in the state of Utah. The Utah Gold & Silver Depository was founded on the belief that every citizen of the global community has the fundamental right to legally create, preserve and store wealth. To meet the global demand for safe, secure transactions and storage, UGSD has developed a number of depository account options from which a customer can choose and tailor to best meet that customer’s needs and goals.”

The idea is that citizens who wish to monetize their gold and silver will lodge it in an account with the Depository which will then issue them with electronic money in the form of a debit card, which stores the dollar equivalent which is debited against the gold and silver which backs it. A simple idea, but one with radical implications.

The Fed can hardly claim that this sort of thing, especially if it starts to spread to other states, will undermine its authority – the Quantitative Easing it has been indulging is already doing that!

See here also for the Sound Money Act.

French coins: The Cérès Family

Friday, May 25th, 2012
20F Napoleon Cérès Reverse

20F Napoleon Cérès Reverse

The Cérès are among the most unusual of gold coins in light of their history. Though certain types are somewhat mundane, others are extremely rare and make the Cérès one of the most sought-after coins for numismatists.  Here is an introduction to these small coins which have all the markings of a great one!

Brief introduction to the coin

The Cérès, as the name suggests, displays the head of Ceres on its obverse, the Roman Goddess of agriculture, harvests and fertility and a symbol of the Republic.  She is represented from her right profile, wearing an earring, a pearl necklace and a braided chignon in her hair attached with a ribbon and in which seeds, acorns and oak leaves are placed.  This face is framed by fasces lictoriae featuring the hand of Justice on the left, behind the nape of the neck, and a laurel branch on the right, under the chin.  A 6-sided star is above her head.  The title is “Republique Française” (French Republic).

On the reverse, which comprises the words “Liberté, égalité, fraternité” (Liberty, equality, fraternity), the value of the coin is displayed (5, 10 or 20 Francs), between an olive branch (on the left) and an oak branch (on the right) linked at their base by a ribbon.

The 5 Franc Cérès: an extremely rare type!

The numismatists who have the immense privilege of coming across a 5 Franc Cérès can die happy: they hold in their hands one of, if not the rarest gold coins in the world!  Unobtainable in B, TB or TTB condition, it can be found in SUP, SPL or FDC.  There exist only 30 specimens in all for the year 1878 and 40 for the year 1889.

The reason for this extreme scarcity?  A coin which was destroyed as it contravened the Latin Union convention – a convention dating from 1865 aimed at unifying the currencies of France, Belgium, Italy, Switzerland and later Greece in 1868 – which prescribed that, among other things, 5 Franc coins be made of silver and not gold!  Indeed, at that time, as astonishing as it may seem, the “gold of the poor” took precedence over gold before being heavily devalued in 1871.

The 10 Franc Cérès: a little gem for numismatists

With just over 3.7 million specimens minted, the 10 Franc Cérès is a little less rare than the 5 Franc Cérès.  Since one can easily find it in B, TB and with more difficulty in TTB condition, anyone who finds it in SUP or SPL condition should be pleased.  As for the FDC, it is unobtainable for the 10 Franc Cérès of 1850.  To give you an idea: the 1850 10 Franc B sells for approximately 70 €, whereas the fleur de coin can reach €3,000.

The 20 Franc Cérès: quintessence of the IInd Republic

More than 17 million 20 Franc coins were struck between 1949 and 1951.  The quality of strike is quite exceptional.  On the other hand, this coin is difficult to authenticate.  It is the condition of its preservation that dictates its authentification.  One must concentrate on the last leaf on the right of the crown and the cheek of the face to differentiate the SPL from the FDC.  Like all gold coins from this period which were in circulation, this series has three different surfaces between the obverse and the reverse: glossy, matt and cameo.

The Cérès: collector’s item or great investment?

