The following Q&A is excerpted from Clifford Mishler’s Coins: Questions & Answers: Q: Is collecting any type of coin a good investment? A: No! The hobby collector—be it of coins, back-scratchers, or Bavarian beer mugs—is occasionally persuaded to purchase by impulse or sentiment. Indulging frequent lapses into irrationality is part of the fun of maintaining a hobby. But the strictly … [Read More...]
After Rosemont Fiasco, US Mint Should Hold Lottery
Any time a numismatic writer begins with disclaimers, as I am now, you can be sure the content in one way or another will rile someone. Although I am a member of the Citizen’s Coinage Advisory Committee, the views expressed herein are my own concerning the 50th Anniversary Gold Kennedy Half Dollar and the US Mint’s decision in August to suspend retail sales in Philadelphia, Denver and Washington, D.C., as well as at the 2014 ANA World’s Fair of Money in Rosemont, Illinois.
Let’s start with the 50th Anniversary Gold Kennedy Half Dollar. I never liked the idea. The US Mint was not honoring the 35th President of the United States but a coin depicting a portrait of JFK in a minting process that initially accented and then smoothed over his hair above the ear, in response to a request by First Lady Jacqueline Kennedy. Many believe the obverse design is fetching and the reverse, by former mint engraver Frank Gasparro, noble. Well, yes– if your like the United States seal. (Gasparro made the “e pluribus unum” somewhat larger on the half dollar.)
This reprise by the Mint was going to be a hot-seller because of the tens of thousands of JKF Half Dollar hobbyists. My sole contribution to the project as a member of the CCAC was noting that the date on the obverse should be 1964-2014, rather than just 1964, to distinguish the new coin from the thousands of gold-plated 1964 half dollars still found on occasion in rolls.
I knew the new coin would be popular, but I never anticipated the groundswell perpetuated in part by NGC and PCGS labels, which helped create a mob scene at Rosemont, Ill., during the ANA show. I wasn’t there. But one of the best accounts of the coin-buying frenzy was written by Barry Stuppler under the title: “Kennedy Gold Coin Becomes a Numismatic Disaster.”
Stuppler made these points:
- 1000-person long lines with many there bused earlier by large retail dealers.
- Dealers paying $1250 over the Mint-listed price and then immediately slabbing them with NGC and PCGS for retail on their sites at $4000 to $5000 per coin.
- Police arriving in the middle of the night to arrest brawlers and quell bad behavior of buyers.
- Longer lines forming as the ANA show progressed until safety concerns became so pronounced that the US Mint suspended sales, concerned about safety.
Ungodly profits have a tendency to cause brawls and worse, especially when the buyers are not hobbyists but are bused in for the sole purpose of making a quick buck off of a gold half dollar. Profits were out of this world, especially the coin bought for $1240 and slabbed PR70DCAM by PCGS with the phrase “1st coin sold–Chicago”–on the label. That specimen went for $100,000. You can read all about that in Coin World by clicking here.
As viewers know, I often take a hard look at the slabbing companies and the questionable but nonetheless legitimate profits being made for what is printed on the label, be it “Early or First Release®,” “First Strike®,” or, in this case, “1st coin sold–Chicago.”
As Stuppler says in his article about the Kennedy gold half dollar, “You are not buying or investing in a rare coin; you are paying a very large premium for a label that has little to no chance of becoming part of a registry collection by PCGS or NGC. ”
The numismatic fiasco, or if you prefer Stuppler’s word “disaster,” will be repeated again as long as the US Mint produces desirable gold coins in new or enhanced styles with increasing safety concerns that (a) will require more security at shows to monitor bad behavior because of long lines forming in the middle of the night, (b) could eventually result in thefts of coins from the bourse, especially when hundreds of non-collectors are bused in, whose sole purpose is to make quick, easy money, and (c) could tarnish the good name and reputation of the US Mint, particularly if bad behavior leads to a death or felony crime.
Long lines form overnight in Rosemont, Illinois.
A more timely question is how, in particular, are these advance sales helping the hobby–which the US Mint truly wants to effect, creating new generations of collectors–if non-collectors, profit-seekers, corporate branders and more costly security-driven shows are the result?
