Wednesday, August 18, 2010

Coin Collectors Need to Speak Up About Sneaky Provision in Health Care Bill

It's been almost a month since ABC News exposed a hidden provision in the recent health care bill that passed earlier this year. Now coin collectors and dealers are being asked to speak up.

The Problem

Section 9006 of the Patient Protection and Affordable Care Act (aka Health Care Reform Bill) will cause a change in the Internal Revenue Code that will expand the scope of Form 1099.  In 2012 dealers will be required to report to the IRS via Form 1099 the purchases of all goods and services by small businesses and self-employed people that exceed $600 in a given year. Collectible coins and bullion fall under this new law.

In essence what this means is that every time you sell more than $600 in coins to a dealer within a single year, that dealer will need to report those transactions to the IRS on a form 1099.  This means that you will need to give that dealer not only your name and address, but also your social security number!

In this day and age of identity theft, I'm not real comfortable giving many of the dealers I meet and deal with at coin shows this information. Plus, all these new reporting requirements are going to increase a dealer's cost of doing business, especially some of the smaller dealers. This means higher prices on the coins we all buy.

If this provision of the healthcare bill goes into law, I for one will scale back on the number of dealers I do business with. I suppose this is good news for those dealers that make the cut, but it is bad news for the hobby overall. I'm also less likely to do business on the bourse floor of coin shows which means I probably won't go to shows as often.

But maybe we can still stop this sneaky provision!

The Solution

Rep. Dan Lungren (R-CA) and Sen. Mike Johanns (R-NE) have introduced bills to repeal this provision of the health care bill (H.R. 5141/S. 3578, Small Business Paperwork Mandate Elimination Act). Whether you are a Republican or a Democrat, you should contact your members of Congress and ask them to support the repeal of this provision. This is a non-partisan issue.

The American Numismatic Association (ANA) has posted sample letters on their website from the Industry Council for Tangible Assets that collectors and dealers can send to their Congressmen.

To get the contact information for your Congressmen, go to and

It literally took me less than 5 minutes to fire off emails to my Congressmen. So take a few minutes right now and send those letters.

Monday, August 09, 2010

Numismatic Bucket List: 3 Famous Coin Exhibits You Must See

Most of my encounters with great coins or collections have been at large coin shows such as Long Beach or the ANA's World's Fair of Money. They were temporary exhibits of individual rarities, or they were great collections in the process of being broken up as the coins were auctioned off one by one.

So I thought I'd put together a bucket list of 3 coin exhibits that I'd like to see before my time is up. This list is not in any particular order as my hope is to one day make it to all three of them.

#1 The Smithsonian National Numismatic Collection

The National Numismatic Collection at the Smithsonian Institution in Washington, D.C. has to be on any collector's must see list. With over 450,000 coins, medals, and decorations, and over a million pieces of paper currency, the collection is the largest in North America and one of the largest in the world.

The collection includes coins and currency from all over the world going back to the first coins produced about 2,700 years ago.  There is a large collection of ancient coins from Greece, as well as over 12,000 Russian coins from the collection of Willis DuPont.

The main part of the U.S. collection came from the U.S. Mint's Coin Cabinet that was started in 1838. It contained over 18,000 items when it was transferred to the Smithsonian in 1923. It contains some of the great rarities in U.S. numismatics, including a Brasher half doubloon, two 1933 $20 gold double eagles, the unique 1849 $20 gold double eagle, and the first gold nugget discovered in 1848 at Sutter's Mill that kicked off the California Gold Rush.

#2 The American Numismatic Society's Numismatic Collection

The numismatic collection of the American Numismatic Society (ANS) consists of around 800,000 coins, medals, and other numismatic related items. Like the Smithsonian's collection, the ANS numismatic collection also consists of coins from all over the world including one of the finest ancient coin cabinets.  Great rarities also abound in this collection.

While their headquarters usually has only small, frequently changing coin exhibits, there are larger exhibits of their items on display at the Federal Reserve Bank of New York (read my article on the FRBNY gold vault). It is the main exhibit at the FRBNY that is on my bucket list.

The main ANS exhibit at the FRBNY is called "Drachmas, Doubloons, and Dollars: The History of Money."  The exhibit is a well diversified display of coins from ancient and medieval times through U.S. coins of the 20th century. It also includes among other items, paper money from around the world.

This exhibit also has some great rarities on display, including the famous 1787 New York Brasher doubloon, an 1804 silver dollar, and 1 of only 4 existing Confederate 1861 silver half dollars.

