by Adam Crum – Monaco Rare Coins

Two years ago‚ a company that performs financial research and analysis on commercial and government entities and has a 40% share in the world credit rating market warned the United States government that it risked losing its triple A rating if it didn’t get its finances under control. That company was Moody’s and the warning was motivated by the future of healthcare and Social Security costs and long before the present financial upheaval.

Does our government deserve a triple A credit rating?

While the U.S. government has had a triple A credit rating since 1917‚ there are those who feel that if the United States were any other country‚ its coveted top-tier credit rating might have been stripped away by now.

“For too long‚ the U.S. has delayed making the tough but necessary choices needed to reverse its deteriorating financial condition‚” David Walker‚ chief executive of the Peter G. Peterson Foundation and a former comptroller general of the United States‚ recently wrote in the Financial Times. “One could even argue that our government does not deserve a AAA credit rating based on our current financial condition‚ structural fiscal imbalances and political stalemate.”

“The triple-A rating is undeserved‚” suggests Peter Morici‚ a professor of international business at the University of Maryland. “If Washington were a state capitol‚ we would have lost the AAA with the current budget.”

Here are just some of the reasons Mr. Walker and Professor Morici would make such statements:

* Equal to about 80 percent of total output of the United States‚ the Treasury Department recently reported that the total U.S. government debt is $11‚270‚547‚397‚564.64.
* With the U.S. relying on foreign buyers to keep its borrowing costs low‚ China and Japan alone hold more than $1.4 trillion of U.S. Treasury bonds as of March‚ according to U.S. Treasury data. A sovereign downgrade would certainly alarm at least some of those buyers.
* The Fed is now burdened by the same kind of toxic paper that has been plaguing private U.S. banks for several quarters.
* Leveraging its capital 48-to-1‚ Fed banks are holding total capital of just $45.7 billion against the sum total of $2.19 trillion in assets. Two years ago the ratio was only 27-to-1.
* The government’s $787 billion economic stimulus package and $700 billion bank bailout fund have strained the country’s resources and the jury is still out as to whether any of this will actually make a difference.
* The International Monetary Fund expects the debt-to-GDP ratio to hit 97.5 percent next year. Standard & Poor reaffirmed its AAA sovereign rating for the United States in January; however‚ the ratings agency also cautioned that the hundreds of billions of dollars committed to bailing out the banking sector would lead to a “noticeable deterioration in the U.S. fiscal profile.”
* The Chinese premier and the head of the People’s Bank of China have expressed concern over America’s long-term credit worthiness and the value of the dollar. China has also called for the creation of a new international reserve currency to replace the U.S. dollar.
* With a loss of 5.7 million jobs since December 2007‚ the number of workers collecting unemployment checks increased to a record of more than 6.6 million in the week ending May 9‚ the highest level of unemployment since 1983.
* The present economic situation in the U.S. is taking a huge chunk out of tax income‚ reported to be down 34%.
* Manufacturing in the U.S. Mid-Atlantic area shrank in May for the eighth straight month.
* States like California have been hit hard by the credit crunch and are struggling to arrange backing for municipal bonds and short-term debt.

(more…)

News and Analysis regarding scarce coins, coin markets, and the coin collecting community #19

A Weekly Column by Greg Reynolds

This week, I wish to focus upon the topic of viewing Great Rarities. This topic relates to several key concepts:

(1) To understand and appreciate Great Rarities, there is a need to see them.

(2) Viewing Great Rarities is important for coin enthusiasts, especially for those who cannot afford them. At a major art museum, most of the people viewing paintings cannot afford to buy such paintings or commensurable ones. They may still learn a great deal by seeing and interpreting works of art. Coin enthusiasts can and should learn about coins and examining Great Rarities is part of a learning process.

(3) Of course, I realize that many coin enthusiasts do not have the time or the resources to travel to view many Great Rarities. I hope that this is a reason, among other reasons, why coin enthusiasts read my columns and articles. Indeed, I hope that readers care about my interpretations of important coins, as I have devoted innumerable hours to viewing, analyzing, and writing about Great Rarities.

(4) I strongly maintain that, to be qualified to analyze coins, there is a need to carefully examine them. Further, to become an expert, there is a need to direct questions to experts, and I often do so. Certainly, viewing coins and asking questions are not the only criteria to qualify someone to analyze Great Rarities. These activities, though, are crucial to attaining knowledge in the field of rare U.S. coins.

(5) Though digital images of coins are sometimes wonderful, and imaging technology, along with its implementations, continues to improve, there is a great deal about many coins that cannot be seen in pictures. It is necessary to view actual coins to understand them. This will always be true.

(6) My comments below regarding many of the Great Rarities that I have seen are not meant to be boastful. Rather, such discussions relate to my qualifications and I wish to share my enthusiasm for Great Rarities with others.

