Inflation Alarm Bells Ring.

NEW YORK (CNNMoney.com) -- The cost of producing goods is rising, and consumers could soon pay the price.

The Producer Price Index rose 1.6% in February alone, the Labor Department reported Wednesday, the biggest jump in nearly two years. The rise was far worse than the 0.6% increase that economists surveyed by Briefing.com were expecting. Overall, prices rose 5.6% from a year ago.

The biggest drivers were a 3.9% jump in wholesale food prices and 3.3% rise in energy prices. But core inflation, which strips out volatile food and energy prices, was up only 1.8% compared to a year ago following a 0.2% rise in the month -- in line with forecasts.

The sharp rise in oil prices is a major concern for economists. In a recent survey by CNNMoney, economists identified the oil spike as the biggest headwind facing the nation's economic recovery.

And some fear that unlike previous scares, higher prices could hit consumers. "The big difference today relative to the 2008 commodity rise is that underlying demand is significantly more robust. This means that price gains are more likely to stick," said a note from Joseph LaVorgna, chief U.S. economist for Deutsche Bank.

But the Federal Reserve seems less concerned with inflation. The Fed regards core inflation as a better gauge for rising prices.

Will the costs be passed on to consumers?

A number of companies have already announced a range of price increases to respond to higher commodity prices, including Kellogg (K, Fortune 500), Whirlpool (WHR, Fortune 500) and clothing maker Hanes Brands (HBI).

The closely watched Consumer Price Index, the government's key inflation reading which measures what the average American pays for goods and services, is due out Thursday.

Despite rising gasoline prices over the last month, economists surveyed by CNNMoney are forecasting only a 2% rise in overall consumer prices over the last 12 months, and a 1.1% rise in core-CPI.

Even if the inflation pressures don't bleed through to the retail level, higher wholesale prices could still be bad news for the economy. If businesses don't think they can raise their prices to respond to higher wholesale costs, that could squeeze profits, leading to a drop in stock prices and weaker hiring going forward

After its regular meeting Tuesday, the Fed said recent increases in commodity prices were "transitory" and that underlying inflation had been subdued.

Gold hits 10th annual gain; silver outperforms in 2010

(Reuters) - Gold rose to within $10 of a record high on Friday, closing out an unprecedented tenth annual gain as the combination of a weaker dollar and global economic uncertainty seemed to pave the way higher next year.

The entire precious metals complex had a stellar run in 2010, led by palladium's 97 percent rise, in a broad commodities rally that pushed the 19-commodity Reuters-Jefferies CRB index .CRB up 15 percent.

Spot silver, too, swept higher for an 83 percent gain on the year, as investors sought the white metal as an alternative to gold. It was the best-performing assets in the CRB, hitting a 30-year peak of $30.92 on Friday.

Spot gold moved up to $1,418.85 an ounce by 2:22 EST, up 1.06 percent from the previous close at $1,403.99, and a 29.4 percent advance over 2009. Bullion prices were on track for their fifth straight month of gains, the longest stretch of monthly increases since late 2001.

U.S. February gold futures settled 2010 at $1,421.40 an ounce, up $15.50, or 1.1 percent, and marked a 29.7 percent gain over 2009's settlement when the active gold contract ended at $1,096.2 on the COMEX division of the NYMEX.

Friday's gains were spurred by the dollar's broad decline against a basket of currencies .DXY, as investors closed their books on 2010. But the U.S. currency still managed to end a volatile year a bit firmer.

"The gold price remains well supported by a weaker dollar and solid investment demand," said Anne-Laure Tremblay, precious metals strategist at BNP Paribas.

"We expect the gold price rally to continue into 2011 on the back of strong fundamentals, including inflationary pressures (notably in China), ample liquidity and concerns about the value of the dollar," she added.

Traders and analysts expect gold to break above $1,500 in 2011, particularly if the dollar extends its decline, the U.S. economy remains unable to generate enough jobs to lower unemployment and Europe's debt crisis is not diffused.