Both!  The 5 Franc Cérès, in spite of its extreme rarity which classes it amongst the great coins of true numismatics, as in the case of the 10 Franc FDC, can nevertheless be a good object for investment for those who have the means and the immense privilege of being able to purchase it!  Indeed, like a work of art, it maintains a quite stable price, hence protected from fluctuations in the market price of gold.

As for the 20 Franc Cérès TTB in particular, like the Napoleon III or the 20 Franc Marianne Coq, it is an ideal gold coin for investing in physical gold, its price being around €170.

The Mint Museum of Colombia located in Bogota’s La Candelaria district.

Thursday, May 17th, 2012

From an original article published at L’Or et L’Argent.

Museum of Money, Bogota

Museum of Money, Bogota

There are several institutions throughout the world which are part of the historical numismatic memory  –  without which we could not enjoy the collections nor any interest in investing in those precious coins which safeguard our heritage in the way that gold coins do. Today therefore we will touch upon the history of Colombia’s Mint Museum.

For those passionate about numismatics travelling to Colombia and in particular to Bogota, there is one place not to be missed: the Mint Museum, located in the working-class district of La Candelaria.

Latin American countries have always had a very strong link to the history of gold – therefore we shall dedicate some space to them, sharing their history and an analysis of their coins, those which are most representative and much valued and appreciated by their inhabitants.

King Felipe III of Spain ordered the foundation of this emblematic Mint Museum in Santa Fé de Bogota and entrusted the works to the engineer Alonso Turrillo de Yebra.

First coins struck

First coins struck (BANREP)

The striking of coins began in 1621 in one of the very first buildings constructed in Bogota. The history of this Mint Museum is very important since it is the place where the first gold coins of the Americas were manufactured, the “macuquinas”, which were named ‘doubloons or mintings’.

Some were struck in Cartagena and others in Santa Fé de Bogota. It was only a decade or so later that the striking of gold coins was authorized in the Mint Museums of Mexico and Peru.

Its infrastructure improved gradually, going from a small, simple blacksmith’s workshop located on only one level at the current Museum, endowed with a beautiful Andalusian-style architecture with a touch of provincial colonial period features.

Santa Fé de Bogota was the capital of the Spanish Vice-royalty of New-Grenada, home to the viceroys, the judges of the Royal Court, the Clergy, the Captains of the Tercios of Spain and of course to Gonzalo Jiménez de Quesada, its founder.

The amount of work becoming increasingly important in terms of volume, the directors of the museum found themselves under increasing pressure over time to reform it in order to meet requirements. Half a century after its inauguration, it was Felipe VI himself who ordered its expansion – in the beginning, the striking was highly traditional, but following the implementation of various changes, machines started to be used.

Their treasures were much coveted during the riots which took place in the Colombian capital, but they fortunately survived all attacks – including natural ones, notably during earthquakes.

Nowadays, we can enjoy the same museum as that of several centuries ago, which was re-inaugurated by Viceroy Solis in 1756.

Bogata’s Mint Museum is recognized as a National Monument, a title which was granted in 1975 following the decree of 1584, currently dependent upon the Bank of the Republic of Colombia.

Within, one can follow all the most important events of the country’s history, the history of the museum and all the coins and notes manufactured throughout these centuries.

KRUGERRAND SCANDAL AT THE SOUTH AFRICAN MINT

Monday, April 23rd, 2012

By Mark Rogers

On 8 December 2011, the Board of the South African Mint Company suspended the Managing Director of the Company and its General Manager Numismatic Coins, having become “aware of certain technical issues within the operations of the SA Mint Company.” The media statement went on to say that:  “Investigations into the matter have been instituted and are on-going.”

Nothing at this time was said publicly about what these “technical issues” were. However, dealers were alerted in confidential meetings to the need to assay their stocks of proof Krugerrands. A further statement, going into much more detail, was publicly issued on 13 April 2012.