Why discuss the topic of viewing Great Rarities now? While viewing the 1856-O Double Eagle ($20 gold coin) that Heritage will auction in Long Beach, I thought about the number of 1856-O Double Eagles that I have personally examined and then about some recent open discussions among coin enthusiasts regarding the “coolest” coins that each has held in his or her hands. I have seen at least seven different 1856-O Double Eagles.

I. 1856-O $20 Gold Coins

In the official auction for the Sept. Long Beach (CA) Expo, Heritage will offer a recently discovered 1856-O Double Eagle that is NGC graded “EF-45+.” In regards to how circulated, early New Orleans Mint Double Eagles are typically graded by the NGC, the “45+” grade is fair. I must admit, though, that there are several 1856-O Double Eagles that I like more than this one. Even so, this coin is sharply struck for the 1856-O issue and has minimal noticeable contact marks. It may not be easy to find a better one. All 1856-O Double Eagles, which I have seen, have been cleaned and/or dipped at one time or another. Type One (1850-66) Double Eagles have surged in popularity over the last ten years, and prices for rare dates of this type rose dramatically from 2003 to 2008.

“The two key collectible Type One Double Eagles are the 1854-O and the 1856-O. These have appreciated in value more than virtually any other United States gold coin in the last five to seven years,” declared Doug Winter in Oct. 2008.

In 2007, I wrote an article about 1856-O Double Eagles and I then focused upon a PCGS certified 1856-O that B&M auctioned in March 2007. On July 31, 2009, Heritage sold two 1856-O Double Eagles in one Platinum Night event. One of the two very much appealed to me. It is PCGS certified EF-45 and has a CAC sticker of approval. It has nice color and a great overall look. It scores particularly high in the category of originality.

Just weeks earlier, also in Los Angeles County, Heritage sold the special striking, ‘Specimen-63′ 1856-O in the official auction of the Spring 2009 Long Beach Expo. For years, I had dreamed about viewing that coin, and I was not disappointed. It is truly astounding. It is perhaps the most memorable and important of all New Orleans Mint gold coins. (more…)

Veteran numismatists may remember the great rush on silver dollars that occurred during the early 1960s. For generations these coins had laid undisturbed in Treasury and Federal Reserve vaults, serving primarily as a backing for silver certificates. When, in 1935, Congress changed the written obligation appearing on silver certificates so that the notes could be redeemed “in silver” instead of in “silver dollars,” production of these coins ceased. Only in the far western states were silver dollars used in daily commerce, and even collectors showed little interest in Morgan and Peace Dollars.

Starting about 1958, however, the number of silver dollars being withdrawn from government vaults increased annually, reaching a fever pitch in 1963-64. In November 1962, during an annual distribution, it was discovered that there were some rare and valuable dates, still sealed in their original mint bags, all in uncirculated condition, among the millions of dollar coins still in the Treasury vaults.

Following the discovery of previously scarce dates. Collectors/investors/dealers lined up to purchase them in $1,000 bags, trading silver certificates for the coins.
Lines stretching for blocks formed around the Treasury Department headquarters in Washington, as speculators bought up silver certificates to redeem them for $1000 bags of “cartwheels.”  In March of 1964 the Treasury, after having discovered many bags of scarce CC dollars, stopped redeeming silver certificates with silver dollars, offering bars or granules in their place. After June 24, 1968 the redemption of silver certificates in silver ceased altogether, though the notes remain legal tender to this day.

The Treasury then inventoried its remaining stock of dollar coins, and found approximately 3,000 bags containing 3 million coins. Many of the remaining coins were Carson City mint dollars, which even then carried a premium. These coins were turned over to The General Services Administration (GSA) for sorting , marketing and disposal at a profit to the government. The GSA sorted the coins into several categories, the most populous of which was the “Uncirculated CC” and in a series of sales lasting from  to 1973 to 1980, the dollar hoard was dispersed via auction and fixed prices.

1971 Video of Transportation, and Sorting of GSA Dollar Hoard

Five sales were conducted in 1973 and 1974, but sales were poor, and the results unspectacular. There was much complaining among the coin buying public, many stating that the United States Government should not be in the “coin business”, especially considering that the government had spent little more than a dollar to mint and store each coin. After these sales, more than a million coins were still left unsold.

This remaining hoard, mostly Morgan Dollars minted at Carson City (CC) sat  until 1979-1980, where, amidst an extraordinarily volatile precious metals market, the remaining coins were sold under chaotic conditions. The GSA, having published minimum bids in November 1979, announced on January 2, 1980, that those minimum bids were no longer valid, and that prospective bidders would have to “call in” to a toll free number to get current minimum bids. Then, on February 21, 13 days after the bidding process officially began, the maximum number of coins per bidder was changed from 500 to 35. Many bidders, under these confusing conditions, ended up with no coins at all. Complaints again flooded in to Congress, but the damage had already been done, and the last silver dollars held by the United States Treasury were gone.Sealed in rigid plastic holders and boxed with a message from then President Richard M. Nixon, these silver dollars account for most of the mint state CC Morgans known today.