Coin Collecting Club

Much has been written about the current bull market in gold and how it compares to previous moves, in particular during the 1970s when the metal soared to at the time unimaginable heights.

On this basis it is worth looking at the background to the value story on gold, and this may shed some light on why its bull market may have significantly further to go for CFD traders in coming years.
The gold standard

The UK, which at the time was the world’s dominant economic powerhouse, adopted a gold standard in the early 19th century. Other currencies then looked to have gold backing, and towards the end of the century, various European countries joined the standard, though some chose for a time use a joint gold and silver standard.

The emerging strength of the US saw it adopt the standard in 1879, by making “greenbacks” that had been issued during the Civil War period convertible into gold, and the gold standard was formalised by legislation in 1900. On the outbreak of World War One, it was accepted by the whole of the developed world. This called for fixed exchange rates, with parities set for participating currencies in terms of gold, and it provided that any paper currency could on demand be exchanged for gold by its central bank

The system worked well having been designed to make each country adjust in terms of external deficits or surpluses in transactions between countries. Any deficit country would then have to surrender gold to cover its deficit, with the result that the volume of its money would be reduced, leading to lower prices, while the influx of that gold into the surplus economy would expand the volume of that country’s money and lead to higher prices.

This meant that there were effective pegs in the foreign exchange market, so that exchange rates would fluctuate only within very narrow limits determined by the costs of shipping and insuring gold.

US and UK comparisons in terms of gold

Up until 1914, the parity between the U.S. dollar and sterling was approximately $4.87, based on a U.S. official gold price of $20.67 per ounce and a U.K. official gold price of £ 4.24 per ounce, and the exchange rate would not fluctuate beyond about three cents above and below the mint parity, which represented the cost of shipping and insuring gold, since otherwise there would be arbitrage potential.

Although there were some gold transfers under the system, it was easier to adjust monetary policy to attract currencies, which might offset the financial impact of any import excess. Higher interest rates would usually have a deflationary effect in the deficit country aswell.

Under this system, participating countries needed to give an absolute priority to external adjustment over domestic objectives, so if there was a conflict between domestic and external objectives, policy tools might not be available to be used for domestic problems of recession, unemployment, or inflation. This reflected the prevailing economic philosophy that economies would tend naturally toward reasonably high levels of employment and reasonable price stability without such government policy actions.

The effect of the First World War

The four great economic powers, the US, UK, Germany, and France saw unchanged currency values up until the war. There were few barriers to gold shipments or capital controls in the major countries, and capital flows appeared to play a stabilising role.

After the outbreak of the First World War, each country needed to raise cash for the war effort, and at this stage they began to issue more and more bonds, some of which still exist today. These were domestically issued at the time and not backed by gold, but the promise to repay came from the central bank and was seen as rock solid. This was the beginning of what is known as fiat monetary policy, and which is widespread today.

The result of this was that as more and more paper was not backed by the common value of gold, floating exchange rates began. The US, which entered the war later than the others, had maintained gold convertibility, and soon the dollar floated against the other currencies, which were no longer convertible into dollars.

Dollar strength and weakness

Once the war ended there were significant economic problems in Europe, and exchange rates began to change rapidly, with many major currencies devaluing against the dollar.

This helped cement the US dominance of world trade, as the dollar had greatly improved its competitive strength over European currencies during the war.

In a reverse of what is happening today, within much of Europe and certainly in the UK there was a widespread desire to return to the stability of the gold standard, and growing concern over the attractiveness of the dollar, which was still convertible into gold, and of dollar-denominated assets. The pound thus went back on the gold standard, but this coincided with the Wall Street Crash and the beginning of the great depression, which highlighted the weaknesses in existing economic policy.

Following a disastrous five years back on the gold standard, the UK abandoned it in 1931, and others followed over the next few years. There were also problems in the US, and in 1933, President Franklin Roosevelt imposed a ban on US citizens buying, selling, or owning gold in order to kickstart the depressed economy. This was the birth of Keynesian policies which shaped much of economic policy in coming decades.

At the same rime, the Federal Reserve continued to sell gold to foreign central banks and government institutions, but the ban prevented hoarders from profiting after Congress devalued the dollar against gold in 1934.

This action raised the official price of gold by more than 65% to $35 per ounce. Only gold coins and certificates considered collectors’ items were exempt from this prohibition, and artistic and industrial users were allowed to deal in gold under a special Treasury license. Once the price rose, there was a mining boom, which saw major growth in gold output.

