Archive for July, 2011

July 29, 2011

Better Date Peace Dollars Increase


Peace Dollar  

1921-1935

With the signing of the Treaty of Versailles on June 28th, 1919; most of the world once engulfed in total war paused for reflection. The United States, which would not formally end hostilities with the defeated German Empire until the signing of the Treaty of Berlin on July 2nd, 1921, adopted a new sense that, perhaps, this was the “war to end all wars.”

             Wishing to commemorate this new found sense of peace; Farran Zerbe (historian of the American Numismatic Association and founder of the Chase Manhattan Bank Money Museum) proposed, at a meeting of the A.N.A., that a commemorative half dollar or silver dollar be issued for general circulation. Using the Pittman Act of 1918 as the impetus, the federal Commission of Fine Arts initiated a design competition for the new dollar coin.

 Anthony de Francisci, using his wife Teresa as a model, won the competition with his design that featured Liberty wearing a Romanesque radiate crown on the obverse with the legend: “LIBERTY” and IN GOD WE TRUST”; and an eagle perched atop a mountain peak with the legends: “UNITED STATES OF AMERICA”, “E PLURIBUS UNUM”,”ONE DOLLAR”, and “PEACE” on the reverse. De Francisci’s first design for the reverse depicted the eagle clutching a broken sword symbolizing disarmament. This device was viewed by government officials as symbolizing a defeat rather than a negotiated peace and was rejected. The mint had George Morgan (designer of the previously issued Morgan Silver Dollar) rework the eagle so that it was now clutching an olive branch. De Francisci used Roman style lettering on the obverse, notably using a Roman “V” for a “U” in “TRVST.” Many people mistakenly to this day believe that this stylized “U” is intended to symbolize “V” for Victory.

 Morgan also re-worked the lettering on the reverse. Unfortunately it didn’t match the lettering on the obverse, creating the above mentioned confusion.  The new silver dollar was minted in high relief in 1921, its first year of issue. In 1922 the relief of the coin was lowered (by hammering the electroplate model with a flat board!) to facilitate the minting process. The Peace Dollar would be minted until 1935 when designated silver supplies were exhausted. This dollar commemorating Peace would be the last of the general circulation silver dollars minted by the United States.

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July 29, 2011

How High Will Silver Prices Go in 2011?

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NEW YORK (TheStreet ) — Gold was the hot metal in 2010 but silver has grabbed the early lead in the race to be 2011’s precious metal winner.

As gold prices struggle to hold new highs, silver prices are on a tear, reaching 31-year highs and up 31% already this year, but these levels are still a far cry from their $50 record.

Silver hit an all-time high of $50 an ounce in 1980 after the famous (or infamous) Hunt brothers bought the metal aggressively for 7 years; at one time owning more than 200 million ounces of silver.

The silver bubble burst soon thereafter, shedding 50% of its value almost immediately, and over the last 30 years the metal has traded as low as $4.

The appeal of silver is three-fold. Often called the “poor man’s gold,” silver performs the role of a hard asset — a form of moneythat retains more value than paper currencies. Silver, like gold, is also a safe-haven asset. There’s been a lot of safe-haven headlines of late with the explosion of violence in the Middle East, rising food prices, riots, inflation, conflict between North and South Korea, a nuclear disaster in Japan and high unemployment.

Silver is also an industrial metal, with about 60% of its usage coming from the sector, which makes the metal a good play on a global economic recovery. Experts say, however, that industrial demand will not likely be as big of a support to higher silver prices in 2011 as it was in 2010, forcing investment demand to pick up the slack,

So far, no problem. The iShares Silver Trust has added more than 280 tons so far in 2011 as traders jumped in. There have also been rumors that Asian buyers were gobbling up shares of the SLV in order to take physical delivery, which they have to do in 50,000 share lots.

Backwardation in the futures market, where the spot month price is higher than the future months, points to a supply crunch and has been a green light for some traders that silver is headed higher.

July 28, 2011

Gold at all-time high. Thanks, Washington!

Gold prices have surged to a record high thanks to concerns about the debt ceiling. But Europe's debt problems have been a factor too.

NEW YORK (CNNMoney) — I think I’ve figured out why this debt ceiling fiasco is being dragged out to the last possible minute.

The longer that politicians hold off on an agreement, the higher gold prices will go. And then the U.S. will unload its massive stake of gold to help offset some of the spending cuts!

Note to conspiracy theorists. I am JOKING. In fact, Treasury Secretary Tim Geithner ruled out the sale of any of the nation’s gold assets just two months ago.

