THE SELLING OF INSTANT COLLECTIBLES

The article on how the minting of collector items has its sad stories here in Spain as well. I had an opportunity to buy an entire silver coin series of the 500th anniversary of Spain’s encounter with the Americas. The retired fellow who had diligently purchased all of these handsomely packaged pieces in the 1990s knew he had to face the fact that for all those years he had not been investing in coins, only collecting them. These are Spain’s moneda-medalla pieces. That word, obviously meaning coin-medals, is a Madrid mint’s profit center just like our cumbersome NCLT — Non Circulating Legal Tender.

Felix was ready to sell his collection. His now-adult kids showed no interest in the ‘coins’ so he turned to a mutual good friend, a jeweler, to find a home for them. I checked with two coin dealers here to determine how I could buy these beautiful not-quite-coins for a fair price. I am willing to pay a bit more than a dealer would give him. They both gave me the same advice.

I asked the most seasoned dealer to visit my home. I opened my 2012 Standard Catalog of World Coins 1901-2000 to the Spain listings. The first of the coins I wanted was KM 841 (The huge book does not have page numbers!), one of the series of .925 fine sterling pieces illustrated in the catalog. The mintage varied from 7,000 to 47,000 for the giant 10,000 peseta pieces and catalog values ranged from $165 to $275.

“What should I be paying for these — 40% off retail?” I asked my dealer friend. “No — Melt” was the dealer’s stern answer. Wow — that means those big five ounce pieces were worth only $80 each in silver. Translating the peseta price tags still on the packages, that meant that my new friend had paid about $120 in the 1990s for each piece. I am still waiting to hear from Felix. I imagine he struggles with taking a loss on these pieces. As I feel for the seller, I am also not doing much for myself as an investment. Silver has hung around its current price for quite a while. I would be gambling that it will go up and not down when I buy these NCLT pieces.

Editor Wayne said last week: “Educate me, readers — we don't ordinarily cover topics such as pricing and investment.” OK — Numismatics as I have lived it has always been collecting linked to smart coin buying and an eye on investment. That worked for me. I sold most of my 1960s era collection (when I was a high school and college kid) in the late 1970s (when I was back in San Diego after six years in the USAF) to help me buy a small office building for my new advertising agency. I miss those great coins, but one office building led to another and we now live in Spain thanks to leasing a building worth about $800,000. Those coins sold in the 1970s produced about $5,000 but that was a key part of launching my business.

The loss to Felix in just straight dollar (or euro) amounts is annoying enough. The relative value or standard of living value of that $120.00 purchase from 1990 today ranges from $220.00 to $374.00. The higher amount represents the economic status value or the economic power value of the purchase after 27 years or so.

A couple of other terms for the current $200 value of the purchase are particularly ironic: These are called the historic opportunity cost or the contemporary opportunity cost. What that mint product did not deliver in any way was an opportunity. The buys Felix made in the 1990s were a fun hobby but a crappy investment no matter how you look at it.

There is a passion in many people to collect things. This can be as silly as sugar packets to as sophisticated as ancient coins or patterns made by the U.S. Mint. We see Hummel figurines, original edition Ford Mustangs, Cabbage Patch Dolls, Pet Rocks and, of course, coins and things that look like coins. Some people collect, some hoard and some suffer from obsessive compulsive disorders (OCD).

Having owned an advertising agency during 30 years back in San Diego, I study the messaging the mints use. They want to touch on aspects of value in their promotion, yet they know that ads are an implied warrantee of products so the writing carefully walks the line.

Typical mint advertising messages: “Don’t miss this opportunity to add these limited edition products to your collection before they go off sale forever.” This classic manipulative advertising line appears on the website speaking to the most ignorant of American shoppers. It leaves the impression that if you fail to take action and buy these items they will become difficult to find and their price will go up. History shows us that such is not the case. The word ‘coin’ is used extensively on the mint’s website. Legally they are coins because you could spend a one ounce silver piece for a dollar as you ignore it holding $17 in silver. Got ya!

The mints might rationalize this situation this way: “You have years of pleasure with these items. If you were a golfer and quit playing you might get 20% of what you paid for clubs and gear. It is just a hobby. Your country has made money off of you, so — thanks.

On the topic of Silver Bullion Coins the mint’s website tells you that these round one troy ounce ingots “provide investors with a convenient and cost effective way to add silver to their investment portfolio” while disclaiming that “Pricing for bullion coins typically depends on the market price of the metal.” The mint steps further away from this issue by not selling such items directly to consumers. You are told: “Visit the [on-line] Bullion Dealer locator to locate a dealer — bullion coins are not sold directly by the U.S. Mint.”

No discussion of mints conduct regarding NCLT is complete without mentioning the Franklin Mint, that benchmark of collector scams since 1964. It is still alive, exploiting that unending desire to collect things. It is turning out items of no numismatic importance whatsoever, such as colorized $2 bills featuring such themes as Star Trek, Elvis and President Trump. You can also buy on its website a half pound of ‘wheatback pennies,’ WWII cent sets, and the last Franklin silver half dollar. A look at the Wikipedia website for Franklin Mint is a fascinating look at how businesses can pander to and exploit the ignorance of many driven to collect things.

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