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Archive for May, 2010

Coin Grading

Friday, May 28th, 2010

Grading is probably the most controversial and by far the most important area of coin collecting and there are almost no grading guides for world coins. Grading issues have caused disputes between buyers and sellers since collecting begun and will continue to do so for ever more. Grading coins accurately is a skill acquired in time and after looking at many similar/identical coins in all ranges of condition. Many coins fall in between grades, and so terms such as ‘nearly VF’, ‘good VF’, ‘gem BU’ are encountered. The numerical system (1 -70) popular in the USA is not common in Europe but it does allow greater flexibility within key grades. We should bear in mind that their grading system is more generous than that of the UK. E.g. the lower ranges of Almost Uncirculated ( AU50 – 57) allows for some wear which is not acceptable in the UK, so care is needed. There are also differences between European countries where FDC (Fleur De Coin) is used to describe an uncirculated coin but in the UK, FDC is a perfect coin that could only be attributed to the best of proofs and is equivalent to the to the top number on the American system (MS70) and is rarely found

We are not numismatists and our concern is only with gold and silver coins as an investment so the grade is not as critical as it is for a collector of rare coins. Nevertheless the condition of a coin is important and numismatists agree that in most cases the condition of the coin is more important than its rarity.

There are key grades and grades between these grades so it is often easier to start with buckets, Circulated, Almost Uncirculated and Uncirculated.

The coin should be graded on its weakest side, look for overall wear and loss of design detail such as strands of hair, feathers or coats of arms.  Detecting wear can be made more difficult where relief is low particularly applicable to coins of Edward VII and George V

Some tips for sovereigns

The majority of Sovereigns since 1820 contain Benedetto  Pistrucci’s fantastic engraving of St. George slaying the dragon and there are some high points that can indicate wear.  Look at the helmet above the eye this is the first place wear occurs, the strap across St George’s chest, the fingers on the hand, signs of wear on the reins, relief of the sword against the flank. This reverse covered a number of monarchs on the obverse. In general look for detail of the ears on males and hair on females.

Look at the example below of a 1918 Halfcrown. With examination under magnification the slightest rubbing can be seen on the ear, cheek and moustache. A very nice coin but not Uncirculated

G1918_Halfcrown_AU marked

1918 Halfcrown AU (About Uncirculated) American AU58-59

KEY GRADES

I have listed the Key grades below with some sample coins of various denominations to give an idea of grading but please remember this is subjective and maybe variable in the eyes of the expert who would examine with magnification.

Poor: A very worn coin but better than a smooth disc. Inscriptions worn off, date illegible, only outline of design visible. Such coins are generally of no value to a collector.

Fair: A heavily worn coin but date and denomination legible, type recognisable. Very little detail visible , worth no more than the metal value

Gpennyfair

Penny Fair American F2

Good (G): (sometimes Mediocre) Inscriptions and date considerably worn but legible. Generally worth no more than the metal value

Very Good (VG): Considerable wear over the whole coin, and high spots worn through. Coins in this or the previous grades are really only collectable if extremely rare and generally worth no more than the metal value

Fine (F): Worn over whole area, but only the highest spots are worn completely through. Some of the hair volume should be visable but not individual strands (US Grade about VF)

GfarthFine

Farthing F (Fine) American F12-14

Very Fine (VF): Detail clear, but obvious evidence of limited circulation. High spots worn but detail remains. More hair detail is evident and also detail of other designs. Traces of mint lustre may linger amongst the letters of the inscription. (US Grade about XF)

GsixpVF

Sixpence VF (Very Fine) American VF25-30

Extremely Fine (EF): A coin with little sign of being circulated. Slight wear on high spots on close inspection, and all other detail clear and sharp with minimal scratches and marks. Much mint lustre may remain. (US Grade about AU)

GHPEF

Half Penny EF(Extremly Fine) American XF40 - 44

Almost Uncirculated (AU): Not quite in Uncirculated condition could be down graded because of heavy bag marks, edge knocks or other undesirable feature but without the slight wear that determine it to be EF, would usually contain more than half of its mint luster.

GflorgEF

Florin gEF (Good Extremly Fine) American AU About Uncirculated AU55

Uncirculated (UNC): No wear, although it is possible for the design not to be fully struck up in the minting process. Not perfect as there may be bag abrasions and knocks through mass production. The coin should have most of its mint luster present. Older coins may be tarnished or toned.

GShlChUNC

Shilling UNC ( Uncirculated) American MS60-62

Brilliant Uncirculated (BU): There will be no visible signs of wear or handling and ideally no bag marks.  Usually implies full mint lustre, in other words no toning or tarnish.

GHPGemUNC

Half Penny BU (Brilliant Uncirculated) American MS67-69

FDC: (Fleur de Coin) Perfect mint state, with no abrasions or marks, and full lustre. Usually applied to proof coins only, as coins intended for circulation are in contact with others during production.

