 |
|
The source of the best business, financial and legal news |
|
|
||||
|
||||
|
||||
|
|
|
|
|
 | |
| |
 |
Business Informations |
|
|
|
New U.S. Mint Coins a Golden Opportunity
In April, the U.S. Mint revealed plans to strike in early 2006 new .9999 bullion coins to go after the growing world market for .9999 fine (24-karat) gold coins. Studies show that pure gold coins claim 60% of the world's gold bullion coin market, which is some $2.4 billion annually. The Royal Canadian Mint's Maple Leafs hold the number one spot for pure gold coins. However, problems with Maple Leafs have surfaced. If the Mint avoids the problems that have developed with Gold Maple Leafs, it has a golden opportunity to grab an even bigger share of the gold bullion coin market. The U.S. Mint's American Gold Eagles are the best selling 22-karat gold coins in the world. Despite being the world's best-selling 24-karat gold coins, 1-oz Maple Leafs' design and packaging leave them susceptible to damage. As a result, Gold Maple Leafs have fallen in disfavor among U.S. gold bullion coin investors. Indications are that gold bullion coin investors worldwide have the same frustrations with 1-oz Gold Maple Leafs. It is nearly impossible to remove, inspect, and put 1-oz Gold Maple Leafs back in their tubes without scratching them, no matter how carefully done. Gold Maple Leafs have smooth, clear fields around Queen Elizabeth's likeness and sharp milled edges. As the coins are put back in their tubes, the edges scratch the fields--and sometimes the Queen's raised image. And, Heaven forbid that a 1-oz Gold Maple Leaf is dropped on a floor or even a hard tabletop. But, most of the damage is done when investors handle the coins. If Gold Maple Leafs are handled roughly, as investors are used to handling Krugerrands and Gold Eagles, Gold Maple Leafs are easily damaged. Consequently, many badly damaged Gold Maple Leafs have come back into the secondary market. Until a few years ago, Gold Eagles and Maple Leafs sold at the same markups over spot. But, as Maple Leafs, which investors have bought since 1979, started coming into the secondary market, problems surfaced. Now, to keep investors in the U.S. market buying Maple Leafs, the Royal Canadian Mint has to offer new (current year) Gold Maple Leafs at a half-a-percent below Gold Eagle prices. Damaged 1-oz Gold Maple Leafs are such a problem that one important secondary market maker stopped dealing in the coins for a while. The head trader said he did not have time to discuss with buyers and sellers the conditions of the coins. Further, he said his staff did not have time to inspect each coin and classify it as to the amount of damage. It is commonplace for sellers to say the coins are in "perfect condition." Yet when Gold Maple Leafs arrive, they often are badly scratched or rim nicked. Another major bullion dealer (perhaps the nation's largest) currently buys back "perfect" Gold Maple leafs from established dealers at a little over spot, which means investors receive less than spot if their dealers unload to this firm. For scratched or damaged coins, this firm pays less than spot, which enables the firm to send the coins to a refinery at a profit if the firm has no buyers for Gold Maple Leafs. The secondary dealer returned to trading Gold Maple Leafs but buys all them only at prices that enable him to profitably melt the coins if they are really beat up. As noted, because of the problem with secondary market Gold Maple Leafs, the Royal Canadian Mint has to price Gold Maple Leafs below Gold Eagles to entice investors to take Gold Maple Leafs in the U.S. market. Luckily--the free market being what it is--there are dealers who will take the time to evaluate Gold Maple Leafs and pay more for the ones in better condition. Still, the spread (the difference between what an investor can buy and sell for at any moment) on "perfect" Gold Maple Leafs is about $4 wider than on Gold Eagles. However, the U.S. Mint's new 24-karat gold coins need not be problem coins. For example, the 1-oz Austrian Philharmonics and The Perth Mint's 1-oz coins are .9999 fine. Yet, these coins are not easily damaged during normal handling because of their designs and/or their packaging. Philharmonics come ten to a tube and can be taken out and put back in their tubes without scratching. The Perth Mint coins come individually encapsulated in hard plastic capsules. As long as Perth Mint coins remain in their capsules, they maintain their perfect conditions. Hopefully, the U.S. Mint knows of the