"As for next year, I'm thinking gold could trade firmly over the next quarter or two. And then have the potential to see some weakness in the second half of the year," said Tom Pawlicki, precious metals analyst at MF Global in Chicago.

He said he thinks gold investors will remain focused on sovereign debt issues, and Chinese and central bank buying of gold, along with quantitative easing enhancing gold's luster.

But eventually those issues will get played out, he added and an increase in the negative real yields that have been benefited gold in 2010 could work against precious metals plays in 2011 as economic growth begins to pick up.

"If short-term yields start rising because the economy gets better or because monetary policy gets normalized that may take away that negative yield argument for holding gold and add pressure later in the year," said Pawlicki.

Also tempering some of the enthusiasm, holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to 1,280.722 tonnes by Dec 30, its lowest since early June.

Spot palladium surged to a nine-year high at $799.47 an ounce, and platinum, at $1,766.24, was up 20 percent on the year.

(Additional reporting by Rujun Shen in Singapore; editing by Keiron Henderson and Sofina Mirza-Reid)

Commodities Surge

Reuters) - Oil prices hit a 26-month high over $92 a barrel on Friday, closing the year up 15 percent on expectations that the economic recovery will drive demand growth next year and send prices into triple digits.

Strong growth from Asia, especially China, and a rebound in demand from recovering economies elsewhere fueled a four-month rally that knocked crude over the $70-$80 range it held for much of the year.

U.S. crude oil futures surged to a 2010 high on Friday, settling up $1.54 a barrel at $91.38 a barrel, after touching $92.06, the highest level since October 7, 2008. The settlement marked the largest end-year price since 2007.

London Brent gained $1.66 to settle at $94.75 a barrel, its highest end-December settlement since 2007 and up nearly 22 percent on the year.

Global output jumped 2.2 million barrels per day (bpd), according to a Reuters poll, the biggest increase since 2004, and another healthy 1.5 million bpd gain is forecast for next year.

While many experts say oil could break $100 a barrel in the new year, they don't expect a surge to levels near $150 seen in 2008, when crude first broke into triple digits.

The Organization of the Petroleum Exporting Countries would step in to cool off markets if they headed into territory that could endanger the global economic recovery, analysts

said.

"At some point, I would expect OPEC to increase production, whether through an extra cargo here or there to cash in on high prices or whether by a more concerted effort to calm people down," said Tim Evans, analyst for Citi Futures Perspective.

Recent gains in the dollar could also help cap oil's momentum by increasing the cost of dollar-denominated currencies for holders of other currencies.

U.S. crude averaged $79.61 a barrel for the year, second only to 2008's record $99.75. Crude shot to a high of $147 a barrel in July of that year, before the global recession hit demand and sent prices below $33.

Cold weather in the United States and Europe and OPEC's decision to keep production levels steady earlier this month have added to bullish sentiment this month. Analysts are watching to see how much of the recent rally has been caused by seasonal weather demand and how much has been driven by more structural consumption

growth.

Speculators betting the economic recovery will boost demand have poured into oil markets, with net long positions held by money managers in U.S. oil futures hitting fresh records in December.

U.S. crude rallied back from early losses on Friday in light holiday trade of about 275,000 contracts -- about half the level seen over the past 30 days -- bouncing off lows near $89 a barrel.

"We're seeing exaggerated price swings because of low volume of trade but there is technical support around $89 a barrel and the rally will continue to march into next year," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.

(Additional reporting by Jeffrey Kerr in New York, Randi Fabi in Singapore and Dmitry Zhdannikov in London; Writing by Matthew Robinson; Editing by Lisa Shumaker)

Safe Haven Investing

"When it comes to safe haven investing, people immediately think about physical assets such as gold, silver, oil, land, real estate. There is a reason for this: Physical things have intrinsic value. The value of a paper fiat currency, or a stock, can fall to zero. But the value of any physical asset can never fall to zero. The intrinsic values of physical assets are the reasons why they preserve wealth during times of financial and economic crises."*

While like any other investment there is risk, the nature of rare coins as an antique systematically provides investors with a sense of long term stability, a stability you can't expect with traditional investments like stocks or bonds.