#3 The American Numismatic Associations Money Museum

While the collection at the ANA's Money Museum is smaller than the other two with about 250,000 items, it is no less significant. Plus I like the focus on numismatic history which includes items like the first steam press at the Philadelphia Mint from 1836.

As a collector of U.S. gold coins, what really puts this museum on my bucket list is the Harry W. Bass Collection.  It is one of the finest collections ever assembled of U.S. gold coins, patterns, and paper money. Some of the highlights of the Bass Collection include a unique 1870-S $3 gold piece, 1 of the 4 existing 1804 proof eagle restrikes, and a complete type collection of U.S. gold coins from 1795 through 1933.

There's a Hole in My Bucket

These 3 coin exhibits make up my current bucket list, but visiting and checking these exhibits off my list may not be so simple. While each of these collection have some core items that will probably always be on display, their collections are so large that items being exhibited frequently change.

Major exhibits at the ANA's Money Museum change each and every year, and an ANS exhibit on counterfeit money, currently on display at the FRBNY, is only scheduled through the end of 2010.

So while I may be able to check off the more permanent coin exhibits from my list, the ever changing temporary displays may wind up changing my list from that of a bucket, into more of a bottom-less pit.

Friday, August 06, 2010

Insider's Guide to Buying and Selling Coins

Buying and Selling Coins via Auction

Learn how to never pay seller's fees again!

If you are like many coin collectors who feel that the best way to avoid getting fleeced is to buy and sell their coins at auction, then please read my article "Insider Tips to Buying and Selling Coins at Auction."

Buying and Selling High Value Rare Coins via Private Treaty

Learn why some dealer's commissions are much lower than others!

Finally, there is one area that is not often talked about and that is the sale of very rare and high value coins via private treaty.

For every rare 1856-O $20 gold double eagle that sells at auction, there is probably 3 or 4 others that have sold behind the scenes through private treaty sales. Most of my collection has been put together via private treaty sales.

Private treaty sales are a common way to sell high value assets where the market is limited. What makes this type of sale different from that with your local coin dealer is that there is no wholesaler involved, and many times the dealer doesn't risk any of their own capital since the buyer and the seller are determined ahead of time. Sometimes, the dealer may provide financing to the buyer for really high value coins not unlike getting a loan for a car or house. Like a local dealer, the difference in the purchase and selling price is the dealer's profit or commission.

The Tale of Two 1856-O Double Eagles

But not all dealers are the same and neither are their commissions. To give an idea of how great this disparity can be, I'll use the actual sales of two 1856-O double eagles both graded AU-55 as examples.

Near the end of 2007, one dealer bought an 1856-O for $525,000 and turned around and sold it to his client for $542,000.  His profit on the sale was $17,000. While that may sound like a lot of money, it represents just a little over 3% of the dealer's purchase price.

A couple of years earlier another dealer bought an 1856-O double eagle in the same grade and similar in appearance for a little over $431,000. Within just a few minutes, the dealer turned around and sold that coin to their client for $483,000. The profit was almost $52,000 representing about 12% of the dealer's purchase price.

In both cases, I consider the dealers to be trustworthy and have done business with both. The dealer charging the 12% commission did not hide that fact from their client. They just weren't willing to do the deal for a smaller fee.

Levi's Jeans versus the Armani Suit

So what makes one dealer charge so much more for the same coin? 

I don't know the exact answer to this question, but I do have an observation to share.

Ironically, the two dealers involved in the previous examples actually co-wrote a coin book together. And while their names may both be on the cover of the same book, their business models are a world apart.

One dealer, who I like to call the rare coin "expert," operates a solo business. Although he may have one employee, I'm not sure if he even has an office outside of his home. He definitely keeps his expenses very low and therefore can pass some of those savings on to his clients.

The other dealer, who I consider to be the rare coin "mega-marketer," operates out of a multi-story office building in the wealthiest city in America (based on average household income and median home prices), and has many "brokers" making sales calls each and every day to clients. His company also advertises frequently on television. Their expenses are obviously much higher than the first dealer, and that is reflected in their higher fees.

Patience versus Instant Gratification

So which dealer should you use? 

Well, if you want to buy a rare 1856-O double eagle fairly quickly and are willing to pay a higher commission, then you go with the "marketer" in the Armani suit.  However, if you have the patience to wait for the right coin (possibly even years), and you want to feel that you are also getting a good deal, you go with the coin "expert" in jeans.

Although you may never find yourself considering a half million dollar coin, it may be worth your while to take a second look at your dealer anyway. Does he have a high profile shop in an expensive mall?  Or is it off the beaten path in a location not easy to find? Sometimes the best deals are where you can't easily see them.