Sunday, September 24, 2006

Doubled-Die State Quarters! How can this be?

I must admit, the continuing discoveries of doubled-die state quarters had me baffled. The last time I checked there were almost 40 different doubled-die varieties with the Minnesota quarter alone. But I actually became baffled after the very first state quarter doubled-die was discovered. Why? Because as of 1997, the U.S. Mint changed the process with how they create working dies that was supposed to eliminate the possibility of doubled-dies. So how can there even be one doubled-die variety, let alone dozens? So I did some investigating.

Definition of Doubled-Die

A doubled-die is the doubling of some design element on the coin. If it’s on the obverse, you will see it referred to as a doubled-die obverse (DDO); on the reverse it’s a doubled-die reverse (DDR).

Here is an example from my Arlington Collection of Type 1 Double Eagles:




This is an 1859-S DDO $20 Double Eagle. The doubling of the design shows up best in the word LIBERTY.

Die Making Process

To understand how doubled-dies occurred prior to 1997, you must first understand a couple of basics about die making. Briefly, dies that are used to strike coins are made from hubs that contain a coin’s design elements in positive relief; that is the elements are raised on the hub just as they would be on the coin. The hub is pressed into the die (called hubbing) in order to transfer the design into a die in negative or incused relief; that is the elements are sunken into the die in a mirror image to that of the coin. In order to receive a sharp, detailed design, the die would have to be hubbed multiple times.

Generally, the die making process included creating a master hub which was used to create a master die. From the master die, multiple working hubs were created. These working hubs were used to create working dies and these dies were used to strike the coins. It was during these transfers from hub to die, or vice versa, that the hubbing process allowed for the possibility of doubled-dies. This usually occurred when the hub was misaligned with a die on subsequent hubbings.

Definition of Doubled-Date (aka Repunched Date, not to be confused with Doubled-Dies)

Another type of doubling occurred with repunched dates (RPD). In earlier times, dates were not part of the hub’s design, but were hand punched into each die used to strike the coins. Punching the date a second time with a misaligned punch could cause a doubled-date variety.

Again, here is an example from my Arlington Collection of Type 1 Double Eagles:




This is an 1854 Small Date Doubled-Date $20 Double Eagle. It’s hard to see in the photo, but the date was first punched too high and the second punch was positioned correctly. You can see the doubling at the tops of the 1, 5, and 4.

In the early 20th century, the dates were incorporated into the master dies so that RPDs became a thing of the past. This is why the 1955 Lincoln cent that shows a doubled-date occurred from a doubled-die.

Conclusion

So in 1997, the U.S. Mint changed the die making process into a single squeeze process. This meant that a die was made from a single squeeze from the hub versus the multiple squeezes it took in the past. Logically, what this should have done was eliminate the possibilities of doubled-dies.

So, how can we now have dozens of doubled-die state quarters? How is this possible? I had heard explanations that ranged from “more people are looking for errors than ever before” to “quality control at the mint has changed to where they don’t look for really minor errors anymore”. But these don’t answer the question. How are doubled-dies possible today with the “single squeeze” process? I’ve heard two scenarios that make sense to me.

The first scenario is the simplest. For some reason or other, the single squeeze process does not do the job the first time requiring an additional squeeze which is misaligned.

The second scenario that I’ve heard is due to the fact that the die blank is not actually flat but somewhat cone shaped with the center sticking out further than the edges. I’ve seen a picture of these die blanks and they look something like an artillery shell. If the die blank and hub are not positioned correctly, the die and hub shift into their correct positions from pressure after the initial contact between them. So the doubled design elements are from the initial contact just before the hub and die repositioned back into alignment.

If this second scenario is true, I would think that this would cause doubling to be restricted to the central areas of the design. This does seem to be the case with the Minnesota quarter varieties I’ve seen, but I’m a little more skeptical with the new doubled-die Oregon that has been discovered. In this case some of the doubling is away from the central area suggesting that the first scenario may be more likely.

Whatever the actual reason for the large numbers of doubled-dies now appearing, the only thing certain is that the new single squeeze process that was supposed to make doubled-dies extinct is doing just the opposite. It will be interesting to see how all these varieties affect the way people collect state quarters, and what types of premiums, if any, will appear on each variety.

And where will the Minnesota varieties stop? With a mintage of close to a ½ billion for the P and D mints combined, I’d be willing to bet it’s definitely less than that!