Investing in rare coins now, no matter what the current market conditions, at least provides the comfort of knowing that rare coins will ALWAYS be rare and valuable, and always be sought after by those who can afford them.

The tangibility of wealth, knowing you can preserve it in uncertain economic times proves, every other decade or so, the most profitable safe haven investment.

Governments and banks fail. Rare coins will always be a rare and lucrative parking for capital in an atmosphere of uncertainty.

*seekingalpha.com

Top Democrats and Replublicans back 1099 requirement repeal

NEW YORK (CNNMoney.com) -- Top Democrats are uniting with Republicans in a show of support for small business owners: Senate Finance Committee Chairman Max Baucus, D-Mont., said Friday that he will introduce legislation to repeal the expanded 1099 reporting requirements set to take effect in 2012.

"I have heard small businesses loud and clear and I am responding to their concerns," Baucus said in a prepared statement. "Small businesses are the backbone of our economy in my home state of Montana and across the country, and they need to focus their efforts on creating good-paying jobs -- not filing paperwork."

The measure was adopted in March as part of the massive health care reform law, but only came to light months later when advocacy groups drew attention to the provision. Starting in 2012, businesses will be required to issue 1099 tax forms not only to contracted workers (as they already do) but also to any individual or corporation from which they buy more than $600 in goods or services in a year.

Tax experts say that change would require business filers -- including freelancers and sole proprietors -- to issue millions of new 1099 forms each year.

Business owners say that the change -- intended to raise tax revenue by increasing compliance -- will swamp them with an onerous flood of paperwork. Republicans have lead the charge for repeal of what they called a "job-killing" requirement. National Taxpayer Advocate Nina Olson warned that the burden of filing all those additional forms "may turn out to be disproportionate" to the benefit it will deliver.

In September, Sen. Mike Johanns, a R.-Neb., proposed a measure to repeal the requirement entirely. Sen. Bill Nelson, a Florida Democrat, countered with a more moderate proposal at the same time, but neither measure passed.

Since then, however, President Obama indicated that he would support a repeal of the measure.

Baucus did not indicate when he plans to introduce repeal legislation. His office did not immediately return a call seeking further comment.

Small business advocates have been lobbying hard to get the measure repealed.

"We are pleased to see that our leaders on both sides of the aisle are willing to do the right thing for our nation's job creators," Dan Danner, president and CEO of National Federation of Independent Business, said in a prepared statement. "Small business should be the one thing that unifies our leaders as we work to come out of these difficult economic times."

Why There's Gold Fever (CNN)

Princeton, New Jersey (CNN) -- There is at present a profound uncertainty about currencies. That is why the president of the World Bank, Robert Zoellick, created such a stir with a brief reference to an enhanced role for gold in the course of a plea for a more sustainable international exchange rate system.

The revival of interest in a golden measure of value derives from two fundamental sources. First, there is a question about our personal sense of worth. The aftermath of the economic crisis has destroyed our confidence in the reliability of conventional paper money.

We need money as a store of value, but in the course of the crisis it has also become a tool of government policy. Looser monetary policy or "quantitative easing" can help to get the economy moving again. But the purposes of money may conflict and collide. When money becomes too much of a policy tool, the function of reliably measuring value gets chipped away.

We look at gold when we are really upset about big price changes. Over the past two years, market sentiment has shifted abruptly from fear of deflation to fear of inflation.

The crisis has produced a profound shock, in which some prices (especially housing) have moved sharply lower while others (notably foodstuffs and some raw materials) have increased. The movement of prices is actually an important part of the adjustment process: that is, Americans should devote less of their resources to building and filling mega-size houses. But the price changes involved are deeply discomforting: The prices that are falling represent a major store of wealth, because people viewed their house as a sort of source of cash; and the prices that are rising are a major part of daily expenditure.

The appeal of gold would be that it might be a better way of storing value. But it would not avoid the harsh task of adjustment at a personal level.

Secondly, there is an international dimension to the concern with gold. The crisis has intensified international conflict. It has pushed countries to compete much more aggressively for markets, and to worry that other countries are using unfair means to push their exports.

