The Coin Analyst: Are Coin Show Releases Good for Numismatics?

By Louis Golino for CoinWeek …………

As the dust settles on the largest and most important coin show of the year, the ANA’s World Fair of Money held in Rosemont, Illinois last week, it is a good time to take stock of the launch of the 2014 gold Kennedy half dollars, which has important implications for future coin show releases and numismatics more broadly.

To a certain extent, the widespread mainstream news coverage and the great interest in these coins is probably good for the hobby and brought in some new collectors. But much of the coverage was not very flattering, especially as the week continued, and it gives the hobby an ugly image.

Kennedy gold coin The Coin Analyst: Are Coin Show Releases Good for Numismatics?News accounts at the beginning of the week focused on the long lines of people waiting to purchase the coins at the ANA and the Mint’s three retail sales outlets, as well as the extensive use by dealers and speculators of shill buyers. Those buyers were generally not collectors and were getting paid anywhere from $20 to $600 or more to enable dealers to secure large quantities of the coin that were then graded at the show and given special show release labels, resulting in profits of around 300% per coin when sold.

The first four coins, which David Hendrickson purchased for $5,000 each plus a replacement coin, later changed hands for a cool $100k after the coin was graded by PCGS and received a special “first coin sold” label. How interesting that the first four coins bought and graded all happened to receive 70’s, while the next two got 69’s. Personally, I think it was all a publicity stunt to create even more frenzy for the show release coins. What makes the fourth coin worth $5,000, and the 5th worth much less?

As the crowds continued to form each day, stories began to emerge of people rushing to get in line and trampling others in the process, of shady characters hiding in bushes until the police left at night, and unconfirmed reports of robberies. On August 7 the Mint first suspended sales at its retail locations around the country out of safety concerns, and later in the day it and the ANA announced that in-person sales were also being halted in Rosemont.

Meanwhile, first day sales online and via call centers were extremely strong, reaching 54,825, and total sales for the day including in-person were 56,694. But by the second day online sales dropped to 4,090. I have heard numerous reports of buyers cancelling their orders since then, and I expect online orders to slow down even more in the coming days and weeks. Speculative demand is what drove sales the first day, and that is gone.

The Mint also announced on the 7th that in addition to the 40,000 coins it had ready before the launch, it will produce 6,000 coins a week with the goal of having 75,000 by October 1. And if the demand is there, it will continue striking coins all year, though no specific cut-off date has been set.

However, I think the Mint is overestimating demand based on unusually strong first day sales from buyers who wanted to have coins in hand as soon as possible to send them in for first strike and early release grading, and who wanted to ensure their coins were among those shipped first in light of past delays with order fulfillment.

E-Bay sales have been uneven for such a high-interest release, with raw coin pre-sales anywhere from barely over Mint cost to close to $2,000. This is very different from, for example, pre-sale prices of the Baseball Hall of Fame coins, which rose very quickly. The reason is the baseball issues sold out in hours, and only a small portion of them shipped in April, so demand continued to build for coins that could be delivered and prices rose until enough supply was on the market. Similarly, the 2009 Ultra High Relief gold double eagle did not ship for a month from issue date, and the delay as well as rising gold prices pushed premiums up.

The long-term market outlook for the JFK gold issue will depend on the final number sold, gold prices, and future demand. The ones that in the short to medium-term are likely to continue selling over issue price are the show releases, especially now that the number of ANA releases was reduced from 2,500 to 1,500. In addition, graded-70’s, especially first strike PCGS coins will surely be well over $2,000 when they hit the market in about a month.

Raw coins that ship in the coming weeks should have some premium since new orders are being backordered by the Mint to at least mid-September while the coins are produced, but overall I do not see these coins as having much “flip” potential. They are collectible coins to be enjoyed for their beauty.

And buyers of show releases and first day coins should bear in mind that values for previous show release coins from the past year have not held up very well over time. I would not recommend paying the current retail of $4,000 for 69 show coins and $5,000 for 70’s. Buy four raw coins for the same money.

As for the Mint releasing major new issues at coin shows, which Deputy Director Richard Peterson said in Rosemont on the 7th the Mint will repeat next year, I am sure Mint officials and the ANA will be reviewing what happened last week with a view to seeing how to avoid some of the problems encountered.

More broadly, I think it is time for coin buyers to ask some hard questions about the real value of coins sold at shows, and whether putting their money in those coins is really a wise move. In addition, while coins sold the first day in Philadelphia, Denver, and Washington, D C were eligible for first day release labels, the ANA first day coins seem to be priced higher. But what makes them better, and why aren’t the first ones sold online special too? To me this is all an artificial creation of the grading companies and dealers that is unhealthy for the hobby because it puts too much emphasis on labels.