GPenny_FDC

Penny FDC (Fleur De Coin) American MS70

Proof: Not a condition, but the coin has been struck using specially prepared dies and polished blanks, and the minting process has been carried out usually twice with extra pressure to ensure the die is filled. A characteristic of proof coins is that they have very sharp edges because of the high pressures used to ensure that the metal flows into all details of the design.

All the above photographs are by courtesy of Wybrit British Coins

The table below attempts to show in detail the Key Grades in bold and grades in between

Coin Grading

Maurice Hall

Gold to go

Thursday, May 27th, 2010

TG-Gold-Super-Markt, a company based in Reutlingen, southwestern Germany, has developed a machine to dispense pieces of gold as small as one gram.

A prototype was launched in the summer of 2009 in Frankfurt Airport where many passengers queued to buy one gram, 5 gram or 10 gram bars. The machine was linked to the internet to update the gold value every few minutes to provide the lowest possible price The idea is to undersell the small group of banks and dealers who dominate the gold market in Germany  and make it convenient for anyone to transfer Euros into tangible gold

CEO Thomas Geissler announced then that they would be ready to delivery the first commercial machines in a few month time to potential buyers in Asia, the Middle East, Britain and the U.S. He said he came up with the idea of gold dispensers in 2008 and was  convinced by a heightened interest in gold as a hedge against inflation as the financial crisis rippled around the globe.

“People do not believe that the worldwide financial changes will have a good end,” Geissler said. “So I say give the people what they like to buy.”

gold-to-go-1

Gold to Go vending machine

The demand in Frankfurt was brisk enough to install a more sophisticated machine in the lobby of Abu Dhabi’s emirate Palace hotel. The exterior of the machine is coated with a thin layer of 24-carat gold. Customers using the unusual ATM can choose from many items, including gold customized with logos.

One,five and ten gram gold bars were available and other options including a Maple Leaf Five Canadian dollar coin and a Kangaroo Fifteen Australian dollar coin. Both represent about one tenth of an ounce of gold and the price is updated in real time based on the gold value.

The margins are lower than those offered by banks but fluctuate at about 20 per cent higher than market prices.

The vending machines are easy to use and a virtually burglar and tamper proof and can be adapted to produce personalized logos

The company’s business plan is to install up to 200 gold ATMs world wide.

Maurice hall

Gold will soar in the long term

Tuesday, May 18th, 2010

In the credit crisis of 2008, gold went down with everything else. Gold stocks were hammered as the world deleveraged. But gold and gold stocks were also among the first to rise from the ashes. They made their low in November 2008, while the major Western stock indices carried on declining until March 2009.

Gold was not the safe haven it was touted to be. However, this only reflects what was happening in the paper markets of stocks, futures and exchange-traded funds (ETFs).

In the ‘real world’, bullion dealers reported unprecedented activity. Such was global demand, that there was a Krugerrand supply crunch in South Africa; the US Mint was unable to supply gold and silver coins; and Tony Baird of Baird & Co, one of the UK’s main dealers, confessed to me that he could have had ten times the number of people working for him and still not have had enough staff.

And something similar is happening again today.

Germans are buying up gold fast

The FT ran a story on Saturday, headlined: ‘Germans lead gold rush frenzy’. It seems Germans are panicked by the inflationary implications of last week’s €750bn eurozone bail-out. They have been buying up gold coins and small bars at a faster rate than during the Lehman bankruptcy of autumn 2008. Krugerrands are now commanding a premium of about 8% above the spot price of their gold content.

“We have some extraordinary sales to German customers,” says Deborah Thomson, treasurer at the Rand refinery in South Africa. “The refinery,” writes Jack Farchy in the FT, “which usually sells 2,000 coins to each customer at a time, says that last week it received an order from one German bank for 30,000 coins. Another bank requested 15,000 coins”.

We seem to be threatened with another bout of deleveraging. But this time, unlike in 2008, gold has remained strong in the futures markets. In fact, it is sitting at a vital inflection point. Against the euro and the pound, both of which have been exceptionally weak, gold has gone near parabolic and has long since broken out to all-time highs.

Here we see gold against the pound. It costs nearly £850 an ounce – it was just £570 last summer.

image

And here is gold versus the collapsing euro:

image

Against the US dollar, however, it is trading at or barely above the all-highs of December 2009 at $1,224 an ounce.

image

The futures markets are where the price of gold is, largely, determined.

If I was a futures trader – and I’m not – I would be long gold (betting on the price to rise) in the belief that it could easily go parabolic from here, as has happened in euros and pounds when it broke out.