Recommended Reading:
The Official Red Book: A Guide Book of Washington & State Quarters (Official Red Book)

Cherrypickers' Guide to Rare Die Varieties of United States Coins: Half Dimes Through Dollars, Gold, and Commemoratives (Official Whitman Guidebook)

Thursday, September 21, 2006

SS Central America coins, ingots confiscated at Long Beach!!!

The $10 million Monaco Financial display at the Long Beach show last week was raided and six SSCA ingots and a 1857-S coin that were part of the display were siezed by US Marshals. Apparently there is a civil lawsuit between a company called International Deep Survey that did sonar work and Columbus-America Discovery Group, the company the discovered the treasure.

The scary part is that they are confiscating this stuff for the lawsuit even though the current owners have nothing to do with the dispute and the ingots and coin were not even purchased from Columbus-America. Five of the six ingots were on loan from collectors for the display. If this stuff isn't returned, what's that say for our hobby when any coin we buy could get seized because a few owners ago, someone owed someone else money. This would be the equivalent of all you people who have the Norweb pedigree on your coins and suddenly today US Marshals seize it because Mr and Mrs Norweb never paid off all their debts. Or any other pedigreed coin for that matter.

It also makes you think twice about participating in the PCGS or NGC registries if you have anything of value that is pedigreed. I may have to rethink my participation depending on what happens with the Long Beach stuff.

But I would not panic and crack out those pedigreed coins just yet. In all probability the lawyers for International Deep Survey probably did not do their homework and mistakenly thought that Tommy Thompson still owned the gold. Let's hope so anyway. If that is the case, then we should see the gold returned as soon as proper ownership is established. But I plan to play it safe until I actually see that this is the case. Better safe than sorry.

Recommended Reading:
America's Lost Treasure

A California Gold Rush history: Featuring the treasure from the S.S. Central America : a source book for the Gold Rush historian and numismatist

Ship of Gold in the Deep Blue Sea

Sunday, September 17, 2006

How do you calculate the value of the gold or silver in your coin (or WTC medallion)?

With the recent anniversary of September 11th, I like many others found myself reliving in my mind where I was on that day. The old anger quickly bubbling back to the surface as I thought about the horror of that day and all those people whose lives were cut short. So you can probably imagine the uncomfortable feeling I got when the ad came on for National Collector’s Mint’s new “2001-2006 World Trade Center Gold and Silver Clad Commemorative” medallion. This medallion has the WTC buildings that can pop up from the medallion and . . . I’m sure that they didn’t think about this . . . the buildings also can be knocked down. But, regardless of how distasteful I find this medallion to be (that’s a whole topic in itself), it got me to wondering about a part of their advertising.

According to their advertising, the medallion is clad in “24 KT gold” and “.999 Pure Silver!” The advertising leads one to believe that the gold and silver make this item more desirable. So how much is the gold and silver in the medallion worth? Or for that matter, how much is the gold and silver in any of our coins worth?

So I thought I would do a write-up to help everyone understand just how to determine the answers to these questions. There are two things that you need to determine this: weight and fineness.

If you just want to know the answer to how much the gold and silver is worth in the National Collector's Mint medallion, jump straight to the last paragraph. If you really want to know how to calculate the value yourself, read on.

Let’s start with fineness. Fineness is the measurement of the purity of the metal. One method of describing the fineness of gold is the karat (kt). This is the measurement of the proportion of gold in an alloy equal to 1/24 part of pure gold. For example, 12kt gold is 12/24 part of pure gold or 50% pure gold, 22kt gold is 11/12 part of pure gold or 91.7% pure gold, and 24kt is 100% pure gold (as in the new gold Buffalo bullion coin).

Free Coin Price Guides
But fineness can also be stated as parts per thousand or 1/1000. For example, you can see $20 double eagles in the 2007 Redbook listed as “.900 fine” which is equal to 90% pure gold. In the case of territorial or private gold, you will sometimes see “887 thous.” or “900 thous.” on the coin itself.

So, to bring the two methods together, 22kt gold is the same as being .917 fine or 91.7% pure gold. This is step one to determining the value.

Step 2 is to determine the weight of the metal in the coin. This is a little trickier to understand. There are two different methods of weights used depending on whether it’s a precious metal or a base metal. Precious metals (i.e. gold, silver, platinum) use Troy Weights where base metals (i.e. copper, nickel, etc) use Avoirdupois Weights, abbreviated avdp. Nickel can be a little trickier because in the early days of the mint, it was considered a precious metal and used the Troy system. Today nickel is considered a base metal and uses the Avoirdupois system.