The 1970s

The licence to print money had been conveniently forgotten, despite the widely remembered problems in Germany’s Weimar republic in the 1920s, and just fifty years later, in 1971, President Nixon ended US dollar convertibility to gold. On the 31st December of that year, gold stood at $43.8 per ounce.

This finally ended the central role of gold in world currency systems and it then began a spectacular bull market as inflation raged and the value of paper currencies fell. Gold enjoyed a nine year bull market, with the price hitting a record of $850 per ounce against a background of an international crisis arising from the Soviet invasion of Afghanistan and the Islamic Revolution in Iran. If this was rebased to today, the all time high would be equivalent to $2,100 per ounce.

Why gold could go a lot, lot higher

Gold’s current bull market has lasted six years, during which it has risen around 200%. In the 1970s, gold peaked with a 2000% rise in just nine years, so this gives some food for thought.

Admittedly inflation art present is not the problem it was at the beginning of that decade, but don’t bet against major changes in the value of gold against paper currencies in the years to come. For long and short term CFD traders this creates a major opportunity to profit from a potential further major revaluation.

You may have thought that when it comes to lost or stolen art, sunken treasure discovered on shipwrecks and buried treasure and antiquities that all you have to do is find it, or buy it in good faith and you can keep it, but international, maritime and competing state laws have something to say about it. The right California Art, Maritime Shipwreck Treasure and Antiquities Lawyer, however, can sort out the competing legal issues.
If you have a legal issue involving art, antiquities or have a claim to a maritime shipwreck, sunken or buried treasure under California, martitme, or international law, visit our website at http://www.sebastiangibsonlaw.com and call us at any of the numbers easily found on our website.

Maritime Shipwreck Treasure

Recently, a number of prized shipwrecks have been found, one as recently as February 2009 when a U.S. salvage company, Odyssey Marine Exploration found a prized British warship believed to be the HMS Victory, lost in 1744, which just may hold four tons of gold. The HMS Victory discovery may solve one of the most intriguing naval mysteries in history. Why did this ship with one of the most famous admirals of his time, disappear with a crew of 1,100 men with one of the largest shipments of gold and silver, including four tons of gold coins, and why has it eluded treasure hunters for so long?

Believed sunk near the Channel Islands by a fierce storm that separated the Victory from other ships that broke through a French blockade at Lisbon and were returning home, the Victory (a later version which would be commanded by Admiral Nelson) had the sons of some of Britain’s most influential families on board when it sunk with perhaps the largest collection of bronze cannon as well.

In a less important find of another English shipwreck, Odyssey negotiated a deal whereby it received 80 percent of the first $50 million salvaged, and then a sliding scale up to $500 million, after which the profits were split 50-50. Since that time, however, the British government adopted a set of UNESCO guidelines that will complicate any hope of a similar arrangement.

Two years earlier, the same company, Odyssey, located the mystery ship, the Black Swan” believed to be a Spanish galleon, the Nuestra Senora de las Mercedes y las Animas, that sank off the coast of Portugal, with seventeen tons of gold and silver coins.

The Spanish government has sued Odyssey in a Florida federal court on the basis that it never abandoned the shipwreck. One could say, they simply lost it for a few hundred years. The British government is believed to be negotiating with Odyssey about a collaboration to salvage the warship.

Maritime Shipwreck Treasure Law

What’s important in sunken treasure cases is where the treasure is found, whether the ship was owned by a government or a private entity, and whether there has been any dishonest conduct by the treasure hunters.

 

Most countries and their maritime lawyers claim anything to be within 12 nautical miles from their coast as their territorial waters. Additionally, if the ship was owned by the state or government, Law of the Sea Conventions come into play, which again allow the state or foreign country to determine what compensation the treasure hunter is entitled to. Finally, if the treasure hunter or salvage company has been guilty of any fraud or dishonest conduct, they can be deprived of any or all of any payment due them. Entering a foreign state’s territorial waters to look for a sunken ship counts as such misconduct.

International Maritime Law and The Law of the Sea

Under international maritime law and the law of the sea, if an owner abandons a vessel, it can be claimed by the finder. When a vessel has not been abandoned, it can still be salvaged by the finder and is usually compensated by the sovereign state claiming ownership. The Abandoned Shipwreck Act of 1987 encourages cooperation between sovereign governments and states and private entities.

The rule of “finders, keepers” applies only where the previous owner of a ship is found to have abandoned its property. Under various state laws, treaties and conventions, however, the positions taken by most governments, including the U.S., is that the state only abandons its sovereignty over, and title to, sunken U.S. warships by affirmative act. Mere passage of time or lack of positive assertions of right are insufficient to establish such abandonment. Thus, France’s claim with respect to the Griffin (or Griffon) that it never abandoned its interests in the ship.