As you might have anticipated, I have a solution that will further the hobby and bring thousands more real and prospective collectors to the US Mint website: a lottery.
Here’s how it would work:
- The Mint would order and collect from its production line the first 1000 manufactured coins for distribution to the public. This would be a real, honest-to-goodness early release and first strike. (For those who believe those corporate designations are spurious, see my latest post on that.)
- Hobbyists would have to visit the US Mint site to register free of charge for the lottery. Registrants would receive a lottery number and nickname (more on that later). This has the potential to bring thousands of new buyers to the government’s online retail shop.
- The Mint would create packaging specifying that the enclosed coin was a lottery winner, either creating its own label and slab or allowing holdering companies to process the coin for an undoubted new and exciting label, as long as the packaging wasn’t opened,
Oh, and what about the ANA? How will it profit from lottery now that alluring new gold coins will not be sold onsite by the Mint?
Imagine this: Mint officials on the first day of the show alongside a gargantuan screen with a digital roulette wheel spewing out 100 winning numbers and nicknames every hour and cameras on site capturing the sullen faces of dealers who had to advertise in advance in coin magazines asking winners to contact them if they want to make a killing.
Interesting piece, but both the Mint and the ANA have already ruled out any lotteries stating they would not be appropriate.
Well, Louis, the Mint and the ANA might reconsider the alternative … a disaster or fiasco … take your pick.
Michael,
Good post. This fiasco could be seen at least a year before when the RP Buffalo debuted at the same show last year, people in line took profits and the coin eventually became oversubscribed with little numismatic premium now because of the oversupply. Thanks to the sellout of the gold baseball coins earlier in the spring, the momentum carried forward and unleashed itself on this release leading to the unruly mobs and fisticuffs seen in Denver, Rosemont and elsewhere. I advised a few collector friends that this mint to demand coin was simply a investment train wreck just waiting to happen. Cooler heads at the ANA and at the Mint should’ve known what was coming based in last years show, the BHOF gold coins sellout, and the hyped up anticipation before ANA and pulled the plug on it, but obviously they wanted their cut of the label pie while they could get it hot… It’s a sad commentary on the state of the hobby and gives the entire numismatic community a black eye, not just the US Mint, the deep pocketed coin marketers and the ANA.
Dear Zaz,
Thank you for adding to the discussion of this very important matter. We appreciate your comments.
Michael
Well, a lottery? I’m not too sure about that route either. Perhaps it would have been to the Mint’s advantage if they had put a pre-ordering registration in place to determine just the amount of coins they would be producing as well as the items potential popularity.
What I found difficult to understand is the very element whereas none of these coins are numbered, and the certificate of authenticity even if numbered is not included in the slabbing process so why…? would anyone buy such a slabbed item attesting to this and for such inflated and extortionate-like prices?
I was also under the impression that everyone interested in purchasing one of these coins would simply have their request accommodated – it was also difficult to understand the frenzy which occurred – would one simply not just wait for their coin to be delivered after a successful & confirmed order..? is having a “first” of its kind so important that you’d stand in line all night or worse, pay someone to camp there just for this boasting right? A coin is not an iphone! (those you eventually discard)
Some kind of fair ordering process to legitimate collectors would have to be adopted if there is another coin which has as much appeal as this coin did and only if it has a limited mintage – a repeat of this price gouging doesn’t look good for either the Mint of the activity.
M Alexander–
Thank you so much for sharing your viewpoints and, once again, enriching the discussion. Your points are well taken.
Michael
Its stupid, just release them via the website and be done with it. Does everything have to be such a cluster f.
The lottery is a good idea, but with a major flaw. Since we all know that these gold coins such as the HOF coin have a way of going out the back door to big money dealers and showing up already graded the same day they are released, it would just stay the same. The rich just get richer thanks to all the criminals working in our government. The biggest issue for me and many others is how long we have to wait for our coins. I ordered my HOF coin in the first half hour and didn’t receive it for 101 days. This is what needs to be fixed. I had to buy a FIRST STRIKE because that is the coins that retains the best value and why I even ordered the coin in the first place. I ended up canceling 5 of the 10 coins I ordered.