Americans think that China has maintained an artificially undervalued exchange rate, while Mediterranean countries accuse Germany of having devised the Euro as a monetary unit that gives Germany permanent cost advantages. Even former Federal Reserve Chair Alan Greenspan now says that U.S. monetary policy is aimed at the weakening of the dollar. As a consequence, the victims start to retaliate.

Both the rhetoric and the consequences in terms of exchange rate actions seem to recall the currency wars of the 1930s, when the world spiraled down into protectionism.

Can the countries of the world sit down at a table and hammer out an agreement on what exchange rates can be? No previous attempt at such an exercise has been successful. The exchange rates adopted at Bretton Woods in 1944 needed to be extensively modified in the late 1940s, and the Smithsonian conference of 1971, which tried to work out a new system, broke down within a year and a half as countries ignored any need for monetary constraint.

The appeal of gold is that it sets a clear limit on the extent to which policy actions can manipulate exchange rates. But for nations and individuals, it does not in any way remove the pain from living in altered circumstances.

The gold standard worked reasonably well in the 19th century, but even then it did not produce complete price stability. In the absence of new sources of gold, it exerted a downward influence on prices; then, in the 1890s, new gold started to flow from South Africa, Australia and Alaska, and the result was mild inflation.

A real effort at the monetization of gold today would produce a much more dramatic version of the same sort of logic. First, there would be a major scramble for gold and the current gold bubble would swell to even greater proportions.

That would provide very large incentives to existing producers of gold in South Africa and Russia to intensify extraction, but also to others to look for nonconventional sources, such as the bulk processing of seawater to extract the very small gold content. The result would be an initial deflation and then a colossal inflation that would make the 19th century experience look trivial.

The late-19th century critics who thought that there must be a better way of storing value than gold were right. But such a search demands sustained attention to methods of limiting the tendency of both individuals and governments to behave in a way that produces short-term gains while sacrificing the longer term good of stability. Self-limitation, rather than the magic fix of a new precious metal-based currency, should be the real golden rule.

The opinions expressed in this commentary are solely those of Harold James.

Understanding High End, Low Pop Pricing.

"If you look at the charts you'll see some BIG gains for Liberty Seated Dimes. Heritage had an auction of a fantastic set, some finest known examples, some highest graded, none better, only one graded that grade [type] coins and the prices were very juicy.

This is one thing about our price guide that you should understand; I looked at some of these prices and a coin was like $15,000 and I look back in the historical and its $15,000 for five years, well... you know obviously that coin was worth more than $15,000 in 2008 but worth more than it was in 2005, but sometimes the coin doesn't sell, it's the only one, then it comes to auction and brings $48,000.

So we go over those real high pops and we sometimes raise them or lower them where it makes sense. But it really takes the appearance at an auction or in a dealers price guide or we see something at a show trade hands or find out about a private sale before we can really do something with those unique coins."

Transcript of PCGS Founder Mr. Hall's "Coin Market Analysis".

When Will Gold Slow and Coins Surge?

Precious Metals Surge

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With Gold Nearing the $1,400 level investors see no end in sight. Analysts and experts suggest $2,400 gold. Where does it end? Either direction gold and silver rare coins keep investors optimistic. Much of the rare coin market remains in the shadow of bullion advances. Because of this collectors and investors are enjoying the affordable buys that will not likely last the winter. Bids on Morgan dollars and smaller denominational gold are beginning to edge forward. Investors that decide to buck the trend and purchase rare gold rather than bullion will be the happier buyer when the emotions of gold bullion wane. Couple this with an uncertain political environment over the next few years and we see an even more profitable market in U.S. Rare Coins.

Silver is The New Gold

Morgan Dollars are the MOST UNDERVALUED area of the entire market. Since the beginning of 2007 gold has shot up from $635 to over $1,320 (116%). Common date Saint Gaudens have responded with a 75% gain of their ownâ€"from just under $1,650 to above $2,900 right now. Silver has also seen a surge over this time period, from under $11 to nearly $23 currently (115%). Morgan Dollars, on the other hand, have actually dipped 6% over the past 3 years. This cannot continue.