But I am not kidding about rising gold prices. Back in mid-May, gold was trading at about $1,515 an ounce. Today, just a little more than a week until a possible U.S. default? Gold’s near $1,615 an ounce, after hitting a new intraday record of about $1,624 earlier Monday morning. With the unthinkable (no debt ceiling agreement before Aug. 2) now thinkable, gold is likely to keep climbing.

U.S. Treasury bonds won’t be as much of a safe haven if Standard & Poor’s and Moody’s cut the nation’s credit rating. The dollar? It will clearly suffer if there’s no deal.

And stocks? Hard to imagine how they’d go up next week if Uncle Sam defaults. Next week may not necessarily be as bad as the post-Lehman Brothers bankruptcy/failure to pass the bank bailout on the first go-around days. But it certainly won’t be pretty.

Gold, however, thrives in market and economic environments like this. Forget the oft-quoted (but not really forward-looking) VIX. Gold is the real fear gauge. So the question may be not whether gold goes up but by how much.

“The biggest factor driving gold is the debt ceiling news — or lack thereof. Nobody wants risk right now,” said David Beahm, vice president of economic research with Blanchard & Company Inc., a New Oreleans-based investing firm that specializes in tangible assets like gold and other precious metals.

Beahm said that if (or more hopefully when) there is an agreement to raise the debt limit, gold prices should pull back a bit because the dreaded cloud of “uncertainty” will finally be lifted.

But even if a deal is reached soon, gold could continue to climb higher once the euphoria about avoiding Default-ageddon subsides.

It’s important to remember that although politicians are trying to find a way to cut the deficit going forward, the immediate result of boosting our borrowing limit is more spending.

“Higher debt levels could potentially lead to further debasement of the U.S. dollar and gold is a play on a weaker currency,” said Ted Wright, director of portfolio management for Genworth Financial Asset Management in Encino, Calif.

“Adding more debt also adds an element of inflation to the picture and that could spark gold to go higher,” Wright said.

There’s also the possibility that the government could make the economy worse in the short-run if it decides to drastically pull back on spending over the next few years.

And that could mean that the Federal Reserve, which has already kept interest rates near zero since December 2008 and has injected trillions of dollars into the bond markets, may take more drastic steps to keep the economy afloat. The net result of such actions would probably be bad for the dollar and great for gold.

“If fiscal cuts are too large, the likelihood of a double dip recession in the US economy will increase. In turn, the spectre of additional monetary easing due to a weakening economy would support gold prices,” wrote commodity analysts at BofA Merrill Lynch in a report late last week.

Gold isn’t just rallying because of the problems in the U.S. either. Beahm still thinks gold could go higher because it’s not as if Europe’s debt problems are completely solved.

After all, gold is increasingly being viewed by traders as a currency alternative. With the dollar and euro both hobbled by severe fiscal problems, that’s another reason gold can, uh, shine. (Sorry. Couldn’t resist.)

It’s not just traders either. James Dailey, manager of the TEAM Asset Strategy Fund (TEAMX) in Harrisburg, Pa., pointed out that many emerging market economies need to buy gold because of trade imbalances.

“Gold would be in a bull market even if there weren’t concerns about sovereign debt. That’s just adding gasoline to a raging fire,” said Dailey. “China and Brazil, because of their trade surpluses, need to be voracious buyers of gold.”

With all that in mind, Wright said he thinks gold should march higher. But he said he has no clue how much more gold could run.

“I won’t even attempt to put a number on where gold goes. You need a light at the end of the tunnel on the debt ceiling and cutting the deficit,” he said.

Beahm agreed. But he said he thinks gold may have room to run until it gets close to the all-time inflation-adjusted highs for the metal from the early 1980s. And that’s between $2,200 and $2,300 an ounce.

Even though that may sound high — it’s another 40% higher from current levels — Beahm notes that people who have been doubting gold and calling it a bubble have been wrong for a while now.

“Sure, a lot of people have been saying they don’t want to buy gold at what they think are the highs,” he said. “But many have been saying that since gold was at $800 an ounce.”

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.

July 18, 2011

Gold Breaks $1,600

LONDON, Jul 18, 2011 (Dow Jones Commodities News via Comtex) —

Spot gold Monday broke the psychologically important $1,600 a troy ounce level in Europe, hitting a fresh record high of $1,600.64/oz.

The move comes amid heightened concerns over debt contagion in Europe and failing confidence in the U.S. economy, raising gold’s appeal as a hedge against insecurity.

At 0842 GMT, spot gold slipped back to trade at $1,599.69/oz, up 0.4% on the day.

-By Francesca Freeman, Dow Jones Newswires

(END) Dow Jones Newswires

07-18-11 0448ET

Copyright (c) 2011 Dow Jones & Company, Inc.