I firmly believe that for the first 15-20 days of release the max amount of coins any household/person could buy should be 2-3. If someone wants more than they can just wait so that everyone gets a shot at getting their coin/coins in a decent time frame. And just bag the whole idea of show releases until the mint has sold that coin for at least 2 weeks.
Thank you, Jess. You are broadening the discussion. You also have the hobbyist in mind. Much appreciated. Michael
All this is great and good ideas…but to really fix this, we the consumer need to get a grip…STOP the craziness, stop thinking that a printed label actually has value. Start realizing that we’re dealing with modern coins and there will be more than one coin. Come to your senses as precious metals are at lows we never thought we’d see again and the coins are only worth so much. Stop trying to keep up with the Jones Family and think that because you got the “first coin sold in x-city” that you got something special… Lastly, stop hating on the mint… stop hating on the secondary market and stop hating on the profit making few. Start hating on yourself…because it’s you the consumer that has driven this great hobby into something it’s not, you have been driving it to a pure “quick buck”…and that is the problem.
Thank you, Troy. Sometimes it does seem crazy. Rosemont is a textbook case of wackiness eroding a noble hobby. Michael
In regards to the fist one sold in Chicago that was later re-sold by HSN to a collector for $100,000. I wonder if this transaction really happened or if it was just a publicity stunt to create more interest in the coin.
I’m sorry but I always thought for the most part grading coins was a waste of money and even a bigger waste of money when these grading companies started this first strike or early release stuff on the silver eagles, BHOF, gold Kennedys etc. For the most you learn through many books and discussions with other coin dealers what a particular coin would and should be graded with your own judgement. Now if you have a coin that is valuable and is authentic then I see a purpose in getting it graded. Or if you are not sure if it is authentic. Also, most of the coins from the mint (commemorative’s and non-bullion eagles) will grade MS69,PF69,MS70,PF70. and to be honest I rarely can tell the difference in some cases. But to me the biggest problem is the hype over a PF/MS70 over PF/MS 69. I really never quite understood why a coin 1 point below be so much less valuable at least with the modern issues.
All good comments. Keep them coming.
Good article as usual.
I do take issue with, “…and the questionable but nonetheless legitimate profits being made for what is printed on the label,…”.
Perhaps it’s a semantics thing, but ‘legitimate profits’ are certainly not the words that come to my thoughts.
Sorry to hear Mr. Stupler was so put out at the goings on of dealers at Rosemont. With all that competition for slabbed coins, maybe he was just out of sorts because he had nothing on which to add his premium-enhancing little Stupler Stickers to.
MTH,
Thanks for your comments. I included the phrase “legitimate profits” because consumers are more than willing to pay astronomical sums for what is on the label. As long as people are willing to pay, the companies can profit on that impulse, even though many numismatists (including me) question their purchases.
You’re right. It is semantics. I could have been clearer.
Michael
What the Rosemont show displayed, more than anything, is the tactics some dealers will use to circumvent any means intended to give a fair distribution of coins. I spoke to one dealer at the Long Beach (CA) show in September who told me they had used family and friends to obtain about 250 of the Kennedy gold coins.
Perhaps what could be a better solution would be to limit purchases to one per day from any customer (yes, I know this would be difficult); have a per-household limit for high-demand coins that stays in effect throughout the duration of the program; do not have any high-demand items at any show; hold all orders until 30 days after the first release date (this would give time to ‘validate’ the 1 per customer per day limit); limit cash (anonymous) transactions to low dollar items (annual proof sets, etc.).
These may not be practical or desirable, particularly in an age when ‘instant gratification’ takes too long, but it would certainly mitigate or eliminate many of the issues which surfaced with both the Baseball Hall of Fame and the Kennedy gold programs.
I would not relish a 30 day hold, but that would eliminate the ridiculous ‘First Strike’/’Early Release’ programs that most acknowledge are not even accurate designations – consider that probably 60,000 Kennedy gold coins would qualify for such designations – and a one per day limit would certainly impede the attempts of dealers.