The most important thing to keep in mind is that regardless of which method of weights is being used, the one measurement that is equal in both systems is the grain, abbreviated gr. (i.e. 1 troy grain = 1 avdp. grain) When looking at the daily spot prices of metals, you will find the precious metals quoted in troy ounces and the base metals per avdp. pound. So what you need to know is how many grains make up each of those units.

For troy weights, 1 pound (lb) = 12 ounces (oz) = 240 pennyweight (dwt) = 5760 grains (gr)

For avdp weights, 1 pound (lb) = 16 ounces (oz) = 256 drams (dr) = 7000 grains (gr)

So, now lets go through an example using a $1 Morgan which is listed in the 2007 Redbook as 412.5 grains, .900 silver, and .100 copper (copper being added to increase the hardness of the coin). Basically, this coin is 90% silver and 10% copper. Using these proportions on the grains, the coin is 371.25 grains of silver and 41.25 grains of copper. Using the troy weight system on the silver, this is equal to 0.773 oz. of pure silver. Using the avdp weight system on the copper, this is equal to 0.006 lb. of copper. Using spot prices from 9/8/2006 of $12.16 per oz. of silver and $3.56 per lb. of copper, the metal values of the morgan silver dollar would come to $9.40 of silver and $0.02 of copper in each mint state coin.

So how about a $20 double eagle? Again using the 9/8/2006 spot prices where gold is $609.60 per troy oz., the 2007 Redbook lists the double eagle as 516 grains, .900 gold, and .100 copper. But this is actually inaccurate because legislation allowed for up to 5% of the alloy to be silver, not just copper. So for this example, I will use .900 gold, .050 silver, and .050 copper.

After doing the appropriate conversions, the gold content comes to 0.9675 troy oz. of gold or $589.79 of gold. The silver content comes to 0.05375 troy oz. of silver or $0.65 of silver. The copper content comes to 0.0037 pounds or about $0.01 of copper.

Here are the equations I used for the $20 double eagle:
Gold equation: (516 x 0.9) / (5760/12) = 0.9675 troy oz.
Silver equation: (516 x 0.05) / (5760/12) = 0.05375 troy oz.
Copper equation: (516 x 0.05) / 7000 = .0037 lb

Now, just because you know how to calculate the value of the metals in your coins, don’t go running out to sell your 90% silver and expect to get these values. Selling these for melt is a whole different story. One dealer that I know of that buys 90% silver for melting told me that they basically just add up the face value of all the coins, and then multiply it by .715 which, in general, covers the wear on coins along with the dealer’s cut of the proceeds. When they sell it to the refiner, they actually get anywhere from 95% to 98% of the spot price depending on the quantity of the metal. But don’t think you can skip the middle man and go straight to the refiner. The minimums required to sell directly to them are pretty high.

So, how much is the gold and silver worth in that World Trade Center Commemorative “clad in 24 KT gold and .999 Pure Silver” being marketed by National Collector’s Mint for $29.95? Since both the gold and silver are basically pure with no alloy added, all we need is the weight of each metal. According to their website, both are 15 milligrams (mg) each of gold and silver. Oops, this needs a new conversion I didn’t cover above. How many mg per troy oz? Well, 1 mg is equal to approximately 0.0154 grains. So, multiply 0.0154 x 15 = 0.231 grains (yes, that’s less than ¼ of a single grain each of silver and gold!). Divide the grains by 480 (grains per troy ounce) = 0.00048 troy oz. each of silver and gold!!! That means there is 29 cents worth of gold and approximately ½ cent of silver!!! So, each medallion has less than 30 cents worth of precious metals in it!!! This is not a joke, do the math!!! The 15 mg of gold and silver came from their website, I did not make it up!!!

UPDATE SINCE THE ORIGINAL ARTICLE WAS POSTED!

Someone who read my original post sent me a real cool way to simplify weight conversions without having to do all the math. If you recall my WTC medallion example, it is clad in 15mg of 24k gold and 15mg of .999 fine silver. Since both metals are basically pure, all I had to do to calculate the weight of each metal was go to Google and type the following into the search box:

15 mg in troy oz

and out came the answer:

15 milligrams = 0.000482261199 troy oz

Multiply that by the price of gold and silver, add the two results together and guess what? It's still only about 30 cents worth of precious metal in the WTC thing!

Just keep in mind that if you do use this Google calculator, you still have to multiply any answer by the finess of the metal whose value you are calculating.

So consider my original post as an academic exercise in how to do the calculations yourself. I plan to use the Google calculator going forward.