July 15, 2011

High-End Civil War; Clark, Gruber & Co.

        Austin Clark and his brother, Milton owned a successful wholesale dry goods business in Leavenworth, Kansas selling commodities such as sugar, tobacco, tea, fish and corn to the local population and to nearby Fort Leavenworth.

In January 1858 the Colorado gold rush brought great demand for goods such as were sold by the Clarks.  That March, the brothers decided to form a banking business partnership with Emanuel Gruber, also of Leavenworth.

Clark, Gruber & Co. prospered from the start.  Heavy trade in gold dust at both the bank and their wholesale operations created a need for a branch bank and mint in Colorado near the source of the gold.  It was not cost effective for the firm to ship gold dust to Philadelphia and wait sometimes up to three months for their funds.

The Clark, Gruber & Co. Bank and Mint opened in Denver, Colorado on July 20, 1860.  By October, the gold coins of Clark, Gruber & Co. had become the principal currency of Colorado.  The coins were well made and of proper weight and fineness.

During 1860 & 1861 Clark, Gruber & Co.  minting Colorado gold into coin. A $2.50, $5.00, $10.00 & $20.00 bearing either the name or image of Pikes Peak Were minted. The coins of 1861have turned out to be the rarest Civil War specimines minted.

In 1862, the firm started to assay the gold into small bars perhaps due to fiscal problems from the Civil War.  This ended minting operations in Colorado until 1906 when the Denver Mint opened for business.

Obverse of 1861 Clark, Gruber & Co. $2-1/2Reverse of 1861 Clark, Gruber & Co. $2-1/2

July 15, 2011

1933 Double Eagle Case Ready To Go To Trial

By Steve Roach-Coin World Staff | July 07, 2011 11:26 a.m.
Article first published in 2011-07-18, 1933 Double Eagle Trial section of Coin World

Click to Enlarge

This example is one of 10 1933 Saint-Gaudens gold double eagles whose disputed ownership is scheduled to decided in a federal jury trial starting July 7.n Images by Thomas Mulvaney courtesy of United States Mint.

The federal trial that should decide whether a family or the government owns 10 1933 Saint-Gaudens gold $20 double eagles will begin July 7 in Philadelphia.

The trial of Langbord v. U.S. Department of the Treasury et al, is scheduled to start at 9 a.m. It is anticipated that the trial will take two weeks. Judge Legrome D. Davis will preside over the case in Room 6A of the U.S. District Court, 601 Market Street in Philadelphia.

The legal dispute over the 10 1933 Saint-Gaudens gold $20 double eagles began in 2003 when Joan Langbord, the daughter of Philadelphia coin dealer Israel Switt, allegedly learned that a family safe deposit box contained the coins. She and her two sons, Roy and David, transferred the coins to the U.S. Mint for authentication in September 2004.

In May 2005, the Mint authenticated the coins but refused to return them or initiate forfeiture proceedings. The Langbords sued the government in December 2006. On July 28, 2009, Judge Davis ordered the government to file a forfeiture action, ruling that the coins were unlawfully seized. The government filed its amended complaint for forfeiture and declaratory judgment against the Langbords and the 10 coins on Nov. 10, 2010.

The government’s case attempts to create a framework for the 10 1933 double eagles as being embezzled or stolen from the Mint and wrongfully retained. The Langbords have argued that there was a window of time where people could legitimately obtain 1933 double eagles from the Mint cashier, and that some pieces may have left the Mint that way.

At the heart of the case is the problem of proving actions alleged to have taken place in the 1930s and 1940s. To this end, both sides have retained three experts each, including numismatic experts David Enders Tripp, who is testifying on behalf of the government, and Roger Burdette, the numismatic expert retained by the Langbords.

A landmark case

The case is important for several reasons. Most obvious is that the coins are extremely valuable. On July 30, 2002, at Sotheby’s in New York, more than 700 people watched as six different bidders fought for eight minutes until the 1933 Saint-Gaudens double eagle allegedly once owned by Egypt’s King Farouk sold for $7.59 million, plus $20 to officially monetize the coin. The buyer of that coin has remained anonymous.

If the Langbord coins are legal to own, the Professional Coin Grading Service Million Dollar Coin Club estimates that they would bring $2.5 to $3.5 million each at auction. Numismatic Guaranty Corp. posted a press release to its website on Nov. 3, 2009, announcing that it had graded the Langbord coins. One was graded Mint State 66, two were MS-65, six were graded MS-64 and a single one received an NGC UNC Details, Improperly Cleaned grade. The press release was removed from the NGC website several days later, adding further mystery.