Sorting out these competing claims can take awhile. In 2001, the Great Lakes Exploration LLC found a 17th Century ship, the Griffin, in northern Lake Michigan, near Wisconsin. One might think that Michigan or Wisconsin would have good claim to the ship. But just in January 2009, France filed papers with the court hearing the case that claims the ship expedition was undertaken on behalf of the French Crown and was not a private enterprise.

The Richest Shipwreck Ever Found

And then, just when you thought the scale of these discoveries could not be topped, they have been, at least monetarily, with the discovery of a British merchant ship, sunk by a **** submarine, that was transporting just goods from a European port, to the U.S. with repayment to the U.S. Treasury for the Lend-Lease Program that gave support to the Allied war effort. And what was this ship, code named the Blue Baron carrying? Just the world’s richest shipwreck cargo ever. The ship is thought to have been carrying a $3.7 billion cargo of gold, platinum and diamonds.

Believed to have been found about 40 miles off the coast of Guyana by Sub Sea Research, a U.S.-based marine research and recovery firm, the shipwreck will be the richest find ever. It was reportedly carrying at least ten tons of gold bullion, 70 tons of platinum, one and a half tons of industrial diamonds and 16 million carats of gem quality diamonds.

So far, no counter claims have been filed in the federal admiralty court case relating to the find, but it is likely that a number of countries may make claims to possessions on board that originated in those countries, including Russia which, like Britain, shipped large quantities of precious goods to the U.S. in payment for the war effort by the U.S. The question for historians who may have some influence in this case, is whether the Soviet Union paid subsequently for the Lend-Lease war effort after the ship was sunk.

Stolen Art and Antiquities Law

The law with respect to stolen art as opposed to lost shipwrecks is quite different, but no less complicated. Some countries view the movement of stolen works of art as the smuggling out of its country of a “national treasure,” even if it was previously, privately owned. Other countries view the contents of tombs and other relics to be the property of the state and their taking as “theft.” Another view of situations in which a work of art is previously owned by one person and then appears in the collection of another, is viewed as a further variation of theft. In this last variation, most legal systems provide protection to the bona fide purchaser, unless the property is stolen.

Unfortunately, the laundering of stolen works of art is facilitated by the lack of consistency of state laws and international law, statutes of limitations, the bona fide purchaser defense and the burden of proof on the person claiming that the art work was stolen.

Under a common law rule in Anglo-American law, a person cannot give what he or she does not have. Thus, a thief cannot convey good title to a stolen work of art, even where there have been several subsequent purchases by bona fide and unsuspecting persons acting in good faith. However, the vast majority of western countries with civil law systems accord protection to the purchaser in good faith of stolen art. While there are international treaties and conventions which are gaining supporters, for the most part, it has been said that international law on the illegal sale of art works and cultural treasures is not retroactive.

Visit our website at http://www.sebastiangibsonlaw.com and call us if you have an issue involving stolen art or any art issue, maritime shipwreck sunken treasure, or with regard to international or cultural antiquity treasures.

The FBI now maintains a National Stolen Art File (NSAF) which is a computerized index of stolen art and cultural property reported to the FBI by law enforcement agencies throughout the United States and the world. The primary goal of the NSAF is to serve as a tool to assist investigators in art and cultural artifact theft cases and to function as an analytical database providing law enforcement officials with information concerning art theft.

It has been reported that the trade in illegal art and antiquities in the U.S. is exceeded only by the trade of guns and drugs. It is believed that most of the stolen art in the world (over 100,000 objects since the 1980s) comes to London or to the U.S. with much of it bought secretly by persons for their private collections, for a fraction of their market value.

If you need legal assistance in connection with any type of art, treasure or antiquity, look to our California art, antiquity, maritime and international law firm for representation in the U.S. and throughout the world.

Years ago, if you wanted to buy something you paid in coins minted from, or at least backed by, precious metals. United States currency, for example, was backed by gold held by the government – hence the term “gold standard”. Your dollar was backed by a dollars worth of gold which in theory you should have been able to get by simply turning in your dollar.

Since that time however a lot has changed. The dollar is no longer primarily backed by the tangible, but rather the intangible. It is basically backed by itself on the condition of the stability of the United States government, the productivity of the citizens of the United States and the willingness of foreign countries to use it as a guarantee of their own currency.

This, of course, is problematic because of a pesky little thing called the United States Constitution which states, “No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts “. So if no State can do this, then how can they allow a currency issued by the federal government to be used by their citizens?