Finally, the authorizing body – Congress – needs to be educated as to what production limits should be adopted, or if they should be in the legislation at all. At this writing, I believe only commemorative coins are subject to legislated limits and the mint director has discretion as to how many coins to produce for all other programs.
Outstanding comments and counsel, Jeff. You have hit on major points, all worthy of consideration. Thank you so much for enhancing the discussion.
Perhaps TPGs should be regulated a bit, given that their grading is often taken as fact, not opinion and that they create value by assigning those grades. If a TPG also has the power to create a ‘rarity’ by simply making a few designations via a different label or signature combination, then they are not providing a grading service at all.
i cant afford new gold coins, but i have a comment. how would a lottery prevent big dealers from abusing them? couldn’t they still pay people (especially people they know who have debit/credit cards) to buy the coins online and get a drawing? therefore, they would tilt the odds in their favor. i know its ultimately up to the consumer but what about the dealers? they share much of the blame. maybe collectors should demand the TPGs stop labeling common modern coins with first strike or whatever, and stop grading modern (8os on up) coins by number past MS or PF 68. i guess we can only vote by our pocket book, but that doesnt seem to do much these days
Joe S,
The lottery I proposed concerned registering, not buying, gold coins. In other words, everyone would get one chance to register at the US Mint site for a qualifying number. You’re right about voting with your pocketbook. That’s the best influence, always.
Thanks for sharing your thoughts!
Michael
Personally, I just don’t get it. I don’t own one of these coins, and won’t, simply because the price is out of my budget. That said, even if I was to get one, I would much prefer it to be in its original mint packaging. Sorry, but to me, the graded capsules just look ugly. Apparently, I’m in the minority, otherwise there wouldn’t be enough demand for graded and specially-labeled coins to cause such stupid things to have happened. As a dealer once commented to me about older coins…he buys for the coin, not for the label attached to it. I have trouble seeing long-term value in labels…but again…I may just be out of my mind…wouldn’t be the first time. 🙂
Dear Bob,
You’re not out of your mind; you’re a serious hobbyist who enjoys the art and science of numismatics. Thank you for your comment. Much appreciated.
Michael
I was stunned at first when I read your article! How dare you question the insane, greedy show at Rosemont? How dare you question the plastic gods about their magical labels that turn an ordinary coin into a rare coin? How dare you question the big dealers and their sleazy, objectionable tactics and marketing procedures?
You, sir, are a credit to the numismatic world and to your journalistic courage. It’s about time that the under-belly of shows such as the Rosemont are exposed, no matter what the stink factor is.
I would love to see a collector boycott of all TPGs that have the superfluous attributions of “early, or first strikes, grades of 70, etc. And to be included in my rant are the magical green, elliptical labels that seem to say “the TPG didn’t know how great this coin was”.
Keep up the great work, Michael. I will be following your future articles.
@Bob –
You are NOT out of your mind. The label bring nothing to the table as far as the coins value is concerned, other than identifying the grade of the coin. Beyond that, it is solely in the mind of the purchaser, based on the hype generated by the TPGs so they can profit at the expense of the lesser informed who believe that a graded, encapsulated coin is always worth more.
Dear RVNMedic6869,
I’m the director of a journalism school at Iowa State, and when I read your paragraph I let out a belly laugh that startled my staff! You made my day!!
Michael
i am fairly new to the coin collecting family. but i do know that total mintage numbers on any coin, can increase it’s value alot. i really wanted 1 of the new kennedys, they are a beautiful coin. but from the collector value they messed up big time,the large mintage #’s only decrease it’s value for me, cheaper to buy a $50 gold eagle..1/4 oz more gold and several hundreds of $$ less. maybe when all the hoopla subsides ant the coin sells for what is really worth(numismatically) speaking,i will get 1..tks
Thanks for your comment, Jeffrey. It’s difficult to tell with modern coins whether they will increase or decrease in value after the hoopla dies down. I’m suspecting the gold Kennedy will hold its value because of so many Kennedy coin collectors. But that’s just a guess and you should do whatever your collecting budget allows. Gold eagles are always a safe choice–again, only an opinion.