Prior to this most recent run, gold had an all time high of just over $800/oz, set back in January of 1980. Around that same time silver was trading comfortably above $30/oz. Not surprisingly, gold rare coins saw gains alongside bullion moving, peaking in 1980. However, Morgan Dollars had only begun their own bull run at that timeâ€"over the next 6 years they were up nearly 1,000%!

Over the past 3 years gold, Saints, and silver have all realized big gains. The next major run, if history holds true to form, will be in Morgan Dollars, and it will be memorable for those involved.

The Colorado Silver Boom

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The Colorado Silver Boom started in 1879 following the discovery of silver in the town of Leadville near the headwaters of the Arkansas River by Horace Austin Warner Tabor and August Meyer in 1877. In total, more than $82 million of silver was mined, mostly as a consequence of The Bland-Allison Act of 1878 which authorized the U.S. Government to purchase at least $2 million in silver annually.

The first discoveries of silver in Colorado occurred in the early 1860's, but because of the low price of silver and the larger demand for gold in the area few mines were profitable enough to operate. The Bland-Allison Act of 1878 changed the landscape entirely. Politicians, facing pressure from farmers in the Midwest and miners in the West, authorized the U.S. Government to buy silver as a way to raise inflation. As a result many of the previously unopened or unused mines started operating. The discovery of a large silver lode in nearby Leadville swelled the population of the area significantly with many miners in the same valleys that had produced the earlier gold rush. The silver boom brought along with it improved railroad lines, including lines from Denver to Leadville and Denver to Aspen, the latter of which saved the town from dying out.

The Sherman Silver Purchase Act of 1890 more than doubled the amount of silver the government purchased and extended the silver boom in Colorado to even further heights; at one point there were serious discussions about moving the state capital from Denver to Leadville. However, when President Grover Cleveland called for the repeal of the Act in 1893, the silver market collapsed; by the end of the year many of the old mining camps were completely empty.

The increase in population and wealth that occurred during the silver boom in Colorado remained in the state, moving into other pursuits such as agriculture. In a very real sense the silver boom of the late 19th century helped build the state of Colorado into what it has becom

Gold's Popularity Grows

NEW YORK (CNNMoney.com) -- As economic fears drive gold prices to new highs, the creator of a gold-dispensing ATM is attracting attention around the globe.

Germany-based GOLD to go, which is currently churning out 50 gold machines a month to meet a recent jump in demand, launched its first ATM in Abu Dhabi's Emirates Palace Hotel earlier this month and opened its second in Germany last week.

The golden ATM's next destinations are the Bergamo Airport in Milan, Italy, all major airports in Malaysia, one of Russia's biggest banks and an undetermined location in Turkey.

By making gold investing as easy as buying a candy bar from a vending machine, GOLD to go hopes to attract average buyers to the gold market.

"We are going to make gold public with these machines," said Thomas Geissler, CEO of Ex Oriente Lux AG, which owns GOLD to go. "The prices are so easy to control that we're going to de-mystify gold and make it easier for anyone to buy it."

GOLD to go's ATM looks like a vending machine and dispenses gold coins and bars weighing up to one ounce at prices updated every 10 minutes based on the real-time spot price of gold.

ATM-owners can choose from a variety of other gold items, such as gold Canadian maple leaf coins, South African Krugerrands, and even some custom designs. For example, the special edition gold medallion it engraved with the Palace Hotel's logo was created for the United Arab Emirate debut.

See the gold-vending machine in action

Locatelli is now launching a GOLD to go ATM in Milan's Bergamo Airport, which he says is one of Italy's fastest growing airports.

"[Bergamo] is a great place for it, because serious international business travelers will stop over here a few times a month at least," he said. "In general you tend to spend more when you're traveling and in a good mood, so you can now use a vending machine to get a present for someone or buy some bullions as an investment."

After a three-month testing period at Bergamo Airport, Locatelli said he hopes to introduce gold ATMs in every airport in Italy as well as major community centers and banks.