A quick scan of all the amendments made to date shows no repeal of that clause was ever made. Which means that it is still valid and “the law”.

To me, at least, it seems we have a bit of a problem even though to me it doesn’t really matter what the dollar is backed by. Although there are many that are indignant at anything other than what they want used as a basis for value being used. My opinion is that as long as whatever backs the dollar is valued, it doesn’t matter what that something is.

Everything that could be proposed to back the dollar has periods of highs and lows. I don’t care what you come up with. Even the value of gold fluctuates with supplies, new sources being mined, old sources drying up and even plain old demand just as the value of the perceived stability of the American government and its promises to back its own currency do.

So to me it has always been a moot point. Base the value of the dollar on whatever you want. Just make sure that that “whatever you want” is valuable and be careful. As the old story goes, leaves make great currency until you discover a forest. Then you have to worry about inflation.

But I do believe that we should abide by the Constitution. Or at least be willing to change it by amendment if we no longer think that the standard set forth in it is no longer valid or attainable.

So fast forward with me if you will to the modern day. Arrive with me at just this past month when FBI agents raided and seized the precious metals and coins owned, minted and circulated by Liberty Dollar. The company is owned by Bernard von NotHaus and has been minting its own coins for a decade which some, and I emphasize some, companies and individuals have chosen to accept as legal tender for exchange of goods and services. All told, it appears that over the years millions worth of “Liberty Dollars” have been placed into circulation and all are backed by precious metals and a guarantee by Liberty Dollar.

Disclaimer time so bear with me. I supported the concept of the Liberty Dollar until Mr. von NotHaus decided to make his enterprise a political operation instead of simply an exercise in Constitutional adherence. By producing coins with a political messages such as the anti-war “Peace Dollar” he thoroughly ceased ingratiating himself in my mind and became someone that doesn’t understand the dangers facing American and individual liberty. And when the “Ron Paul for President” coin became available, well, he became a basically a fund raiser and promoter for that candidate. Personally I believe that he ruined a good idea even if it had yet to really catch on. If I had been him I would have kept the politics out of it.

I think it is only right to also disclose that I have never used any of the products by Liberty Dollar for two reasons. First, because I could not get any local retailers to say they would accept them. Second is that the value of the coin is not backed by its actual value in precious metal. For example, from the Liberty Dollar website, “When the price of silver rises near $10 per ounce, a new $20 Warehouse Receipt series will be issued. All new Certificates will be identified with “$20 Silver Base. The new $20 denomination certificate will be backed by one ounce of .999 silver”. Note that that “one ounce” however is only worth “near $10”. I didn’t think it was a good idea to invest something that wasn’t worth nearly its weight in gold … um … I mean silver if you know what I mean.

I liked the idea, but hey, those are the breaks. Currency doesn’t do you any good if no one values it at the value you assign to it.

So, back to the FBI raid on Liberty Dollar. It was because the government claimed that the company’s money was too “similar” to “official” U.S. currency even though the “official” U.S. currency isn’t based on the Constitutional provision of being gold and silver backed. To which I ask the obligatory question of, “So what?” Is there now some monopoly that the federal government should have over how we conduct our business?

Not according to the Constitution. The Constitution doesn’t give the federal government the exclusive right to be the sole source of “money”. It only gives the government the power to issue money stating, “The Congress shall have Power … To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures“. Being the strict constructionalist that I am, I have to call it as I see it.

There are also other charges that appear to be headed to court to be sorted out. Issues such “counterfeiting”, a bogus charge because Liberty Dollar was not creating copies of the federal currency, and others such as whether or not the endeavor was a sort of ponzi scheme where the coins were sold at more than the value of the gold, silver, etc that backed them.

You see the potential problem here. The money is inflated in value as I previously discussed. But you can’t really make the money and pay for the costs of turning the raw metals into coins without charging more than it is worth right? After all, it takes many times the value of an “official” U.S. dollar bill to keep it in circulation than the value of the dollar bill in the first place. So the same problem exists with federal money.

As long as people agree to accept the currency as payment shouldn’t we let them? If people are willing to accept the coin and Liberty Dollar makes good on its pledge to redeem the currency for the precious metals that back it as promised when asked, what really is the problem here? Should gold and silver not be legal currency? Should people not be allowed to barter and trade in any form they desire for goods and services barring the infringement of someone’s rights in the transaction? Or should the government be allowed to dictate what we can and cannot use as “currency” for private transactions?

And if gold and silver are not to be legal currency, then wouldn’t every coin dealer in America be just as guilty as those that created the Liberty Dollar each time they bought or sold a coin? What about the local pawn shop that buys and sells jewelry made of gold and silver?