One collector discussed the issue with a dealer at the ANA convention, who had stacks of graded coins offered for $5,000 a piece, which he said would mostly be sold to unsuspecting buyers on coin television shows. He noted that those buyers are so clueless they think they are getting a good deal.

There is nothing wrong with trying to maximize your profits, but is this really good for the long-term health of the hobby? When someone finds out a year later that the coin he paid $5,000 for is worth $3,000, do you expect him to continue being an eager collector?

Since this is going to continue, it is time for some major changes to the process to give the average buyer a better shot at getting a coin at the show. One idea is to require that buyers have a Mint account. Another is to just display the coins and take orders for them. Perhaps the first buyer can get his receipt framed and auction it off! I would welcome any suggestions from readers.

Copyright © CoinWeek – 2014

Editors Note: The issues raised in this commentary, along with a host of  facts surrounding the events in Chicago and the other mint facilities will be the subject of a series of forthcoming articles by CoinWeek.  There are strong opinions being expressed and numerous questions being raised as to the marketing decisions made and the unintended consequences of dealer actions taken to capitalize on the release of the Gold Kennedy Half Dollar. There are also divided opinion as to  how this situation reflects upon the modern coin market and on numismatics as a whole.  We hope you will join us as we investigate what actually took place and sample the mood and reactions of both collectors and dealers.

***

golino The Coin Analyst: Are Coin Show Releases Good for Numismatics?Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin WorldNumismatic News, and a number of different coin web sites. His article, “Proposed Design Change Takes Flight,” which deals with the CCAC’s recommendation for a new reverse for the American silver eagle, appears in the July issue of the NumismatistHis column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA,PCGSNGCand CACHe has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

About the Author:

Louis Golino is a numismatic journalist and writer specializing in modern coin issues. He has been writing a weekly column for Coin Week since May 2011 called "The Coin Analyst," which focuses primarily on modern U.S. and world coins and developments at major world mints, and is also a contributor to two magazines, American Hard Assets and the Numismatist, the American Numismatic Association's monthly publication. His work has also appeared in Coin World, Numismatic News, and various coin web sites. He collects classic and modern U.S. coins and modern world coins from a number of different countries. He first joined the ANA in the 1970's. He has also worked for the Congressional Research Service of the Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of publications. He has been writing professionally since the early 1980's.

30 Comments on "The Coin Analyst: Are Coin Show Releases Good for Numismatics?"

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  1. Ikaika says:

    @Louis

    No one describes it better than you do. Clear, straightforward and true. Looking forward to the follow up articles.

    • Louis says:

      Thanks so much, Ikaika. You are very kind. One benefit of being an independent writer is I have the freedom to be a little controversial, and I thank CoinWeek for allowing me to try to push the envelope a little more than most of the coin media does.

  2. Dennis says:

    Louis,

    My idea is to have people pre order the show coins online from the Mint. A random lottery would determine who gets the coins from all eligable orders. If they really wanted to provide fair and equal access they could not do much better that this.

  3. dbtuner says:

    There were reports that dealers were handing paid line standers cash or prepaid credit cards to buy the coins from the Mint. Why not enforce only credit cards and make the buyers name be on the credit card? Then enforce a household limit in addition.

  4. steve says:

    “One collector discussed the issue with a dealer at the ANA convention, who had stacks of graded coins offered for $5,000 a piece, which he said would mostly be sold to unsuspecting buyers on coin television shows. He noted that those buyers are so clueless they think they are getting a good deal.”

    The above comment I find troubling. Fortunately, HSN has a 30-day refund policy.

  5. N. Yadgarov says:

    Lou, thank you for your article. The U.S. Mint should not allow unlimited mintage for its numismatic collector’s coins. The U.S. Mint should specify a quantity limit within an ordering period. I think that the U.S. Mint should close accepting orders for the 2014-W gold JFK half-dollars by September 5, 2014. This would allow one month for these gold coin to be ordered. The U.S. Mint has changed its mind in the past such as cutting off sales of these coins earlier than anticipated at the recent ANA’s World Fair of Money held in Rosemont, Illinois, the Denver Mint, the Philadelphia Mint and Washington DC. Then around mid October 2014, the U.S. Mint can launch sales of its 50th Anniversary Kennedy Half-Dollar 4 Silver Coin Collection Set. The U.S. Mint can close sales on those silver coins after one month.

    • Louis says:

      Hi Nick,
      Is it really you, the famous buyer on coin #1? Thanks for your comments and suggestions, Nick. If you are interested in doing a brief interview either by phone or I can send some e-mail questions, please drop a line at news@coinweek.com and I will use it for a forthcoming article.