Not for serious investors? While the ATMs could be a hit with wealthy travelers, the idea is unlikely to catch on with serious investors, said Jeffrey Nichols, managing director at American Precious Metals Advisors.

"It's an interesting phenomenon, and I can see that wealthy and high-net-worth travelers might make impulse splurges on gold bars or coins, but I can't see a serious investor buying gold through a vending machine," he said.

Jon Nadler, senior analyst at Kitco Metals, agreed, saying that he would be surprised if investors bought into the new invention, because unlike the spot market, ATMs don't take your gold back when you want to sell it.

"Gold is a two-way market, so I would like to see that same machine buy back that gold and spit out cash," said Nadler. "A gold-dispensing ATM is great, but a real ATM also accepts deposits."

Nadler also said that GOLD to go's higher prices may be a deterrent, especially to investors who want to purchase large amounts.

GOLD to go says that, like any physical gold vendor, it must apply a margin to its items. While the spot price for one ounce of gold was about $1,214 in midday trading on Thursday, GOLD to go was selling a 1-ounce gold bar for 1,044.86 euros, or approximately $1,284.13.

But the ATM's popularity shows how much more available gold is becoming as demand picks up.

"It shows how attitudes toward gold are changing," said Nichols. "Gold is available in more forms and through distributors that make it more accessible for average people around the world to buy gold."

Earlier this month, gold prices hit an all time high of nearly $1,250 per ounce, and the precious metal has continued to climb as euro zone countries struggle with debt and investors worry that the region's problems could spread globally.

Until this uncertainty in the market eases, the demand for gold will only grow, said Carlos Sanchez, a precious metals analyst at CPM Group.

"[The ATM] is just a reflection of the demand from consumers and investors for exposure to gold," he said. "As long as prices continue to trend upward and investors remain concerned over economic and political conditions, I think we'll keep seeing strong demand for safe-haven assets like gold."

Next stop, Italy: Patrizio Locatelli, owner of SE 6, a small company in Italy that pays customers for gold, flew to GOLD to go's factory in Germany to check out the prototype when it was first unveiled.

Locatelli was having a hard time keeping up with the costs of rent and hiring employees, so when he came across the GOLD to go ATM online, he saw it as a golden ticket to an efficient way to expand his business.

"When you see exchange rates going up and down every day with the euro under so much pressure and stocks decreasing, this gold machine seemed like a very sound idea," he said. "In times like these you must think of somewhere else to put your money, and physical gold still has great appeal for everyone."

Civil War Gold

Give consideration to civil war gold. The coins minted during the five years our country was at war with itself (1861-1865) are niche coins often overlooked. Their significance should not be underestimated. Few dealers out there actually specialize in civil war gold. If you can find one, often you find they also sell battle flags, weponry and other relics. When you can make a connection or cultivate a relationship with someone who's passion for the era or passion for the history outweighs their inventory, and need to "pay the bills", you've got a friend. Not all are created equal. 

As for the investment? First off, either way you look at it, they are rare coins.  But, if you can invest in a rare coin that has historical significance, or a story that goes along with it, you've got a coin that will be easier to sell and easier to get top dollar for. Also, consider the idea of focusing dollars on one rare coin than four lesser ones. Low pop, high grade coins, especially from the Civil War, cost more because they are worth more!

One rule of thumb, the lower the mintage, the lower the pop the higher the price- the better the coin. It's simple. The best, in 99 percent of the cases, costs more. That doesn't mean you need to over pay for a coin though. Check your sources or listen to someone you trust. But either way, consider Civil War Gold!