Friday, September 08, 2006

First Strikes: A Marketing Gold Mine

I never paid much attention when the “First Strike” designation started popping up on slabs. But recently, I received a call from a dealer who offered me a chance to buy the new 24k Gold Buffalo in a “First Strike” holder with a grade of MS70. Although my collection (link) does not include “First Strike” coins, this made me curious to learn more about what “First Strike” really means. Was this some U.S. Mint designation? Boy was I surprised when I found out just what kind of marketing program the “First Strike” designation was.

I don’t know who first thought of the “First Strike” marketing concept, but I’d like to congratulate the individual who did. Good job! I wish I had thought of it first!

Do you remember when all shampoo bottles had the directions “lather, rinse, then repeat”? Do you think some doctor discovered our hair or scalp was better off if we washed it twice? No, some marketer figured out that if you changed the directions to add “then repeat”, people would do it and you would sell twice as much shampoo to those people. Maybe this marketer moved on to one of the third party grading services.

So what exactly is a “First Strike?”

In general, a third party grading service gives a “First Strike” designation to those coins packaged for shipment from the U.S. Mint within a month of their official release date. For Mint State coins, the cutoff is basically January 31 of each year. Proof coins are based on the announced release date. All coins must be submitted with their original Mint shipment packaging with accompanying documents indicating they were packaged for shipment from the U.S. Mint within the first month of their official release.

The key words here are that the coins must have been packaged for shipment from the U.S. Mint within the first month of their official release. It has nothing to do with the date of manufacture other than they obviously were manufactured before they were packaged and shipped.

So, the “First Strike” designation is a marketing program based on the principle that collectors have always sought out coins of special significance, and one way that a coin can be distinguished from another is by the date that it was struck. The perception being given by the “First Strike” designation is that somehow these coins were struck first, or at least early, in production. In general, I would agree with this statement. The problem is that, during production, the U.S. Mint does not keep track of the order in which they mint coins. Also, the U.S. Mint begins production several weeks before the coins are officially released. By the release dates for the 2005 and 2006 bullion coins, the U.S. Mint had already minted approximately 50% of the total projected mintage for these coins. The dates on shipping labels and packing slips do not necessarily correlate to the date of manufacture. This is all clearly stated on the U.S. Mint’s website under Consumer Awareness.

I have also heard the argument that the “First Strike” designation somehow implies that the strike of the earlier coins is somehow better that those struck later. This might be true if the Mint only used one set of dies during production. Since dies wear out and are replaced, this argument goes out the window. Also, a coin graded First Strike MS69 is no better than a non-First Strike coin graded MS69, regardless of what day it was minted.

But there is no arguing the fact that coins with the “First Strike” designation are commanding a premium over their non-designated counterparts. So there is demand for this designation whether you think it makes sense or not. Third party grading services are profit oriented businesses and not charities set up to benefit the hobby. If there is a demand for this designation from collectors, then it is in their interest to supply that demand. Whether or not this demand carries on into the future is something that we will have to wait and see.

For now, the “First Strike” designation has been a successful marketing campaign. So successful, in fact, that one third party grading service has come up with a another designation, “First Day of Release”. Apparently the coins were packaged and the shipping documents created on the first day of release. It doesn’t matter what day the coins were actually minted, only when they were packaged for shipment. One can only imaging what they may think of next.

So, if you get a call from a dealer offering you a “First Strike” 2006 24k Gold Buffalo graded MS70, you now know that that coin may be any one of the coins minted before the official release date that possibly represent 50% of the total mintage based upon the U.S. Mint’s projected sales numbers, plus any others minted and shipped within the first month after the release date. Do you know how many that is? . . . Neither do I. . . . But I do have to fess up, I may not have bought a “First Strike” coin, but I do still rinse and repeat.

And now, a related tale for you Philatelists . . .

Are any of you stamp collectors that collect First Day Covers? . . . Then you might be interested in this story.

When I was a kid, I loved collecting First Day Covers. I would always read the stamp column in my local newspaper watching for the next stamp to come out. I would go to my local stamp dealer to buy an Artcraft envelope for the new stamp, send it to the Postmaster of the city where the stamp was being issued along with coins, to cover the postage, taped to a piece of paper. I then waited for my First Day Cover to arrive. All this had to be done prior to the first day of issue so that your cover would be there on the first day to be cancelled.

Then the rules changed. Apparently, the Post Office no longer wanted to affix the stamps and cancel them all on that one day. So they changed the rules so that you had to wait until after the first day of issue, go buy the stamp yourself, affix it to the envelope, then mail it to the Postmaster in the city where the stamp had already been issued! Basically the covers were being backdated as First Day of Issue! What’s the point of having a First Day Cover if it was not really cancelled on the first day of issue?