  6. dan says:

    Louis

    Is their an email address where I can send something to you so that it would not be open for all to read? Thanks

    • Louis says:

      Hi Dan,
      Please write to me at news@coinweek.com and put it to my attention in the subject line. I should have a coin week e-mail soon so folks can just send them straight to me, but I will get that.

  7. Anonymous says:

    It cheapens the hobby.

  8. Louis says:

    Thanks to all for their excellent suggestions. I know the Mint does read this column, and it cares what customers have to say, so hopefully we will help them come up with a better system.

  9. John O says:

    Maybe a national coin summit to bring order to chaos.

  10. Louis says:

    While I do not believe ANA and first day releases will retain their value, it seems to me that Nick should have been paid more for his coin than $5,000 since that is what all the other PF-70 ANA release coins are going for, esp. if the buyer then turned around and sold it it for $100K. If you believe these distinctions matter, then why would all 4 of the first coins sold be worth exactly the same amount? Plus, it was reported in the spring that Cole Banks at the Baltimore Whitman Exo received offers of $20K+ for the first baseball gold coin sold, so again I think Nick was substantially underpaid.

    • Ikaika says:

      If this is the case, the first coin sold at the Denver, Philly, DC stores and online should be worth $100K too. The difference would be the location printed on the label and perhaps grade (if we can believe it).

      I have a strong feeling the sales of these first JFKs is an act (similar to those actors hired by the dealers)to create euphoria and illusion of rarity to the uninformed.

  11. Rob says:

    Thanks Louis
    It was just anounced that the other #1 coins from the other three locations were resold for 75k each on the Coinvault last night.
    That’s $325,000.00 for the 4 coin #1 set.
    It looks like the Mint blew this release as well. And I am on the verge of cancelling my order also, however since gold is artificialy supressed the melt value is close enough to consider holding.

  12. jeff jonson says:

    Great article. I think the only fair way to release coins like this I for the mint to have an online lottery. Take the greedy dealers and fast buck non collectors out of the equation.

    • Louis says:

      Thanks, Jeff. A lottery seems to be the most frequently mentioned idea, though there is a chance the Mint is prohibited from using lotteries. I will try to find out.

  13. Mammoth says:

    I ordered one of these gold JFK commemorative coins only because this is a one-of-a kind coin. From the photographs this is a beautiful piece of work. Even though I ordered this coin on the first day, I have no intention of sending in on to be graded & labeled.

    This gold JFK commemorative coin will reside in its nice-looking wood case and appreciated for its beauty – which is what it was intended for.

    It is truly a sad commentary on the state of the economy, when so much money can be made by buying and then reselling something for a huge profit – without really adding any value to it.

    -Mammoth

  14. Erik H says:

    1. The mint could have a larger quality on hand (enough for 8 hours of sales) with a one per person limit. If they all sell on day one fine if there are extra for days 2,3… that’s good too.
    2. The online orders could start a week before the show with a shipping date one or two days before the show. This way everybody starts receiving the coin about the same time as the show releases.

  15. Ikaika says:

    Are we going to hear from David Hendrickson and Co. regarding the activities that went on during the JFK release and sales? I have not heard or seen any statements from them.

  16. Paul says:

    Thank you for the article! I love when people write complete honesty. I was a member of PCGS’S chat site and was banned for doing the same!

  17. Longarm says:

    Thanks Louis, nobody says it better than you, “They are collectible coins to be enjoyed for their beauty”.

  18. Joe says:

    I would think most collectors cant afford gold coins, modern commems are usually high quality near perfect, and population numbers of these coins will stay too high for any rarity to exist. So why the rush and interest in these coins? I can understand paying a little for a clad commem or gold one close to bullion, as a curiosity or work of art to own, but paying much beyond this is just absurd in my opinion. Maybe the interest and rush is mainly because of those seeking financial reward. I just hope this doesn’t speak for a large part of the collecting community

  19. Louis says:

    Just got my order from the Mint. Wow! Really gorgeous coin and great display box. The Mint did a great job with these.

    Please let us know if you get your coins and how you like them, the quality, etc. The larger field may result in more imperfections, so grading data will be very interesting.

  20. Louis Golino says:

    The Mint is again offering the large JFK bronze medals that were the inspiration for the 1964 halves, and I got one with my gold coin. Very nice HR medal.

  21. LGF says:

    The mint should offer a loyalty program. Collectors and investors who buy products through out the year from the Mint should be given priority over random people looking to make a quick buck. Customers who buy from the Mint on a regular basis should be put ahead of those Black Friday sellers, and plants.

  22. Louis Golino says:

    Auctions prices for the ANA releases are dropping faster than anything I have ever seen. This might just be the nail in the coffin for hyped-up show label coins. I like mine in the OGP.

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