“Confident Collectors are Aggressively Buying”

This sounds loaded, but its the truth. After a brief dip in the spot price of gold, the rare coin surge higher continues. Fortunately for coin investors, no dip was experienced. Gold’s mood swings have seem to have nothing but a positive effect on the market. Those investing in rare coins that are patient and watch the economy around us falter; will be the winners in the investment arena. Investment guru Warren Buffet recently said inflation is “exploding.” “Whether it's steel or oil ... We see it everyplace.” In the history of the rare coin marker it seems that inflation is the number one force that prompts the increase of rare coin prices. There are still so many truly rare coins that are affordable and increasing in value. This will not continue forever as “confident collectors are aggressively buying rare and interesting coins”, said the CDN

Morgan Silver Dollars

If inflation continues over the next three years you can project the acceleration of investments in Morgan Silver Dollars to increase on average 122% per year.  Morgan Dollars performed outstanding between 1983 -1986, (stock market crash, recession, savings and loan scandal and inflation). Morgan Dollars have always been the most popular way of investing in silver in the rare coin market and will prove to be such during this run. 

Between inflation, increased demand and rising silver prices; expect Morgans to explode. Consider the fact that silver over the last three years has gone from $5.00 an oz. to over $18.00 per oz., that’s a 275% increase, while Common Date Morgans have only gone up 18%. We see this trend time and time again. Rare coins seem to wait until precious metals peak out and begin moving downward before they see “bull market” gains. Yet, rare coins increase at a steady 6% per year during prosperous metal markets. Again, if inflation continues; rare coins will significantly outperform their bullion counterpart.

Morgans During Inflation

Basic San Francisco Morgan Set MS-65 (1878-1882) during Inflation:

1983 1986
$1,320 $6,125 365% or 122% per year

A basic San Fransisco Set bought today, under with higher prices of silver should shatter these returns.

silver

It is highly probable that silver from the household of George Washington was used to mint the first batch of silver half dimes (dimes) in 1792! The silver coinage of the United States is extensive, with seven different denominations ranging from the three cent piece to the silver dollar. Silver is no longer used in everyday United States coinage. But it certainly was from 1792 to 1964! Investing in U.S. silver coins involves much more than just silver dollars; from the Comstock Lode of Nevada to the Pittman Act of 1918, it involves a cultural survey into our history!

Gold Hits Record, Rare Coins Surge

With gold hitting record levels rare coin investors are ecstatic. Investors have pushed the spot price of gold over the coveted $1000 mark and have begun investing heavily in bullion related rare coins like $20 Gold Saint Gaudens and $20 Liberty’s. But what the average investor tends to forget is that high- grade, low-pop, truly rare coins are the money makers over the long term. These numismatic specimens are not susceptible to the often violent volatility that gold bullion or low grade rare coins can experience. The numbers coming back from recent auctions prove we are in the midst of a strong and stable rare coin market. The only problem we are encountering is a serious lack of rare coin availability.

Incuse (in-kyoos')

The artistic success of the 1907 $10 and $20 gold coins of Augustus Saint Gaudens made President Theodore Roosevelt want to continue the overhaul of United States gold to include the $2.50 and $5 coins. Unfortunately, Saint Gaudens died in August 1907. Roosevelt, in his usual impetuous way, asked his friend, Dr. William Bigelow, to come up with a new approach and a qualified sculptor for the two coins; and fast!

Bigelow was a third-generation Harvard-trained surgeon who chose to follow the art world instead of the scalpel. He became enamored of Asian art and philosophy. Several trips to Japan later, he had amassed a huge collection of Asian ceramics, prints and paintings. He would eventually donate his collection to the Boston Museum of Fine Arts, where it is considered to be the finest collection of Japanese and Chinese art in the United States.

Dr. Bigelow met Bela Lyon Pratt at his studio in January 1908. Pratt was a Boston sculptor who had attended the Yale School of Fine Arts and the Art Students League of New York City, where he studied under Saint Gaudens, eventually becoming his assistant. After further studies in Paris, Pratt became Professor of Sculpture at the Boston Museum School of Fine Arts. Pratt had a great deal of confidence in himself, and that impressed Bigelow who knew that Roosevelt was not fond of those who were timid or shy. Bigelow explained to Pratt that he was interested in a sunken relief design for the new coins. This statement astonished Pratt, for just a couple of days before their meeting he and his assistant had been discussing the very same idea!