But, assuming that I have enjoyed a nice run, I wouldn’t want to give too much profit back, so I would also have my stops very tight, perhaps at just below $1,220 (near the old high). If not there, I might have them just a little lower, a little beneath the $1,200 mark.

Other traders might not think like me, but there is the danger, in my opinion, that just a small sell-off here could easily trigger a load of stops and drive the price down.

Why would gold sell off?

But why would gold sell off, given the circumstances? Well, for several reasons. First, sentiment – as demonstrated by the Germans – is wildly bullish. It is hard to find a gold bear out there. That is often a bearish sign.

Second, gold’s move has not been confirmed by silver. Silver, trading at $19 an ounce, is still $31 off its all-time high of 1980, and $3 – or 15% – off its more recent high of $22 set in spring 2008. I know silver has, for various reasons, a tendency to be rather, shall we say, errant, but like me at school, it should be doing better.

Third, gold’s move has not been confirmed by the gold stocks. These are still trading below their highs of March 2008 and December 2009. Perhaps that makes them a buy here, but purists like to see gold stocks leading gold.

Fourth, open interest on the futures exchange is extremely high, with the commercial traders short a worrying 282,644 contracts. These are often levels concomitant with a top.

Now, I am not calling a top here by any manner of means. I remain wildly bullish about gold in the long-term and think we are eventually going to go back to some kind of botched gold standard as the only solution to this ballooning monetary crisis that just won’t go away.

And in the event of ‘another bout of 2008’, I don’t think gold will be hit so hard. What was a credit crunch largely in the private sector is now morphing into a full-blown sovereign currency crisis. That should be bullish for gold.

But as I noted above, there are some grounds for ‘short-term concern’, and it doesn’t do any harm to be aware of them.

A report by Dominic Frisby London 18th May 2010

Italy’s tradition with gold

Tuesday, May 11th, 2010

We are well aware of France as the leading gold hoarder in Europe both in the central bank with second highest reserve and by private citizens who are reputed to have over 3000 tonnes in private hands. French gold is mainly in the form of gold Napoleons widely distributed as safe haven for family wealth. Whereas Italy is a consumer of gold whose jewellery industry is the world’s leader a tradition that goes back to Roman times; but they are not lacking in gold reserves either.  It is certainly worth exploring the Italian gold situation.

Central banks

The gold bullion stored beneath Rome’s Palazzo Koch stands at 2,451.8 tonnes, the fourth  largest central bank hoard in the world, just behind France as third in Europe. It has been unchanged at 2,451.8 tonnes for the last 11 years or more making Italy the only Eurozone nation not to sell any of its gold reserves since 1998. It’s also the only signatory to the Central Bank Gold Agreements of 1999 and 2004 not to sell any gold either. Italy’s fellow CBGA signatories, in contrast, have shrunk their gold reserves by more than one quarter on average.

Central Bank Holdings

Country                      Tonnes

USA                            8133.5

Germany                     3412.6

IMF                             3217.3

France                         2487.1

Italy                            2451.8

Gold Jewellery

Italy has a large jewellery industry contributing to a considerable portion of Italy’s economy and is located in the regions of Veneto, Toscana, Lombardia, Lazio and Piedmont. About 45,000 workers engaged in this sector and there are two major clusters located in Vicenza and Arezzo where there are over 2500 companies employing around 22,000 workers.

Fine Italian gold jewellery in both its handmade and mass manufactured designs generally continues to hold the lead in customer appeal for a variety of styles and products. Many Italian gold designs reflect hundreds of years of influence while still appealing to those who value trendy style, romance and quality. The country remains as largest producer of gold jewellery in the world and its exquisite designs date back to the fifth century. Over 400 tons of the precious metal a year is processed and shaped into beautiful bracelets, necklaces, earrings, rings, medallions, broaches and other items that are worn with pride by both men and women in every corner of the globe.

The home of the country’s first goldsmith organization is in Vicenza and dates back to the early 1300’s. From that time until the present, artisans have passed the trade down to subsequent generations. The city is also known to produce the best machinery for producing precious metal chains used in some of the finest pieces world wide. Combining machinery and handcrafted techniques, a goldsmith may produce only approximately 12 inches a day of chain to be later fashioned into necklaces or other finished pieces.

This technique takes years to learn and goldsmiths who achieve success in the art of chain production in Vicenza produce products that are adored by many jewelry connoisseurs.

Italy has faced substantial competition from lower-cost manufacturing centers in China, Turkey and India in recent years and its fabrication has declined. Its domestic market has suffered too as consumers, against the background of a sluggish economy and increased competition.

Despite this, Italy remains the undisputed leader of fashionable and high quality jewellery design and the city of Vicenza hosts the leading trade fair each year. This is not a position of complacency  as Turkey has the skill, a growing market is determined to overtake Italy  While demand for basic products is declining, that for more innovative and high quality pieces is now showing healthy growth.