In a larger sense, any court ruling that would question a collector’s right to own coins not issued as legal tender could jeopardize other legendary U.S. rarities like the 1913 Liberty Head 5-cent coin.

Final filings

While May and June were quiet months for filings, a June 24 order required the Langbord family to provide the court with two copies of its proposed trial exhibits before June 28.

On June 27, the Langbords filed a motion for leave to file a supplemental memorandum to allow the addition of Exhibits 200 to 207 to their exhibit list and prevent the government from offering several of Tripp’s expert appendices as summary charts.

The additional exhibits the Langbords seek to add fall under two categories.

The first includes two exhibits that should have been included in the Langbords’ original list and are not new to the government: Treasury Regulations issued under the Gold Reserve Act in January 1934 and an advertisement from a 1941 issue of The Numismatist for the auction of a 1933 double eagle.

The second category includes six additional documents that the Langbords are trying to introduce in response to exhibits produced by the government during discovery. These include three reports and a memorandum from a 1937 Secret Service investigation related to the Philadelphia Mint and “obsolete and inadequate” Mint record-keeping procedures in the 1930s, a document from April 1933 considering what constitutes “hoarding” and a 1934 memo to the Cashier of the Treasurer’s Office addressing gold and other coins being made available to “fill request[s] for a few pieces of new coins for special purposes.”

Perhaps more interesting are the Langbords’ objections to admitting all or parts of several of David Tripp’s summary charts introduced into evidence by the government.

Among them is Government Exhibit 75-B, titled a “Chronology of Relevant Dates regarding the History of 1933 Double Eagles, Including the 1944-1945 Secret Service Investigation and Reported Involvement of Israel Switt.” The Langbords characterize this chronology as being based on Secret Service reports that should not be admitted at trial. The Langbords also contend that it should not be admitted because it is written as an argument for the government’s position, and selectively characterizes (or as the Langbords argue, mischaracterizes) various presidential proclamations, laws and other directives while leaving out contradictory directives and letters.

In a June 23 e-mail to Coin World, Barry H. Berke, the attorney for the Langbord family, said that he fully expects that jury selection will begin July 7, with opening statements beginning on Friday, July 8 or Monday, July 11, while noting, “It’s always possible that a trial can have an unexpected delay.”

During the five years that this case has been in litigation, the possibility of a settlement has always loomed and could happen the day before trial is scheduled to start. ■

July 15, 2011

Gold Futures Add Over $23 To Close At New Record

Gold Tallies Seven-Session Gain of Nearly $103; Silver Up 7% On Day

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By Myra P. Saefong and Virginia Harrison, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures climbed more than $23 an ounce Wednesday to close at a record level as European debt contagion fears and the U.S. Federal Reserve’s hints at further economic stimulus fed investment demand.

“Inflation and deflation have now been slugging it out for over a decade, and physical gold remains an obvious, sensible refuge for private savings caught in the middle,” said Adrian Ash, head of research at Bullionault.com, an online service for gold-bullion trading and ownership.

“A European debt-default, plus QE3 in the States, would make the perfect storm yet again,” he said, referring to the potential for a third U.S. round of quantitative easing.

Gold for August delivery GC1Q -0.12%  added $23.20, or 1.5%, to $1,585.50 an ounce on the Comex division of the New York Mercantile Exchange.

Prices, which marked their highest nominal settlement price, have now tallied a gain of almost $103 during a winning streak that, so far, has spanned seven sessions.

untested means to stimulate growth if conditions deteriorate, including another round of asset purchases, dubbed QE3, Fed Chairman Ben Bernanke said Wednesday in remarks prepared for the House Financial Services Committee. Read more of Bernanke’s remarks.

Bernanke’s comments “hint at inevitable emergency techniques in the face of various treasury-auction situations and credit-rating events,” said Richard Hastings, a macro strategist at Global Hunter Securities. So, “the tone is growing darker and gold, of course, is lighting up against this ominous background.”

The gains among the metals were strongest for silver Wednesday, with the September contract SI1U +0.24%  adding $2.52, or 7.1%, to finish at $38.15 an ounce.

Futures prices haven‘t closed above $38 since May 31 and analysts said silver is likely playing catch up with gold’s strength.

Brien Lundin, editor of Gold Newsletter, said Bernanke’s statement, in response to questioning from Congressman Ron Paul, that gold is not money “reveals either intellectual ignorance or arrogance — or both.”

“The rise in gold since [Bernanke] has taken office is a direct result of his accommodative monetary policies, and to confirm or pretend ignorance of this fact shows investors that he’s really not concerned with how high gold may go in reaction to his policies,” Lundin said.