Pratt immediately started work on models for the $2.50 and $5 gold coins. He believed that the headdress on Saint Gauden’s $10 coin was not natural looking, so he modeled an Indian chief (possibly Chief Hollow Horn Bear), wearing a headdress with feathers lying in a more natural position. For the reverse, President Roosevelt was adamant that the reverse of the $10 coin must be used. He was pleased that this powerful eagle was featured not only on the $10 gold coin, but on his inaugural medal of 1905 as well.


The $2.50 and $5 coins were minted around October of 1908. The radical sunken relief design was an artistic if not popular success. These coins were the opposite of the higher relief $10 and $20 coins of Saint Gaudens, because they stacked easily in banker’s trays. There was some comment by concerned citizens that the recessed areas of the coins might harbor germs. These concerns were unfounded. The coins would continue to be struck through 1929.

These United States gold coins of 1908, under the aegis of President Theodore Roosevelt, were more than worthy of comparisons between the finest gold of Europe, or of the ancient world of Greece or Egypt. America had finally utilized the talents of its best sculptors to show the world that their coinage was second to none!

buffalo bullion

So, ok... I know they are not "rare coins" but in the mad rush towards bullion the new Buffalo Gold pieces that have been slabbed "Cameo Proof" or "First Strike" are inherently rare. These bullion pieces already sell at a premium over spot and that premium has been climbing. Consider the state quarters which are really kids stuff but make the point. State quarters are worth a quarter unless they are proof or slabbed with some unique identifier like "Ultra Cameo Proof", some of which now retail for 100x's their face value. So if you are going to make an investment in bullion consider the fact that bullion will always be the price of bullion but a graded proof automatically makes the coin rare.

Previous Market Highs?

Large denomination gold coins have moved up with the price of gold but are not anywhere near their own previous market highs. $20.00 Saint Gaudens and $20.00 Liberties in grades MS 63-65 are the coins of the season. These undervalued rarities have been disappearing from the market. Their availability has been dwindling since the beginning of 2007, but are still available. Getting the highest grade possible is the best way to assure return on your investment as the population of these rarities in high grade drops off significantly. Even though gold has reached record levels rare coins haven’t.

big gold

Both Liberty and Indian $10s and $20s are seeing bid jumps and record prices at auction houses with gold’s higher prices. The particularly exciting aspect of these results is the fact that rare coins lag behind gold’s movement, meaning there are a lot of buying opportunities even with prices moving up. We expect to see a continuation of this activity in 2008 as new investors flock to rare gold in search of better gains. Some of the more notable prices realized at auctions recently include a 1931-P $20 GSG in MS-66 ($126,500), an 1854-O $20 Liberty in AU-50 ($368,000), and a 1910-S $10 Indian in MS-66 ($82,800).

Gold Rush


The first “gold rush” in the United States was not in 1849, but 1828 in Georgia and North Carolina. The discovery of gold in southern Appalachia dates from 1799, when a 17 pound gold nugget was found in a creek near Charlotte, North Carolina by a 12-year-old boy. Mining in the area continued on a limited basis until 1828, when larger deposits of gold were located in two counties.

Templeton Reid, of Georgia, started the first private mint devoted to minting gold coins in the United States in 1830. He minted $2.50, $5, and $10 gold coins for only two and one-half months before closing his operation due to lack of public confidence in the gold content of his coins.

A much more successful enterprise was that of the Bechtler family of Rutherfordton, North Carolina. Metallurgist, gold and silversmith Christopher Bechtler and his son Augustus were recent German immigrants to Philadelphia. They moved to North Carolina in 1830, probably with the intent of being close to a readily available supply of usable gold. As with future enterprises in the West, miners in the area faced many obstacles when shipping their gold dust to Philadelphia for assaying purposes. Recognizing heavy demand as well as the potential for a good profit, Bechtler started an assay and coining business in 1831. The Bechtlers’ output was known for its well-assayed and honest coins. Their coins were so highly regarded that, in the Civil War, the Confederacy stipulated that fiscal obligations were payable in “Bechtler gold” rather than Union, state, or Confederate coins or currency. The Bechtlers struck the first gold dollar produced in America. The family closed their operations in the early 1850’s.