VOVincenza Oro’s fair for yellow gold remains a high selling point, and this year’s fair paid tribute to the market with Gold Expressions, a collaboration between the World Gold Council, the Vincenza fair, and sixty-nine premier Italian goldsmiths. The exhibit featured new and creative works (almost all in yellow gold) by the goldsmith artists invited to participate. The works are now scheduled to tour the China, the Middle East, and the United States as part of an international marketing campaign

The sector is coming from a very long and deep recession. The demand for gold and jewellery in 2009 recorded a steep fall of about 18% at world level with very marked downturns in the United States (-17%), in the Arab countries and in Europe. The sole sign of solidity came from the Chinese market where there was a 12% increase in the demand for gold and 8% growth in jewellery.
The forecasts indicate a market recovery for 2010, the scale of which will however be linked to the performance of the economy in the various parts of the world.

Gold Expressions is a collaboration between the World Gold Council, the Vincenza fair, and sixty-nine premier Italian goldsmiths. The  tour of China, India, the Middle East, and the United States as part of an international marketing campaign was successful particularly in the worlds greatest market, India, where the quality has attracted the new rich Indians.

Italian Gold Coins

It VE both

20 Lire Victor Emanual

Italy for a large period of time was in the form of a number of states with different governing bodies, because of which various kinds of coins as currency were used. However, “fiorino d’oro” or the gold coins of the republic of Florence were probably the first European coin to be made and used in larger quantities. The time of the birth of the first Italian gold coin is estimated to around 1252. This gold coin had approximately 3.5 grams of gold content. Apart from fiorino d’oro, many other famous gold coins used as currency were ducat, scudo d’oro and sovranos. Italy began using the currency Lire from 1861 and were in production until 1940. The most readily available of modern Italian gold coins is the 20 lire of Victor Emanuel and Umberto 1

Italian Gold Coins as a safe haven

The Italian gold coins have now attained the status of being a collectors’ item. People buy and sell these coins and investors take them as safe investments because of rising prices of gold. Whilst the economy of Italy is not in such a dangerous state as Greece, it is incorporated in the Southern European euro demise.  An Economy Ministry document trimmed the forecast for 2010 gross domestic product growth to 1.0 percent from 1.1 percent and slashed the 2011 forecast to 1.5 percent from 2.0 percent. As fears grew of contagion from Greece’s debt crisis to other euro zone countries, Rome raised its public debt forecast to 118.4 percent of GDP this year, up from a forecast of 116.9 percent made in January. The 2011 forecast was hiked to 118.7 percent from 116.5 percent and 2012 raised to 117.2 percent from 114.6 percent.

In times of impending crisis families who understand the situation will try and protect their wealth in intangible gold.

Maurice Hall

Gold Coins “the hottest property”

Tuesday, May 11th, 2010
Gold coins ‘the hottest product’
Friday, 7th May 2010 (489 views)
Gold coins continue to be a highly-coveted asset among investors and collectors alike as new figures from the US Mint show that they were popular purchases in April.
Coin News reports that gold numismatic pieces have been some of the “hottest products” in the coin-collecting world in recent weeks.
Some 60,500 American Gold Eagle bullion coins were sold throughout the month of April, while 56,500 American Buffalo gold pieces were snapped up in their two-day debut last month.
Despite only going on sale in April, 70,000 of these coins have already been sold, which is the equivalent of 35 per cent of the total purchased by collectors throughout the whole of 2009.
First Spouse gold coins have also performed well of late, by nearly doubling their previous weekly figure with orders coming in to the Mint for 785 of the items in comparison to the 404 that was noted the week before.
Elsewhere, Greg Rohan, president of Heritage Auctions, recently advised that gold numismatic pieces have been dominating among all categories at auctions in April. provided by Adfero Limi
Friday, 7th May 2010
Gold coins continue to be a highly-coveted asset among investors and collectors alike as new figures from the US Mint show that they were popular purchases in April.
Coin News reports that gold numismatic pieces have been some of the “hottest products” in the coin-collecting world in recent weeks.
Some 60,500 American Gold Eagle bullion coins were sold throughout the month of April, while 56,500 American Buffalo gold pieces were snapped up in their two-day debut last month.
Despite only going on sale in April, 70,000 of these coins have already been sold, which is the equivalent of 35 per cent of the total purchased by collectors throughout the whole of 2009.
First Spouse gold coins have also performed well of late, by nearly doubling their previous weekly figure with orders coming in to the Mint for 785 of the items in comparison to the 404 that was noted the week before.
Elsewhere, Greg Rohan, president of Heritage Auctions, recently advised that gold numismatic pieces have been dominating among all categories at auctions in April.
provided by Adfero Limited

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Thoughts
"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."