So I quit collecting stamps and switched over to coins where things like this could never happen, or so I thought. . . . First Strike! First Day of Release! . . . Hmm! . . . I hear the third most collected item after coins and stamps is postcards. . . . Postcards could be cool! They don’t have any third party grading services for postcards do they?

Tuesday, September 05, 2006

Shipwreck Gold: Would it have slabbed if it were not from a famous shipwreck?

Would it have slabbed if it were not from a famous shipwreck? This question was asked of me after posting an image of a double eagle recovered from the SS Republic on a NGC message board. Link to post

At the 2000 ANA World's Fair of Money in Philadelphia, Bob Evans, Chief Scientist and Curator of the SS Central America treasure, had just finished giving a presentation on the SS Central America when a gentleman asked, "Why do these coins get graded when coins from other shipwrecks get returned as no grades?"

So the question is not new to the SS Republic shipwreck. As far as Type 1 Double Eagles (1850-1866) are concerned, it also applies to the SS Yankee Blade, SS Brother Jonathan, and SS Central America shipwrecks. Why do gold coins from the SS Yankee Blade get returned as no grades when most of the coins from the other three wrecks get graded?

As Bob Evans answered at the presentation in 2000, "the coins speak for themselves." My understanding is that the coins really get put into two groups, those that are "numismatic" and those that show a "shipwreck effect". In other words, numismatic coins show no signs of having come from a shipwreck. The shipwreck effect coins, on the other hand, show signs of having been in a shipwreck.

Gold coins from the SS Central America, SS Brother Jonathan, and SS Republic were mostly graded while, as far as I know, no gold coin from the SS Yankee Blade has been graded and attributed to the shipwreck. The reason is that SS Yankee Blade coins show salt water effect in the form of cracks on the surface of the coin. So this is one shipwreck that is missing from my collection. (see The Arlington Collection of Shipwreck Gold )

So the answer to the question is that the gold coins (this does not include the silver) from the SS Central America, SS Brother Jonathan, and SS Republic shipwrecks, if looked at raw, could not be distinguished from a similar non-shipwreck coin and therefore they get graded.

The reason for this is most likely due to the underwater environment of the shipwrecks. Although gold is a soft metal, it is virtually indestructable and chemically inert. Basically, that means that few things will react with gold in a harmful way.

However, one of the chemicals that does react with gold is chlorine. Chlorine causes gold to corrode under acidic conditions. Seawater is loaded with chlorine. So the key to the condition of the coins is the level of acidity at the site.

My understanding is that shallower seawater sites, with a mostly sand or silica seabed, have a highly acidic environment. This acidic environment, combined with a more turbulent environment, causes damage to the gold coins in the form of corrosion and/or "sandblasting" from the surrounding sand. This apparently was the case with the SS Yankee Blade and other shallow water shipwrecks in the past.

With the deep water shipwrecks, the surrounding environment is not one of silica, but one of calcium carbonate, also known as lime. Apparently, this is a result of thousands of years of shells falling and settling on the bottom of the ocean. This is an alkaline substance that would counter acidic conditions. So the coins resting in these deep water shipwrecks were preserved instead of corroded.

Unfortunately, the same can't be said for silver coins. The silver coins from the SS Central America and SS Republic that I have owned were all not graded. All of them showed shipwreck effect in the form of saltwater etching on the surfaces or corrosion.

In general, shipwreck gold coins are actually in better condition than non-shipwreck coins, especially Mint State coins. If you had unlimited resources and wanted to create a collection of Type 1 Double Eagles that were all the finest known or even condition census for each date and mint, you would have no choice but to include coins from these shipwrecks. 1857-S coins have been graded as high as MS67 by PCGS! As for the SS Republic, an 1865 Philadelphia graded MS66* (star designation) by NGC!

Here is a picture of one of the shipwreck coins that I own. You be the judge!

Click to Enlarge


Recommended Reading:

Treasure Ship: The Legend And Legacy of the S.S. Brother Jonathan

Lost Gold of the Republic: The Remarkable Quest for the Greatest Shipwreck Treasure of the Civil War Era

Ship of Gold in the Deep Blue Sea

The treasure ship S.S. Brother Jonathan: Her life and loss, 1850-1865

America's Lost Treasure

Agony and Death on a Gold Rush Steamer: The Disastrous Sinking of the Side-Wheeler Yankee Blade