This stated that “investigations into the matter have revealed that some of the proof Krugerrand coins cast between April 2011 and May 2011may not meet all the required quality specifications. Based on information that there had been fluctuations in assay results in the production process starting from April 2010, a conservative approach was adopted to analyse results from 01 April 2010 until 31 October 2011, the latter date being one on which  new quality control measures were introduced.  The extended period was adopted merely as a precaution.”

Proof and Bullion Kruggerands and Investment

The SA Mint only strikes the proof Krugers, bullion Krugers being the preserve of the Rand Refinery. Proof coins are issued in smaller quantities for the collectors’ market and are struck in a way that provides a mirror-like finish with a contrast of matt. They are important to collectors who are interested in “a perfect uncirculated” coin, a distinction that mattered when the Krugerrand was first struck given that the bullion coins were intended to circulate as currency.

This means that Krugers are minted from a copper-gold alloy, as the copper gives the coin greater durability. Apart from the mirror finish, the other difference between the proof and the bullion coins is the number of serrations (or reeds) around the edges, being 180 on the bullion and 220 on the proofs.

While the minting process is different between the SA Mint and Rand Refinery in order to achieve the required finish, the gold content and ultimately the investment are the same: bullion coins are still as valuable for their gold content and premium and are the most prevalent, but there is no difference to an investor if the Kruger is proof or just bullion.

The proof can be found to be more expensive but usually in collectors’ circles as they insist on this type of coin. However, in effect all of the Krugers are bullion coins and they can be found at the same purchase price. The importance of all this comes into play when demand is high: investors buy them all for the same reason. Even “proof” Krugers are important as they are part of the available investment quality bullion coins and there is no real need to differentiate their importance as an investment. Most Krugers are held for their investment potential and not by collectors – they are very “liquid assets” that contain a sure value (1 oz of gold).

Scandal Story Breaks – Misleadingly

Within a couple of days of the latest Media Statement issued by the SA Mint, TimesLive published a story that some of the proof coins were underweight. This was a very careless reading of the Mint’s statement which is quite clear on this point: the coins were under-specification, containing less gold than required by law. The South African gold collector who first alerted the Mint to the problem makes the crucial point on PM Bug (Precious Metals Forum):

“The coins are NOT underweight in any way, shape or form, they are under-spec. They weigh exactly the same as any of the Krugers available. This is just bad reportage from TimesLive. Now people will just weigh their coins, see the weight is right, and forget about it.” (Readers should view the short excerpt from CNBC Africa report that is posted on this forum after the statement just quoted – and look out for the moment when a gold coin being assayed registers at 94% silver! GoldCoin.org is attempting to discover more…)

Apparently TimesLive was aware that CNBC Africa and Forbes Africa were onto this story and wanted to scoop them – hence the sloppy reporting. Forbes Africa is due to publish the fruit of its investigations in its May issue.

So what was happening at the Mint?

“Concurrent with the investigation into proof Krugerrand coins, the SA Mint investigated the evidential theft of R5 circulation coins. This crime was ostensibly committed by a number of employees who appeared to have acted in collusion with what appears to be a syndicate-style operation that included external parties. Appropriate steps have been taken and all evidence gathered has been handed over to the Police’s Directorate for Priority Crime Investigation.”

How did a criminal gang come to be operating at the South African Mint, a wholly-owned subsidiary of the South African Reserve Bank? How far up the scale of management did it penetrate? Were the two officials suspended because this happened on their watch or is there evidence that they were somehow complicit and/or bought off? Is this yet another instance of the corruption and malfeasance that have embroiled South Africa after the early promise of the post-apartheid years? The ANC is after all no more than a tribal ascendancy and there is widespread disillusion with the ruling elite in South Africa.

True Value

This is an astonishing story and one that may have considerable implications for the Krugerrand, a popular investment because widely regarded as a strong one. Perhaps investors should start taking a very serious look at the Vera Valor, recently highlighted in the luxury magazine Meze.

The Vera Valor is a serious contender for replacing the Krugerrand as the gold coin of investor choice.