Shouldn’t we be able, as free people, to trade something for something else of our own free will?

These are serious questions that need to be answered. Because in a time not too far removed from modern day, we as Americans, used to conduct our business in things other than the paper money and coins of modern day America. We offered gold and silver and even cows and chickens as payment for our debts and to acquire services. Heck, at one point in America, “wampum” was a currency for God’s sake! Wampum, for your information, being polished shells plentiful in the ocean to anyone that had the drive to fetch them.

If I offered you a steaming pile of fresh manure for a dozen eggs because you could use the manure to fertilize the corn in your field should the government have the right to tell us, “No, you can’t do that”?

One cannot mention Spanish gold coins without envisioning pirates, hurricanes, and shipwrecks in the Caribbean. As a matter of fact, the distinction of Florida and the Caribbean as being the location of more buried treasure than anywhere in the world has been propagated and accepted since the 1500s.

Gold collectors and investors are well aware that over $160 million in gold and silver lies buried in the tropical waters off Florida and the Caribbean. Because of its rich history of pirates, wars, hurricanes, and the presence of Spanish galleons carrying gold (also known as Spanish Escudo) and silver from the New World to the Old World, treasure hunters seeking doubloons and pieces of eight have made Florida and Caribbean waters their home away from home for decades.

Spanish gold coins are exquisite in their design and detail and some are available to collectors and investors in a wide range of denominations, sizes, and gold content. Spanish gold coins minted in 1877 and emblazoned with the right facing bust of King Alfonso XIII are a favorite.

The more popular denominations of gold pieces available to collectors today were struck between the years 1889 and 1890, though gold coins minted between 1588 and 1874 are much sought after. Ranging in gold content between 0.8671 and 0.0951, many of the more common denominations of Pesetas are available at reasonable prices for many collectors.

A feather in the cap of any collector, pre-1850 Spanish coins, and most especially those minted before 1800, are sought after like no other coins in the history of mankind. The coast of Florida as well as the Gulf of Mexico and the Caribbean have brought gold coins buried for hundreds of years to the light of day, to be enjoyed, admired, and coveted, by most coin collectors around the world.

Coin Price Guides are useful among collectors. In brief, coins are tiny disk shaped metal pieces of currency. Coins come in various categories currency coins which are valued as per their face value, currency coins come with an amount printed on them and the printed amount is the price of the coin.

Rare and Historical coins are those which belong to centuries before us ,these coins are rare and very significant in finding out historical information of our ancestors ,these coins fetch a very high price in the market, the pricing of the coin is also based on the significance quality condition uniqueness and beauty of the coin.

Gold coins or Silver Coins, these coins are mostly bought as an investment the price of these coins usually depends on the market price. There can be no price guide as with the fluctuations of the economy the price of Gold and silver coins will also fluctuate.

Coin Pricing guide is based on certain criteria’s-

*Coin must be made of valuable metal, the pricing of this coin will be close to the market price of the metal.

* Coin should be of standardized weight and purity.

*The marking of the marking on the coin has to be genuine and marked only by an authorized authority only.

* Pricing of the coin also depends on the date printed on the coin, as well as its historical significance.

Coin collectors from time to time come across such coins too which are very difficult in analyzing their price ,so clarify sometimes a coin may own a very unique coin whose price cannot be determined due to its unclear marking or worsened condition in such occasion the pricing of the coins is based on the demand the coin or how many coin collectors would be interested in your piece.

Sometimes a very unique coin would not be as well priced as a coin which is relatively plenty in nature and the simple reason would be as the coin is in more demand by the coin collectors. For example there are only 30000 dimes of the 17th century where as 20th century dimes are nearly 4,00,000 still the 20th century dimes are sold for higher value than the 17th century dimes the only reason being the 20th century dimes are more popular among coin collectors.

Generally coin price keeps varying, the general rule in the coin price guide is rarer the coin higher the coin value ,still there are some exception in this case too for example a 1913 marked Liberty head Nickel was sold for as high as $1,000,000 as there are only 5 pieces of such coins ,where as 1000yrs old Chinese coins were sold for not more than $100-$200 as there were number of these coins available.

Coin grade also influences the coin price guide, coin grade depends on the condition, better the condition higher will be the grade and higher will be the price the coin will fetch.

However one should remember monetary valuation of a coin is not everything, even if one coin does not have a high market value it does not loose its significance it can still be very much a part of your collection.

Coin Price Guides come in print (softcover and hardcover) and online in digital format.