problems with Gold Maple Leafs and will design its new .9999 fine coins and their packaging so that the coins are not easily scratched or damaged. If the Mint opts to go with packaging its new coins in tubes, as it does Gold Eagles and as Philharmonics are packaged, then the Mint needs to avoid milled edges. Although Gold Eagles have milled edges, old U.S. gold coins ($20 Libs and St. Gaudens) were minted with lettering on the edges. So, lettering is not new to the U.S. Mint. With lettering, the edges can be smooth, making the coins less likely to scratch other coins in handling. Philharmonics, which are not prone to damage, have lettering on their edges. [Over the centuries, mints learned to design gold coins to guard against "shaving," a process by which a small amount of metal is "shaved" from the edges. Milled edges that have been shaved are clearly detectible. Light lettering on the edges solves the problem as well. If no lettering can be seen on coins that are known to have been minted with lettering, then the coins have been shaved and no longer have their original gold content.] As do Maple Leafs, Perth Mint .9999 fine gold coins have milled edges and carry a likeness of Queen Elizabeth II on the obverse (front). However, to protect its coins from damage, The Perth Mint encapsulates them in plastic capsules. When Perth Mint bullion coins are removed from their capsules and put in tubes, the coins are susceptible to scratching as are Maple Leafs. In going after a piece of the $2.4 billion .9999 fine gold bullion coin market, the Mint needs to consider the mindset of bullion coin investors. Bullion coin investors seek alternatives to paper money; they are not coin collectors. Bullion coin investors prefer coins packaged so that they can be easily stored and secured. This means the Mint should package the coins twenty to a tube, which has become--primarily because of Gold Eagles--the preferred method. Five tubes conveniently total one hundred coins. Further, the tubes should be made of the same durable plastic from which Gold Eagle tubes are made. Hard plastic tubes, such as those used for Philharmonics, can and do break when dropped. Gold Eagle tubes, on the other hand, are virtually indestructible. For protection against "shaving," the Mint should design its new coins with lettered edges. Lettered edges would make the coins much less susceptible to scratching. The Mint is going after the bullion coin market, and bullion investors like to feel and heft their coins. Packaging the coins in tubes enables investors to more easily inspect their coins. Collectors, on the other hand, want their coins in as pristine condition as possible. Although capsules are excellent for protecting collector coins, coins individually packaged in capsules require more space for storage. The other aspect that the Mint has to consider is the coin's theme. The Mint should make the theme something uniquely American, as it did with its American Eagles coins. For the Gold Eagles, the Mint chose a slimmed-down rendition of Augustus Saint-Gaudens' famed Standing Liberty, which he created in 1907 to grace a new Double Eagle ($20 gold coin). Nearly one hundred years later, the Saint Gaudens, which the coin is now called, is viewed as the most beautiful coin produced by the U.S. Mint. For its Silver Eagles, the Mint chose A. A. Weinman's Walking Liberty design, which was used on half-dollars 1916-1947. Walking Liberty halves are among the most popular silver coins ever turned out by the U.S. Mint. Judging by the success of the Silver Eagles program (more than 128 million sold since their inception), putting the Walking Liberty on Silver Eagles was the right move. Some may argue that the Standing Liberty and the Walking Liberty designs are being used in the American Eagles program, and, therefore, the Mint should go onto another design. However, the Standing Liberty and the Walking Liberty are immediately identified as American by the world's bullion coin buyers. Besides, is not Miss Liberty as much our nation's icon as is the eagle? If the U.S. Mint avoids the problems that have surfaced with Gold Maple Leafs and offers gold bullion coin investors a strong alternative, then it has a golden opportunity to capture a big share of the .9999 fine gold bullion market. With the right planning, the Mint could shake the Maple Leaf's hold on the .9999 bullion coin market. Bill Haynes heads CMI Gold & Silver, one of the nation's oldest precious metals dealers. See his website at www.cmi-gold-silver.com.
MORE RESOURCES:
investing - Google News |
|
|
|
RELATED ARTICLES
Planning Starts with the Basics When developing a plan for your finances, the toughest question often is: "Where do I begin?" Before investing in stocks and bonds or buying life insurance, before implementing any change or making any decisions, you first need to analyze and understand your entire financial picture. Two documents allow you to do just that. Beginning Investor - Investment Terms Over the course of the past two months, readers have brought to my attention that there is a steep learning curve for investment terminology. That's why the focus of this month's Beginning Investor column will be investment terminology. Expand Your Pool of Investors for Your Company If you own a company that sells complicated products and you want more investors, consider having topics on your web site that discuss the background needed to understand your products and your company. For example, if your company specializes in producing and researching monoclonal antibodies, post articles discussing exactly what monoclonal antibodies are, how they are produced and what research your company is engaged in. Real Estate Clubs Hot Among Investors Six or seven years ago, the stock market was booming, Internet companies that no one had ever heard of were valued at billions of dollars, and anyone and everyone was investing their money in tech stocks. Then, in 2000, the stock market crashed, the Internet companies closed their doors, investors lost trillions of dollars, and life went back to normal, more or less. Getting Started Investing is Often the Hardest Part There are several reasons people give for not investing their money in things like stocks, bonds, and mutual funds. One reason is that they feel that they don't have enough money to make a serious investment, but a more common reason that many people have absolutely no idea how to go about getting started investing. Dumb Money Many people have, at one time or another, taken some of their hard-earned funds, and decided to put them in the stock market. These well-meaning individuals either acted on a tip they saw on CNBC, or actually believed one of those crazy faxes/emails that said XBXB @ $0. Economic Survival in the 21st Century - the Three Key Questions to Ask In this "special report", I want to pose a few important "philosophical questions" to my readers. Firstly -- our Federal Reserve Chairman, Alan Greenspan, addressed the effects and implications of our aging population on things such as Social Security again in a speech that he made last Friday. Retirement Plan Considerations Cheat Sheet for Small Business RETIREMENT PLAN CONSIDERATIONS are something every small business person needs to be thinking about. Do you have a strategic plan? Don't expect to have social security save you. Powerful Options Basics Lessons Improving your trading in 180 days. An option is a traded security that is a derivative product.By derivative product we mean that it is a product whose value is based upon or derived from the price of something else. Can Using Sales Leaseback Method of Investment Property Acquisition Reduce Risk? Sales Leaseback compared to traditional property investmentCan a Sales Leaseback arrangement make investing in Orlando investment properties more safe and reliable?Yes. Providing a guaranteed rental amount each month is the safest and most reliable way to realize a return on your investment. A Gadfly On A Dinosaurs Butt, Or The Hood-winking Of The American Investor Have you ever noticed how some words in the English language are so perfectly named for what they describe? And how some words seem to be, I guess you could say, backwards? For instance, the word sunflower! How wonderfully aptly named is the sunflower, that beautiful yellow flower that follows the sun from sunrise to sunset.And then there are those words in the English language where there meaning appears to be backward, so to speak - like parkway and driveway. Bankers in Denial Denial is a ubiquitous psychological defense mechanism. It involves the repression of bad news, unpleasant information, and anxiety-inducing experiences. Creating Wealth by Gearing Up Gearing is where you borrow money to invest. As already mentioned, it is best to clear all your debt before looking at investment. Chinas Great Missed Opportunity While a U.S. How To Start Investing For Financial Independence, Part 1 Today, I am going to start a multi-part series about how to go from being a beginning investor to being "financially independent" in a steady and predictable way. At our website, we get tons of e-mails about how do I start, how do I start with little $'s, etc. Investing in Car Dealerships: Doing Your Homework This article attempts to help give the investor a broader basis upon which to decide whether a dealership merits their time, money and attention.Interviewing Factories and Financial InstitutionsLenders have an affirmative duty not to promiscuously disclose the financial condition of their debtors. How to Buy to Let Find out everything you need to know about buy to let. Learn what to buy, where to buy and what not to buy. Gold; What Type of Gold to Buy JewelryThe advantages are:? Gold Jewelry is the easiest of the gold to buy and has the enjoyment of being able to be worn.The disadvantages are:? Retail Jewelry is often marked up by 300% or more in the shops. Fundamentals of Option Pricing When one begins to consider an option, it is very important to figure out how the premium is calculated. Option premiums depend on a variety of factors including the time left to expiry as well as the price of the underlying security. Investigate Before You Invest "Through wisdom is a house built. And by understanding it is established.
|
| home | site map |
| © 2006 |
|
|
|
|
|
|
||||
|
||||
|
Comment by Frank O'Donnell
